Sell my gold now?

[nalkin]

Isn't it kind of weird how gold has value?

[Skope]

Originally Posted by nalkin [You must be logged in to view images. Log in or Register.]

Isn't it kind of weird how gold has value?

I strictly barter. coins/currency has no value to me

[Messianic]

Originally Posted by nalkin [You must be logged in to view images. Log in or Register.]

Isn't it kind of weird how gold has value?

Gold always emerges as a voluntary money in civilization - i.e. when legal tender laws or their equivalent do not exist. Always - it may emerge among competing currencies (and this is usually the case), but it's always one of the monies people prefer to use in a free system.

Often some king or ruler gets control of the money, starts shaving off the edges of coins and reducing their weight so he can pay for something they want but doesn't want to pay the exact amount requested...So he pays for it in diluted money. Since he's the first person to use this and individuals haven't had time to realize it, he gets addicted to it and does it until a crisis unfolds.

The odd thing isn't why Gold has value - it's why Gold has been so low in perceived value, or why people trust paper money (a notion people laughed at 150 years ago) based on the promises of an institution that has the power to make as many of that paper money as they want without even having to print it or tie that money to some kind of solid standard.

Since the 1970s the US was able to twist or break the trend of a few millenia of history...My guess is it's probably because oil continued to be denominated in dollars so there was kind of a de facto oil standard...

[Raavak]

Originally Posted by Messianic [You must be logged in to view images. Log in or Register.]

... why people trust paper money (a notion people laughed at 150 years ago) based on the promises of an institution that has the power to make as many of that paper money as they want without even having to print it or tie that money to some kind of solid standard.

Whenever I think about this it kinda blows my mind. The only reason paper money (fiat) has a value is because of a perception, and everyone is on board with it. Or even worse, money in the bank: Its just a number on a register or a computer, yet someone will give me real stuff for this vaporous number. Its kind of a big system of trust.

Scary part is when the trust goes away (i.e. faith in US or any currency) so does that perceived value. You could conceivably be a multimillionare and wake up one day and not be able to buy anything if the system crashed overnight.

[Messianic]

Originally Posted by Raavak [You must be logged in to view images. Log in or Register.]

Whenever I think about this it kinda blows my mind. The only reason paper money (fiat) has a value is because of a perception, and everyone is on board with it. Or even worse, money in the bank: Its just a number on a register or a computer, yet someone will give me real stuff for this vaporous number. Its kind of a big system of trust.

Scary part is when the trust goes away (i.e. faith in US or any currency) so does that perceived value. You could conceivably be a multimillionare and wake up one day and not be able to buy anything if the system crashed overnight.

Notice that the kind of system you're recognizing only exists as a post-gold standard system. It usually doesn't grow organically among voluntary transactions (and if it does, it dies quickly) - gold has always emerged as one of the primary competing currencies when people are allowed to use whatever they want as currency. Fiat money always emerges via coercion and legal tender laws. So enshrining it as the only currency people may trade with ultimately creates imbalances.

And it only works for a short time - because it relies on the goodness of those in power not to abuse the awesome power they have (essentially free money to spend on whatever you want for a short time, since you're spending dollars you just created). I can't say i'm surprised that the privilege was abused. After you abuse the privilege of creating the world's currency enough, it gets taken away (if over a period of time) and given to someone else. It happened to Britain before the US - now it happens to us. And the living standard of Americans will dramatically decrease when that happens.

Hence China's recent statements, echoing Russia's sentiment for some time...