You'll hear people, even PhDs in economics, say gold and silver is not money, you cannot buy anything with it. You cannot pay for a meal in a restaurant with it, you cannot buy a house with it, or a car or a washing machine, or pay a babysitter with it.
This is particularly astonishing to hear from people holding doctorates in economics, for in econ 101 they teach Gresham's Law, bad money drives out good (and my corollary - bad credit drives out good credit.)
Who would use gold or silver to buy anything when you can use funny money, USA currency, or the whimsical tallies, to effect a title transfer? Of course it is not used in a false economy! Who would be willing to lose good money into a false economy, to likely never see it again?
I was speaking to one PhD, not yet fifty, who had no idea we once had silver coins as currency. Had no idea that paper currency was once backed by silver and gold (I carry one of each to show people.) Had no idea that back in the 1960s you could buy a gallon of gas for 20 cents, or two silver dimes. Today, you can exchange those two silver dimes for USA currency/funny money, 2 or 3 bucks, enough to buy a gallon of gas. Real money keeps its value.
Gold and silver is not used as currency because people are conditioned to accept less. Much less. In fact, it is the law.
Feel free to forward this by email to three of your friends.
This is particularly astonishing to hear from people holding doctorates in economics, for in econ 101 they teach Gresham's Law, bad money drives out good (and my corollary - bad credit drives out good credit.)
Who would use gold or silver to buy anything when you can use funny money, USA currency, or the whimsical tallies, to effect a title transfer? Of course it is not used in a false economy! Who would be willing to lose good money into a false economy, to likely never see it again?
I was speaking to one PhD, not yet fifty, who had no idea we once had silver coins as currency. Had no idea that paper currency was once backed by silver and gold (I carry one of each to show people.) Had no idea that back in the 1960s you could buy a gallon of gas for 20 cents, or two silver dimes. Today, you can exchange those two silver dimes for USA currency/funny money, 2 or 3 bucks, enough to buy a gallon of gas. Real money keeps its value.
Gold and silver is not used as currency because people are conditioned to accept less. Much less. In fact, it is the law.
Feel free to forward this by email to three of your friends.
3 comments:
The problem with gold and silver is that they are commodities and as such their value fluctuates based on supply and demand. Gold is worth around $1168 per ounce in the market today yet in 2006 it was just below $500 per ounce. In 2011 however gold was being sold at over $1800 per ounce before it reached today's price of $1168 per ounce of gold. According to the US Departmemt of Agriculture historical files, in 1971 the world GDP was $19897 ($ billion) while in 2014 world GDP stands at over $7257 ($ billion). That's almost a 400 % increase in 44 years. Clearly, with the fluctuation in gold prices since it is a commodity (and is a finite resource) and with a more complex and massive world economy it would not make sense to have the dollar pegged to gold lest we pay $300 for a gallon of milk or $2,000,000 for a used car.
What is used as money is always also a commodity. Yes, as a commodity it fluctuates in price counted in a relative currency, but why gold and silver have emerged as consistently repferred as money as well as a commodity is that its fluctutation is relatively minor.
Your data set on prices suffers form the error of narrow basis of comparison. US Ag dept data is meaningless by design. Try something more substantial: a gallon of gas cost about two dimes in the mide -sixties when USA money was either silver or gold or backed as such. Today a gallon of gas is still two silver dimes, if sold for todays currency.
The ecoonomy is no more massive or complex at any other time, unless you consider the accounting fraud, which is purposely complex or simply inscrutable. Finite gold is irrelevant. It has a price. No one in 1964 could imagine paying $4 a gallon for gas or a million dollars for a house. But we do. Nominal figures are withing a context. 300 yen for a gallon of milk is no big deal, so what if dollars were used instead. It is just a signal.
I don’t advocate a dollar pegged to gold. I advocate no dollars. Gold is money. If someone wishes o issue warehosue receipts for gold that is a private matter. Gold has a spcific purpsoe in an ecnomy, extinguishing debts. Real business people have no real interest in extinguishing debts and relationships, only customers who have revolving credit lines, non-interest bearing asset backed credit lines.
I suspect you are a greenback advocate, but in any event, your argument gets confused for poor definitions.
John
Gold is money however one of the reasons that the Roman empire fell apart is that the gold and silver was being diluted until the precious metals were worth less and less. What kind of controls are there to use gold as money? The hegemony will not stop, far from it corruption will be the same or worse.
There will be a one-world system in the not too distant future however it will most likely be based on digital currency and not on a commodity.
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