CB -
I suppose you could say that we are all suffering from a mass hallucination that dollars are valuable, but let me ask you this - given the choice between a one ounce gold eagle coin and a thousand dollar bill, which would you take?
The only value of money, as money, lies in the degree to which it is generally acceptable in exchange for goods or services. Since money is essential to a complex, division of labor economy, and therefore, modern civilization, the non-monetary value of gold as a commodity material, or a paper currency as paper, is usually trivial, compared to its monetary value. Gold has never served, and may never serve, as a primary monetary medium in an economy anywhere near as complex as the current economy, and so has never seen the monetary value as money that it would have today were it to do so.
A money analogy -
An automobile is a machine for converting gasoline to speed and physical displacement. For any given automobile design, there is a roughly constant relationship between displacement (distance travelled) and gasoline consumed. If you are the owner of a car, the value you place on the displacement desired implies the value of a given amount of gasoline necessary to achieve it. On the other hand, oil is vitally necessary to the functioning of the automobile in converting gasoline to displacement, but its value is not strongly related to the desired displacement if there is enough oil for basic functioning. This is the same with money. Once a given form of money exists, with certain requirements for both acceptability and scarcity, more money has no added value to society, but rather just dilutes the goods exchange value of the existing money, and may re-distribute it to the initial owners of the new money.
Regards, Don |
