It is a sad commentary on our species that we haven't been able to design and maintain a fiat currency that adequately serves the function of money over any length of term, your railing against the barbarism of precious metals is quite understandable, you'd think we could be smart enough, and more importantly, collectively wise enough, to come up with a fiat money that works as both medium of exchange and store of value, our failure to accomplish this is shocking, embarrassing ... nevertheless, we haven't, and aren't about to, and that's the way it is
From the time we began division of labour we needed this thing called money, that's how long we've been working on it ... Adam Smith recognised how crucial it was in the order of chapters in his Book One, this is out of four Books with up to 11 chapters each -
1. Of the Division of Labour
2. Of the Principle which gives occasion to the Division of Labour
3. That the Division of Labour is limited by the Extent of the Market
4. Of the Origin and Use of Money
We still don't have a fiat that works, and there's a reason we don't - any construct of human beings will be subject to whims and fashions of human beings, and we've learned through hard experience not to trust each other to quite this extent, without an external framework for guidelines ... that's the thing about precious metals - they're external, in that they can't be printed, or poofed into existence with a few fresh electrons through somebody's computer, you can't say this about any fiat money whose beauty and horror both are that its cost of production is low
For any nation of any size to peg its fiat to gold or silver would be neither practical nor desirable, because that only means its politicians will be inhibiting its actual use as money, diddling around with it in whatever way ... remember how Roosevelt made gold illegal and it remained so until Nixon closed the gold window to de Gaulle - that was the day of its freeing, best to leave it free, a thing unto itself in a parallel system to act as standard of measure to everything else, standard de facto as opposed to de jure
But there is much more to metals than simply gold - every object or thing around you that wasn't grown had to be brought out of the ground at some point ... and there is more to resource plays than metals even - that's pretty funny that a company called Goldsource didn't actually come up with gold, went looking for diamonds and found coal, but stranger things have happened in resource plays, and the same basic factors determine ultimate degrees of success or failure ... better than gold, as a speculation for the longish term, is silver imho, it doesn't have near the above-ground stocks overhanging, most of its uses are consumptive, demand has exceeded mine supply for many years now, a new high-volume use and/or speculative interest would have its value moving up well against gold, and of course even more against any fiat |
