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comment by b_b
b_b  ·  4708 days ago  ·  link  ·    ·  parent  ·  post: Dana Bash of CNN is worried about Ron Paul
The intrinsic value of gold does not exist. I saw Paul on a Sunday news show once try to defend his position by saying that if there was a shipwreck with gold and currency, we could dig up the gold years later, but the currency would have perished. Its nonsense. Gold has as much value as any arbitrary currency, i.e., whatever value we agree it has.

The other argument they make is that there is a finite amount of gold in the world, whereas currency could be essentially infinite. This is equally stupid, because it make economics a zero sum game. Trade works best when it makes both sides richer, an impossible task in a mercantile economy; that is why anyone who believes in free trade hates the gold mongers, and probably why news organizations dislike him, too. A gold-mongering president would cost everyone money.





alpha0  ·  4708 days ago  ·  link  ·  
The ancients :)) valued Gold and Silver because the 'cost' of faking such matter was deemed far greater (if even possible, minus the lore of alchemists) than the actual material. Today we have strong cryptography. (Some one should break this to the Vienna school.) Actually, the ancient kings' strong preference was for Silver, since that allowed for greater liquidity and promoted greater commerce.

> The other argument they make is that there is a finite amount of gold in the world, whereas currency could be essentially infinite. This is equally stupid, because it make economics a zero sum game.

I agree, it is completely stupid to cap a nation's economy. Fiat within (sovereign) domain coupled with commodity based (e.g. Oil reserves) for trans-national trade, would be the sensible way to go, imo. The transnational commodity 'trade currency' would keep internal national funny money at bay.

Thinking in the economic space has been stuck in usuary and flat (not fiat) currency since Sumer. The consequences have been known since then. (It is in the bible too.) I still haven't figured out how one would disentangle 'storable value' from 'unit of exchange'. That is what is required and regrettably no one apparently is working on finding a solution to that problem.

b_b  ·  4708 days ago  ·  link  ·  
I've been reading several histories of the Conquest of South America recently. It gives great insight into the blood lust for gold that Spain possessed in the 16th c. But, look where it got them. The raided the most gold and were so contented that they were left in the dust when the industrial revolution took shape. It has hurt them to this day, since they never built the proper economic infrastructure that the other Western European powers did.

Trade, for as many problems as it creates vis-a-vis destruction of local culture and exploitation of populations, has inherent value in that it raises the standard of living for most of the people of a given nation. Gold hinders trade because of its limited quantity; that's why Nixon (a real socialist, right?) got us off the gold standard. Why Ron Paul and his ilk don't seem to understand this is far beyond me.

thenewgreen  ·  4708 days ago  ·  link  ·  
Gold, like money is a symbol.. it's that simple. There is little intrinsic value. I know that it is a great conductor and has some unusual qualities but let's face it, the reason it's worth so much is because we say it should be. If you think the fed is screwed up, that's fine but why the gold standard?