That argument is often raised. But it is utterly foolish!
For exampel, plutoniom is much more “rare” and difficult to find (and actually very diffucult to handle without it killing yourself).
Gold is money for other reasons. I argue that one of, if not THE most important resasons is that GOLD IS USELESS!
Sorry, I went out of my way with “identifying” some people with some “views”. I thank you for the helpful info you brought to my attention! (I might even read it soon[8-|] )
However, until I’ve read up on some “potential” argument against my proposal, or until someone actually explains (with text here, rather than with foot notes) where i am wrong, until then I will keep an irritating eye on this subject!
Value, being subjective, consists in the utility a given agent finds in the item. Consequently, for one to assert jewellery is valueless is nonsense, if it is valued, for whatever reasons… in fact jewellery can be very highly valued if not only for its aesthetic qualities.
A law requiring people to use gold as money is just as evil as a law forbidding people to use gold as money.
In the present, it’s illegal to use gold as money, due to taxes and government regulations.
Historically, given the free choice between gold and fiat paper, people have chosen gold. Therefore, gold must be banned.
The correct answer is “People should be free to use whatever they want as money.” In practice, this means a return to using gold or silver.
And why would that be?
Personally, I am very interested in what archeology would say about the circumstances that existed when gold turned from just another commodity into a form of money. First of all, to assume that gold was the most valued metal for all ancient, here I am restricting myself to the Mediterranean nations, cultures is a false assumption for the Egyptians valued silver more than gold; nevertheless, this only proves the prior assumption wrong, and does not yield much knowedge. Gold, of course, has its uses as a decorative metal from which it will definately derive value, the fact that gold is one of the easiest metals to work with ensures that gold is definately the optimal metal for an ancient jeweller to work with. The value of gold would definately be augmented by the fact that its durability is unrivalled thus making it probably the most durable good known to man.
It is also necessary to understand that coinage itself did not emerge a bit before 600 B.C., and the first Greek coins appear on Aegina around 595 B.C., and in Athens at around 575. However, as far as being a medum of exchange, the Egyptians before measured the value of surplus goods based on a unit of weight, the deben, which weighed about 90 grams, that was usually calculated in gold, silver, or copper. Also, the Kas shipwreck gives a picture of commerce at around 1100 BC that involved many small quantities of different commodities, thus implying that barter was the primary form of paying for goods. Nevertheless, this does not explain why gold was chosen as a form of money, but the fact that the Egyptians measured debens in gold, silver, and copper, the three being probably the most important metals for the Egyptian economy, displays that the fact gold was a metal was very important for it becoming a form of money. I must admit though that I am unprepared to take this any further; nevertheless there are some important conclusions that can be derived.
I cannot explain above why gold became money, though I do believe I gave a sufficient exposition of how it could possibly turn into money. Also, the nature of social evolution, a decentralized process of trial and error that proceeds across generations to distill the behavior patterns that are the optimal, and most efficient from those that prove unsatisfactory. Eventually, the behaviors that survive will spread across society by other imitating them . It is possible to understand how gold became as entrenched as it is through social evolution because by its very durable, and cannot be counterfeited gold is a great commodity to be used as a money. Eventually, the forms of money, such as the Egyptian copper deben, that prove less satisfactory than gold are abandoned as forms of money that historically eventually result in gold and other specie becoming the dominant form of money across the entire world. In addition individuals are born into a society that has already undergone generations of social evolution, and ergo they are likely to take certain facts for granted. Eventually, they will stop caring about the nonmonetary uses for gold, and instead start valuing it pretty much soley for its monetary worth.
I wish that I could continue this analysis into the post-gold standard world, but I do not have enough time, so I hope what I have wrote provides some light upon the matter at hand.
Value to weight. It takes, literally, a ton of iron to equal the value of an ounce of gold.
Many different things have been money in different places. Iron coins have existed, so have salt coins.
In order for people to want to wear diamonds because they are expensive, they must first become expensive. Diamonds have value because people want them, same for gold.
I’m starting to suspect that you’re an imbicile.
P.S.
This is an Austrian forum and we use what is called praxeology. If you want to convince us that gold is money because gold is useless you are going to have to show us why an individual would accept in a transaction something they know to be worthless.
(You can’t, because people demand something of value in exchange for their goods)
It is not in the realm of praxeology why people like x. Only the implications of the fact that people want x. It might be rather in the area of psychology or history (or marxism..hehe).
I have never read Mises on the history of money, but I think the “uselessnes” of money might indeed have something to do with its desirability. I’m thinking along the lines of the Maslow Pyramid. For most of history, people didn’t have the time to pursue things other than satisfying basic needs like shelter or food. When a guy comes along with shiny metal on him indicates that he is a powerful man who has enough extra time/slaves/peons/friends to satisfy higher needs like looking extra pretty. I think the aesthetic aspect and the social aspect of gold are reinforcing each other.
(That people today value gold so high might actually be kind of an anachronism, given that nearly everyone can afford it ← Haha, i just noticed how stupid that sentence is)
Because gold has no uses, there is no alternative cost for using it as money. Gold is actually the cheapest metal, the most useless of all metals. Copper, iron, uranium and so on, are so very useful, that it would a waste to withdraw them from industrial uses and keep them in bank valves and pockets in the shape of bullions and coins. In ancient times, (as far as I know) gold was never used as a weapon metal. It’s too soft.
I suppose that gold won the race to become money, because it was the cheapest alternative.
If gold wasn’t money, it would not be attractive as jewelry either. Gold would lie around like (other) useless stones.
like rubys, jades shapphires,emeralds and pearls; i suppose.
they arent widely considered money and are found in plenty jewellery.
please find another argument.
gold is not ‘useless’. perhaps you dont have a use for it, but that does not mean others dont.
Really? Then please list all those potential uses of gold!
There are no chemical uses whatsoever. And electrically, gold is a worse conductor than the enormous quantities of copper and silver around. Gold can indeed be used as a “place holder” for a missing tooth. So it does compete with plastics and ceramics, in very very small quantities.
One can’t even make useful knife out of gold, nor a shield which cannot be smashed by one blow from an iron sword. It’s the most useless metal, and hence it has a decisive competitive advantage over all other metals for being used as money.
dont ask me, I have no use for gold aside from its monetary value. ask a person who has gold who would say that he likes it not entirely because of its monetary value.
you are just being silly and using the word ‘useless’ in a ridiculously narrow sense.
Well, it seems to be very difficult to make any meaningful conversation here.
But take a look at argument #2 in my first post. What are actually the alternative costs of using gold as money? What would the alternative cost be if we instead used copper as money? Can noone here see the point I’m trying to make???
oh, so now that we arent using gold for money, we can use it for all its non-existant uses. it is useless afterall.
we would use copper if we wanted to use copper.
certainly copper money mght be used to facilitate trades and store value (it has done this in history) where the value of the item(s) are relatively low compared to gold.
ProudCapitalist, you’re being a fool. Calling gold the cheapest metal is absurd. It is money because it is rare, and people have, for thousands of years, valued it. You’re saying its useless, and therefore good as money. We’re saying its good as money, and therefore extremely useful. You make two arguments in your first post, both of which are incorrect, yet call them true. Then you go back and forth throughout your posts either refuting them or claiming them again. I dont think you have a solid position, nor a straight line of thought on this matter. Gold is money because the market desires it to be money, because for thousands of years people have valued the rare, pretty element. No matter how much you want to question the market’s decision making, gold/silver are perfect choices as money.
If you are done pointing out THE BLEEDING OBVIOUS, then maybe you are able to come into the game here, and start discussing WHY precisely gold is prefered by the free market!?
I have argued that a decisive advantage of gold money is that the gold metal is USELESS! I haven’t said that it is WORTHLESS. Because gold is useless, there exists no alternative costs for using it as money (instead of using it for what it’s good for: nothing at all). Thus far, no one here has even commented this argument. Why? Has no one here understood it? Is my English that bad?
If copper was money, then the production of electric appliances and power cables would become more expensive, since alot of copper will lie unused in bank vaults. Many electric appliances would not be produced at all, since it would be more profitable to simpy use the copper as money instead. When savings increase (the demand for holding money), so would the cost of producing electric goods. Using copper as money would cause widespread destruction to the economy. But since gold is useless, there are no such side effects for using gold as money. There are no applications which compete for the use of gold.
Are you saying that gold has no value, as in it would be absolutely free, if it werent used as money?
If so, you are wrong. Not only is it common sense that gold is shiny and durable, and would therefore have some value to some people, but we can know that it must have had some value regardless. Gold was used as money in circumstances other than by decree, that is, on the free market. Praexology tells us that it is impossible for a valueless object to arise as money naturally. Mises told us this, and his views are summarized in the link i provided that you did not bother to read.
If you agree that gold had some value besides as money, but just very little, then that is something different. I am not sure exactly if this is true, but it is irrelevant that/if gold is less industrially useful than other metals. All that matters is that gold fulfilled the criteria for what makes good money better than the other metals. That is, it is durable, exists in a good amount (not too rare or too common), is divisible, etc. The “usefullness” is not a factor - it only matters that it has some value. Gold and silver are better than copper and iron, for example, because they are more durable and are not too common. They also are/were widely acceptable because of their beauty.
Please read the section in An Introduction to Economic Reasoning I linked you too. This is a very simple section that should only take like 15 minutes to read, and you will understand why people are calling you a fool.
You did not come up with a great new theory, you are just misunderstanding the basics.
Its true that there would be less side effects for industry if gold was used than copper. but that is not WHY gold is the most likely to be chosen by the free market.
I’m going to have to go along with Juan.
I suspect many if not most of our readers here read LewRockwell.com? Here’s an article from our old friend Bill Bonner that supplements this discussion:
http://www.lewrockwell.com/bonner/bonner364.html
Best regards,
Samarami