Is the USELESSNESS of gold an advantage for it being money?

Economics Economics Questions
61

I disagree! Gold was pretty useless in the iron age too, since iron weapons and protections were superior. Gold was too soft. Have you ever heard of a gold sword which wasn’t only meant as decoration, but as a real weapon? I read somewhere that gold might have been the first metal humans used. But we never had a “gold age” with weapons and tools made out of gold. Because even stones and bones are more useful than gold is!!!

I think that is a very mystical explanaition. I’d prefer an economic explanaition, such that gold became money because it had no other potential uses.

I agree that iron would be better than fiat. But gold would be even better. And the reason is not than humans have a genetic hard-on for gold. With iron money, many kinds of industries would see their materal costs vary with the savings- and loans business. But with gold as money, we could use iron for swords and plows, instead of locking it up in bank vaults or carrying iron coins in our pockets. With gold as money, you can have both an iron knife, and a money coin in your pocket. With iron as money, you’d have to choose only one of those.

I think that people started to like gold estetically only AFTER it became money.

62

Ah, finally someone here who has read and understood my point!

The competitve advantage of gold use lies in it being money. There is very vast gap down to the next best use of gold (such as heat conductor or substitute for a porcelain tooth). And that chiefly depends on it not being chemically reactive (unless that it can form some toxic salt together with chlore). Its indestructability is therefor the same property which makes it industrially useless.

Concerning estetics. Silver is also used as jewelry and decoration, although it has the same grayish colour like so many other metals, like tin which is much cheaper and easier to shape. But silver is prefered BECAUSE IT TOO IS MONEY! And what about white gold??? Certainly, gold became money before it was valued estetically.

63

I once worked for a man by the name of Jesse E. Bush, who pioneered and owned a number of large firms in Texas. He was the uncle of the first Pres. George Bush, the great uncle of the last (hopefully J). He once explained “money” to me (oh, he was also one of the early and wealthiest Dallas millionaires):

“There is only one thing you can buy, sell, or trade on, and that’s energy. Man’s physical and mental energy. Everything else comes out of the ground, goes back into the ground. Money, therefore, is only a symbol of that energy. Money is meaningless and has no value of itself except for its representation of certain previously agreed upon quantities of man’s production and ingenuity…his energy”

This was back in the 50’s, when the term “energy crisis” was yet to be coined – we were still buying .129 diesel fuel and .149 gasoline in Texas. And got green stamps to boot. Remember green stamps??

The greatest con game and Ponzi scheme in the history of mankind has been that acted out by those smiling, waving gangsters who devised the plan of governments authorizing a central bank, capable of printing fiat “money” and issuing “credit”.

Gold simply kept those thieves somewhat honest. Somewhat. Because banks could still (long before “The Fed”) issue duplicate and triplicate receipts for quantities of gold supposedly in storage as long as people trusted them, gambling upon the statistical likelihood that only a small fraction of the legitimate owners of the gold would demand specie at any given time. Fractional reserves.

But if confidence in the bank waned and everyone demanded his or her specie (gold, in this case; but could be silver, horseshoes – anything of limited supply and therefore of certain value that everyone trusted and agreed upon in advance) the bank would be bankrupt quickly and abruptly. Which is how it “should” be today, except those same gangsters (or their progeny) are now “mortgaging” the energy of our great-great-great (lets see, how many greats do we need here?) grandchildren; “bailing out” their partners in crime.

“Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.”

~Ron Paul

The Second Great Depression

http://www.lewrockwell.com/paul/paul479.html

64

I tried somehting which is far too complicated for internet forums. I cited the arguments of OTHER people which I have encountered several times and who argue AGAINST a gold standard. yes, they are contradictory and both are wrong in different ways. But yes, #1 gold IS useless and therefor, no #2 there exists no opportunity costs for using gold as money. Either gold is money, or it is garbage.

65

Yes, I agree with him. If gold is money, gold has value only from its use as money. But if for example iron was to be used as money, iron would indeed have a substantial industrial value even apart from it being used as money.

Btw, gold mining does no good, does it? It only creates some inflation for gold money, hence somewhat reducing golds usefulness as money, and causes a redistribution of wealth from everyone to gold miners. And the miniscule industrial uses of gold wouldn’t be worth the mining costs. The hundered or so thousand tons gold around, is more than enough for gold plating contacts in corrosive environments. Especially since it can so easily be recycled.

66

Then send me your gold. You’re completely wasting everyone’s time on here. You’ve been disproven, time and time again, about the uselesness of gold, and yet you just keep trucking on repeating yourself and your incorrect assumptions.

67

seriously. read about the formation of money on the free market, and about the theory of regression which proves that gold must have had value before it was used as money, THEN challenge it. I’m sure you think you are right but you do not even understand what you are arguing against…

68

you are absurd:

you must hold that the first person to ever accept gold in exchange for goods he had produced did so despite the gold having no value to him, as there had been no precedent of anyone else ever accepting gold in a trade. i.e. its moneyness was not proven. and yet the first-accepter must have valued the gold more than the things he gave away, so how do you square this by saying gold has no value aside from monetary value??? furthermore how would anyone have ever come to posess gold to offer it on the other side of the trade?? someone must have taken time to collrct the gold, because they valued possessing it, and considered others might. bud dang it! its valueless!, why dont people have the same value scales you do ! oh noes!

69

I asked first. :wink:

70

Well, sorry for repeating myself, BUT SO DO YOU! You and some others here meticulously refuse to even touch my arguments. That you stupidly just keep on repeating “booh, your just wrong but I refuse to tell you how and I believe that gold knifes are very useful anyway” doesn’t promote this discussion at all.

Gold is the least useful of all metals to the industry today.

Gold was already practically useless in the stone age.

This is a great argument for the gold standard, since it refutes the “opportunity cost of gold” argument against putting thousands of tons of gold in dark bank vaults.

If gold would suddenly become very useful industrially, for instance because of some exotic advancements in nuclear physics, then that would be a very serious economic argument against gold ever becoming money again.

71

no it would not.

72

Let me (try to) make three points clear here:

  1. Todays industrial uselessness of gold strengthens it position as money. If (very unrealistically) we suddenly discover how to extract huge amounts of energy from nuclear gold fission, then gold would be like uranium. Instead of storing it passively in bank vaults, we’d destroy all gold and turn it into electric power. It would no longer be attractive for money uses.

  2. Historically, the regression theorem as i understand it, says that gold become money based on it having an estetic value in itself before it became money. While I think that this argument is a bit “mystic”, it need not be contradictory to my proposal that gold became money because of its practical uselessness! Iron and wheat could also have become the first money good, but for some reason gold was prefered. I suppose that people wanted to eat the wheat and make tools and weapons out of their iron. Gold had no such opportunity costs, hence gold was prefered as money.

  3. Lets assume that gold had no estetic value before it became money, and obviously no practical use value. Maybe iron became the first money, and only later did gold take over that role. The viking on the market place wants to buy a bear skin. It costs as much money, i.e. iron weight, which corresponds to half his sword. Since iron is so useful in the shape of weapons and tools, iron coins or bullions would have high opportunity costs, they would be a waste of iron . Does he break his sword in two and thus loose all the practical usability of his sword? Maybe one comes up with this idea: "Hey, what if I pay with the iron price’s weight in this useless gold metal for the time being? I promise to exchange it back into useful iron on the next market, if you want. I’ll even give you a little extra, so I don’t need to destroy my sword to pay for the skin. Or else there can be no deal right now*, sorry, because while your skin is indeed worth the iron in half of my sword, it isn’t worthwhile for be to bear the opportunity cost of rendering my sword useless by breaking it in two."*

73

You have a very narrow definition of utility. You’re also applying a utility theory of value, which is so flawed I want to cry. But still, even then, you’re saying that if it cannot be made into a knife, a metal has no value. All the whilie you’re ignoring the uses gold has, how its used in industry (electronics) all the time due to its non-corrosive nature, and how it has always been used for jewelry and ornamental purposes.

Back it up, or shut up. You’ve been proven wrong on this by almost every poster in this thread.

Other than the ornamental purposes, how it was used as money almost exclusively due to the ornamental use/‘prettyness’ of it, sure. Hell I could say copper is useless to people if you ignore its electic conduction abilities. But you’d say thats foolish. No more foolish than you ignoring the primary use of gold - ornamental/display of wealth.

Again, no it wouldn’t.

74

“no, i wont take the useless gold in exchange, it has no value to me. give me something that has value.”

and gold never becomes money.

get it yet?

75

Among the dumbest paragraphs i’ve ever read. Really? You say its a stretch to say gold was valued because of its looks (pretty), but then come up with this as your counter?

And, once again, no matter how many times you want to say it, gold is USEFUL.

76

What about this point:

The regression theorem only says that SOME good could become money. But it says nothing at all about why it was gold, does it?

So the lack of opportunity costs for gold, explains why gold, and not iron, became money. Thanks to that, it became possible to make payments without destroying productive tools and weapons.

77

If you think about it for a moment, the argument is moot. Like one poster earlier commented: “If you think gold is valueless, then send what you have to me!” (I don’t think I quoted him accurately, but you get the point).

Gold is currently valued on the commodities exchange at from 900 to 1000 frn’s (“Federal Reserve Notes” – counterfeit “money” designed by the most skilled gangsters known to modern man –- your “public servants”). So obviously it has value to SOMEONE. It goes up one day, down the other. I suspect in a year or so it will take approximately twice the frn’s to purchase a 1 oz gold coin as it takes today – and that’s because frn’s certainly aren’t going to go “up” in value (or usefulness to purchase stuff down at Wal-Mart).

It’s almost like arguing that gasoline is useless. It is, actually. Goin’ places has value. Gasoline is not only useless, but it’s also dangerous. It can damage your eyes and your nose and your mouth if you’re not careful, to say nothing of its combustion dangers and explosion capabilities. But if you wanta go somewhere, get yourself some gas!

Regards, Geo. Keagle

78

gold must have value outside of its use as money, otherwise it wouldnt be good money.

if it was as valueless as fiat money(which has use as low grade toilet paper) or worse, it could not outcompete fiat money.

so you believe if legal tender laws were repealled people would rather use fiat dollars than gold back dollars.

you are delusional.

79

I’ve said that gold WOULD BE WORTHLESS if it wasn’t used as money!!! The “second best use” (i.e. industrial USEFULNESS) of gold is of a very very low value compared to all other metals. And I see the estetic value of gold as a function of it being money. Just like silver is estetically higher esteemed than other gray metals such as tin, because silver too is money to some degree. And yes, I consider gold being money even today , regardless of what politicians say about it. They cannot fully control such things. They can only partially hinder the use of gold as money.

80

Except, unless I agree that gold has VALUE, i would never accept it over iron if usefulness is the judge of value. Quit using a utility theory of value. Gold had value before it was used as currency. Its ineffectiveness as a weapon is just a bonus, though completely beside the point. Regression theory wouldn’t take a useless item that no one wanted (as you claim gold should be) and make it money because its useless. It has to be desired/valued first.