The Southron Nation wrote:Nazis in Space wrote:[*] Demand for gold is, to 90%, based on its shinyness (The rest is its use in electronics). This is because something just being scarce doesn't make it valuable - it has to be scarce
and desirable. And the most desirable aspect of gold happens to be its shinyness. For comparison purposes - Rhenium has 1/5 the abundance of gold, yet costs less than a seventh per mass unit. If your delusions were correct, it'd have to cost five times more - it doesn't.
:palm:
{<snip> of examples mostly concerning shiny>]
I think you get the point. Far from being valuable because of it's "shine," gold is a highly valuable commodity b/c it is one of the most stable of elements in existence and it has the added benefit of being malleable, edible, and dense. It has been a historical store of wealth throughout the centuries. It is easily recognized and is instantly valuable to anyone who sees it, making it a perfect commodity for trade. Fiat currency is maintained only through gov't coercion (legal tender laws).
Distribution of gold use:
- 85% Shiny (Jewelry etc)
- 12% Industrial
- 3% Investment
Okay. I got it wrong by circa 5%. You got it wrong, uhm, entirely so.
Incidentally, no. The value of gold is not immediately recognizeable to anyone. The Aztecs for example, valued their gold rather less than pretty things made from prtety coloured feathers. The egyptians were happy to throw gold away in exchange for a bit of iron (The hittites refused, determining that their iron was more valuable than gold). Plenty of countries did historically opt for silver instead of gold as the basis for their currency - copper and bronze, too, were popular. For that matter, so were the very pretty, very big stones I linked in my previous post. So were clam shells.
Nazis in Space wrote:[*] The price of gold is therefore variable like everything else, too. Indeed, in the past forty years, it's varied by a factor of three - its high point was thrice the value of the low point.
You are mistaking price for value. Of course the price of gold goes up and down. The flood of fiat currency in the marketplace is directly linked to this trend in prices.
While there are indeed (Marxist) concepts of economics that differ between value and price, this does unfortunately not help you - the argument was
specifically that the
price of gold remains stable - which it has to be if it's supposed to prevent inflation. It's the value expressed as a price that matters - just as it's your value as a potential employee that defines your value on the labour market. Your value as, I don't know, a human being, a soul or whatever is as irrelevant as the 'Value' of gold as a particularly a-reactionary element on the periodic table.
You're also not getting that you can replace gold with
absolutely everything else imaginable - and get exactly the same argument and result. Hence the example of the raj stones you saw fit not to quote.
It gets worse - okay, lets call it price instead of value. This changes... Exactly nothing whatsoever. You changed the vocabulary, not the facts. Well, congrats.
Nazis in Space wrote:[*] The amount of gold is finite; Thus, if a currency is gold-backed, so is the volume of monetary transactions that is possible. Needless to say, this fucks with economics somewhat badly.
Which is precisely why Ron Paul argues for (surprise surprise) not a Gold Standard but abolition of legal tender laws. He thinks the market will best decide which currency to use.
He admits that if the gov't will not relinquish the power of the purse, then a standard is preferable to fiat currency, but he acknowledges that this would send shock waves through our fiat addicted economy. He, and any number of gold standard economists would hasten to point out that these market fluctuations are necessary to provide a healthy infrastructure to the economy.
A stable gold back currency makes market wide panics and collapses obsolete.
The bolded parts being where he's wrong, for reasons already mentioned.
Nazis in Space wrote:[*] This is a problem since the total value of all gold on Earth is presently rather less than six trillion USD. The total global GDP - that's only
newly generated wealth, not
already extant wealth - is well over an order of magnitude greater.
[*] Thus, for gold to actually back all of this up,
its value would've to increase by over one (Over three or four, actually, if we count total accumulated, rather than total annually generated wealth) order of magnitude - increasing its pricetag times ten (Thousand or ten-thousand, realistically speaking).
[*] This is a disconnect between the actual demand for gold, and its supposed value. This is a bit of a problem.
And why is it that the economy of America, and of the various european nations, grew the fastest, at the most stable rate, and to the greatest height under gold standards? Why is it that with the introduction of a central bank, America's entire economy collapsed within a generation? What market wide fluctuations occurred before then in America?
Because you're imagining it. Incidentally, notice how Jackson fucking with the central bank made mattters worse? You do, admittedly, have a point that American monetary policies did do their share in making the great depression worse - how did that happen? Oh, the global debt to the US considerably exceeded the global gold reserves. So, when America demanded all its debts being paid back in gold... Oh, wait, that's an argument against the gold standard.
Golds value remains constant. Its price, however, varies quite a bit. Why would you suppose that all market participants seem to flee to Gold, Silver, and other commodities when the market begins to slide? I mean, if gold standards are so horrible an idea... then why does the public, in every single country around the world that allows access, flee to gold?
It, err, doesn't. The relevant participants don't invest in gold, they invest in capital - you know, means of production. Now, granted, there
is the odd idiot who invests in gold. Well...
I've my reasons to call them idiots. And even ignoring scams of the linked nature, you're killing your own argument - if the price of gold varies, then it can (And does) vary downward. So, you try to avoid losing money by investing in gold... And if the gold price drops, you just lost a hell of a lot of money.
That's not very bright, all things considered.
Incidentally, would you care to explain the difference between value and price to me? It seems to be very important to you, for reasons I can, frankly, not really divine. What is this 'Unchanging' value? The things one can make with gold? If yes, then this... Doesn't matter. At all. Look at how dirt-cheap, say, iron is - yet, its utility value is orders of magnitude greater than that of gold.
We're not talking about a bunch of savages debating the value of things for their survival (Gold? Zero). We're talking about the utility of gold as a means for determining the price - I'd have written value, but you'd missunderstand that - of money. As mentioned earlier, the 'Innate Value' of gold matters to this no more than your 'Innate Value' as a human being. Nevermind the 'Innate Value' - utility - of gold being so staggeringly low compared to things like iron, wood, food, land...
Though I'll grant you that the
low utility of gold for things that actually matter is a pretty good thing - the higher the actual utility of a given something, the more of a waste it is to simply hoard it. Of course, this goes counter to your rather impractical argument that high utility somehow makes things a useful determinant for the price/ value of money. But eh.