I think there is 250,000 Tons of gold in this world (not sure). Each world trade center building had 100,000 or 200,000 Tons of steel. Now imagine the steel in this world. There is a little bit of steel in everybody's life. There are millions of other products, goods, metals (world business/trade) Maybe that is the reason gold is not used as money because there is not enough gold in this world to support the world business/trade. Correct me if I am wrong. Just my thought.
1) The money/credit supply would be "constrained". :eek: 2) A finite commodity can't support infinite credit/borrowing.
This idea that there is "not enough" gold to use as money is often repeated, but it just isn't true. As long as a monetary substance is evenly divisible, any amount of it will do for the purpose of measuring wealth. Money itself is not wealth itself, it is a measure of wealth, which is real things like goods and services. The amount of gold or paper money in existence does not directly change the amount of goods and services in existence, it just changes the scale on which you measure those goods or services. For example, if the world were capitalist, and on a gold standard, it wouldn't really matter if a new suit cost an ounce of gold, or half an ounce, or even 1/1000 of an ounce. As long as the rate were relatively steady, the suit would still be produced and marketed, and the transaction would still take place. No loss of wealth, just a different amount of gold used for the transaction. More explanation in the second paragraph here. In a debt-based monetary system, however, the amount of money in existence does need to constantly increase in an exponential fashion in order to pay the interest on the debts already accumulated. As Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, noted in 1934: "We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. " This writer proposes using the term 'credit-ism' as opposed to capitalism to describe our current economic system, which I think makes things more clear.
Here's an updated link to the article above about creditism vs capitalism, to replace the link to the google cache: http://www.strike-the-root.com/82/davis_m/davis1.html
The world GDP is about $50 trillion per year. This means that about $136 billion dollars of transactions take place on a daily basis. At gold being $1,350 per oz, this equates to about 4,228 tons of gold changing hands on a daily basis if we went to nothing but gold coin. So you can see there is plenty of gold to handle the worlds transactions. Of course the whole world will not be using gold though. Most transactions under $100 would use silver and copper coins, so we dont even need 4,000 tons of gold to use as money.
A Airbus A380 jumbo plane costs some $300 million which equals to some 7 Tons of gold. A B-2 bomber plane costs some $1.2 billion which equals to 28 Tons of gold. There are 20 B-2 bombers with USA. A boeing 747 jumbo plane costs some $200 million to $250 million. There are some 1500 boeing 747 planes flying all over the world. There are 100 hundreds some different planes (passengers and fighter). This should give some idea.
Let us say there are $500 Billion worth of planes. What must be the worth of all goods, services, products, machines in the world. The world has some $10 trillion worth of gold. Is there enough gold equal to world products/machines?. There is something definately wrong with the world economy or bearice is terribly wrong. Let us say you earn $200,000 per year and you spend $100,000 per year. So remaining $100,000 gets deposited in banks or other investments. I think this saved $100,000 does not go back to the economy (confused). If this is true imagine the multi-trillions dollars that have not gone back to the world economy.
And how fast is that money recycled back into the economy? Almost instantly. All the labor and parts to build the plane have to be purchased from many many people. Boeing sells about 60 billion dollars worth of planes per year. Thats $164 million per day or 5 metric tons of gold per day. Like I said in my other post...4,200 tons of gold are exchanged worldwide per day(if we were on a gold standard). You also used the biggest single ticket item in the world as an example and it barely equated to 1/10 of 1% of world transactions. Plenty of gold to keep the economy turning.
Today's money is backed by labor (taxes). Get to work! j/k Labor-money is the "best" money for the most people, but the problem is in the execution of its use in the system today. Do a little history homework and you will see that gold was/is a favorite of the banking pedigree. Start with Rothschild's perspective on gold.