Money Is An Illusion...

Discussion in 'Economics' started by TraderTactics, Apr 13, 2010.

  1. All values are cultural.
    The rest is necessity.
     
    #11     Apr 13, 2010
  2. Most of golds value is derived from the same thing that makes the dollar valuable.

    other than being a good conductor of electricity it has little real world applications.

    most of golds present value is do to the fact that people think it will be worth more than paper money which puts gold's value based on some belief (faith) rather than intrinsic value.But all gold bugs believe that the current value of gold represent it's value as a rare metal when steel has more uses and should be coveted for it's real world or industrial value.
     
    #12     Apr 13, 2010
  3. The ultimate currency is the human brain and innovation. If you have a good and applicable idea, you are essentially printing money.

    However, if gold is the currency, wealth creation depends on the amount of gold that is available. This limitation renders the gold standard obsolete.
     
    #13     Apr 13, 2010
  4. volente_00

    volente_00



    You can't print gold.


    :D
     
    #14     Apr 13, 2010

  5. You cannot print potatoes either.
     
    #15     Apr 13, 2010
  6. poyayan

    poyayan

    Ha. No. US currency is backed by it's ability to maintain control of USA and its citizen. Yes, you and me. The ability to extract part of our productivity (tax) is the collateral for our currency.
     
    #16     Apr 13, 2010
  7. pspr

    pspr

    Send me your worthless dollars. Don't send any gold, just those worthless dollars. I'm happy to dispose of them for you.:D
     
    #17     Apr 13, 2010
  8. OK, this much is true.

    Going back to a gold standard is not feasible, though. If money went back to a gold standard, the normal limitation of the amount of gold would inflate its "price" to a point of basically being a fiat currency anyways.

    One oz of gold currently trades for maybe 3 weeks, or 1/20th of a year's worth of manual labor. The intrinsic value people keep talking about is the value that a person would be willing to pay for gold jewelry. Currently a typical .33 oz wedding band would go for $400, or maybe one week of labor.

    The US treasury owns roughly 262 million troy oz of gold. The current M1 in the US is $1.7 trillion. To go to a fractional reserve gold standard we would need to peg the value of gold to $7000 an oz. To go to a fully gold backed currency, gold would be "worth" over $30k per oz!

    Do you feel that an oz of gold is worth 5 months of manual labor? I couldn't imagine anyone working for two months for a wedding band. At this "cost" gold is about as fiat as our current dollar.
     
    #18     Apr 13, 2010

  9. Real new thought here on ET. Right on the money.
     
    #19     Apr 13, 2010
  10. Lethn

    Lethn

    We used seashells and measuring sticks once as a currency, as long as it can't be printed and represents the value of the countries' assets then almost anything can be used. It's also why you have things like collateral etc. though I of course shouldn't really need to explain this to someone on this site so I'll leave it at that.
     
    #20     Apr 13, 2010