re: #446 Killian Bundy

Paper is a commodity and a hard asset.

Like paper, gold is also a “fiat” only because the population believes it has intrinsic worth and the government has the gold reserves to back it.

/yeah, multiple private currencies backed by various commodities, that’s condusive to orderly market function

There is no intrinsic value to anything. Value is determined relative to usefulness to humans, reflected by market demand. Guess what, all human societies, even those that developed independently of one-another for millenia, have always valued gold. Think Aztec empire. The whole conquista of the Americas was fought over gold. It tells you something. People wanted gold to the very end, they still do. The price of gold has fluctuated a lot since the adoption of the fiat system, but only in terms of paper money. And that’s because paper money is unstable. The government inflates it away at will, or devalues the currency, corrodes its value. Look at some charts of the value of gold relative to other currencies, say oil. Plot it over the last few decades (use the price of gold in $ terms, to the price of oil in $ terms). You’ll be amazed.

And the fact that huge vibrant commodity markets exist, is a solid indicator that commodities would serve as units of exchange and for certain classes of transactions, as well as stores of value (since their demand is relatively stable). Not so much as unit of account, however… The main currency, dwarfing all others, would serve as unit of account. That currency would probably end up being gold.

If paper holds just as much intrinsic value as gold, then why the beef with gold? Would paper circulate as money unless the government MADE it legal tender? Its supply is limited. The government can’t pull it out of its ass to stealthly finance its operations.