The trillion dollar coin

[Graham Kennedy]

I heard you the first time.

It's still stupid as hell that our money is valued on the power of "because". IMO, of course.

Well ultimately it has to be. "Value" is a property humans assign to things, after all. There's no such thing as inherent value, it's all just valuable "because".

[Tsukiyumi]

There's no such thing as inherent value, it's all just valuable "because".

I get you; what I'm saying is that at least gold is a tangible substance with worth beyond mere existence.

[Graham Kennedy]

Sure, but even gold is only valuable because people happen to value it. You can just as easily say that dollar bills are tangible objects with worth beyond mere existence.

[Tsukiyumi]

Sure, but even gold is only valuable because people happen to value it. You can just as easily say that dollar bills are tangible objects with worth beyond mere existence.

Yeah, but gold is useful for things like electronics, whereas the dollar bill could maybe patch a pair of jeans.

[Lighthawk]

Yeah, but a dollar has never been meant to be useful for anything other than being money. In that regard, it is fulfilling its purpose quite well.

[Captain Seafort]

the dollar bill could maybe patch a pair of jeans.

The material, sure, but what about that little scribble on it? "I promise to pay the bearer on demand the sum of X dollars." The note is worth as much as the world believes that promise to be worth.

[Mikey]

Exactly. A dollar is worth what it's worth not because of an equivalent value of a commodity, but because anywhere you go you can trade for exactly $1 of goods or services.

[Tsukiyumi]

...

My point was that gold has value as a material beyond just "people say it's worth something", or, "the world believes it's worth something."

[Graham Kennedy]

Sure, but even gold is only valuable because people happen to value it. You can just as easily say that dollar bills are tangible objects with worth beyond mere existence.

Yeah, but gold is useful for things like electronics, whereas the dollar bill could maybe patch a pair of jeans.

Paper is fairly useful too.

Indeed there are several substitutes around for gold - copper is virtually as good for electronics or as a heat conductor. But there's nothing around that does the job of paper as well as paper does.

[shran]

Gold is also more useful because it doesn't degrade, unlike copper or paper. So in an x amount of time paper may have become slush, whereas gold would still be intact.

[Mikey]

As far as currency, though, a dollar is a dollar (or a pound is a pound, or...) If I found someone willing to accept gold as payment for goods or services, they'd be behind the eight ball - they'd have to then find someone else willing to exchange it for a dollar or a dollar's worth of stuff. A dollar will still be a dollar, no matter what it's spent on or to whom I give it.

[Tyyr]

You can't eat gold, can't wear it for protection, there's not enough to make shelter out of, it sucks for tools. Gold has no intrinsic value, it is for all intents and purposes, useless. Almost any good and especially service, beyond the basic needs has no real intrinsic value and is only valuable because we as a society say it is.

Really, take everything you own now and imagine taking it to some remote Amazonian tribe, back in time 1,000 years, forward in time 1,000, to another planet, to another species. What items that you own will be universally of interest to anyone you see? Food, clothing, shelter, basic tools. Everything else has no intrinsic value and is essentially worthless except that our society has attached a value to it that is largely "because we say so."

[Mikey]

The thing is that a gold standard is directly related to a time when barter was relevant. Even when it was, it broke down. If three people traded the miller a chicken for his services, why would he accept your chicken for the same service? He's got enough chickens, and you're SOL with your unground grain. If the shopkeeper raised his own hogs at home, you couldn't buy anything with an offer of a rasher of bacon.

Further, we live in an era of credit and virtual money. Folding money works because it's in the same vernacular as credit. Commodities aren't. I can literally carry tens of thousands of dollars of buying power in my pocket in the form of a few plastic cards... it would be, ah, inconvenient to do that with gold. Now, if I'm never going to do that with gold, why do I need the promise of gold in exchange for my currency?

How would remote business work? I reserved a hotel room last week with virtual dollars. If, instead, I told the clerk, "Book the room, I have the value in bullion which I'll bring when I get there," the best response I could hope for would be, "Bring the stuff, and when I see it we'll see if there's a room left for you."

[Lt. Staplic]

Just in case it hasn't already been hashed to death this is what I remember from my intro to economics class on the subject:

currency, regardless of if it's gold or cash, is used to make trading more convenient. Before currency was used it was a barter system where you traded your skill or product for other services/products, which is really inefficient. Currency therefore makes it easier because it allows me to trade my service/product for another service/product without having to worry about who needs/wants my service/product.

Gold was initially used, but really it is no different than paper money in that both on their own are fiat money. Their worth is entirely based on the value people put in it to be able to trade it for a good or service they will need later. With the dollar this is all backed by the fact that the Government has promised the value of the currency.

So when the Government prints more money they're not actually creating more value, but just dividing the existent value between more money. This is reflected in rising prices, it's why things cost $5 now that used to cost $.5. So if the Government minted two trillion dollars and started paying people with them the purchasing power of a dollar would go to shit so the $100,000 you have saved up for your kids college education now barely pays for day's groceries.

[Sonic Glitch]

So when the Government prints more money they're not actually creating more value, but just dividing the existent value between more money. This is reflected in rising prices, it's why things cost $5 now that used to cost $.5. So if the Government minted two trillion dollars and started paying people with them the purchasing power of a dollar would go to shit so the $100,000 you have saved up for your kids college education now barely pays for day's groceries.

We call that inflation