On Gold and the Origin of Money

We have such sights to show you....
You summoned me but I have no time for lilliputian squabbling about the origin of money and the claims that gold is a worthless piece of metal. Do not invoke my judgment to such drivel again.

From my Oct 2007 column, "Money"
http://www.strike-the-roo...

Money itself can be almost anything, including feathers or sea shells. Still, as you'd expect, some things work better as money than do others. Well-chosen forms of money hold their value over time; they resist rust and fire and rot and other forms of physical destruction; they do not melt when wet or otherwise change easily into something of lesser value. It helps if the material used as money has intrinsic value of its own, as do gold and silver – both of which are useful in jewelry, industry, medicine, and in increasing numbers of high-tech products and processes.

Well-chosen forms of money are also relatively scarce and their supplies cannot be easily increased without significant cost or effort. If a supply of money CAN be increased without much cost or effort, that money will be counterfeited by either the state or by other groups or individuals – and each new money unit brought into circulation reduces the value of all existing units. Artificially double the number of dollars in circulation and you have twice the dollars chasing the same number of houses, cars, carrots, accountants, and so on. Goods and services do not magically increase in availability just because the number of dollars has increased, and the market quickly and unavoidably adjusts to the new situation with a general rise in prices. Prices are raised until demand diminishes to what the market can handle.

Because an increase in dollars (or other monetary units) for one individual represents immediate, increased prosperity for that person, this general inflation of the money supply is easily misunderstood, especially at the start of an inflationary period. "More money – whoopee!"

It is only later in the inflationary cycle that the upbeat (and false) sense of prosperity turns to unease, and then to fear, and then – if the cycle is allowed to go far enough – into outright terror.

was to get everybody to read and compare

my 2006 paper, An Answer to Stephen Zarlenga, www.axiomaticeconomics.co...

with Ron Paul's paper, What Do Rising Gold Prices Mean?, www.lewrockwell.com/paul/...

Good! Now that I've rocked you back on your heels with a couple of left jabs, it's time to whallop you with a right cross:

www.dailypaul.com/node/58...

Gold does have value. It can be used over and over and over again. You can change its state by melting it, but it still remains gold. Its life time is unlimited!

Other commodities such as oil and salt do not have an unlimited lifetime. Once they reach the final consumer and are used by the consumer they are history.

Sell your mining stocks, ETFs, silver paper and certificates. Get Physical possession of silver. Why would anyone in their right mind want to invest in a mining company, when it is going to produce more silver, and you want the value of silver to increase, duh.
grant

Nothing has an intrinsic value, not even a cow. What if no one wants milk, or, if (hypothetically) cow milk is suddenly found to be really bad for you but goat's milk isn't.

Value is determined by two things, supply and demand. Naturally, nothing can have "intrinsic" value, because someday that value may disappear, and possibly, disappear altogether (if not almost so).

As Ron Paul discusses, the sole advantage of having gold (or silver, or platinum) over a fiat money system is that is puts a natural limit on the expansionary ability of government spending when monetary value is entrusted to government (as we do in our country).

The reason why gold is better than, say, something like oil, or salt, is because it is relatively hard to expand or contract the gold supply whereas it is relatively easy to expand the oil supply, and the supply contracts very very rapidly due to natural demand.

I read this post before I got your email. The article you post it is good but on the other hand I support people decision to buy gold, but doing it in a smart way...not puting all money in gold when it was $955.

And for God sake...people like Lisa C, stop telling others to buy gold in times like this saying that gold will go up. Based on what ? On some articles writen by the people who make a living selling metals ?

I don't understand this idiotic idolisation of precious metals...if is not paper is metal, so ? Hoewer has alot off money go ahead and buy some metals, that's ok...but don't send a poor bastard to spend his $200 savings on silver coins, paying the gas or shipping, paying the premium just to be forced to sell a month later cause he needs cash.

Remember, the value of the premium when you sell depends on the look of your face, the most desperate you look, the lower the premium will be...

I would say gold does have intrinsic value. Gold can only be made from gold. If there isn't any gold to melt you can't make any. Because of the scarcity of gold it holds its intrinsic value.

On the other hand, the dollar can be made out of thin air! Just call the federal reserve and tell them to print another billion.

In thrity years time, thousands of stock certificates have gone to zero.

Never, in thirty years time, has a single commodity gone to zero. Never.

If a person has large money/staying power and ten or twenty years to live they can trade most commodites with no stop loss orders and be assured that their controlled contract will produce a profit.

I don't use stop loss orders. I can cover whatever the market moves in price. Why get stopped out and take a loss.

Silverbugs who hold and ounce of silver will always be at least able to by a BigMac with their ounce. Guaranteed.

"Committed To The Eradication Of Poverty Among Patriots"

The historic and intrinsic value of gold has always been higher than paper... It's called the law of diminishing marginal utility. It has to do with scarcity... not use value.

discussion. Personally, I prefer to have my wealth in a variety options best chance at survival that way. Let's face it, money is about survival, getting something for something. Gold is good, Ammo is good, etc, etc. it's all good. Just my ignorant two cents. Peace

So what happens if all the Cows were to die. I'll take the Gold

Wisdom from reflection - as when the Moon speaks to the waves of the sea. Yeah I am way out there.