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Economics Gold as Currency, How do you think it would play out?

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cherroy
post May 22 2010, 02:26 PM

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Money is just a medium of trust that you can exchange for other goods. This is the basic principal of money

Why gold is valuable?
It is solely because it's scarcity that make it valuable.
If gold availability as abundant as iron/steel/stone. Then it is just a conductive metal.

So gold never a suitable candidate as money due to its scarcity.
The scarcity of gold will hinder the economy growth.

For simplicistic eg.

One day you go to bank to apply your house loan or car loan. Banks tell you, there is not enough gold to loan you, so you cannot take a loan.
You cannot take a loan to buy the car. The car manufacturers have no business to do, need to lay off worker and sequence event going on to depress the economy.

If one knows how economy works, then gold surely is not a suitable candidate at all.
cherroy
post May 22 2010, 03:51 PM

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QUOTE(garytong @ May 22 2010, 03:28 PM)
Gold coins was currency in the past.
Now it isn't, simply because it's not so easy to print money out of thin air with gold.
The problem with capitalism is uncontrollable consumption, and gold would help to prevent that.
Fiat/Debt money won't.

*
As you have highlighted also.

To make curreny money valuable, then just control the print money part, which is depended on ourself.

If ourself is not willing to control, the use gold won't solve the problem as well. As human is always creative, even you use gold as currency, human also can come out a way to get rid of gold limitation or abuse the system.

For eg. we know when we doing business time, there is no immediate or direct transaction of money/or gold, credit term is applied. So in the credit term, you don't need physical money/gold or whatever as a medium.

With current economy size, there is not enough gold around to fulfill or replace the money around.
In the ancient past, economy size is not as same as today modern world. Also there is little banking system around, even got, it is those elementary banking system only.

Now we live in a world with credit term, commercial paper guarantee, various swap option etc, which is not as simple as gold coin trade anymore.

 

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