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.
Economics Gold as Currency, How do you think it would play out?
May 22 2010, 02:26 PM
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