10 ms·

Common consent doesn't have much to do with the real value of precious metals. The reason why gold and silver are "valuable" and the dollar is not, lies in the

• yters 18y ago
  The dollar cannot be created out of thin air either. The constraints are not physical, sure, but they are there.
  • mjnaus 18y ago
    Really? Care to name a few? The US government has "outsourced" control of the money supply to a cartel of private banks who have, as far as I know, no restrictions on the amount of money that they're allowed to create.
    • Retric 18y ago
      This is where it really get's odd, banks pretend to have money but they don't. When the big banks lend 1 billion they did not create 1 Billion even if it looks like they did. The secret is there is more money in circulation than there is cash. So when you write a check, it just get's deposited in another account somewhere. So your bank can then borrow that money back if it needs to. In the end there is more debt than there is money. So there is a lot of people who are constantly looking for money and they can't all get it at the same time. The actual amount of money is less important than the amount of debt out there. If Debt > money then there is demand. PS: It's far less harmful for society to mess with the value of pretend money, than to take a useful thing like gold, and prevent people from using it for useful things. And because people don't have gold debt it's value is far more flexible. I don't think gold is worth much, and I don't own any, but I don't want to get into gold trading because guessing when the bubble pops is risk I don't need.
      • palish 18y ago
        I really like how you communicated your point by repeating it in 5 different ways, including an if statement.
    • yters 18y ago
      So, you're saying the government won't do anything to stop banks printing off reams and reams of money indiscriminately? Sure, like all things, power can be abused. But no power is absolute. It is all dependent, at least to some degree.
  • aoeu 18y ago
    "Money is created through forms of credit and debt, i.e., when banks make loans and debtors accept them, the money instantly exists. Only a fiat system can allow this form of money creation." http://www.theoildrum.com/node/4611 http://www.theoildrum.com/node/4611
    • yters 18y ago
      Ok, I stand corrected, then. I didn't realize banks can make money whenever they want. Thus, money is really a form of speculation. EDIT I reverse my position. Sure, banks have the prerogative create money, but their ability to do so is based on people using the banks. Once banks no longer provide value for people, they lose their money creation ability. So, even banks are limited in their printing of money.
• Xichekolas 18y ago
  No, the reason they have "value" is by common consent. The scarcity issue determines what options are available to manage the money supply, but gold/silver is still only valuable to me if someone else wants it. If I were starving on an island, I'd much rather have a sandwich than a bar of gold. Gold is worthless without someone else around who wants it, just like fiat money.