If you devalued the diamond, something else would just step into the void, whether it was another gem, something synthetic, whatever. It would just have to be

If you devalued the diamond, something else would just step into the void, whether it was another gem, something synthetic, whatever. It would just have to be shiny, small, expensive, and easily seen. The need for displays of status are common to many animals, humans included. There is a fundamental need there that will be filled if you devalue the predecessor. Why pick on diamonds anyway? The fashion industry is just as bad - thousands of dollars for garments that cost a fraction of that to produce - and all because people wish to show social status by the clothes they are wearing. A diamond is no worse than an expensive holiday, a new car, a new suit - whatever. At least a diamond is very durable and can be with the wearer for a lifetime if they so choose.