I'd prefer my money be made of ...
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Trust (Score:5, Insightful)
Trust. I want my money to be made of trust. The whole point of money is freeing up barter. I have something you want, you give me something that I can then trade for something I want.
I have to trust that you gave me something other people will accept from me.
Without trust, even gold is just 'shiny crap'.
AC
All of the Above (Score:4, Insightful)
Why favor a restriction to just one option? Renting a car, I want to use plastic. Ordering online, I want to use pure electrons and math. When buying a hot dog and coke at my warehouse club, I want to use bits of paper and metal. When the federal reserve keeps purchasing "debt assets" I want to accumulate small amounts of precious metals and packaged commodities in proportion to the risk. Once the government decides to radically reallocate my precious metals, land and food in the name of the people, acts like I have no human rights, then I want courage, comrades, bullets, fuel, food, a defensible position and broadcasting media.
Re:Virtual Commodity (Score:5, Insightful)
You have conflated token currencies with commodity currencies - An "IOU" for goods and services at a later date, vs something you can roll up and smoke 'em if you got 'em.
Yes, I think we all agree that Dollars and Bitcoins have value only by popular agreement. Weed nuggets and bales of hay, however, have actual value in their direct use as an intoxicant and as livestock feed, though the latter doesn't make a very good currency for casual use (you can carry around an ounce of weed; you can't carry around a bale of hay).
Gold gets a little fuzzier - Yes, it has a ton of practical uses, but nowhere near the value we ascribe to it. That said, for all of human history, we have valued those pretty little yellow lumps of metal far beyond any inherent usefulness they have. I would put gold somewhere between a commodity and a token, something we inherently value for no good reason. As an animal-world analogy, I view it as similar to the bower bird's obsession for blue things - If bower birds evolve into an advanced civilization complete with token currencies some day, what would they do with their money? They would buy blue things with it. And if you want to get side-tracked with a discussion of such behavior as merely an evolutionarily-sound conspicuous display of resources in excess of those needed to survive for the purpose of attracting a better mate - Remind me what we make most wedding rings out of.
this is what all the currency dorks don't understand...any currency can be manipulated b/c that is the nature of currency
For tokens, that holds true. For commodities, it does not. And don't mistake commodities markets for actual commodities - Again, in that case, you don't have a bale of hay, you merely have an IOU for a bale of hay at a later date.
Re:I don't care (Score:4, Insightful)
Re:Trust (Score:5, Insightful)
Precious metals, on the other hand, do not require trust in other human beings (at least when held directly) -- all you need to do is verify that what you are receiving is authentic (which you can actually do yourself with gold coins). Once you are in possession of physical gold, you are subject only to market forces. In other words, there is absolutely no counterparty risk, and therefore the value of your investment can never go to zero. The value of fiat currency can most certainly go to zero.
So you do not need to trust humans, you just trust in the market, which is run by humans. You lost me. The value can go to zero. There have been localized drops in value to where iron was worth more than gold (and wood, by weight, for good wood).
Re:I don't care (Score:5, Insightful)
Re:I don't care (Score:4, Insightful)
Yes, they turn lead into gold...
Re:Trust (Score:5, Insightful)
Think more along the lines of real estate owned outright compared to investing in a real estate trust fund.
Nice try. Eminent domain. Pollution by an entity that you can't effectively sue, regulated by cronies. Face it. Nothing is risk-free. The best you can do is take reasonable precautions and hope for the best. Insuring the real estate you own directly is reasonable. Believing that the insurance company will pay out easily is just wishful thinking. You have to trust that society will hold them to their contract.
The more I thought about this, the more I realized you don't even need to engage in hypotheticals. When the USA was on a gold standard, people got swindled all the time. The worst thing about "real money" is that when you lose it, it's really gone.
OK fine, counter-party risk. Whatever. If you cherry-pick your risks then you can make anything look better.
This is like saying you're going sail across the Atlantic rather than fly, because there's zero chance of rapid cabin depressurization.
The real world doesn't care about a particular flavor of risk. Most people, quite rationally prefer today's slow, steady erosion of purchasing power. Why? Because when people had stacks of silver and gold in their closet, or at a bank, the chance of 100% loss was very real and not uncommon. People are much more likely to be injured by sudden, catastrophic loss than slow erosion. Think of inflation as a form of insurance which is actually quite nicely priced. There is nothing to stop you from opting out of it either. If you wish, you may still stack silver and gold, as I suspect you may.
Re:I don't care (Score:5, Insightful)
Gold has no "intrinsic" value. The market sets the price, and there have been times and places where iron was more valuable (yes, it took more than a pound of gold to buy a hammer) That reality disproves the fallacy of "intrinsic" to me. What specifically did you object to? I do reject "common sense" as it's generally an excuse for not thinking, but I'm bound by reality.