Anne (ajva) wrote,

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A thought about Goldfinger as money. There's a certain gold-loving subculture among investors peopled by those who believe that fiat money (i.e. to put it simply, money that is money purely because a government declares it is money - so that would mean pretty much any modern currency you care to name) is fundamentally untrustworthy because it is subject to the whims/evils of political machination, manipulation, incompetence and so on; believe me, some of these people do get rather excised about this. I have sympathy, but I'm not entirely in their camp.

So these people see gold as what they tend to call "sound money", in other words, the total amount of gold available in the world may increase a bit year-on-year as more is mined, but it can't be increased purely at the whim of a government like paper money can. Ergo, there is a naturally controlled total amount of it. It's not an accident that many of the gold bugs worry themselves sick about the possibility of hyperinflation. Interestingly, though, when you look back at the late 19th century, when there was a gold standard (i.e. currencies fixed to gold e.g. the US dollar used to be fixed at about $36 to the ounce or thereabouts), there were problems too. I've heard that The Wizard of Oz was actually written as an economic allegory. When the gold standard was in operation, there was a debate in America about the fact that there wasn't quite enough gold to make it a practical currency, so silver should be brought in as an everyday currency backup too. Which is apparently why Dorothy originally had silver slippers (not ruby) with which to walk along the yellow brick (gold) road. I'm not sure how true that is, but I'd be interested to know more.

So anyway, my point is this (notwithstanding my own liking for the yellow metal): what are such people going to do when chemical technology advances to the point where synthesising gold, and indeed any other element, achieves the ultimate dream of the old alchemists, in other words - it is both easily and economically achieved?

What will work as "sound money" then? I mean, even if you tried to make "naturally mined" gold into a different category from "synthesised" gold, there would then develop a new de facto fiat currency that was indistinguishable from your "sound" currency.

What then? :o)

ETA: I'm leaving this post public on the off chance that some geekish digital archivist in 2350 might discover it and point out that "people had thought about this as far back as 2008!"

In the hope I may become famous posthumously, obviously. :o)

PS to future archivist: I'm listening to Duran Duran's "View to a Kill" on my iTunes just now - there's a bit of human interest for you. One for the future equivalent of the papers, there.
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