It continues to amaze me that people talk about money and value as if there is some magical thing out there that REALLY DOES HAVE VALUE. There isn’t, unless it has a use and then we get into the problem of a monopoly competition. And when there is a recession or event that affects the productivity or employment and incomes of people… what then? In these circumstances, those who have will eventually accrue more since those who don’t will have to sell to stay alive. Unless there is a plan to redistribute the gold or crypto or whatever. And we’re practically back in the jungle.
Virtually no functioning government on earth operates a gold- or other commodity-backed currency or uses anything but analogues to fractional reserve banking.
And why is that? Because gold or any other commodity looks like one of the charts below. And you can’t run an economy on something that forces every citizen to reprice every item they need or use on an hourly, daily, weekly… basis.
I do understand that most human beings and those who occupy the crypto space abhor complexity. Having to understand even simple things seems to challenge them and pull them in. And the biggest one is “inflation”. This is the bugbear for gold bugs and crypto folks. But even this simple circumstance challenges their analytical ability: inflation means nothing as long as living standards rise with it. Yes, a hundred years ago you could buy a hamburger for 12 cents. But your daily wage (and excluding healthcare, education, electronics, infrastructure and all these other living standard multipliers) was about a dollar.
Backed by gold.
How is it that this extremely obvious thing escapes these folks? Some are, yes, ignorant or just playing the game for money and/or attention. But there still are many not in these categories who fail to understand even the most simple and observable aspects of modern economics.
And when people use the word “debased” in referring to the dollar, then why is the USA and the rest of the developed world enjoying higher living standards and enjoyed more rapidly rising living standards in the whole time that gold played less and then no role in backing currencies?
National currencies are a measure of trustworthiness, reliability and capable and sophisticated economic and political management. It’s not some random thing on a market you can only really guess at like the price of gold or crypto. It is something that is reflected in its employment numbers, production and consumption number, productivity numbers, its legal infrastructure, and political stability. These are things that can can be evaluated and give a currency its value and the better and more consistently good they are, the more stable and valuable the currency.
But it’s true, these are things that really require both your attention and a level of understanding. This is therefore something that is not inherently simple like a belief. Just like, say, why planes fly or how vaccines work. But every day people use these and benefit and have no idea.
Gold, crypto, NFTs, etc. are cults and/or fetishes. These are things that require just a belief. There is no way to evaluate them except by number of believers. And the more believers unwilling or motivated against investing some bit of intellectual effort, the more we edge toward the cliff.
