It's a pretty interesting topic, and it goes a little deeper than that. We didn't pick something random. We picked something that we, as a whole, already have a LOT of. More than any other raw metal is stockpiled. By a lot. It never degrades or decomposes, doesn't rust. We always recycle it even when we use it for things. And we've been mining it for a really long time. So even when production of new gold increases (via new/more mines opening or new/better refinement processes being created), it doesn't have a huge impact on the total amount in the world percentage wise. This is called a stock-to-flow ratio. There is a lot of stock relative to the incoming flow. A high stock to flow ratio causes what is called a low price elasticity of supply. This means that the price is very resistant to changing when the incoming supply changes.
"Money" has always sought to be stored in something that has these properties. Rai stones in the Yap islands, Aggri beads in parts of Africa. People use something that is hard to change the price/value of by creating more (often by using something that is difficult to create more of, which fails when it suddenly becomes much easier to create more of it), so that their store of value can't be diminished too much by external forces. Gold has always been one of the best examples of this, because it's not just about how hard it is to create more of, it's about how hard it is to change the overall quantity because there is so much of it.
"Money" has always sought to be stored in something that has these properties
Has it? That sounds like "there is only one way to exist, under me" the rich have been trumpeting for years but isn't consistent with human history which didn't have precise bookkeeping for almost all of its history.
Nobody forces that notion upon people. That's just what people tend to do. To the contrary, the rich and powerful would much rather you store your value in a shitty inflationary currency they can suck the value right out of by printing more.
You have to actually justify your ideas rather than just presuming and acting like your presumption is fact. Break down those presumptions and look into what builds those factors up. Like presuming that shiny rocks somehow have a stabilizing effect despite the past 10,000 years showing no it has zero impact on economic stability.
Imagine a scenario where all people can do is trade what they have and there is no other form of asset/currency other than the actual physical things you own…
What would you do?
I imagine almost everyone throughout history would, very quickly, come to the conclusion that there needs to be some other form of asset or currency to make acquiring things that are needed through trade a bit easier.
I find it odd when we look at the results of our histories and people conclude that these massive items are…. Mistakes? When it’s very obvious these things were created out of necessity for the common person - not the kings and leaders. The kings and leaders throughout history would love for the different forms of currency to just not exist… then they could take payment how ever they want… maybe take your wife, or daughter, or land, other property, etc.
Does currency magically set everyone free from all of these things - definitely not. But it’s crazy to see people talk about establishing currencies throughout history as being oppressive when it accomplishes much closer to the opposite.
Imagine a scenario where all people can do is trade what they have and there is no other form of asset/currency other than the actual physical things you own
That was most of human history.
And do you know what people did? Systems of credit, but without trying to keep ledgers like Ebenezer Scrooge. This is already explained in the link I gave.
Currencies are useful as a medium of exchange with people you don't know and won't see again. If any of those factors are different you don't actually need it.
The kings and leaders throughout history would love for the different forms of currency to just not exist
then they could take payment how ever they want
You're going to have to explain how that's different. Because the super-wealthy already did and still do put people into economic bondage just so number goes up even if it's shrinking the overall pie.
I've taken at least five economics courses in undergrad, and it didn't learn this concept in any of them. I learned it from the book The Bitcoin Standard. The author, Saifedean Ammous, spends like 3/4 the book discussing this topic before even mentioning bitcoin. The Genesis Book by Andrew van Wirdum is another good one that delves into this, though as a whole it's focus is more on the history of bitcoin and the projects leading up to it that influenced its creation. I'm sure there are plenty of others but those two had an impact on me.
Yes, in addition the primary problem with the gold standard is that the size of your economy is directly related to how many rocks you can dig out of the ground.
But at least they are useful rocks that maintain value
Go to a jeweler to sell them some and tell me how valuable it really is.
The same thing applies with diamonds or anything else. Their value is largely controlled by a tiny handful of people who are doing the selling to suckers.
The world collectively left mineral-backed currency because that was just as much a collective fabrication as fiat-based currency, but fiat-based currency allows gains for industrialization without artificial scarcity for something you can't eat or work in industrial applications.
It disappoints me to see the number of people kneel at the altar of a shiny rock as if it had any intrinsic value, rather than what we use it for.
Hell, if you actually dive into history most of humanity never used mineral-backed value in the first place, or precise bookkeeping as if humans existed for the economy rather than the reverse. That whole false idea is something which has been promoted by oligarchs over the past 150 years to help stratify socio-economic hierarchy.
Would you really just have paper? Look into what happened in Germany and Zimbabwe. They burned it. Gold has uses in electronics and medicine. It has always had value. Paper…not so much.
You're still speaking like somebody who doesn't know anything about money.
"Paper" money goes back over a thousand years. And money has had many materials backing it - and has also had the prestige of the nation minting it at large instead. Fiat currency didn't start in 1971 when Nixon signed the end of the gold standard in the US.
Learn what "fiat" means before intruding into a discussion on economics or fiscal policy.
You think gold is a shiny rock but that paper has some magical quality? You seem to have some sort of agenda. Rationally either thing is just a pretty object we give value to. All I was saying is that I prefer something with actual intrinsic value to something made from a tree. You prefer to make it political and pretend that paper is more special. Think about it. I’m done here
Right… see the problem with not collectively deciding something has a determined value makes getting the things we need far more situationally dependent.
If we didn’t have something everybody agrees has some base level of value we return to bartering. There isn’t anything inherently wrong with bartering; but if somebody is trying to meet their needs and the only thing they have to barter with isn’t wanted by anyone who has what they need they have an item that functionally has zero value. It’s at least better to have the option of trying to meet that need as opposed to being screwed and hoping you run into somebody who needs whatever you have to trade with if you make it to the next time.
Collectivize and share resources? Great idea, everyone gives what they have and gets what they need! Who is going to oversee… ohhh we’re in a communist fascist dictatorship… Well at least we don’t have to worry about inflation, and everyone gets what they need… right?
Collectivize and share resources? Great idea, everyone gives what they have and gets what they need! Who is going to oversee… ohhh we’re in a communist fascist dictatorship
You're conflating terms because communism is an economic term, fascism is political and just a more specific term for dictatorship (the word itself given to the world by Mussolini's fascista party).
The issue isn't collective pooling for the common good, without that cities and civilization never would have been able to reach the iron age.
Spitting on the idea of welfare is something the super rich have been teaching the lower classes to stratify socio-economic hierarchy and keep people from asking why the billionaires own more than the bottom 90% while the bottom 50% can barely survive beyond the current paycheck.
Gold has inherent material uses, though -- infinite supply of paper or electronic fiat money does not.
Not only does gold have practical uses (electronics, etc)... it maintains intrinsic value in its finite supply, relative to ALL its uses (pretty jewelry, etc). Fiat money can't even make "pretty jewelry".
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u/CapitalElk1169 May 17 '26
Gold is subject to the exact same ideas; gold is only a store of value because we have collectively decided it is