posted on Jul, 4 2012 @ 05:28 PM
In my opinion, gold is just as much as a fallacy as paper money and digits in a computer.
People say fiat money isn't backed by anything. What is gold backed by? While it has uses in industry, the amount of gold required for such industry
isn't anywhere near enough to warrant the high price of gold.
Currency is always about one thing. While they say currency can be backed by gold, or oil, or whatever else, the REAL value of currency comes from the
LABOR that currency can be traded for. Oil is a product, while oil is basically backing the US dollar, it's the LABOR of getting that oil out of the
ground, refining it into useful products that the value comes from.
The dollar's true backing is a given amount of labor units that 1 dollar will guarantee. That's the true value of a currency, not gold or oil. Why
would you want to trade in your money for gold? What use is it to you? You want to wear shiny metals on your body to look cool? Trading your money for
labor is what makes it useful.
Then people set, or accept, the value of their labor. I decide, or accept the offer, that 1 hour of my time is worth $10, or $20,or $30. That's where
the instability of currency comes from, that everybody places a different value on a given amount of their time, or of other people's time.
If we had a planned economy where everybody made the same amount of money per hour of work, currency would be stable and inflation wouldn't exist.
One hour of labor is always worth a given amount, say $15, so $15 always stays constant as representing a single hour of labor from an individual.
The price of products is still tied to the value of labor. If I buy a product for $15, I'm accepting that I would be willing to trade 1 hour of my
labor for that product. The paper dollar, or the digits in a computer, or a little chunk of gold is just a means to more easily transfer the value of
labor from one party to another.
It all comes down to labor, regardless of what form of currency you are using, because people accept that their labor is worth a given amount of
value, and then compare that value to a product they are buying, they are simply trading their labor for a product indirectly. Instead of going out to
dinner, and racking up a $15 bill, and then paying your $15 bill with one hour of labor, you pay it with fifteen dollars of currency, which represents
your hour of labor, in a way that's easy to trade and store between people.
And because the value of different people's work is always variable because of people's age, gender, education, physical ability, danger of certain
types or labor, currency is never going to be stable. It doesn't matter what they say it's backed by, be it gold, oil, spacebucks, because it's
really backed by assumed amounts of labor value you can redeem that currency for.
Which is why, as I said, currency and economies can never, ever, be stable unless you have a strong central controlling organization that enforces
that every single person's labor is worth the exact same amount of value regardless of any factor. This too would be bad. A guy sweeping the floor
for one hour is not providing anywhere near the value as a guy doing life saving surgery for one hour. Because this system is unacceptable, we have to
live with unstable currencies and economies.