Originally Posted by Irish Liberty Forum

Ok, a couple of things to clear up. First, all economic value is subjective, whether that good is the medium of exchange or a Maserati. The term "good" only has meaning for an item with respect to the subjective valuation attached to it by a prospective consumer.

On the other hand, we can say that gold has intrinsic value because of the qualities of this metal which many people do in fact find valuable. This no longer theory: this is a real-world, historical interpretation. Gold has industrial and cosmetic uses which are highly valued by many people. It also satisfies all the properties of a medium of exchange better than any other commodity.

Similarly, we can say that government paper money does not have intrinsic value, since there are negligible non-monetary uses for it. If it wasn't for the status of euros as legal tender, it's hard to see where the demand for them would come from.

It's possible for gold standard economies to suffer booms and busts, bank failures, and government bankruptcy, but the dynamics are very, very different. Also, while we can think of the gold standard to mean a gold-backed government money monopoly instead of an unbacked government money monopoly, we can also think of the gold standard to mean "free market money", i.e. the money that would emerge from its competitive production, i.e. free banking in a decentralised legal system (that implies among other things the abolition of coercive legal tender laws, currency pegs, bank holidays, and fraudulent fractional reserve arrangements). The gold standard alone (in the former sense of the term) is not enough to prevent important factors which tend to lead to major boom/bust scenarios.

Originally Posted by ibis

There are too many hidden assumptions in that for me to even start to take it seriously. The cosmetic and industrial uses of gold don't have any meaning in terms of making the metal some kind of standard - strictly, the only value is that of scarcity, which is why primitive currencies have been based on whatever is locally rare. If we were basing things on utility value, there are hundreds of other better candidates - iron or oil being quite obvious ones.

Originally Posted by imported_Déise

Not really true. People had to turn in gold bullion but could keep their gold fillings and watches.
Although I don't trusts that paper money returning to the gold standard would be silly. How would you use your credit card to buy on the internet?

I could explain why the use of gold was dropped but to do that I would have to explain the role of the velocity of money, south african gold mines and so on. I'd like to have some gold coins myself to keep with my extensive supplies of tinned beans in my bomb shelter but it would be horrible messy to return to the gold standard for the whole economy.

One easy to understand reason for not using the gold standard is that it means gold is either kept in vaults in the central bank or used in bullion coins. This means it can't be put to proper use as bling bling jewellery.

Originally Posted by Irish Liberty Forum

The only value is that of scarcity? You need some economics, my friend.

Originally Posted by imported_Déise

Bling bling jewellery was a humorous example. You mentioned the industrial and cosmetic values of gold. If the gold is locked up in vaults or used as bullion coins in transactions then it can't be used for those cosmetic and industrial purposes.

Originally Posted by Irish Liberty Forum

It doesn't matter what we're talking about. Value is always subjective. And if we're talking about a metal, there are all sorts of objective non-scarcity-related properties which someone might subjectively value (besides completely subjective reasons you won't read about on Wikipedia).

Gold - Wikipedia, the free encyclopedia