Bitcoin ?

[Pat Mustard]

The thing you're neglecting here is tha all currency is fiat, even those "backed" by "valuable"* metals. And the currencies tied to metal standards had many problems that todays currencies don't have as well as facing the same problems todays currencies do face. The biggest was its utter inflexibility, in that governments couldn't readjust their currency to suit the needs of their economy (a problem which has resurfaced to some extent with independent central banks pushing monaterist economic policy) And even under the gold standard most of the currency was backed by nothing, any run on a bank would only see the first few people able to exchange their paper for metal.

*What value does gold have any way? It is shiny it has very limited applications in electronics, and that is it. Just because it is rare doesn't automatically confer it with value.

My bold...
I see "flexibility" that as a bigger problem.
Why should governments readjust their currency?! What the heck does that mean? To artificially make your currency be worth more so that you can more easily comply with your past agreements, leaving your international creditors to take the losses?... I'm sure they will be super happy with that will want to give you credit again in the future... yeah right!
Maybe my non-economicist mind just doesn't understand the cleverness of it... because "of course" the international community will again give you credit, huh?! The community is a mass of idiots, after all... and one must rely on such idiocy, and thus be allowed to commit a stupidity (if the community were smart)...


Gold is valuable because people attribute it value. People attribute it value because it's relatively rare and difficult to find, but also because it does not tarnish, does not oxidize. It retains it's properties across millennia, unlike any other relatively rare metal. Also, it's yellow and shiny like the sun... and you know how people have worshiped the sun. People want a piece of the god... and when people want something, it becomes valuable.

If you want to see the value of lexibility look at the UK's response to the great depression, viz to go back on the gold standard. It made the UKs depression longer and worse than most other major economies, because the gold standard kept the currency artificially way above its true value.