Paper money

[etogre]

I recently was reading in the local paper about how paper money is the cause of all our economic problems. The author said that the constitution forefathers foresaw this problem and thus only granted the rights for coined money (I don't remember this clause). Even paper money backed by gold and silver wouldn't have been approved by the forefathers.

This whole argument to me is stupid. I don't see the value in gold and silver. They're completely superficial elements with no value except that within the eye of the beholder. They cannot give you sustenance in any way.

What's the obsession with gold and silver? For most intents and purposes, they're literally worthless elements, besides looking pretty. I realize silver is the most conductive metal, but we don't even use it for that purpose. Plus, if you're using these metals as coins, or to sit in Fort Knox collecting dust, they're not serving any practical use whatsoever anyways. Backing money with worthless metals doesn't make the money more secure, because it's the same exact faith as believing in paper money being secure. Why is humanity so stupid to not realize this?

Silicon has infinitely more use and real value than gold.

You know the saying "It's worth whatever value someone will pay you for it". So why does our society value these metals?

Am I missing something?

[lrh9]

Yes. That you can't expect the majority of people to do the smart thing.

[Oldandeasilyconfused]

Not so much stupid,but ignorant ,based on a misunderstanding of the nature of money and our economic system. He's also partially right. Governments have over centuries tried to get out of trouble by simply printing more money. (classic cases;Zimbawe,today,Germany after WW1) The result; at worst the economy collapses at best,inflation..

A money economy is based on the notion that objects have an intrinsic value. Karl Marx and I disagree with that notion..


Gold,silver,copper, has value while people think it does. EG C16 Spain actually devalued its currency be releasing so much silver into the economy from the "New World that it lost much of it's value.I don't know if this is true;I saw the claim on a recent documentary "the ascent of money"


http://en.wikipedia.org/wiki/John_Hawkwood


One of the most successful civilisations in history,Ancient Egypt had an economy based on barter.A money economy was introduced by the Greeks after the conquest of Egypt by Alexander The Great in the C4th BCE


The current crisis occurred when credit collapses. This in turn was caused by a collapse of the basis of credit,which is trust.The euphemism is "a collapse of confidence in the market". I'm sure it's more complex, but that's my take.


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Wiki

An intrinsic theory of value is any theory of value in economics which holds that the value of an object, good or service, is intrinsic or contained in the item itself. Most such theories look to the process of producing an item, and the costs involved in that process, as a measure of the item's intrinsic value.

For instance, the labor theory of value - the most influential of the intrinsic theories - holds that the value of an item comes from the amount of labor spent producing said item. For example, if a chair is produced by two workers in 6 hours, then that chair is worth 2 x 6 = 12 man-hours (this is a simplified case; the labor theory of value takes into consideration only the "necessary" amount of labor that must go into the production of an item, which may be less than the actual expended labor due to inefficiency).

http://en.wikipedia.org/wiki/Intrinsic_theory_of_value

[Tiberius]

I recently was reading in the local paper about how paper money is the cause of all our economic problems. The author said that the constitution forefathers foresaw this problem and thus only granted the rights for coined money (I don't remember this clause). Even paper money backed by gold and silver wouldn't have been approved by the forefathers.

This whole argument to me is stupid. I don't see the value in gold and silver. They're completely superficial elements with no value except that within the eye of the beholder. They cannot give you sustenance in any way.

What's the obsession with gold and silver? For most intents and purposes, they're literally worthless elements, besides looking pretty. I realize silver is the most conductive metal, but we don't even use it for that purpose. Plus, if you're using these metals as coins, or to sit in Fort Knox collecting dust, they're not serving any practical use whatsoever anyways. Backing money with worthless metals doesn't make the money more secure, because it's the same exact faith as believing in paper money being secure. Why is humanity so stupid to not realize this?

Silicon has infinitely more use and real value than gold.

You know the saying "It's worth whatever value someone will pay you for it". So why does our society value these metals?

Am I missing something?

Paper we can make from a renewable source, making it effectively abundant and worthless. Metals like gold and silver are rare in comparison, giving them a value. The point of using gold and silver isn't the "oooh pretty" factor, it's the "oooh rare" factor.

The idea goes that the rarer the substance, the more it is worth. You say silicon has infinitely more use and "real" value than gold, but what is a real value? Silicon is the 2nd most abundant element in the Earth's crust. It is worthless as a currency.

The point about using metals is that you have something to hold. Liquids you can loose easily, gases even easier. Using a solid metal (that is rare) gives you something of value.

Slowly though, we have begun to designate values to metals, such as 1p, 2p coins. Then we changed to paper money, even more worthless.

Now we're at a point where money is a series of bits (electronic) and has no value at all.

[Eilonnwy]

I have a paycheck that gets directly deposited into my account. I use my debit card everywhere and I very rarely have cash in hand. I pay bills by check or online banking.

Essentially my money is like Adrian says, just electronic numbers.

[Edwardo Piet]

It's still money though, so what I wonder is what negative effect does it have by being 'worthless'?

EvF

[LEDO]

I am not sure what the value of zinc copper coins are either. You can't eat either one. What I do know is the US government accepts it as payment for debt and taxes. That seems to give it some kind of value. If you think dollars are worthless, I will swap you for real blank paper you can print on, pound for pound.

[EdwardHeart]

Greetings,

The world is rushing ahead so quickly, and we're all still trying to catch up. I don't want to come to any generalizing conclusions, but look, I personally place no value to money. It is something that I wish I could live without and know I could if I was able to garner the proper eco-friendly sources such as solar panels and various green materials that allow a life of renewable consumption without the need to place further pressure on the grid of both electronics and economics.

Money may not be the root of all evil, but it is the cause of it in the behaviors of those that give it value. I see no value in cash both paper and metal, so it is not uncommon for me to spend it so wastingly, or intelligently. I will agree, however, that the overabundance of paper money is causing a major ripple in this once balancing stream. Metal currency is renewable through recycling, but people print too much paper cash to cause obscene inflation. Lowering the value. It is basic understanding, the more of it people have, the less value it contains.

My cash is also mostly in digital form and that detaches my sense of personal connection even further. In this age of digita, cash in a physical form may be entirely obsolete. You might as well pay with gold farmed from monsters in World of Warcraft. So I can't say it is the root of all evil, but I can agree that it is essentially worthless. Those that give it value, are blind. I always like to think that it isn't money that makes people happy, but what you do with it that can.

[LukeMC]

I don't want to come to any generalizing conclusions, but look, I personally place no value to money. It is something that I wish I could live without and know I could if I was able to garner the proper eco-friendly sources such as solar panels and various green materials that allow a life of renewable consumption without the need to place further pressure on the grid of both electronics and economics.

I think that by taking a look into the history of money you could gain a greater understanding of where its value has come from. Yes, the paper itself is essentially worthless, but what it represents is certainly not. Also, you say you may be able to live without money. What about the rest of the world? And if they couldn't, how do you reconcile this with the idea of money having no worth? If the world would collapse without this "valueless" money, is it truly without value? (My questions here are almost rhetorical unless you answer that the rest of the world could live without money).

I always like to think that it isn't money that makes people happy, but what you do with it that can.

In most cases yes, but some people quite genuinely love the money itself. My dad for example (the little he has )

Thanks.