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People don't use gold as currency, they use it as a presumed safe store of value during a run on the currency. Runs are, of necessity, reasonably short affairs, so the belief doesn't have to last that long and the time window for the creation of fake gold to respond to popular demand is fairly narrow.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jan 1st, 2012 at 03:59:43 PM EST
[ Parent ]
Exactly. Gold is not being used as money, so any arguments about it being better than paper currency because people seem to want it (and also want foreign paper currency) now in Iran for wealth preserving purposes and not transaction purposes say nothing about gold used as money as the diary talks about -- just that people may want to hedge wealth in Iran now more than before for whatever reason.
by santiago on Sun Jan 1st, 2012 at 04:10:09 PM EST
[ Parent ]
It comes down to a fundamental dispute over whether money should function as a long-term store of value. The gold bugs believe that money should store value long-term, and so see the failure of paper currency to do so as evidence that it is a poor form of money.

I believe - and you seem to agree - that money should store value only long enough that its depreciation is not an inconvenience in ordinary transactions, because money is an instrument for organising transactions. In this picture, the failure to store value over years or decades says nothing about the suitability of currency to function as money, because money only needs to store value on the order of weeks and months.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jan 1st, 2012 at 06:23:42 PM EST
[ Parent ]
The beneficiaries of gold buggery are the traders, not the hoarders.

There are huge parallels here to the financialization of commerce that brought the booms and busts.

Gotta have booms and busts. Higher money velocity generates higher returns for financial parasites. I'm reminded of Kurt Vonnegut's analysis of lawyers:

"To encourage movement of money and always take ten percent."

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Thu Jan 5th, 2012 at 11:04:08 PM EST
[ Parent ]

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