The gold standard and competing monies

[uberliber]

There seems to be a contradiction here. Value is not intrinsic. It exists only in the mind of someone, like beauty.

Which is the reason that I said it may have SOME intrinsic value. History has proven that it has remained consistently valuable in the minds of people. Sure people decide what has value, and people have consistently showed that gold is something that has value. It's been shown for thousands of years.

I guess one can't say that it has intrinsic value necessarily, but they can say that it IS valuable. It's properties are what makes it valuable to people. What constitutes gold is the reason people have seen it's value. So perhaps it's true that only people can give value to something, but at the same time, maybe they only make that decision based on the properties of the object. So are the properties that give it value among consumers, not intrinsic value?

[Augustine2004]

Map of high-risk banks http://www.click2map.com/maps/kwaldm...s_Ratio)_Banks

[joel]

It's properties are what makes it valuable to people. What constitutes gold is the reason people have seen it's value. So perhaps it's true that only people can give value to something, but at the same time, maybe they only make that decision based on the properties of the object. So are the properties that give it value among consumers, not intrinsic value?

Mises differentiated between these two concepts as follows:

"Acting man believes that the services a thing can render are apt to improve his own well-being, and calls this the utility of the thing concerned. For praxeology the term utility is tantamount to importance attached to a thing on account of the belief that it can remove uneasiness. The praxeological notion of utility (subjective use-value in the terminology of the earlier Austrian economists) must be sharply distinguished from the technological notion of utility (objective use-value in the terminology of the same economists). Use-value in the objective sense is the relation between a thing and the effect it has the capacity to bring about. It is to objective use-value that people refer in employing such terms as the "heating value" or "heating power" of coal. Subjective use-value is not always based on true objective use-value. There are things to which subjective use-value is attached because people erroneously believe that they have the power to bring about a desired effect. On the other hand there are things able to produce a desired effect to which no use-value is attached because people are ignorant of this fact."

--Mises, Human Action chapter VII

As for the main question here, I would say that gold has intrinsic (objective) use-value whereas paper money does not. But if the debate over "intrinsic" or "objective" causes any difficulty, I think we can safely drop it. The key difference between fiat money (e.g., the modern American Dollar) and commodity money (e.g., gold) is found in the word "fiat." Gold is valued apart from its use as money. The dollar is not (other than rare items for collectors). And the dollar is given a privileged position by force (e.g., legal tender laws, its being demanded in payment of taxes, the criminalization/taxation of other forms of trade, and the criminalization of counterfeiters), not by its own merits. (Incidentally, in the past, when the U.S. government did not prevent it by force, foreign currency would circulate freely as money alongside domestic (government and private) currency. History shows that there is no need for a privileged government currency.)

The dollar has market value only because of the use of force/coercion. Gold has market value because of the objective uses for its material properties desired by free people.

[uberliber]

Mises differentiated between these two concepts as follows:

"Acting man believes that the services a thing can render are apt to improve his own well-being, and calls this the utility of the thing concerned. For praxeology the term utility is tantamount to importance attached to a thing on account of the belief that it can remove uneasiness. The praxeological notion of utility (subjective use-value in the terminology of the earlier Austrian economists) must be sharply distinguished from the technological notion of utility (objective use-value in the terminology of the same economists). Use-value in the objective sense is the relation between a thing and the effect it has the capacity to bring about. It is to objective use-value that people refer in employing such terms as the "heating value" or "heating power" of coal. Subjective use-value is not always based on true objective use-value. There are things to which subjective use-value is attached because people erroneously believe that they have the power to bring about a desired effect. On the other hand there are things able to produce a desired effect to which no use-value is attached because people are ignorant of this fact."

--Mises, Human Action chapter VII

As for the main question here, I would say that gold has intrinsic (objective) use-value whereas paper money does not. But if the debate over "intrinsic" or "objective" causes any difficulty, I think we can safely drop it. The key difference between fiat money (e.g., the modern American Dollar) and commodity money (e.g., gold) is found in the word "fiat." Gold is valued apart from its use as money. The dollar is not (other than rare items for collectors). And the dollar is given a privileged position by force (e.g., legal tender laws, its being demanded in payment of taxes, the criminalization/taxation of other forms of trade, and the criminalization of counterfeiters), not by its own merits. (Incidentally, in the past, when the U.S. government did not prevent it by force, foreign currency would circulate freely as money alongside domestic (government and private) currency. History shows that there is no need for a privileged government currency.)

The dollar has market value only because of the use of force/coercion. Gold has market value because of the objective uses for its material properties desired by free people.

I agree 100%. And thanks for that article, it was a good read.

[Augustine2004]

Just read this: China have now used silver as money for thousands of years (Matt Badiali, S&A Oil Report, today).

[Augustine2004]

Gary North suggested a way for the central bank of a nation other than the Fed to upsurp the dollar's international reserve status.

http://www.lewrockwell.com/north/north732.html

It seems to me that it would be simpler to let the nation's citizens use whatever money they wish to use (competing monies).