Andy Bradford <[EMAIL PROTECTED]> writes:
> The same is true of paper money. When you use paper as money, it wears
> two hats; there is a demand for the paper qua money, and there is a
> demand for paper in other uses. In addition, the nominal value of the
> paper money far exceeds the market value.
Yes, but paper *does* grow on trees, so to speak. Using paper as money
does not increase the price of paper, since one can just make more
paper, and not all paper has monetary value. If gold is currency, then
all gold has monetary value, and new gold can not be produced at a
significant rate. These are the things that make it attractive as a
currency to those who would like to keep the money supply fixed, but as
the economies of the world grow, a given amount of gold would become
more and more valuable for monetary use and less and less likely to be
put to real use.
Personally, I'm not nearly as morally offended by an expanding currency
supply as I am by the thought of tying up such a chemically interesting
and useful element in warehouses simply to make economic ultra-
conservatives feel better about the state of the world. I happen to
like my cheap, fast electronics and my corrosion-free gold-plated
electrical connectors, and my affordable gold jewelry. I also happen to
like the Fed, so the whole gold standard thing is a big loser in my
book.
--Levi
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