The TRUE value of money.

Discussion in 'Human Science' started by p_ete2001, Nov 9, 2002.

  1. p_ete2001 Registered Senior Member

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    Money is only valuable because it is shiny and gold is rare.
     
    Last edited: Dec 30, 2002
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  3. Adam §Þ@ç€ MØnk€¥ Registered Senior Member

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    Gold, silver, and copper originally became valuable and used as money because they are what we call "noble metals". They have rather sturdy outer electron orbits, they don't easily bond with other materials. And they don't rust like many other metals. In other words, people soon noticed that if you make coins out of these metals, they retain their form and weight (thus their value) over long periods. Within those three, the order of value was based on how rare each was; copper, silver, then gold, in order of increasing value.
     
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  5. p_ete2001 Registered Senior Member

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    Yeah but was this really known when gold and silver were first used as currency? The coins themselves arent actually made out of gold and silver though are they?? They just represent gold and silver. (thats what i thought anyway)
     
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  7. Adam §Þ@ç€ MØnk€¥ Registered Senior Member

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    A few thousand years ago they didn't know about atoms and electrons and all. But it doesn't take a genius to look at two coins, one of iron and one of gold, to see that after thirty years the gold is in better shape. Plain old observation told them the noble metals were the best suited for coins.
     
  8. p_ete2001 Registered Senior Member

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    Yeah but i bet they didnt observe the metals for years and years. i bet the value was based on the fact that it looks good. It is shiny. Plus the coins only represent the gold and silver. im sure of it!! a five pound note has no gold in it. it is paper yet u could if u really wanted to, change it for its worth in gold. The monetary system we have, coins etc, is just based on gold,silver (the 'valuable' metals) changing hands.No gold or silver etc actually changes hands does it.

    p.s. five pounds does not represent five pounds in weight of gold does it?? that sounds like a lot.
     
  9. Adam §Þ@ç€ MØnk€¥ Registered Senior Member

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    Coins used to actually be gold, silver, and copper, in the ancient worlds of Babylon and such.
     
  10. Adam §Þ@ç€ MØnk€¥ Registered Senior Member

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    Yes, it represents a weight os materials. Just as a collection of 1s and 0s now represents material wealth, even though those 1s and 0s actually have no value.
     
  11. p_ete2001 Registered Senior Member

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    So if u wanted u could change a five pound note for five pounds of gold. ive just relaised. Gold is heavy isnt it. So five pounds in weight would not actually be that much.

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    silly me. lol. If someone opened up a mine and foubnd a lot of gold then the value of money would go down wouldnt it!??
    I remember something from history at school and the german government printed loads of extra money (for some reason) and it resulted on people holding baskets full of money and the basket was worth more!

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  12. Adam §Þ@ç€ MØnk€¥ Registered Senior Member

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    Well, you can actually exchange a five pound note for gold. It's called "buying it". But due to inflation and the hoarding of gold for investment capital, a five pound won't get you five pounds of gold. It'll get you a chunk about the size of a match-head. There's been a lot of gold mined over the millennia. The older gold is now worth more due to the artistic/cultural significance it carries. New gold is hoarded by banks and such. Most gold now is sitting in the vaults of banks, used as a guarantee that the institution can indeed back its paper and electronic money; altghough these days a bank only needs about 15% of its reserve in gold. Soooo much is just sitting there for decades in those vaults. That's why the little remaining in circulation is now so expensive. And by the way, the reason we don't have massive gold mining to reduce the price of gold is because it would reduce the strength of the material holdings of those banks and such.
     
  13. Rick Valued Senior Member

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    The TRUE value of money...


    is greater than anyone else on this Forums...

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  14. Cris In search of Immortality Valued Senior Member

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    Money has no value, it is the products and services exchanged for money that have value.

    Some say money is the root of all evil. That is not true. It is the love of money that seems to result in evil.
     
  15. Nasor Valued Senior Member

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    United States dollars are backed by the 'full faith and credit' of the people of the United States. The money is valuable because we all agree it's valuable. It isn't backed by gold at all.
     
  16. Adam §Þ@ç€ MØnk€¥ Registered Senior Member

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    No, it's backed by massive stores of gold. Fort Knox, the Federal Reserve... Of course, like banks, only a small fraction of the state's total worth is covered by that gold.
     
  17. p_ete2001 Registered Senior Member

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    I was going to say that adam. What about gort knox nasor. That has nearly all of the gold i think.thanks adam. i agree. They dont mine for gold because it will decrease the value of gold on the whole. The government therefore control the land and therefore what is mined where. Even if u own land u cant do what u like with it. You have to have permission off the council to even put a satellite dish on your house for gods sake.

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    They do still mine gold in some places im told. And u know those people who seive water for gold. Well they still do that too. Is this what inflation is then?? The value of money gradually goes down as more of it is gathered??

    p.s. BTW. anyone got any suggestions as to why gold and silver are so valuable apart from how they look?? Is it because of what they can be used for e.g. making making candlesticks (if u really wanted to) If straw was just as rare i bet it would be less valuable. is this because of how it looks or because of its potetntial for use?? I think it is just because of how it looks. the TRUE value of money........its only a psychological value. Everyone agrees that gold and silver are valuable because....its is shiny and heavy.It looks and feels valuable.

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  18. Nasor Valued Senior Member

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    This is incorrect. The United States stopped backing its money with gold in 1971. The gold at Fort Knox no longer has any connection to the value of United States currency.
     
  19. p_ete2001 Registered Senior Member

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    ooooooooooohhh. thanks nasor. is this really true though?? how can u have a currency that isnt backed by anything. so the money is worthless then!? u cannot change your money for anything. how does this work!???
     
  20. Clockwood You Forgot Poland Registered Senior Member

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    Buy up anything that is being used up and is likly to always be useful and is non-perishable. Eventually it will be worth a fortune.
     
  21. p_ete2001 Registered Senior Member

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    Like oil u mean clockwood!!??

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    thats worth a fortune but is perishable. Also, buy with what!??? What should i exchange for this 'thing' Gold!??? in america apparently u can give someone a peice of paper and get things in exchange e.g. tins of beans, tomatoes, petrol etc etc. Maybe i should invest in a forest

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    Or make my own peices of paper which say 'this is worth 5 pounds worth of gold' and then on the other side in small print have 'but it isnt really. im just saying it is'

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    Sorry nasor. not having a go at u but i just dont see how it can work.
     
  22. p_ete2001 Registered Senior Member

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    appreciate ur posts
     
  23. Nasor Valued Senior Member

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    It is backed by something; the fully faith and credit of the american people. It's valuable because everyone agrees it's valuable. I'm willing to accept dollars as payment for work that I do because I know the guy at the grocery store will accept them in exchange for food. He's willing to accept them because he knows that his employees will accept them in exchange for doing work. The whole system depends on everyone agreeing that we'll use dollars as a form of exchange. If people all across america suddenly decided to stop accepting dollars as payment, they would become worthless. It's like this with any form of money. Back before 1971 when we were still backing our money with gold, why was the gold valuable? The gold had value because we all agreed it was.

    The Federal Reserve stopped backing our currency with gold in 1971 because of exactly the problem that you brought up; when more gold was mined it decreased the value of the dollar. Another problem with the gold standard was that it prevented to government from creating new money. Unless it could also increase the gold supply somehow, any new money would result in inflation because the existing gold was being divided up among more dollars.

    Welcome to the strange world of economics.
     

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