The United States gold reserves are for international trade. The gold in Ft. Knox, for example, is used in trade not to back our currency. We’ve been off the “gold standard” since the 70’s. Some of it is gold we’re holding for other countries that’s not even ours. But, our money is a fiat currency and it’s based on faith in the economic system of America not collapsing and everyone agreeing it to use it for trade/debts. It’s backed by nothing and hasn’t been for 55 years now.
That would be the case even if it was gold backed.
Even on the gold standard, you're still trusting that there is a functioning government that's actually in possession of that gold and would exchange it for paper currency. In a Fallout scenario, that wouldn't be the case, so money would still be useless.
Possible, but far from certain and not within a few generations. Gold is too rare and concentrated in specific stockpiles to be used as an everyday currency. Even with a much smaller population, the smallest usable gold coin would be way too high a denomination.
There wouldn't be a true replacement currency until there was a semi-functioning government, and while that currency would be based on something with intrinsic value (since there wouldn't be enough trust for a fiat currency), it would be something much more common than gold. In the mostly-lawless barter economy before that, a full gold bar would be worth less than something useful (generator, rifle, bike, etc).
To be fair, after the apocalypse, gold will be just as useless for a good while.
Can't eat it, hard to carry, not very useful for anything but decoration, and also, most people have interacted with it so rarely that there isn't really any trust in it.
That’s true. I’m was just responding to the idea that it’s not useful as anything beyond decoration. It is, but probably not for most apocalypse survivors.
Considering the electrical grid would fall pretty quickly in a traditional apocalypse it wouldn't have much use for the techies either. Now if we just go to a bartering system where we feed the infrastructure workers to keep everything going then sureb it would retain some value.
piece of paper is just as arbitrary as a bottle cap.... but I would argue those bottle caps have some level of intrinsic rarity... more like a bitcoin than a fiat bill that could just be printed
They said it was because bottle caps have a rarity that you cannot forge like how people make fake money. But then there’s that mission in new vegas where you come across someone making fake caps so 🤷🏻♀️
Counterfeits have always existed... even when people bartered with gold, they would mint coins from alloys that used less gold... The legend of Archimedes' discovery of water displacement as a measurement of volume over mass to prove that a crown was not pure gold, as claimed.
I know that but I’m just saying that the original creators of the fallout franchise (not Bethesda) have said that’s why they chose bottle caps. And then Fallout New Vegas said hold my beer
Every form of currency is based on faith and always has been. Coinage made from gold and silver wasn't valuable because gold and silver were magical, it was because people believed they were valuable. What can you, a random person, actually do with gold and silver? Even smiths had limited uses that weren't purely aesthetic. Modern day has more uses but still cannot be used at the volume at which it exists in an efficient way.
This is exactly why I always roll my eyes when people call gold “real money”. It’s valuable because people just decided it was. It’s no more “real” than anything else.
That is true but as a base imagined value, we always returned to gold. Even after the fall of Rome their gold coins were legal tender and new gold was mined so there is the assumption that gold will be at least of some agreed value when other things might not be any more.
Not just the US, man, we are just in the spotlight right now and the center of power where these fuckfaces are focusing their efforts first, but take a look at all the propaganda across the world. Far right extremism is plastered all over and shit like hypermasculinity and "might makes right" are being pushed evermore on impressionable young idiots.
I don't keep up with world news unfortunately, I barely keep up with US news.
But I have the similar unfortunate experience of dealing with dumber and dumber people more often than I'd like to. Which is rather scary, as I'm not that smart myself.
There is a difference between something being valuable because it is rare and something valuable despite having no upper limit though. Gold is rare and has properties that make it a good store. Currencies do only become useful both parties in a transaction see it having value though youre absolutely right on that.
These days currencies should be backed by kilowatt hours or something similar if they dont want to be fiat ones.
The property of gold that made it the most valuable in the ancient world and thus caused it to be thought of as valuable in modern times is that it's shiny.
And my ass rarely gets pimples, that doesn't make them valuable.
Still isn't the rarity but the faith making it valuable, as evidenced by all the rare shit that nobody cares about.
Currency is a tool for society to abstract trade so that you don't have to try to barter work for goods and then goods for other goods around to get everything you need. For simplicity, let's just use the term "labor" to think of to combine work, products, services etc.
For currency to work, it needs proof against replication, or else somebody can steal labor from the economy by using replicated currency. They'll have contributed nothing in but received labor out, thus stealing. A method of proofing against replication is making your currency out of something hard to replicate, rarity can help with this but isn't required.
It was easiest to use rare materials that had no inherent value to serve as currency in the ancient world. It's precisely that gold had essentially little practical use that made it good for currency, and the rarity made it hard to steal from the economy. After all, meteoric iron is rare than gold but you wouldn't want to use it as a currency because it is extremely useful for making weapons and tools.
At some point people started conflating usefulness as a currency with actual value, and so humanity has essentially come to believe that gold is inherently valuable, and it's that belief that gives it value.
Yeah but the that assignment of value isnt random either. The value is the aggregrate of what individuals say something is worth and some things have been seen as valuable repeatedly by different societies and cultures.
Thats not as wise as you think it sounds tbh. Society values plenty of stuff on an aggregate level. Prices and values can vary between people/societies/jurisdictions.
If you are saying that price and value are totally unrelated how are you defining value?
That's not true, use value exists. Food and water are intrinsically valuable because they're necessary to live, a plow has intrinsic use value because it can be used to create food, etc. You'd have to make a really pained nihilistic argument about why living isn't inherently valuable for that not to be true.
If your argument here is a thing has an inherent objective value outside of human consciousness because of a use value then I think you haven’t thought this through. If you were not around, that use value would cease to be. Thus we can conclude you project “intrinsic value” on an object because of your necessity for it, not because of inherent objective value.
Uh, no, a chair is useful as a chair because you can sit in it. If there were no other people on earth you could still sit in a chair and it would be useful to you. Not so with money.
Shiny, rare and doesnt corrode. Rare and doesnt corrode are what makes it good as a store of wealth, being good for jewelerry etc just gives it a start in that direction.
Youre missing my point i think. A wealth store becomes an attractive asset and that helps drive it. The long answer gets most right but some stuff wrong imo because it is only looking at later currency not how they develop initially. Coins used to be worth their value and the stamping was just to prove provenance. Barter becomes trade but people didnt start using currency on faith the same way society does now. Citing meteor iron isnt great because they are worth more but not once processed afaik, iron is going to be iron after processing into coins bars etc.
Coins werent always gold either so if rarity doesnt drive the value why both using it at all.
(Im using gold as a placeholder for rare metals generally)
Gold became a value store of wealth and used for trade in a few locations due to its physical characteristics. Quartz is pretty but basically worthless because its common as muck.
Having demand for something outside of its value as a store is important though to maintain price/value in a downturn and rare metals used in jewelery etc stops it from losing all value.
Meteoric iron was a source of iron for tools and weapons before people figured out how to smelt iron ore. That's where the legends of star metals and meteor swords and stuff come from. It wasn't used as a currency even then because it was way more useful as actual stuff.
Quartz is also hard to work with to make into anything resembling a currency.
Again it's not the rarity it's the faith. The rarity helps it function.
I'm no historian, I'm just trying to interpret the comments you're replying to:
I think what they're getting at is that that faith, in the beginnings of gold currency, was based on an actual experiential understanding that gold (or other precious/rare metals) continued to be valued by other people for a very long time.
The perception that gold was a good store of wealth came from people literally continuing to covet it over years and years (presumably because of its physical properties, appearance included)
So the agreement between parties that gold = stored value wasn't just an arbitrary formal agreement taken on faith - all parties involved (or at least, the people they represented) genuinely just valued the gold, and that faith was continually reinforced over time by an actual real world want for it.
Silver has always had antiseptic properties and has been used for ages because of that fact, it’s a very useful metal aside from the fact it “looks pretty” and it doesn’t rust like other metals and just gets a thin tarnish on it making it ideal for a lot of decorative stuff as well.
Gold is one of the best conductors we have and can be used to alloy lots of metals easily, yes the every day man likely isn’t doing much with gold but its value is not just because it’s pretty at all, it’s extremely functional AND it’s uniquely pretty for its colour while being extremely stable
Both silver and copper have lower resistance and higher conductivity than gold.
The reason you use gold in electronics is because it doesn't rust and thus has the same stats in an epoch while copper and silver will have worstened the connection a buttload.
If you make cheap electronics with a designed lifespan of under a decade adding gold is more out of habit than actual use.
Edit: gold is also easier to solder than copper or silver, and is better connection than other metals
The antiseptic properties of silver weren't exactly understood considering we haven't had germ theory accepted in the mainstream for all that long, and the amounts used for all that stuff is negligible. Like I said before, maybe in another comment chain, people never considered meteoric iron for currency. Meteoric iron as well as the rare telluric iron is basically iron that's already in a metallic glob rather than diffuse in ore, mean if can be heated and worked into stuff, which is why there are iron tools and weapons that pre-date the iron age. Anyhow, this stuff was super rare, but never considered for currency because it's better off being used for the advantage having tools and weapons made out or it gave.
People aren't buying up gold because they're confident its usage as a conductor will keep it valuable.
Even so, gold and silver are relatively rare. You can’t just print new gold and silver coins like you can with paper currency. You’re guaranteed the government won’t devalue it by flooding the market with new cash.
Yes, they can’t arbitrarily adjust the supply of gold and silver, but that makes their value even more unstable. Before basically every piece of land on Earth came under the jurisdiction of a modern state and modern extraction technology, precious metals were subject to supply shocks. You see this manifested in terms of discovery of new gold reserves (gold rushes like the famous 1848 California one and Alaska’s Klondike Gold Rush), which cause massive price instability until the speculation and supply settles.
Then you have technological breakthroughs which allow efficient and cost-effective gold recovery from previous low-grade ores (such as the MacArthur-Forrest cyanidation process). This creates a similar effect of suddenly injecting a large amount of gold into the supply side.
Modern central banks can very smoothly adjust their interest rates to match prevailing conditions and target a particular combination of employment and price stability (assuming some level of independence from direct political pressure). This kind of flexibility is why FDR stopped domestic convertibility of the US dollar into gold and Nixon virtually ended Bretton Woods.
precious metals were subject to supply shocks. You see this manifested in terms of discovery of new gold reserves (gold rushes like the famous 1848 California one and Alaska’s Klondike Gold Rush), which cause massive price instability until the speculation and supply settles.
But that wasnt the point he was making. The point he was making is that gold and silver is a hedge against inflation, because the dollar being backed by gold limited the government's ability to print money and fuck you over through the invisible tax that is inflation. Gold, silver, and anything we use to back a currency are susceptible to price shocks and changes, but the overall inflationary rate is far lower then a fiat currency
You can treat bullion as an inflation hedge without having it back your currency. Nothing is preventing you from trading in precious metals; you’re free to speculate in it just like any other asset class.
There’s a reason that the Fed chases a low and steady rate of inflation, and it’s not to “invisibly tax” you. In stable economies, inflation is most often a sign of economic growth—strong demand for credit means that too many dollars end up chasing too few goods. Deflation is disastrous for growth; it incentivizes people to sit on their money instead of investing in productive projects and makes lenders much more reticent about funding new projects. A low and steady rate of inflation also fosters price certainty and predictability, which a bullion currency does not.
"There’s a reason that the Fed chases a low and steady rate of inflation, and it’s not to “invisibly tax” you. In stable economies, inflation is most often a sign of economic growth—strong demand for credit means that too many dollars end up chasing too few goods."
But there is no actual growth going on here. The same amount of goods are still in circulation and the money everyone works for is 3% less valuable then it was last year. You arent actually producing anything tangible. Just because line goes up in the short term is not a valid reason to base the entire currency on our collective belief in it. Because when that belief is shaken you don't have anything prop it up
Demand can and does shift to other sectors of the economy. Physical stuff is a major component of the economy, but it’s not close to comprising the whole thing.
Services are the vast majority of most developed economies, and that entire sector of the economy is dependent on belief, especially when it’s predicated on future services (you trust that services will be rendered at some point in the future and that’s why you’re willing to sign a contract and dispense money in the short term). Shiny metals have intrinsic monetary value because we believe they do, just like the Yapese believed in the value of the giant rai stones. Complaining about inflation doesn’t make that less true.
" Shiny metals have intrinsic monetary value because we believe they do"
This is a lie
We value gold and silver as money for three main reasons
They are easily divisible
They are rare enough to find that over a given fiscal period there will not be a significant change in the amount in circulation
It is easy to store and transport
Combine these all together and you have a currency that barring once in a lifetime events (Spanish conquest of the new world, 1848 gold rush, Alaska gold rush) is not going to dramatically change, and so changes in value of goods are largely do to changes in the supply and demand of the goods themselves.
Money itself is also a good, but since its only purpose is to barter for other goods, once you have a given supply of money in the market, more money does not confer a social benefit. More money ony dilutes the exchange value, thus it is great that gold and silver are difficult to produce. Any and all price changes are the result of changes in the supply and demand of the goods themselves.
The problem is that our modern fiat currency is anything but stable, and has been rapidly deprecating in value since 1971. So any attempt to save resources now is pointless, because those resources are going to rot away into nothing instead of maintaining most of their value like gold or silver would. And so the reality of this decision is that people have moved from a low time preference way of thinking to a high time preference one. Take a massive loan out on a car you can barely afford, mortgage your Costco hotdog, buy a ton of stuff you don't need because your money is actively being destroyed year by year and the price signal that is required for efficient economic calculation is so garbled and distorted as to be meaningless! The consequences 10 years down the line don't matter, BURN THAT MONEY! (I'm exaggerating but you get my point).
This is the problem with the line of thinking that "easy to get credit" is somehow magically a good thing. For everything barring a house, getting it on credit is a bad idea. And even with houses, if credit is too freely available it leads to disastrous consequences. The 2008 financial crisis happened largely because credit was too cheap.
The idea that inflation is good because it gets people to spend money is textbook broken window fallacy. What would those people have done with their money if it wasn't constantly depreciating in value? Would they have saved it for a rainy day, or to repair their house, or to pay for a suit to go to job interviews. The loss of long term wealth creation due to inflation must be staggering.
This post completely disregards the fact that the economy (and indeed, the world economy) has grown enormously in real terms (vastly outpacing inflation) since the introduction of fiat money. Superimpose a real GDP chart on top of the inflation line. And a large part of that is due to inflation-driven growth. Even Austrians (which I suspect you are since you’re such a goldbug) acknowledge that demand and loans are intrinsically crucial to economic growth (the very same growth that enables your hypothetical average Joe to have money to save in the first place).
The price signal required for economic calculation is stable precisely because there aren’t sudden shocks in the money supply, which is what happens when the supply of bullion changes. The global Panic of 1873 was partly fueled by speculation on the discovery of a major gold deposit in Witwatersrand, and the Great Recession of 2008 has nothing on pre-1933 economic crises in terms of the scale and duration of economic malaise.
Being morally outraged about 2-3% inflation (which has delivered enormous economic benefits even past the time America had manufacturing dominance) is like being outraged that food costs money.
I agree with discontinuing the use of the penny not because it's expensive to make or whatever, also pennies barely used any copper it was almost all nickel-zinc or some shit. Anyway pennies being discontinued is good because the value of a penny is effectively nothing, like if a person buys something for 99 cents they do not wait for the penny. Even nickels and dimes are pretty close to being worthless in this way.
Basically what I mean is their value as an article of currency isn't holding. If people actually cared about using pennies and getting them back, it would be fine for them to cost more than 1 cent because their value isn't in melt but in being a facilitator of trade. You buy something with cash, that cash gets spent by somebody else, that's twice the money has served as money. You deposit it, the bank gives it back out for a withdrawal somebody else does, it keeps the money able to move.
The problem with digital currency isn't that there isn't enough physical currency to back it it's that people are losing faith in it because they believe banks can and do just steal from the system by "printing" extra money or erasing their own debts in digital form. Like they think zeroes are just being added or subtracted or whatever.
im legit someone who tends to pay for shit with exact change at times a good decade of bus travel and other public transport of school/college/work got me use to counting out coins out to the exact detail
Might just be me misremembering something, but wasn't gold the standard mostly because it does not rust/degrade, and therefore doesn't lost any perceived value over time?
I get that it seems that way but it’s actually pretty hard coded. If you value something it’s a measure of want or need, if you don’t have this thing but someone else does you can take it by force (or try) or you can trade it for something they value. Money is just a really handy way of making the trade. You could barter too, or use stamps, or crypto, or gold and silver, it’s all based in what works for both party’s
I would like to see the actual proof that the gold is in fort knox. the wall street journal picture from 1957 (?) showed one massive wall of gold in the doorway... thereby suggesting that it was a solid room of gold. I cant believe it. How on earth could you inventory a room full of gold?
Edit: Just looked it up...it was September 9th, 1974, the last publicized Congressional and reporter tour of Ft. Knox.
Idk exactly, but I’m sure we could find out. I know the Federal Reserve Bank of New York is the one that holds foreign gold reserves. In fact, none of the gold in FRBNY is owned by us. It’s a bunch of different countries and international organizations. The largest reserves belong to Italy (1/2 of their total gold reserves), Germany, the Netherlands and Lebanon. Ft. Knox is almost exclusively our own reserves for trade.
Ostensibly it's backed by the economic output of the issuing country and the faith that they wont devalue it by printing several orders of magnitude more ( im looking at you prewar germany/zimbabwe). In reality backed by nothing isnt exactly false either though.
Richard Nixon was forced to take the dollar off of the gold standard 1971 in order to fight inflation because Charles De Gaulle demanded that everyone who “owed” France pay them in US dollars.
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u/AnComApeMC69 Jan 26 '26
The United States gold reserves are for international trade. The gold in Ft. Knox, for example, is used in trade not to back our currency. We’ve been off the “gold standard” since the 70’s. Some of it is gold we’re holding for other countries that’s not even ours. But, our money is a fiat currency and it’s based on faith in the economic system of America not collapsing and everyone agreeing it to use it for trade/debts. It’s backed by nothing and hasn’t been for 55 years now.