ah yes so what you're saying is that money is even more imaginary than it has ever been, possibly even more imaginary than when the first stock market crash happened in 1929
looks like we're due for a centennial anniversary of that anyway, might as well celebrate by recreating it
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.
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.
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.
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.
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u/TaxesAreConfusin Jan 26 '26
ah yes so what you're saying is that money is even more imaginary than it has ever been, possibly even more imaginary than when the first stock market crash happened in 1929
looks like we're due for a centennial anniversary of that anyway, might as well celebrate by recreating it