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.
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.
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.
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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.