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surewhynotlem@lemmy.world 3 days agoInteresting. So you think greed exists because of money. I disagree because I have kids and they don’t understand money, but they do understand greed.
arotrios@lemmy.world 3 days ago
No, greed is constant, and I don’t mention it above. I make no apologia for human nature, nor do I expect a utopia if currency suddenly disappeared. But if you get to the heart of it, your kids don’t fight over money - they fight over wealth - physical goods. In essence, a person has no need for money itself, only the goods it can buy.
After money detached from the gold standard and physical connection, it became effectively imaginary. As long as money is tied to the physical possession, it becomes difficult to hoard - a prime example is Fort Knox, which, while it hold a huge amount of physical gold that has a large monetary value, the vaults of Knox are dwarfed in comparison to the amount of money held by Elon Musk. In fact, I don’t think there’s enough physical gold in the world to cover Musk’s fortune.
Now, if Musk actually had to keep his wealth in the form of physical gold, he’d never be able to use it or leverage it the way he can with money. The logistics and expense of handling that amount of gold would be insurmountable. It’s very physical nature prevents the inflation and distortion we see with fiat currency. Another example would the millions in paper currrency Pablo Escobar lost to mold and rats - the need to hold the physical wealth effectively eroded it.
But money isn’t attached to gold anymore, or anything physical. It exists as an arbitrary point value within a bank account, and it’s attachment to physical goods only exists because we believe it does.
And in this arbitrary imaginary system, the value of a pile currency can now end up exceeding the total wealth of the world if the powers that be choose to let it.
Just like one man, Musk, is richer than all the rest of us according to this system, when his actual value as a member of society is about that of your average ketamine junkie.
TranscendentalEmpire@lemmy.today 3 days ago
That’s not really how the gold standard worked. The value of gold is also imaginary, so it’s not immune from inflationary forces. If the government wanted to print more money" they would just adjust the value of the gold.
The reason we moved away from this is because the value of gold in foreign markets was difficult to standardize to the value of the USD. Meaning that while we may want to hold the value of gold to a certain USD mark to help control domestic inflation, the value of the gold was lower than it could fetch in foreign markets. When that happened foreign governments would buy up as much gold as they could and begin to deplete our reserves.
Rich people did not have vast vaults of gold, the reserves and banks would just hold onto the gold and keep track of the “ownership” of it on paper, just as we do today. Fiat currency was just an acknowledgement that currency in general has always been a human construct based on trust.
arotrios@lemmy.world 3 days ago
I was mainly using that example to show how a physical attachment to currency makes hoarding impossible at the scale of trillions.
But you’re incorrect in your last sentence, because the value of gold is not determined by a single government. It’s value is arbitrary and certainly subject to inflation, but only when supply outpaces demand, which happens rarely (Spanish conquest of the Americas being one notable exception) but not to the same extent a non-physical fiat currency can be distorted.
And gold is not imaginary. It is a physical object. It’s not currency (although it can be used as such), it’s wealth. And it’s a more reliable store of wealth than money in a bank account, although considerably less liquid. If all money disappeared tomorrow, gold would still hold value (probably more)… but only to those who have need of gold as a store of wealth.
But here’s the thing, if someone manages to get all the gold in the world, the rest of us still get to eat. If someone gets all the money and buys all the means of production - we only get to eat if we give them our labor.
Now, you actually illustrated my point that money is imaginary here:
In other words, when we attached the dollar (imaginary value) to gold (real value) the value of gold declined because the inflationary pressure inherent in the (imaginary) dollar artificially decreased its value. Thus the distortion of value we see inherent in money. And when the dollar was fully decoupled from gold in 1971, well, remember the Carter years and the oil crisis? In fact, look at our economic stability and inequality pre and post 1971 - economics effectively became a constant boom/bust cycle for most of our lifetimes, and now nearly 60% of the county is underwater.
Because once upon a time the dollar was a symbol of wealth because it was worth gold, and its not anymore. It’s just an point in a rigged system now.
Now imagine if the US only provided gold currency when that
TranscendentalEmpire@lemmy.today 3 days ago
When it’s treated as a commodity… When it’s backing a currency the government sets the value of gold. Under the Gold Standard (Bretton Woods system) the value of gold was set at 35 USD for one troy ounce.
The value of the gold is imaginary… You cannot eat it, you cannot drink it, it is not a tool of production. There is no inherent value of gold other than it is a shiny malleable metal that does not tarnish. None of that helps when you are starving.
There are plenty of examples throughout history where gold became as worthless, a notable example is Mansa Musa’s pilgrimage to mecca causing a decade long depression in Cairo, medina, and mecca because he spent so much gold. It was severe enough that gold was not worth its weight in food or clothes.
Those scenarios are the same. How would we eat if we didn’t have gold to pay for it? Well, another object of value would arise as a currency and gold would lose its value. Why couldn’t the person also use the gold to purchase the means of production? Because buying the means of production would distribute the gold. The same way buying the means of production would disperes fiat currency if you purchased the means of production.
They both have a subjective value… The subjective value of the gold surpassed the subjective value of the dollar. This imbalance in subjectivity created a monetary enticement to people not subject to the US government’s ability to regulate price fixing.
Lol, first of all the oil crisis happened because Iran had a revolution and stopped producing oil. Secondly, there has been more economic stability post 1971 than there ever was in the pre war era. The cycle of boom and bust is just inherent to capitalism. The US has experienced 34 recessions since 1854, all but 7 of them happened while on the gold standard.