Why Gold?
I was recently watching the movie Treasure Planet (based on the book Treasure Island). The plot of the movie centers around the journey to get a bunch of treasure, with certain characters trying to keep all of it for themselves. Let me ask a question with a possibly obvious answer: Why do they want the gold? Most likely, they want to use it to purchase things. But here's another question: How is it that people can trade gold for anything? Sure, it's a precious metal, and the scarcity of certain things makes them more valuable, but gold in and of itself does not do anything for us. You can't eat it, you can't stay warm with it, etc.
Formal currency (such as dollar bills) seems to be valuable, but only when people are willing to trade something for it. There is a scene in the movie Cast Away where Tom Hanks is stuck on the island and discovers that he has a $100 bill. There is nobody on the island that is selling anything, so the bill does him no good for purchasing. However, he is able to use the bill for something else: starting a fire.
Supposedly, every American bill is backed by gold in the US treasury. So we've got bills and gold, neither of which has any practical use except for trading with others. All this makes me wonder: Why do we trade things like gold and paper bills (which are backed by gold)? So often, the price of an item fluctuates based on the laws of supply and demand, and the relative value of gold or bills changes a lot. I'm guessing that if you trace it back far enough, the only reason that gold (and other precious metals) is valuable is because it looks pretty. Personally, I put more value on things that are functional, not things that look pretty.
I would be very curious to see a society where people trade goods and services. I am talking about a society where the goods that you want to trade have inherent value, and even if nobody buys them, you can use them for yourself. For example, if you have a lot of chickens, and you want to trade some of them for a pig, you could offer to trade with someone who has pigs. You might agree that 20 chickens are equivalent in value to one pig, as long as all the animals are healthy. You could barter over the price a little, but in the end, you're trading goods for goods, and nobody really loses anything. There is no stock market crash, no steady inflation rate, although the laws of supply and demand would probably still be in effect. I don't know whether this kind of society would be superior to the one that we have now, but I'm curious to see how well it would work.
The nice thing about currency is that it is liquid; you can buy anything with it. Sometimes people don't want your goods or services; they want your money. Also, money retains its value over time (aside from inflation) whereas many goods do not last (animals die, food spoils, vehicles rust, etc.).
That's all my thoughts about this. Enjoy.
Formal currency (such as dollar bills) seems to be valuable, but only when people are willing to trade something for it. There is a scene in the movie Cast Away where Tom Hanks is stuck on the island and discovers that he has a $100 bill. There is nobody on the island that is selling anything, so the bill does him no good for purchasing. However, he is able to use the bill for something else: starting a fire.
Supposedly, every American bill is backed by gold in the US treasury. So we've got bills and gold, neither of which has any practical use except for trading with others. All this makes me wonder: Why do we trade things like gold and paper bills (which are backed by gold)? So often, the price of an item fluctuates based on the laws of supply and demand, and the relative value of gold or bills changes a lot. I'm guessing that if you trace it back far enough, the only reason that gold (and other precious metals) is valuable is because it looks pretty. Personally, I put more value on things that are functional, not things that look pretty.
I would be very curious to see a society where people trade goods and services. I am talking about a society where the goods that you want to trade have inherent value, and even if nobody buys them, you can use them for yourself. For example, if you have a lot of chickens, and you want to trade some of them for a pig, you could offer to trade with someone who has pigs. You might agree that 20 chickens are equivalent in value to one pig, as long as all the animals are healthy. You could barter over the price a little, but in the end, you're trading goods for goods, and nobody really loses anything. There is no stock market crash, no steady inflation rate, although the laws of supply and demand would probably still be in effect. I don't know whether this kind of society would be superior to the one that we have now, but I'm curious to see how well it would work.
The nice thing about currency is that it is liquid; you can buy anything with it. Sometimes people don't want your goods or services; they want your money. Also, money retains its value over time (aside from inflation) whereas many goods do not last (animals die, food spoils, vehicles rust, etc.).
That's all my thoughts about this. Enjoy.
posted by Ben and Christina at
8:15 AM
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