You Pay whatever your Taxes are Regardless of how much the Government Spends

Other commodities... bananas, iPods, automobiles, even oil or diamonds are created and destroyed. Most will eventually have no value. That's unlikely to be true of gold.

All the gold on this planet existed before the first man took a breath or even the earth was born. Without the magic you mention (call it alchemy), a lucky meteorite strike, or a fundamental change in our understanding of nuclear theory... it's unlikely there will be significantly more before our sun burns out.

Among the 118 known elements, the indivisible and fundamental building blocks of reality, gold is rather scarce. That scarcity, coupled with a density, malleability, and luster unique to gold ... well those intrinsic properties make gold uniquely valuable. Oh the price might ebb and flow, but gold has held it's value and increased in value quite well since mankind first started trading it. A much better run than even Apple stock.

 

Awesome!! Gold has so many cool traits. I can't wait till that block of gold builds me a house or teaches me math!!

 

Such a problem with the country these days... people are so desperate to have things done for them that some even expect the inanimate objects to provide their shelter, food or knowledge.

 

That's not the only reason people buy gold. It's intrinsic value makes it able to be used as the most effective medium of exchange.

If gold were really useless as you claim, that speculation bubble would have popped long ago. You can't keep the price of something that's worthless high for thousands of years like hold has been. If gold were worthless like tulips, that investment would have crashed long ago like during tulip mania.

Until you understand that gold is worth what it is because of the labor it took to mine and refine it, you will not understand gold and you will not understand the theory of money at its most fundamental level.

 

I pods and auto are not commodities.

I'm not aware that diamonds are destroyed and eventually have no value.

At least, the deBeers ads don't say so! "A diamond is forever"

 

Gold doesn't have value because of the effort it took to mine it, unless you are referring to the fact that there is a limited supply, but because people value it for a variety of reasons.

 

People simply valuing it is not what gives it its intrinsic value, they value it BECUASE it has intrinsic value. I already pointed out Tulip Mania as to why this is true. If gold were intrinsically worthless, it would have been reduced to its real value of (almost) zero long ago, just like tulips were. It wouldn't have maintained purchasing power for thousands of years like it has.

So what gives it its intrinsic value? The fact that it took labor to produce it. It's value is directly tied into the amount of labor it took to mine and refine it, relative to how much is in circulation, compared to the amount of other goods and services available in the economy. In that sense, it's no different than any other metal like copper or aluminum (save for their relative demands in the economy). That is why it is an effective medium of exchange, because its existence is representative of labor, and therefore is a positive asset. It is effective to barter with because it creates no debt.

Fiat currencies, on the other hand, are representative of debt, not positive assets, which is effectively the equivalent of everybody bartering with IOUs. It's unsustainable. That's why fiat currencies have never historically survived for very long, and why the ONLY reason they get used is government force (Legal tender laws).

 

Lol!!! The labor it takes to dig gold up out of the ground has nothing to do with "intrinsic value". That is hilarious!!

 

Please don't butt into my conversation with Iriemon. We are both tired of your "debate" tactics. If you want to talk about this, resume our conversation with post #115. I've already addressed this issue with you countless times, and you've shown your position to be contradictory.

 

It's just mind boggling how you associate the labor it takes to dig a useless metal out of the ground as the reason it has "intrinsic" value. Lol!!

 

When you buy copper or aluminum, a good bit of that cost goes to pay for the labor it took to mine/refine it, plus the laborer's profit. What makes gold different?

What's mind boggling is that you continue claiming that gold is worthless. If I had an ounce of gold, I could sell it for almost $2000. I think you're just delusional.

 

Supply and Demand. The laborer digging gold out of the ground has no bearing on what I value gold to be worth. Just like the labor that goes in to an iphone. It dictates what the seller would sell it for, but it doesn't give it it's value. It's value comes from how much I'm willing to give you for it and if you are willing to sell it for that much.

 

Yes it does. The value of the iphone is equal to the cost of materials + cost of labor + profit. Why would anyone be "willing to give me" $2000/ounce for gold if it's "worthless"?

 

The value of the iphone is nothing unless someone is willing to pay for it. You are talking about cost.

I never said gold is worthless is terms of what someone is willing to pay for it, I said gold is worthless in terms of it's productive uses.

 

By that definition of "value", nothing has intrinsic value, so your point is moot.

But if it makes you happy, I will rephrase the question. Why have people consistently valued gold highly for thousands of years if it's "worthless in terms of its productive uses"?

 

Before they valued it because it was used as a medium of exchange... now they value it because they feel like they'll get more of a medium of exchange in return for it later.

Very few people buy gold to use it for anything. I mean most people buy gold and stick it in bank vaults.

 

Defining "value" the way you did, that assumes that nothing has intrinsic value. THerefore, by you saying that gold is "intrinsically worthless" is sort of redundant, because EVERYTHING is intrinsically worthless according to your viewpoint. I would like to avoid that type of philosophical discussion, so let's just say that the term "intrinsic value" applies to things that people are willing to pay for.

The cost of gold is always going to factor in the labor it took to mine it and refine it. So technically yes, if nobody wanted it, then it would have no value. But the fact is that people do want it, so it does have value, and that cost is always going to include the cost of labor attached to it, which is what gives gold its intrinsic value. That's why it was used as a medium of exchange, because one ounce automatically carries the cost of a certain amount of labor. What that labor ended up being worth in the free market, relative to the labor it took to produce all other goods and services in the economy, determined what the purchasing power of that ounce of gold was.

Gold has intrinsic value because labor will always be worth something. There's never going to be a time when people don't want gold, unless we figure out a way to create it out of thin air or produce mass quantities of it with no effort/labor.

 

The labor theory of value is bunk and is something Akphidelt would subscribe to. All value is subjective. Gold has value because it is very useful as a medium of exchange. Akphidelt pretends that it is no longer used as a medium of exchange, but anyone who has been to a country suffering from high inflation will see the gold markets thrive as people quickly convert their excess cash into gold. Only when the day comes that gold is as common and as easy to procure and transfer as salt will it no longer be a useful medium of exchange.

 

But anything that is considered to have value always has the labor factored into the cost. That's what makes gold useful as a medium of exchange, because that labor will always be tied to its cost.

 

Doesn't surprise me that akphidelt ran and hid after my last post destroyed him