Homestead mailing list

["clanSkeen" <sgian AT planetc.com>]

Don writes:

> There have been many times but these times are different.  I personally 
> believe that skills and tools are much more valuable than any hard 
> currency.

On another list we just completed a very long and involved treatment of gold 
as money and the safety and wisdom of investing "value" in it.   The history 
of gold as money is fascinating!

Those who are not Douglas Adams fans please indulge me, but one scene in the 
'Hitchhikers' series is where the protagonists are on a derelict planet 
where they find a space ship thousands of years old still hooked up to its 
power source.  When they make their way in and inquire of the robot flight 
crew, they find that the passengers have been put into suspended animation 
(for their comfort and convenience) thousands of years ago and are awakened 
every 100 years or so for biscuits and tea then put back into suspension. 
The crew is waiting for clearance to take off, which they cannot do until 
the ship's stores are complete ... lacking only their complement of lemon 
scented napkins.   When the protagonists remind the robots that their 
civilization is dead and has been for millions of years, they reply that 
while that is true, the odds are other civilizations will arise and will 
invent lemon scented napkins and then the ship's stores will be complete and 
it can take off.

The phenomenon that gold always is a reliable receptacle of value is akin to 
that.  It surprises many that gold shares one important characteristic with 
paper money or fiat money, it only has a value if a government says that it 
does.  Wait a minute!  says you.  What about when a government was 
collapsing utterly or when we find gold from a sunken ship that went down 
500 years ago?  The gold's still valuable!  Here's the thing, like the lemon 
scented napkins, the gold has value because the odds are there will be other 
governments sometime, somewhere who will enforce gold as a currency and so 
the odds are in your favor that if you hang onto it, it will still serve as 
an exchange commodity.   The difference with paper money is that once the 
monetary system collapses, the odds are that it will NOT serve as currency 
of another government or monetary system.

Tools and commodities (and to a large extent, skills) are not subject to 
someone else valuing them, and this sets them apart from either purely fiat 
money or gold.

James