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homestead - Re: [Homestead] 4 years later ...

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  • From: "clanSkeen" <sgian AT planetc.com>
  • To: <homestead AT lists.ibiblio.org>
  • Subject: Re: [Homestead] 4 years later ...
  • Date: Wed, 1 Dec 2004 19:41:08 -0500


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





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