Hacker News Reader

Comment by Rhapso | Hacker News Reader

If you are trying to pin a currency to a standard, gold isn't great. Its value is almost entirely speculative and it lacks meaninful intrinsic value at this point. If you demand to leave fiat currency, an aluminum or steel standard might make more sense. Rare earth metals, or even just petroleum would be my proposal. Maybe someday we will have a duterium pinned currency.

View on HN

I think this shows the problem of non fiscal pegs - the value of rare earths or duterium is going to be impacted by technical change. For example let's say that a new processing technique means that a rare earth can be extracted at 20% of the current cost, or a new deposit is discovered. The whole economy is now flexed around this change... which has nothing to do with the economy.

I don't think that there is a fixed asset that could be suitable as a proper peg.

Helium? Finite supply that is only going down until we get off planet.

It seems like the actual value of gold is that it is useless, and thus not used up, and all the easy gold is extracted. We could just use numbers instead.

In fact there is no figurative gold standard for value or money. A pokemon card or let's say a banana duck-taped to a canvas can have a lot of value. All there is, is reputation and trust.

Land?

Not fungible.

I think we need to move away from thinking of money as a store of wealth, but a indication of value. (wealth is a side effect, it will of course always be a store of wealth.)

Pegging currency to gold or silver gives it the illusion of being of a fixed value, that can't be gamed or changed. However history says otherwise. Its continuously mined, and there are industrial uses so Gold and silver's actual value will still fluctuate.

plus whilst tradeable gold is normally stored in vaults, there is still a boat load of "free" gold that can move around and cause monetary problems. Its a side plot of one of the James Bond books.

You also have to remember that even if there is a physical backed standard, banks still need to lend, which means that in practice it'll still be a fiat currency, just not centrally controlled.

"Intrinsic value" has not been considered part of the definition of money since The Wealth of Nations. Gold is good money, not because it has some sort of innate value or use, but because it has all of the properties that constitute what makes good money.

rare Earths have a pretty big downside of having huge swings in the supply when there happens to be a discovery. you want a pretty stable supply for a reserve currency / backing commodity.

oil is fairly difficult / expensive to transport and store, certainly at volume.

more at https://www.lynalden.com/what-is-money/

With the current communication capacity, "transport" isn't horribly relevant. Free exchange of any currency backing substance would be as bad as bitcoin for fraud. So why bother moving it? Oil changes owners all the time without going anywhere.

>oil is fairly difficult / expensive to transport and store, certainly at volume.

More difficult for some technologies than others, which I tried to come to terms with long ago.

After over 40 years, I'm still here to help when it makes sense.

>Oil changes owners all the time without going anywhere.

Even more often when it is on open water already on the way somewhere else.

It just doesn't fulfill its destiny until its voyage is not only underway, but fully completed.

Its deflationary if you can consume your reserve currency.

Reply on news.ycombinator.com