[econgeeker]

Gold was criminalized for use in transactions in 1933 by executive order. I think that's a fair point to mark the end of the "gold standard" and the beginning of the fiat era. It is true the US government would redeem dollars for gold for foreign countries up to 1970 or so, under Nixon... but indie the USA, it was a crime to use gold as money. (Though jewelry was allowed) up until the 1970s.

He's using the term "counterfeiting" in the economic sense.

One of the things that makes something money in economics is that it is difficult to duplicate, so you can't just make more of it for yourself. Fiat currency doesn't have that restraint. So, we can say it is not money, or we can say that it is being counterfeited. This is not a word chosen for its alarm value, though it should make you alarmed.

[chopsueyar]

Money is a medium of exchange, unit of account, and store of value.

Those are the only requirements for money.

[perfunctory]

> Those are the only requirements for money.

Obviously they are not. The requirement that it should be difficult to duplicate is essential.

[silverbax88]

Not really. Gold is held as a standard, but I would argue that gold itself is nothing more than another form of fiat. Why is gold worth anything? Because we all agree that it is. How much gold is there? Whatever is reported by the governments who hold it. There's no way to check. There are ways to guess, but it's just a shiny metal that we all agree is worth exchange.

Limiting us to gold also exposes us to massive economic swings, due to the limited ability to control how much or how little we all agree exists. I always hear people talk about how we 'print money' when we need it but NO ONE mentions that we also take money OUT of the economy all of the time.

[billybob]

"Why is gold worth anything? Because we all agree that it is."

True to some extent, but it does have more intrinsic value than paper currency. 1) It's rare enough that small amounts can be used to trade, but common enough that lots of people can have some. 2) It is pretty (subjective, but agreed-upon across many cultures). 3) It is chemically stable - doesn't rust or tarnish - so if you have 5oz today, you'll still have 5oz 10 years from now.

Reasons like these were explored on a Planet Money podcast, and they concluded that gold isn't an arbitrary choice; if you could pick any element from the periodic table to use for money, gold is the logical choice.

http://www.npr.org/blogs/money/2011/02/07/131363098/the-tues...

[mmatants]

You described the requirements for a medium of exchange, and they make sense. But I don't think that that means "value" necessarily. Value is bread when I am hungry. Or gold when I need to make microchip contacts - but that usage is nowhere near justifying the price that gold actually trades at.

This is just a nitpick with the use of term "intrinsic value" - gold's characteristics make it a good form of money, but it's still (abstractly speaking) on a fiat basis.

[billybob]

I don't see how it could really work otherwise. There is no such thing as a good that everyone would value equally. Intrinsic value varies depending on the needs of the traders.

[snth]

Well, maybe that falls out from money being a "store of value".