[hans1729]

>Very few economic transactions are denominated in gold, either as a medium of exchange or a unit of account.

That doesn't mean that gold isn't a viable medium of exchange - it obviously is, just go to a market of your choice and trade it for goods. In fact, it's the single most viable medium of exchange, globally, since currencies are tied to economies, and economies can crash. Gold can not, thus is it valuable.

[apocalypstyx]

>economies can crash. Gold can not, thus is it valuable.

The thing about money is that it is a technology. But unlike other technologies, such as an electric toothbrush, for instance, it has an additional quirk: without belief, it doesn't work. Regardless of whether or not I believe in electricity, an electric tooth brush turns on and off; if the participants in an economy don't have faith in the economy, the economy falters. Money's value lies in this belief, whether it is the belief that I can buy groceries or pay taxes. It is a faith that is a function of utility: there is the interdependence of the gods' delivering and my belief that they will; should the gods not deliver sufficiently, my faith wavers; likewise, if enough of the faith of the masses wavers, the gods fail to deliver.

Gold is like an old god: its faith has a lot of coinage. However, its rule is not necessarily omnipresent.

Scenario: we are in a post-nuclear apocalypse. I have a small trading post and a can of beans; you have a solid gold coin. Challenge: convince me why I should take the coin.

[hans1729]

>Gold is like an old god: its faith has a lot of coinage. However, its rule is not necessarily omnipresent.

Very nice point, you're not wrong. That being said:

>we are in a post-nuclear apocalypse. I have a small trading post and a can of beans; you have a solid gold coin. Challenge: convince me why I should take the coin.

Because it has properties that qualify it as a method of exchange (portability, provable chemical composition [...]) -- the same reasons it worked the first time. Mr Bean-Haggler, what else do you suggest we use for exchange? Mud? :-)

[XorNot]

Proving you're not getting duped with plated lead is actually pretty hard to do without high technology, hence the reason gold coinage came into existence and then gold depositories and banking and all the rest.

Gold is transitorily convenient provided you exercise military force over a domain - that is you can force gold to be accepted for debts within your dominion. Nothing about it makes it intrinsically valuable otherwise - and more importantly you having gold doesn't grant you wealth because you didn't economically contribute to the system to start with.

Turning up with all the gold you want would get it rejected or siezed because it wasn't an approved coinage.

[apocalypstyx]

As an intermediary, currency requires a minimum amount of social relations. Its value, if it can be said to have one, lies in its use as an indirect measure of the degree of faith in a particular set of social constructs.

The reason I use the post-apocalyptic scenario is exactly because of this rupture of social relations. It is not the ghost of the previous civilization trying to reconstitute itself. It is a place in a wilderness onto which people might stumble. (Admittedly, this might not be communicated well and too informed by my early secondary consumption of old western movies.)

Without this broader social context, the concept of trade becomes purely localized. My needs are not serviced by an explicit diffuse network which is conceptualized as an aspect not just of society but constitutive of reality. Operating on a faith, we take the conceptualization as reality and can accept, in our lives now, intermediary exchange: I firmly believe that by accepting an electronic transfer to my bank, I will be able to buy sweet and salty food that is engineered to appeal to my dietary obsessions as bequeathed by a combination of evolution and social conditioning.

In the midst of such a thought experiment, however, I am not guaranteed to encounter another haggard individual in this hypothesized godforsaken world for a very long time. Neither am I guaranteed that any individual I meet will have such social relations as to value such an intermediary, either.

Intermediary exchange is only viable once the pool of social relations grows beyond a certain bounds.

The function of my acceptance of any system is the fulfillment of my needs, to some degree. In such a scenario, the only way those needs can be serviced is an equivalence of exchange. In this case, food is required for immediate survival, the tools of procuring such, and shelter, etc. Intermediaries, in such a scenario, provide no guarantee to provide such. So such must be acquired directly. I can eat beans. To take the gold assumes, incorrectly, I can obtain another can or equivalent. That incorrect assumption is a holdover from the fundamental and all-pervasive faith we are at present steeped in and that must be maintained for our reality to function.

[mitchdoogle]

It's post apocalypse - you trade whatever you find. The most important commodities will be food, water, medicine. Gold would be practically worthless - it's not going to help anyone survive.

[samatman]

More likely, in North America at least, we would have an accepted exchange rate for 9mm and 5.56 and I'd need more than a can of beans for one cartridge.

I unironically suggest having a box or two as a hedge, no associated weapon needed.

[gumby]

> economies can crash. Gold can not…

A glance at the gold prices and economies of the 19th century show that in fact the gold price certainly can crash due to gold strikes.

In addition, the stock of the planet’s gold is negligible compared to the global economy (the hard to quantify set of transactions that people do with each other) so by definition can only operate at the margins. If the world crashes so far that gold is a meaningful proportion, will there be much to transact at all?

[hans1729]

The exchange rate for gold (i.e. the interface of an economy with the material) can crash, not gold itself, thus the inherent value. That was my point, sorry if that wasn't coming across.

>If the world crashes so far that gold is a meaningful proportion, will there be much to transact at all?

This is where I start speculating, but couldn't we just create an arbitrary new currency and tie it to gold?

[XorNot]

> The exchange rate for gold (i.e. the interface of an economy with the material) can crash, not gold itself, thus the inherent value.

What do you think this means? Because gold is only worth what you can trade it for - the exchange rate.

It has no "inherent value" - you don't eat gold.

[gumby]

> This is where I start speculating, but couldn't we just create an arbitrary new currency and tie it to gold?

How is that different from using the gold? i.e. has the same limitations.

There are rational reasons for the gold standard having been dropped.