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by valtron
4485 days ago
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I would be inclined to agree; that value is _not_ entirely caused by scarcity. (Though I will point out that if a resource is scarce, people might put more value on it and try to acquire more now because they're afraid they might not be able to get it later.) However, for a currency, scarcity is critical! Let's say it was easy (and cheap) for people to print their own dollars. You then want to buy an apple. How much is an apple these days, about $1? That doesn't make sense, the apple store can easily print $1 worth of money and keep the apple. What about for $100? Same thing: it's still one bill. What about $1000000? Maybe. Depends how much harder it is to acquire that amount of paper and ink than the apple. At this point, congratulations, your currency is basically paper and ink. Buying anything remotely expensive (like groceries) involves hauling around tons of paper and ink. http://w3.newsmax.com/newsletters/uwr/images/transcript-img1... |
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States have tried to issue currencies without backing for thousands of years. Have any of those currencies lasted long? The answer is no. There's nothing about the US dollar which makes me think it will be any different than such schemes hatched in Ancient Mesopotamia or Greece. In fact the worth of three dollars today is about equivalent to one 1980 dollar. The dollar will not retain its value over time, while an ounce of gold from 4000 years ago has a somewhat equivalent value to an ounce of gold today. Inevitably there will be a crisis of confidence, and the dollar, euro, yen etc. will either become worthless, or will be backed by gold, or silver or the like. It's not as if governments today have some magic which makes their dollars and euros valuable in a way that governments 2000 years ago could not.
I can pay taxes with dollars, I can go to USPS and buy stuff, I can go to an Army PX and buy stuff - but this only goes so far. The day will come, maybe decades from now, maybe a century or two from now, when a crisis of confidence happens and the dollar either becomes worthless or backed by gold from Fort Knox.
If the dollar has a real underlying value - WHY does the government still stockpile gold in Fort Knox?
Again I want to stress I'm talking historically and what must happen in a century or two. I am not claiming the dollar's value will collapse in the next year. But if it is not backed by a real commodity once a real crisis of confidence occurs, then it will inevitably lose its value.
Scarcity has nothing to do with it. The dollar until 1971 backed by the commodity gold, is the historical norm. The past 40-something years is the historic abnormality. Which will inevitably transform back to the old way.