Comment by usednoise4sale

Comment by usednoise4sale a day ago

I believe that is a widely misunderstood conception of the origin of money. Gold has generally not been used as currency. The sovereign right to dictate the value of a coin struck in a metal is called "seigniorage", and exists for all of those 3000 years. The value of the currency comes from the demand for it by the government to pay taxes, not the value of the metal in the coin. The metal in the coin makes it expensive to counterfeit said coin, with punishment by death doing the rest of the disincentive.

There is a reason the coins have the emperor's face on them. They are what he will accept as payment for the taxes he requests, and in assessing taxes according to his power, he dictates their value by fiat.

mr_toad 8 hours ago

> The value of the currency comes from the demand for it by the government to pay taxes, not the value of the metal in the coin.

History has plenty of examples of governments debasing their coinage and resulting drops in those coins values.

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WalterBright a day ago

> The value of the currency comes from the demand for it by the government to pay taxes, not the value of the metal in the coin.

That's the fantasy, not the reality.

> The metal in the coin makes it expensive to counterfeit said coin, with punishment by death doing the rest of the disincentive.

What actually happens is the government declares a dollar value for the coin, and then alloys the gold with cheaper metals. This results in inflation. The usual content of counterfeit gold coins is less than the gold in the government issue, which is where the death threat comes in.

Only one counterfeiter ever put more gold in the coin than the government, that was Baraha. The government got mad at him because a Baraha sovereign was worth more than the government issue.

> he dictates their value by fiat

Governments always try that, and it never works. Governments are always alloying the precious metal with cheaper metal, but nobody is fooled, and the result is inflation.

Why do you think the government no longer issues gold coins? why there's no silver in a dime anymore?

Inflation.

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pqtyw 13 hours ago

>Why do you think the government no longer issues gold coins?
Because it became self evident in the 1800s and first half of the 20th century that a commodity backed currently is not a good idea in any non static economy with a reasonably stable government?
Deflation and constant boom and bust cycles (something like the 2008 crisis would have been pretty mild back in the gold standard days) are somewhat of a drag on economic productivity.

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- MisterMower 7 hours ago
  
  Just because the gold standard had flaws doesn’t mean the fiat system that replaced it is flawless or even better. There are tradeoffs involved in both systems.
  In a fiat currency system there is no meaningful constraint on the supply of money. We’re experiencing the effects of that feature of the fiat system currently. Tying the supply of money to a rare commodity like gold may create other problems, but it completely solves the issue of currency devaluation.
  For the record, the world was on the gold standard when the agricultural and industrial revolutions occurred. It’s not at all obvious to me that the gold standard prevents productivity growth.
  
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