I need an economist to explain this to me


Or maybe a psychologist. OK, I sorta understand the wacky mindset of those people who obsess over gold — they want the heavy shiny stuff, because it seems more solid and real than the abstraction of numbers in a bank account, and if you are a bit paranoid, you might want that apparent reliabilty of an expensive metal under your mattress. It’s the kind of thing that gets advertised on talk radio, with an audience of terrified old people (and your goal is to terrify them even more), so Rush Limbaugh and Glenn Beck rely on that gold advertising money.

But this mystifies me. Why would these same people then turn around and trust…a credit card? The latest iterations of stupid conservative talk radio, like Dave Rubin, are now promoting something called the Glint card, which is a credit card which claims to be based on gold.

I don’t understand the psychology here. If you’re one of those people who doesn’t trust bank accounts, where your money can be whisked away with a flicker of bits in a computer, why would you then turn your precioussss into another abstraction?

Comments

  1. says

    Gold is only valuable in the first place for the same reason paper money is valuable — because people think it’s valuable, and they’re willing to accept it in exchange for other things of value. It’s useful for coating electrical contacts, since it doesn’t tarnish, but otherwise it’s just decorative. It’s actually much less useful than iron. The price goes up and down depending on mob psychology. The idea that it represents an eternal reservoir of intrinsic value is a hallucination.

  2. chrislawson says

    Yep. Gold has some very useful industrial properties, but its monetary value is almost 100% due to perceptual psychology. Much like diamonds.

  3. kome says

    Rubin has a cult of followers. The segment of his audience who believes what he spews don’t care about truth or coherence, they just let Dave do all their thinking for him. Because, for all his shortcomings, Dave Rubin has absolutely figured out how to grift with the best of them. So, as long as Dave says it, Dave endorses it, or Dave (claims to) believe it, the segment of his audience that believes him will trust him 100% of the time. Even when he contradicts himself in the same sentence, his loyal cultists will simply set aside the cognitive dissonance of believing two mutually exclusive ideas because all their other beliefs are basically only around to serve the higher-order belief they have that Dave Rubin isn’t wrong.

    It’s not all that remarkable from a psychological perspective. This has been pretty well documented with cults and cult-adjacent phenomena (extremist religious sects; the really hardcore sports fans) for a long time.

  4. stroppy says

    I think this chimes pretty well with conspiracy theories, one thinks they have some special inside scoop on the ways things “really” work, and gold gives access to power that can actually be spent. And of course, facts to the contrary are turned in to proof of the theory…

    Now if only spiders spun webs of gold… all hail Rumplestiltspider!

  5. PaulBC says

    It bugs the hell out of me that people continue to harm the environment by mining gold. Some endangered chinchillas will be moved from their natural habitat that happens to sit on a gold deposit. Maybe they have been already. And all because some idiots are compelled by the “rational” market to dig up the gold underneath. But how much bullion exists already? This is effectively a warehoused resource. Just use that for jewelry or industrial purposes. If you run out, the gold will still be there in the ground. It’s about as non-perishable as it gets.

    If gold is so important, you can still buy and sell shares of gold claims. It’s true, you won’t know for sure how much is there and the cost of extraction until you do it, but there is less uncertainty than in many ventures, and that can be hedged. Leave the poor chinchillas alone, you assholes!

  6. microraptor says

    It’s the same kind of thinking that leads to people voting for tax measures that benefit billionaires and hurt the middle class.

  7. davidc1 says

    ” Rush Limbaugh and Glenn Beck rely on that gold advertising money.”

    Well, in the case of rush ,not for much longer .

  8. weatherwax says

    It gets worse. Now they’re pushing the next level in currency. Since the government switched from gold to paper, which has no value according to them, you should invest in the most secure currency of all.

    BITCOIN!

  9. jacksprocket says

    I remember being told at school about primitive “Natives” in countries far and hot, who believed that cowrie shells had intrinsic value! Only ignorant non- Europeans could ever be so stupid. Whereas in one mediaeval siege, the price of a loaf of bread rose to a bezant- about 9g of gold, maybe $500 at today’s prices. Note that it was the price of bread that went up, not the price of gold that went down. Me, I stick to the beer standard. The value of the UK pound has fallen by about 97% against a pint of British best bitter over my drinking career.

  10. PaulBC says

    Gold underperforms the stock market and is just as subject to bubbles and volatility (I made that assertion off the top of my head, but this backs it up: https://www.macrotrends.net/2608/gold-price-vs-stock-market-100-year-chart). I wonder how many of the Trump supporters my age are gold bugs who have been following this idiotic advice since they had decent jobs, are just bitter that they aren’t rich, and blame it on “coastal liberals” or anyone other than the snake-oil salesmen they’ve been listening to.

    Francisco d’Anconia (quoted as a hard currency expert by none other than Paul Ryan) is a fictional character from a poorly written work of propaganda by Ayn Rand (though I found Atlas Shrugged amusing enough as a potboiler). If your understanding of macroeconomics is limited to “Fiat currencies are bad, m’kay.” then you’re actually going to wind up poorer than people who follow really boring investment advice and invest in indexed funds, which have much better long term performance and beat inflation, which is the whole point. Inflation is effectively just a change in units, though not evenly distributed. It is not a secret plot to steal your money.

  11. tacitus says

    They like gold because it was used as currency for over 2,500 years before the nascent New World Order conspired to abandon it so jealous governments could exert more control over currency and thus, people’s lives (conveniently ignoring the fact that the Gold Standard was invented by governments in the first place).

    Evidence of gold’s value? Pretty much the same as for the flat earth — you can see with your own eyes just how valuable it is. You don’t need an advanced degree to explain it, like you do with fiat currencies, and all them fancy words are just so the government can pull the wool over your eyes anyways.

    But how do we explain the popularity of cryptocurrency among us anti-NWO freedom loving types, I hear you ask… Easy — we’re using it to beat the New World Order at their own game. Anything that circumvents the system and undermines the confidence in the traditional fiat currencies is good is our books, not to mention we can use it to get rich quick without being a slave to the government. and gives use the freedom to avoid paying unconstitutional government taxes and big finance’s usurious currency exchange fees.

    The fact that cryptocurrency operators have been working tirelessly to lobby governments into embracing crypto as part of their fiat currency schemes is just necessary and temporary smoke screen being used to ensure all the mechanisms are in place to destroy the New World Order’s plans to kill 90% of the world’s population and enslave the rest. They won’t know what hit them — as long as they don’t read this message, or watch Infowars…

  12. raven says

    I need an economist to explain this to me

    No you don’t.
    You just need common sense and a basic understanding of history.

    A fool and their money are soon parted.

  13. raven says

    Ironically, the vast majority of wealth today is stored in computer databases.
    It’s all just bits and bytes

    If the electricity ever went off, trillions of dollars worth of wealth would just go poof.

  14. R. L. Foster says

    If our civilization crumbles, as these ‘terrified old people’ seem to fear, a can of beans will be worth more than an ounce of gold. Look at the current pandemic. Early on many people were convinced that toilet paper was manufactured in China (it isn’t, we’re the continent with the immense pine forests) and we all saw what happened. You couldn’t buy a roll of TP for any amount of money. If you’d gone into Walmart with a jingly bag of gold coins it would be the same thing. Can’t even wipe with gold.

  15. F.O. says

    Our entire civilization is based on digging up metal from a hole in the ground, and putting it back in a well-protected hole in the ground.

    Solid bases for a civilization, I tell ya.

  16. daulnay says

    Money (like race) is a shared social construct. It’s only as real and durable as the shared idea in peoples’ heads. Using a rare non-bulky commodity like gold as currency works because it’s convenient; people have used silver, large rings of stone, and cacao beans as money (yes, it did grow on trees once or twice).

    Gold has an advantage over paper currency in that it’s historically been a widely accepted money. National paper currencies generally won’t be accepted unless they’re from pretty stable regimes — or at a healthy discount to counter the risk. Would you accept payment in Somali paper currency? I sure wouldn’t unless I knew I could rapidly turn it into something else.

    Paper currency of a major Western nation has gone bad within the last hundred years. So holding wealth in non-paper isn’t entirely nuts. Just mostly. If you’re thinking that global warming will lead to the collapse of the U.S. and other governments within your lifetime, then you probably want to hold some money/valuable tradeable asset besides gold. I’d recommend peppercorns, another old form of money. More useful than gold, nicely compact, easily traded (and scarce!) when the apocalypse hits.

    But wanting to put the U.S. back on a gold standard? Plain, pure nonsense; good economic growth without major periodic collapses depends on being able to control the amount of money in circulation.

  17. seachange says

    @18 FO

    Sounds like discrimination against dwarves https://www.youtube.com/watch?v=ytWz0qVvBZ0

    @11 jacksprocket
    Instead of the beer-standard I use the hamburger standard. I try not to leave the house without at least one-hamburger worth of USD on me. Me I learned from being on a commune that beer and jack can be created pretty easily. The parts of a hamburger are pretty refined and take elaborate effort or some industrial capacity, so being able to get a burger just because you want it is harder.

  18. says

    Not long ago I came across a service offering to sell me gold.
    And for my convenience they also offered to warehouse my gold for me.
    In fact, they already had gold in a vault that I could buy from them, and pay them to hold in their vault.
    I did not take advantage of this remarkable opportunity.

  19. PaulBC says

    Ian King@21 This is sort of my point about the chinchillas. https://undark.org/2020/10/12/chinchillas-and-the-gold-mine/ Suppose I have an amazingly secure vault guarded by adorable chubby-cheeked rodents. Nobody’s getting the gold out of that vault without an awful lot of trouble. I’ll sell you the gold there and the security of knowing it’s impossible to steal without creating an enormous racket. Now I’m happy. You’re happy. The chinchillas are happy. This is a huge economic win over some hare-brained scheme to relocate the chinchillas and dig up the gold.

  20. wzrd1 says

    @PaulBC, molybdenum (if memory serves, sulfide) is in my lubrication Bible. ;)
    Forms a nice coating that remains in place even after the grease carrying it is gone. I keep a can of it in my workshop. Well, that and the indispensable graphite lubricant.

  21. unclefrogy says

    to me and my semi-educated understanding, economy’s need a means of exchanging value something that can be agreed on to make the exchange work.
    does not really matter what it is just that there be an agreement of value. that gold has been used for so long is the result of the nature of its atomic structure it is just less reactive than most readily available materials “imperishable gold” is the expression your house burns down and your gold remains melted maybe but still lustrous and weighs the same, you ship sinks and rots for 5,000 years and the gold changes not. Before we had modern electronics there was very little wide spread practical use for gold save “art”.
    What is going on in the gold market and around the gold market is a measure of the insecurity of people and economies and our almost complete reliance on the market and its ability to function for our very survival. If it wasn’t gold it would be something else. where there is fear and insecurity there will always be someone touting “the answer” (often for a small profit) to anyone who will listen
    uncle frogy

  22. consciousness razor says

    If you think this sounds “safer,” well…. They filed for bankruptcy, only a couple months after releasing their debit card for the US and a year after launching in Europe:
    Fool’s gold: Glint Pay goes into administration (Sept, 24, 2019)

    Glint is authorised and regulated by the UK’s FCA with clients’ money stored in segregated bank accounts.

    In a statement on its Website, the FCA cautions that customer funds held by Glint are not protected by the Financial Services Compensation Scheme.

    Translation: no deposit insurance, as in the US with the FDIC or the NCUA. Because I guess they don’t do that sort of thing for gimmick apps like this.

    It sounds like in this case deposits were eventually accessible, but even freezing accounts until all the dust settles is definitely not great. If a depositor couldn’t pay their bills via their debit account which was set up to do precisely that, then shouldn’t Glint be the one that owes all the fees/interest for late payments and such? Or is it in the fine print somewhere that they don’t ever owe you shit?

    Says Baker: “Following a dispute with the secured creditor, the board were unable to secure sufficient funding in time to repay the outstanding loan.

    Uhhh…. But why did this happen?

  23. PaulBC says

    I got into a conversation with a coworker a few years back, and I think he had a concealed political agenda I disagree with, but he raised an interesting point that has stuck in my mind since then.

    I was making what I thought was a commonly accepted point that an exponential growth rate (compound interest, growth in stock value, alpaca reproduction, etc.) is unsustainable because ultimately the fastest growth of accessible value would be limited by an expanding sphere in the real universe (imagine collecting gold coins with replicating bots at the speed of light) so you will never get beyond cubic growth limits in a 3D universe.

    The standard rebuttal is that exponential growth is a time-limited approximation, and that is how I think of it, but his response was: Why should I think value has to be measured in terms of collecting a commodity? Couldn’t some item, say a piece of art be worth twice as much as some other item according to the market, and so forth, chaining up to arbitrary heights of value? Wouldn’t that be as real as any other economic value?

    I started thinking of it in terms of what would be the intrinsic value of information. Suppose there is some intractable algorithmic problem (for this it helps if P!=NP but I can probably make it work without this). Then the solution to some problem that clearly works is very valuable because it would be very unlikely to find it except with an enormous amount of computation (our conversation was not about cryptocurrency and I’m not sure this even came up; I assume that unlike cryptocurrency, this information would have some intrinsic utility even if it was purely aesthetic).

    My mind wandered to a galactic economy in which informational objects could be traded with each other between advanced civilizations and could conceivably have relative value that outstripped any commodity. Does that make any sense?

    I’m still really not sure, because I think that real money ultimately comes down to: I need this much for food, housing, and other necessities. The part above that is “luxury” and basically just a silly game.

    So I think that there is conceivably an economy with value that is not limited by any quantity of a material commodity (though that’s unclear, because weird things happen when you try to convert your hyperwealth into a certain number of red dwarf stars or whatever you suddenly fancy). I think in any case it is very gamelike and the levels of economic value corresponding to utility in any reasonable sense are highly constrained.

  24. John Morales says

    PaulBC — “a galactic economy” makes no sense in multiple ways.
    Even if it were worth doing (information is the only thing that would be worth it), it would be done by post-scarcity societies.

    (Also, I’m bemused at how many people jump to the Galactic scale, when we haven’t even begun exploiting the resources of our local solar system)

  25. PaulBC says

    John Morales@28 I get that. It is merely a thought experiment. Why galactic? I don’t know. Just for fun. I am imagining a kind of Silk Road scenario in which your trading partners are not even known to you.

    The question is whether value ultimately needs to be limited by physical commodities. I think it probably does, if only because someone could hypothetically attempt to purchase commodities nominally valued at some fraction of the informatic objects that can somehow be priced at a exponential scale.

    It’s unclear to me that the notion of economy goes away in a post-scarcity world. In fact, there’s always scarcity if there are limitless appetites. Hypothetically there is something I want to do that conflicts with what another conscious agent wants to do. Exactly how that gets resolved isn’t necessarily an economy but maybe some other system entirely. It is very unlikely that I would be able to say “I have a one of a kind original Picasso” (verified somehow not to be a precise duplicate) that has been bid up so high that it is worth a cube of gold 1 lightyear across. Clearly other market forces come into play when I try to acquire this gold, and probably some benevolent coalition of sane extraterrestrials will work to stop me from doing anything as pointless and disruptive.

    I think human appetites are actually far more limited, and I agree that my scenario seems absurd. I am just trying to wrap my head around market value that is literally unlimited by physical constraints. I don’t think it is possible even as a workable social fiction, but maybe I’m wrong.

  26. PaulBC says

    worth a cube of gold 1 lightyear across.

    And yes, I realize this is a physical impossibility since (among other things I suppose) it would collapse under its own gravity when it was much smaller than this.

  27. Rich Woods says

    @PaulBC #6:

    But how much bullion exists already?

    All the gold ever mined would only fill up about 3.5 Olympic swimming pools. Probably not the place for a Scrooge McDuck dive.

  28. John Morales says

    PaulBC,

    It is very unlikely that I would be able to say “I have a one of a kind original Picasso” (verified somehow not to be a precise duplicate)

    That’s your primate instinct speaking. You value some singular thing so that if you have it nobody else can have it. Very psychological.

    Anyway, at that point, you’re reliant on the purported provenance, which is even easier to fake.
    And more to the point, if it really were a precise duplicate, then it’d be just as good as the original for whatever purpose. Would apply every bit as much to one of Picasso’s turds.

    (Now that’s value!)

    Clearly other market forces come into play when I try to acquire this gold [blah]

    A gold standard for measuring monetary value, post-scarcity?

    Heh.

  29. consciousness razor says

    I think human appetites are actually far more limited, and I agree that my scenario seems absurd. I am just trying to wrap my head around market value that is literally unlimited by physical constraints. I don’t think it is possible even as a workable social fiction, but maybe I’m wrong.

    But the confusion is in thinking that relates somehow to a supply of gold or whatever it may be. That qualifies as a physical constraint, but it’s not the constraint that we actually need to consider here.

    There’s a certain amount of useful resources (goods and services) that a finite number of people can use at any given time (or ever, for that matter), and there’s a certain amount that they can produce. All of that stuff, what goes on in the entire real economy, is what you’re really after here, not an amount of one thing (or a few or even a thousand).

    In fact, we don’t only use gold (for example), because you can’t eat it, you can’t wash your undies with it, it’s not a video streaming service, it doesn’t teach kids how they can solve quadratic equations, it doesn’t transport goods to the places people want those goods to be, etc. There are obviously a vast number of other relevant things one could say about gold which hardly need to be said here. And it would just be silly to act like somehow none of that matters.

  30. tacitus says

    Even if it were worth doing (information is the only thing that would be worth it), it would be done by post-scarcity societies.

    I wrote a short story where first contact is made by an alien race looking for something of value on Earth to trade for. The talks almost fail as they find we have nothing unique to offer, until they detect a memory stick in one of the delegation’s pockets containing a copy of the latest half-baked space opera action movie on it. Turns out Earth did have something unique after all — the products of our imagination.

    For a different take on the post-scarcity society depicted in Star Trek, I’d highly recommend Iain M. Banks’ Culture novels.

  31. PaulBC says

    I’d highly recommend Iain M. Banks’ Culture novels.

    Seconded.

    I doubt very much that our fiction would be of value, since it requires so many cultural assumptions. I can imagine all kinds of stuff just collected as curiosities rather than items of any utility, kind of like “native” art collected by colonial powers. But that assumes a very human kind of irrationality. Who knows, really? Probably nothing at all.

  32. consciousness razor says

    The first Rule of Acquisition: “Once you have their money, you never give it back.”

    If only they followed the rule, it wouldn’t be scarce for them. Ferengism can’t fail; it can only be failed.

  33. stroppy says

    Apocryphal story about Picasso.
    He was once asked, “What is art?”
    He picked up a nail and replied, “This is art.”
    “No, it’s not.”
    “It is if I put my name on it,” said he.

    Regardless, art has always had value of one sort or another. That’s why people have always made it, even when it doesn’t bring in cash.

  34. says

    @#27, PaulBC:

    (Drat, I was going to make one combined post, then forgot I was going to reply to this one as well. Sorry!)

    You can theoretically ask for whatever price you want, but the value of a thing in a market-based economy (which is what you’re implicitly talking about) is what you can get for it. Any price which is above the maximum possible price is automatically equal to any other — and if you have to sell the item, then its actual value is necessarily equal or less than what is available. Even if you were to sell your super-valued item for “everything, plus all the value that everyone everywhere will ever earn” you’re still, at some point, dealing with a finite number.

  35. M'thew says

    @PaulBC, #6:
    Discovery Channel bugs the hell out of me with their shows about golddiggers and opal hunters. Tearing up the environment, dumping gallons and gallons of hydraulic fluid, oil and other substances into the environment, just for a couple of ounces of shiny metal or glittering minerals. When I zap past something like that, I just wish I had a lightning bolt at hand to smite these bastards, including the tv crew and the people who dreamt up the whole fucking show. What these vandals do will take ages and ages to recover, and not a single word is ever mentioned about the devastation they leave behind.

  36. davidc1 says

    @42 You ain’t seem nothing yet, Lithium used in electric car batteries is a environmental disaster waiting to happen ,not so green as people would nave you believe .
    I think Hydrogen is the fuel of the future .

  37. Kagehi says

    @12

    Inflation is effectively just a change in units, though not evenly distributed. It is not a secret plot to steal your money.

    I don’t know.. I would think that having 1% of the entire population hoard more than 90% of the “theoretical” money might have “something” to do with inflation, so.. I think the only word in there that isn’t accurate would be “secret”. But, eh, maybe I am totally wrong. lol

  38. hemidactylus says

    Intersubjectively gold means something more to people, a certain subset of people (Randroids), than mere paper or digital currency or exchange value. It shines and has weight and though can be melted and reshaped, not burned into ash or disappear into the ether. It is a status signifier when combined with diamond as jewelry. You can’t do that with fiat paper. Gold has relative rarity. Paper is ubiquitous as is credit, but crypto hashes are limited.

    BUT, paper and plastic representations of currency are far more convenient. Instead of a wheelbarrow of gold bars under armed guard you can pull out a credit card and make a purchase.

    Paraphrasing Searle at some point some genius figured out “money” as paper representative backed by a promise of gold could be entirely decoupled from gold and have intersubjective exchange value standing of its own as long as people continue to believe in it.

    Credit card companies try to confer prestige upon their branding and bitcoin signified some tech nerd avant garde radicalism for a while so maybe had a chic allure based on that signification. There’s the metaphor of prospecting or mining unique hashes I suppose that boring paper or plastic cards lack.

    But with paper there is a status signification of a “pimp roll” or “making it rain”, the latter quite salacious indeed. Hiphop used to also have the status sign of the thick gold “dookie rope” (thank you Run DMC for bringing crass 80s materialism into rap culture).

    I think one can easily decouple use, exchange, and signification. Intrinsicity is in the eye of the beholder.

  39. hemidactylus says

    Could be in libertarian subculture fiat currency has the taint of hyperinflation mythos where gold is perceived as having discipline or stability. Conservatives despise uncertainty. My recollection is that Friedman’s monetarism was intended to bring strict discipline into monetary policy by limiting supply.

    My memory is that Greenspan used to propagandize the gold standard early in his career and Nixon the me too east coast Rockefeller Establishment guy severed the ties to an international gold standard which perhaps enabled Forex and currency speculation (off top of my head quasihistory).

  40. hemidactylus says

    Oh and East Coast Establishment is code for Bankers (which is super secret code for err…ummm…”da Jews”). Get a gold bugger started on their conspiracy crazy train and it won’t be long before the dots are connected to Rothschilds, Build a Bears, Soros, lizard genealogy of elites, then Protocols antisemitism gets into full swing. Seen it happen multiple times. Toxic absurdity. Add double points for unhinged Smedley Butler name drop.

  41. Kagehi says

    Hmm. Bitcoin, and other similar things have three big problems, as I see it. 1) Existing currencies generally have a, theoretical, government guarantee, “If someone robs the bank, you get your money back. Cryptocurrency lacks a means, other than your own crypto “wallet” to track which “keys” connect to what currency, so there is no way to recover the contents, if someone “robs the bank”. 2) People can rob the bank, piece by piece, in a way that is, ironically, probably not traceable (even if impractical to do). 3) There just are not, with any existing system, enough “keys” – kind of like freaking IPv4 internet addresses, which have become NAT translated, because IPv6 sucked so badly.

    All these make them “worthless” for inclusion as a “national” money system.

  42. PaulBC says

    Kagehi@44

    I don’t know.. I would think that having 1% of the entire population hoard more than 90% of the “theoretical” money might have “something” to do with inflation, so.. I think the only word in there that isn’t accurate would be “secret”. But, eh, maybe I am totally wrong. lol

    Inflation is definitely a form of wealth distribution, but it does not necessarily favor the rich, and usually the rentier class would rather keep a control on inflation so their assets are predictable. That has certainly been a driving force behind federal reserve policy in the US since the 1980s.

    If the price of a loaf of bread doubles, but wages for a certain job triple, then those with that job can buy more bread (all other things equal). In fact, a lot of markets are broken because prices are too sticky. The best thing I can see happening to the Bay Area housing market is for house prices to stay stable while inflation runs rampant for wages and consumer goods. Nobody wants to sell the house they paid $1.5 million for for less than $1 million, so they may stay around when they don’t want to looking for a buyer (note: it is currently absurdly easy to find a buyer at absurdly high prices, and people have other reasons for staying or moving here). But if they don’t notice their magic real estate “investment” has only tracked inflation or worse, they won’t feel the same level of remorse, and the market will function a lot more effectively.

    Gold buggery is a mental sickness based on the idea that if I have accumulated some wealth, I should be able to do nothing, not even the most rudimentary financial analysis, and still hold onto my “property” as a right. It is often sold as a hedge against inflation, but actually the only hedge that will ever work is a diversified portfolio, and even then there are no guarantees.

    The 99% can experience harm from inflation, particularly hyperinflation, but as long as wages can keep up with inflation, it’s actually those with assets who have the most to lose. They are the ones most invested in stopping the clock.

  43. PaulBC says

    Another point, and this was alluded to above, is that the notion of property is less about having access to goods for utility than the ability to prevent access by others. If they’re consumable, it may be impossible to share the same good. On the other hand, if it’s an artwork locked in a vault or some form of IP with exclusive copying rights, the market question really is one of preserving “value” but limited access, which makes it clear that all of this is a social construct, not something real.

    Consider a hypothetical galactic economy where I’m the “richest man in the galaxy” by virtue of having acquired priceless art at auction. (And other absurd assumptions needed to support this scenario.) If at some point I say “I will now use my great wealth to begin collapsing unoccupied star systems into black holes… because it pleases me to do so. I intend to purchase them legally.” then the sane members of the galaxy will eventually collude to stop me from doing this, at a far lower cost that it would be to respect my alleged wealth, even if the market in its infinite wisdom has conferred it to me and there really are enough buyers for my art to begin building a fleet of star-collapsers.

    And I suppose you don’t need a galactic economy. If Jeff Bezos and Mark Zuckerberg were to begin raising a private army with an air force and nuclear weapons (somehow out of the jurisdiction of any sovereign nation) then no matter how much wealth the market says they have, it would be cheaper (and a very good idea) just to do what it took to stop them.

  44. says

    The shiny, shiny gold (or cryptocurrency) is the attractive woman — historically, it’s almost always a woman — distracting marks while pickpockets obtain their wallets.

    The real “money” isn’t in the currency-substitute. It’s in all of the distribution/storage chain fees and commissions. Consider, for a moment, the typical “storage fees” and “transaction fees” and “certificates of authenticity/purity” required for either bullion or coins (Krugerrands, anyone?). Cynical, inquiring minds would compare that to the then-current inflation rate — you know, that Jewish conspiracy to destroy the value of hard-working men’s (again, historically) carefully hoarded “money” — and calculate that at inflation/stagflation’s height in the late 1970s, the value of one’s gold reserve would drop by 50% almost a year earlier than the value of one’s long-term government bond portfolio (even before considering the interest payments on those bonds).

    The first question anyone should ask about any transaction is “who benefits?” The second one is “how?” And sometimes these are relatively innocuous; on the other hand, paying an identifiable rent (Ricardian, non-Ricardian, or structural) is a withdrawal of value from the economy, very much like Maxwell’s nonexistant demon.

  45. says

    @43 davidc1, that old story again. Lithium mining albeit not clean is still massively cleaner than fossil fuel extraction. Lithium, once mined can be recycled endlessly as it is not burned up the first time you use it.
    Hydrogen is not a fuel in the traditional sense but a hideously dangerous substance that can be used as a very inefficient energy storage medium. Hydrogen has a place as a chemical feedstock and in iron ore refining but for replacing lithium it is a non starter.

  46. Kagehi says

    @49 Yeah, didn’t say that inflation was “impossible” without extreme wealth, but sort of tongue in cheek pointing out that in the US its probably almost entirely, at least since the 70s, been driven by all the money going into a few pockets, and none of it ending up back in the hands of the people who, while they might now be able to “afford” something like a computer, are still paying the same amount for a car as in the 40s (in terms of amount of their income), despite the fact that those should be less expensive too, and everything else has gone up in price, while wages.. have only risen by state/fed mandate, not based on need, or cost of living, or anything else sensible.

    So, at least in the US, probably most of the inflation is hoarding.

  47. PaulBC says

    Paul Krugman’s favorite example of a babysitting coop illustrates the benefits of inflationary monetary policy. Sometimes the way to eliminate hoarding is just for people to feel richer by having “more” money even if there is no change in any real assets.

    In practice, the Fed has probably hurt working people the most through decades of anti-inflationary policy that sees full employment as a problem to address because it results in upward pressure on wages. Suppose inflation merely scales wages and prices in sync (I know it’s more complicated). Then a young person entering the job market without any assets is no worse off due to inflation. The problem is for those trying to hold onto their wealth and collect risk-free interest. Unfortunately, policy prioritizes them over labor, not because it should but because they can use their wealth to influence policy.

    While hyperinflation (as in the Weimar Republic) is disastrous, we can sustain a lot more inflation than the Fed usually tolerates, and normal people will usually benefit provided wages increase at the same rate. Note that this applies especially to those in debt if they agreed to a longterm fixed rate that holds during an inflationary period.

  48. hackerguitar says

    @PaulBC #23: molybdenum disulfide, some racially, “Molykote” and a useful compound for any shop.

    Re money: it’s a strange subject. People are tremendously volatile about the subject, bc Americans on the whole are often strapped, even those who supposedly are well off.

    I think UBI and social services would go a long ways towards reducing anxiety about money, and hence foster a useful dialogue aimed at reducing magical thinking. But there are a lot of upper-income juggernauts inveighing against that bc the very rich benefit from financial illiteracy….

  49. hackerguitar says

    Aaargh, autocorrect….it’s supposed to say “molybdenum disulfide,” usually……dammit. Sorry.

  50. davidc1 says

    @52 ,Didn’t know it was an old story ,there was an article in the Guardian ,suggest you read it .Mining in Portugal is going to cause massive damage to the landscape .
    As for Hydrogen ,the only by product is H2O

  51. says

    @57, The other byproduct of hydrogen use is energy, which can cause extremely rapid increases in temperature, ie an explosion. The stuff leaks out of the tiniest crevices, can’t have odorant added if it is to go through an electrolyser, takes approximately 10% of the energy to ignite compared to typical fossil fuels, can even self ignite if the leak causes a shock wave in a confined space. Handling tanks of high pressure hydrogen is not for the ignorant public.

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