[agere_contra]

Precious metals (Gold and Silver) are money. They are the only entities that have all of the attributes of money (fungibility, portability, store of value and so forth)

Fiat currency has most of the attributes of money, but it does not act as a store of value. After a few years a dollar bill has only a fraction of its original buying power. However an oz of Gold from (e.g.) the time of the Incas retains its buying power.

Something that has the attributes of money is valuable because it has those attributes. Would-be barterers can use money to overcome the otherwise insuperable problem of discovering a Coincidence_of_wants .

Trade requires money. Let's examine this vital function of money with respect to the coincidence of wants:

Chicken farm example:

You run a chicken farm, and you need to buy a great many things to keep your farm and family going.

In a given month you need - for instance - to buy chicken feed, to hire someone to repair your generator, to buy a nailgun to allow you to mend chicken barn #9, to hire a midwife to help give birth to your widowed daughter’s baby, to buy milk and bacon - and so on.

Some of these resources will be buyable with chickens or eggs. And some of them will not - there's no coincidence of wants if the midwife or the nailgun owner don't want chicken meat or eggs.

But all or most of these resources will be buyable with money - with Gold or Silver. Because offering money in a transaction vastly improves the chance of a coincidence of wants

Chicken farm example - continued:

You’ve had a successful month at the farm, and you now have loads of chicken meat and/or eggs to sell.

100 people line up to buy what you’ve got.

* 50 of them have horribly devalued fiat money, food-stamps and a bad attitude

* 40 of them have plans for barter - some of which are better than others. One is willing to work on your farm for food: another is willing to sell you their body, another has a stack of AA duracell batteries, another has some miniature bottles of scotch - and so on, with dozens of variations. You have to gauge each transaction on its own merits - an exhausting process - and half of the barter offers are simply going to be unworkable.

* 10 of them have Gold and/or Silver.

Which customers will you prefer selling your produce to? They all want what you've got - but do you want what they've got? Again: real money vastly increases the chance of a coincidence of wants.

Only Gold and Silver fulfill all of the prerequisites of money. This gives them inherent value - useful (for instance) in a survival situation.

(Of course Fiat currency can also be used to run a chicken farm - but historically it breaks down the moment that price inflation reaches ~50% a month).

Hope this was helpful.

Precious metals (Gold and Silver) are money. They are the only entities that have all of the attributes of money (fungibility, portability, store of value and so forth)

Fiat currency has most of the attributes of money, but it does not act as a store of value. After a few years a dollar bill has only a fraction of its original buying power. However an oz of Gold from (e.g.) the time of the Incas retains its buying power.

Something that has the attributes of money is valuable because it has those attributes. Would-be barterers can use money to overcome the otherwise insuperable problem of discovering a Coincidence_of_wants .

Trade requires money. Let's examine this vital function of money with respect to the coincidence of wants:

Chicken farm example:

You run a chicken farm, and you need to buy a great many things to keep your farm and family going.

In a given month you need - for instance - to buy chicken feed, to hire someone to repair your generator, to buy a nailgun to allow you to mend chicken barn #9, to hire a midwife to help give birth to your widowed daughter’s baby, to buy milk and bacon - and so on.

Some of these resources will be buyable with chickens or eggs. And some of them will not - there's no coincidence of wants if the midwife or the nailgun owner don't want chicken meat or eggs.

But all or most of these resources will be buyable with money - with Gold or Silver. Because offering money in a transaction vastly improves the chance of a coincidence of wants

Chicken farm example - continued:

You’ve had a successful month at the farm, and you now have loads of chicken meat and/or eggs to sell.

100 people line up to buy what you’ve got.

* 50 of them have horribly devalued fiat money, food-stamps and a bad attitude

* 40 of them have plans for barter - some of which are better than others. One is willing to work on your farm for food: another is willing to sell you their body, another has a stack of AA duracell batteries, another has some miniature bottles of scotch - and so on, with dozens of variations. You have to gauge each transaction on its own merits - an exhausting process - and half of the barter offers are simply going to be unworkable.

* 10 of them have Gold and/or Silver.

Which customers will you prefer selling your produce to? They all want what you've got - but do you want what they've got? Again: real money vastly increases the chance of a coincidence of wants.

Only Gold and Silver fulfill all of the prerequisites of money. This gives them inherent value - useful (for instance) in a survival situation.

(Of course Fiat currency can also be used to run a chicken farm - but historically it breaks down the moment that price inflation reaches ~50% a month).

Hope this was helpful.

[BOBWADE]

The Nightmare German Inflation
One day everything was fine.
The next day hell was unleashed
http://www.usagold.com/germannightmare.html