Wednesday, January 4, 2012

Why Gold?

David Graeber suggests that gold as a currency was part of a military-slave-minting complex. If one had to continue this pattern, one could conclude in order for a metal to be currency, its rarity is not enough. What is truly necessary is that this metal be hard to mine and rare because only a military complex that can wage wars, get slaves who can be employed for the mining task can get that hard-to-dig material. This must be why military rulers preferred gold for centuries, IOW if say there was a metal on Earth called fartium just as rare as gold but easy to find, it could not become currency. No ruler would make it currency, because this metal could be found by anyone and inserted in the circulation -- by people other than soldiers who a military wants to support logistically.

Some economists argue we need gold standard, or on some standard based on any rare metal -- but what Graeber suggests in the above link is that the rarity of the metal is not the issue. Plus nowadays there are many companies, individuals who can mine this stuff without owning slaves, one of the "advantages" of gold as a currency disappears.

No, a third wave solution must be non-concentrated, non-centralized; individuals should be able to create this stuff. I guess Bitcoin experiment has gone bust now, but maybe another experiment utilizing similar ideas can succeed in the future.