Quote from: Realpra on April 25, 2013, 04:23:29 PM

So everyone seems to take for granted that gold is superior and people only use fiat because of government suppression.

But it occurred to me that this is blatantly false as someone mentioned "gold has already failed".

What backs up this statement? Well for one not a single country I know of uses gold or other metals for money. Is it really feasible that government suppression would be so powerful? Keep in mind quite a few non-oppressive and very peaceful countries with inflation STILL use fiat.

There is also lots of stories of countries using dollars instead of the sanctioned money.

So I think its safe to say that gold is not out because of suppression when you think about it.

Okay so whats the deal then, fiat clearly degrades at 1-5% (avg: 3%) a year in most countries - yet at some point the whole world decided to boot out the metals. Why?

Well a simple explanation would be that gold is simply worse in a free market.

Which turns out to be true when you run the numbers:
Lets say you are saving 20.000$, a decent chunk of savings for most people, considering how many are in debt instead these days and the poor of the world.

Well you will need to first buy the gold at a loss. You will probably have to drive to pick it up and you need to test it a bit to insure its good.
For this amount you will have to go to maybe two different guys found online to pick it up at least.
I think its safe to say buying and selling the gold will cost you at least 3% each time in transportation, offer-research, time used, risk of fraud and so on.

Okay not that bad, since you have value dense gold and not THAT much to store you now get a small safe at 200$ - quite cheap, yet that works out to another 1% cost. You skimp on alarms and other stuff.

So now you're set to go, after just a little more than 2 years you start to save money on inflation.

So on a 10 year basis it does okay - but if that is your time frame why not invest in something more productive like stocks, bonds etc., buy a car with better mileage, insulate your house? I mean gold will NEVER pay your day to day bills, gold does not climb in real value - its not a real investment!

This is supposed to be superior money and all that jazz right and this is a buffer savings so lets look at that instead. So lets say you loose your job and have to live off your savings a while after 2 years, now you pay that 3% again on at least some of your savings amount and you haven't made anything yet!

Keep in mind that you skimped on security and you safe is so small anyone could kinda just grab it and run so on a 10 year time frame what is the risk of burglary - 1% again in a nice neighborhood (that's an avg, could be 100% for YOU)?

So gold is a bad investment and bad as a buffer savings. Even during hyperinflation or the zombie apocalypse a few cigarettes will do you just as well or better.

So now the final one: Is gold good as MONEY and for EXCHANGE?
Not really: Imagine your local supermarket taking gold; total widespread acceptance. You stand there with your groceries and you have to lob like 3 grams off your "shopping nugget" and you brought your own weight to not get cheated...
I mean just play that out in your head and its obvious its a little funny.
Just to start with its a hassle to you AND the supermarket who will need more cashiers to deal with the slower transactions. They will also have a headache doing accounting with grams of gold and silver and all with different grades of purity.
They will have to move a lot of gold around the country every day from all their stores in trucks... its horrible.

But then you say "Realpra, that's not what the goldbugs mean! They mean a gold-BACKED currency you dunce, it can be digital and all!". Well then that is fiat. Fiat is kinda always backed by something (I have yet to hear of actual government "IOUs") but they always print more.
It is still fiat if its backed by gold and you hold the paper - that's how fiat started!

So clearly "barter < shells < gold/silver < fiat < crypto-currency" and NOT "shells < fiat < gold < crypto-currency". (turns out that is the historical order too!)

So what is gold good for? Well basing huge banks off of, backing fiat currencies or clearing rare debts between countries or other huge entities - which is exactly what we see today albeit not even that much (American Chinese debt is denoted in dollars for instance).

I will follow my own realization and prioritize gold/silver savings much less.
(I still need a safe for my paper wallets though...)

EDIT:
SHIT! I forgot my punch-line: "Notice how the gold cost works out to about the same as the cost of inflation for most fiat? Not coincidence! That is free market competition at work between gold and fiat!"

ta-ta-ta-daaaa......

Hi, I didn't read your entire post because it was verbose. But judging by your posting history you have significant experience in the bitcoin discussion.

I would like to point out these things with direct response to your initial post:

1) when the US was on the gold standard this was before the US was the number 1 economy in the world and the USD was the number 1 international reserve currency. The gold standard was stopped prior to this.
2) Lots of your other commentary reflects issues that are handled by the fractional reserve system. Specifically, the fractional reserve system allows some central authority to adjust monetary supply in reaction to economic conditions.

In the case of BTC, once we hit 21 million total BTC in the 22nd century, the only way that the currency will stay relevant at that time is if there is a regulated authority who will control the money multiplier applied to BTC.

In other words, my view is if BTC doesn't establish a respected monetary lending system by the end of the decade, it will soon die thereafter.