Quote from: MoonShadow on June 21, 2011, 02:59:15 AM

Quote from: finnthecelt on June 21, 2011, 02:48:16 AM

Quote from: libertyzeal on June 21, 2011, 01:46:03 AM

Quote from: vector76 on June 20, 2011, 05:54:15 PM

It's a shame that very few people seem to know what "backing" means and what "intrinsic" value is.

I almost fell out of my chair when Peter said gold had intrinsic value because you could craft jewelry from gold or use it in electronics. While being true, you can do the same with seashells and silicon, those properties have nothing to do with why gold is a good medium of exchange.. I thought Peter was smarter than that.

Well I'm sure he's trying to make sense of it too. He needs an education just like everyone else. Does he have the wisdom to feed his intellect?

He was talking about an Austrian economist stating that gold had intrinsic value by reason of it's use value. Austrians don't normally talk in those terms, because use value doesn't equate to an intrinsic value. Value is always subjective, and an 'intrinsic' value would necessarily have to exist, if it did exist, by reason of a commodities natural characteristics. Gold's use value is not very closely related to it's elemental properties, but it's monetary value is related to it's elemental properties. If gold has an intrisic value, it's directly related to it's quality as an ideal money, not it's industrial or commercial uses.

You're quite right! The fact that gold has almost no industrial uses, is one of the properties that it make it a great medium of exchange, you want your unit of account to be in stable and in predictable supply. Silver on the other hand has many industrial uses, it's a key component in PV cells for solar panels for example, so it's a lot less stable than gold in terms of supply/demand.