Saturday, March 14, 2009

Duck Comics: "The Twenty-Four Carat Moon"


Anonymous Anonymous pontificated to the effect that...

If Scrooge were able to keep the entire moon for himself, it would not be valueless. Sure, gold would be worth less _per ounce_, but one's power would be determined by the _proportion_ of the gold supply that one owned. So by claiming the entire moon, Scrooge would have a claim to like 90% of the known gold supply in the universe, thus making him truly the most powerful duck in the world. It would devalue everyone else's fortune, but increase his own.

The argument in favour of the gold standard is not only based on the scarcity of gold, but also on the impossibility of creating gold out of thin air. There is no "emission" of gold, unlike our current system, where it costs the government $0.20 to print a $100 bill, and then exchange that magically created money for real goods. I guess if there really were a gold moon floating around, then the argument wouldn't work any more -- but even then, the moon would be a one-time thing, there would still be no way to create more gold.

- SK

12:58 PM  
Blogger GeoX, one of the GeoX boys. pontificated to the effect that...

Well, you obviously know more about this stuff than I do. But let's say Scrooge wants to sell some of this gold. Isn't it the case that he'll be able to do that for a while, but that at a certain point the market will collectively say, okay--we have enough gold now? And that then the rest of it won't really be worth anything since no one's interested in buying it? Is that completely off-base?

For the gold standard, I understand why it's meant to be valuable, I think, but isn't this only the case because we've come to a consensus that, okay, this yellow metal is going to be valuable? It seems to me that in the event of a total economic collapse, your stores of gold aren't going to do you much good--items with trade value will be things like food, water, clothing, batteries, gasoline, pornography--things with actual USE value.

6:11 PM  
Anonymous Anonymous pontificated to the effect that...

That's true -- the "consensus" of gold being valuable is arbitrary. It could have been some other substance. But the point is that such a substance needs to be something that you can't just brew in your bathtub whenever you need some money. No matter how much gold there is, it's not something that any old schmoe can just _make more of_. Furthermore, the substance shouldn't degrade over time, either.

Scrooge wouldn't be "selling" the gold -- he'd be "buying" things with it. The gold is the money; he'd be exchanging it for real products which cost real resources to make. Now, it is true that, as he released more and more gold into the market, he'd be able to buy less and less _per ounce_ of gold. But gold itself would still be valuable, since there would be a fixed amount of it (just larger than before) and it would be non-degradable.

But yeah, gold requires a lot of civilizational infrastructure in order to be valuable. In the event of an anarchic collapse, the best form of money would probably be certain kinds of alcohol that can be easily stored for long periods of time.

- SK

9:47 PM  

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