It's also not so much of an issue with consumption as with investment. Sure I may still have to buy food and I may buy others as I need/want them, but the farmer who grows that food has to buy the seed and other things up front and then get less money for them later. Depending on the markup and the return, he might be better off just leaving the money under the mattress.
Of course, if enough people do that, prices rise and deflation stops.
Which is what I mean by putting the brakes on the economy. You need money to expand the economy.
It's not just that a bit of deflation and a bit of inflation aren't disasters, it's that a bit of inflation is a good thing. (At least in current economic model.) Money sitting around loses value, which creates pressure to put it to work. Invest it. Build something.
Hi thejeff,
I do agree that changes in the fundamental changes in the accounting unit would cause disruption in forecasting inputs. It’s like trying to build a shed with a yardstick that keeps changing. Bitcoin does inflate at a steady rate as coins are released into circulation to miners. The circulation yardstick of bitcoin is fixed ( it excludes both fractional reserving and unknown supply increases), but the relative value to currencies is quite volatile.I like this tread, and would open it again to comments on why bitcoins are so volatile.
How is bitcoin ownership determined? Is there a database somewhere in which, say, Bitcoin #4457 is the propriety of John Somebody?
How is bitcoin ownership determined? Is there a database somewhere in which, say, Bitcoin #4457 is the propriety of John Somebody?
Nope. Bitcoins are stored in digital "wallets" which have public and private keys associated with them. Everyone knows the wallet's public key, but the private key is required to authenticate any transaction involving bitcoins in that wallet. Possession of that private key essentially represents ownership.
Now, there is a record of which bitcoins are stored in which wallets (known as the blockchain), but it doesn't contain anything more personal than wallet information. No personally identifiable information is ever attached.
The other thing that cypherphunks seem to forget that due to their nature, bitcoins are INHERENTLY traceable, much more so than paper currency.
The growing complexity of calculations needed to make bitcoin and the neccessary increase in power in the riggs needed to do so means that bitcoin is getting to the point where each coin is going have a measureable carbon footprint in it's making.
I agree that bitcoins are more easily traceable than paper, but much less than a credit card.
I also agree that bitcoins have a carbon footprint. Gold and silver also have a carbon footprint, and they functioned as currency for a very long time.
The other thing that cypherphunks seem to forget that due to their nature, bitcoins are INHERENTLY traceable, much more so than paper currency.
The growing complexity of calculations needed to make bitcoin and the neccessary increase in power in the riggs needed to do so means that bitcoin is getting to the point where each coin is going have a measureable carbon footprint in it's making.
I agree that bitcoins are more easily traceable than paper, but much less than a credit card.
I also agree that bitcoins have a carbon footprint. Gold and silver also have a carbon footprint, and they functioned as currency for a very long time.
I'm wondering if LazarX is implying that the carbon footprint involved in the mining of a bitcoin is traceable. Hopefully he isn't, because that's not how bitcoin mining works.
I don't know, I find other people have worth. Companionship and amusement are worth a lot.Mazlow's hierarchy of needs and all that.
Problem with Mazlow's oft-bleated theory is that it is, frankly, dumb as rocks, and has nothing to do with any real human society, or, indeed, real humans. It is a theoretical justification for policies that destroy knowledge, understanding, relationship between humans, honour, dignity, charity, and everything even slightly positive in our lives to focus only on the human as a consumer.
BTC at 800 last i checked. That could rent you a priceless human for a bit.
re: Maslow it was intended to be psychological, not economic, and it was intended to be descriptive, not normative. IIRC.
re: Maslow it was intended to be psychological, not economic, and it was intended to be descriptive, not normative. IIRC.
Yes, as I said, a justification for a brutal oversimplification of human psychology. That in turn makes defining the human as a consumer only, reasonable.
@ Sissyl I don't see that as justifying calling it "dumb as rocks". I doubt Maslow's intention was to do as you describe.
I think it's pretty apt. Humans are far more complex and nuanced than the hierarchy of needs suggests. The only sensible point of the classic pyramid is precisely the simplification it makes possible. Everything else is a consequence of that, which should have been obvious even then.
No, that's not all. It is also a way of limiting the relevant stressors to only those brought up in the classic pyramid, and saying these automatically take priority. That in itself has pretty serious consequences.
I hope your bit coins are in your mattress.
What? Someone hacked the unhackable code and stole millions?But- But- It was FoolProof!
That did take as long as I expected. Not only will this kill Bitcoin, but it will (thankfully) kill any corporate created/owned/sponsored monetary system for decades to come.
What? Someone hacked the unhackable code and stole millions?But- But- It was FoolProof!
That did take as long as I expected. Not only will this kill Bitcoin, but it will (thankfully) kill any corporate created/owned/sponsored monetary system for decades to come.
I think what I find most amusing about this story is the fact that it is the Magic the Gathering Online Exchange.
And no, as I said: The reason the dollar is worth anything at all is that many people believe it is worth something. The old mechanism during the days of the gold standard, that the money could be exchanged for a certain amount of gold/silver, i.e. the state guaranteed the value of the money, is long gone. The dollar is a fiat currency now, and the state no longer guarantees anything regarding its value. Which puts it in much the same situation as the bitcoin, really. But... there are far more dollars out there. That has the effect of dampening the rises and falls of the exchange course, and isn't a desirable trait in something you want to gamble on.
That's an simplistically flawed view of the reality of fiat currency. The American Dollar is backed by the assurance that the United States is viable as a long running, viable concern. That you can take that dollar and get value from it, not necessarily directly from the government but from the American economy itself. So you have the American dollar which is not neccessarily something you take to the government to exchange for a debt, but you have a good degree of confidence that you'll be able to buy something either from an American supplier, or another foreign national because of their mutual faith in the value of the dollar.
Species Standard based economies have their own inherent disadvantages. A cap imposed by the availability of a certain metal puts a ceiling on economic growth. It also opens up the possibility of attacks on said econom by those trying to corner the market on said metal, the way the Hunt Brothers tried to corner the silver market some time back.
It also highly limits what can be done to respond to massive economic fluctuations.
There are some of the very good reasons that no nation with an economy larger than that of San Marinos still remains on a metal standard.
Bitcoin is the extreme of fiat currency because it's backed by a theorectical scarcity more rigid than that of gold itself... and...
The problem with the American dollar is that it relies upon people taking the American government's word that it has value. What happens if they don't? Suddenly, that dollar becomes as valuable as toilet paper.
Gold, on the other hand, has two advantages: First, it is a currency like the dollar, in that it originally was used to represent the economic power of the nation who issued the coin (which is, in fact, its real-world origin as a currency; it was representing bushels of wheat or things like that). It also is valuable in its own right as an electrical conductor and for use in jewelry.
Now, the real value is the goods produced. That, in turn, makes the American dollar worth a lot less than the American government says it is; the U.S. is primarily a consumer nation. Even a lot of goods put together on its shores use parts that were made elsewhere. Overall, an actual, realistic value of the dollar would be about half a nuyen when you take that into consideration*.
*Calculation brought to you by the fine methods of Hyperbole and making things up on the spot.
What? Someone hacked the unhackable code and stole millions?But- But- It was FoolProof!
That did take as long as I expected. Not only will this kill Bitcoin, but it will (thankfully) kill any corporate created/owned/sponsored monetary system for decades to come.
People said the same thing about online shopping when the early hacks of online stores happened.
Crypto currency will always be vulnerable to cracking the cryptography. The chances of breaking the code only ever goes up as time goes on.
Unless a cryptocurrency figures out a way to update and change the cryptography used to secure it while in circulation, they will only ever be economic bubbles and not true tools of exchange.
There's also an inherent trust requirement of the person who made the code, that they haven't placed a backdoor for them to just steal it later. For all we know, the bitcoin "hacker" could just be the creator(s).
Crypto currency will always be vulnerable to cracking the cryptography. The chances of breaking the code only ever goes up as time goes on.
The cryptography is essentially unbreakable and probably always will be (and if someone did come up with a way to break modern encryption, the security of Bitcoin would be very near to the bottom of the list of problems that we'd suddenly be faced with), and the nature of modern cryptocurrencies requires a would-be cracker to recreate the entire blockchain in order for his changes to be accepted by the decentralized verification system.
All of these cryptocurrency thefts are just people stealing wallet information, not people cracking the cryptocurrency itself.
There's also an inherent trust requirement of the person who made the code, that they haven't placed a backdoor for them to just steal it later. For all we know, the bitcoin "hacker" could just be the creator(s).
Bitcoin is open source. There is no way for anyone to take advantage of a non-existent backdoor. Furthermore, stealing 700,000+ bitcoins is a pretty terrible idea if the act of stealing them discredits the currency so badly that it collapses. The creator would only be damaging what he built.
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The problem with the American dollar is that it relies upon people taking the American government's word that it has value. What happens if they don't? Suddenly, that dollar becomes as valuable as toilet paper.
This is simply wrong. The American dollar relies on people taking other people's word that it has value, and the US government doesn't enter into it, except that the US government and its behavior is credible evidence for that belief. There are actually cases on record where failed currencies have continued to circulate long after the governments that created them have disappeared precisely because that failed currency was regarded as more valuable (typically, less likely to be debased) than whatever the current government was using.
The other reason that the USD has value is because, legally speaking, it's the only money that the US government will accept for payment of taxes, so anyone who needs to pay taxes to the US government needs dollars. It's also the currency in which oil contracts are written, so anyone who needs to buy oil on the world market needs dollars to buy it in. Basically, the dollar is valuable because people who have something that other people value consider it so -- and as long as Exxon insists on being paid in dollars, dollars will be valuable.
Gold, on the other hand, has two advantages: First, it is a currency like the dollar, in that it originally was used to represent the economic power of the nation who issued the coin (which is, in fact, its real-world origin as a currency; it was representing bushels of wheat or things like that). It also is valuable in its own right as an electrical conductor and for use in jewelry.
Except the non-monetary value of gold is negligible. As in, less valuable than aluminum.
Now, the real value is the goods produced.
Absolutely wrong.
The value of the American dollar is as a medium of exchange -- that's why Ecuador uses it as its official currency, for example. One of the primary reasons that it has value is because it's relatively stable, and because it's backed by a reasonably competent group of people that are governed by the rule of law instead of whim (e.g., the US isn't simply going to devalue the dollar by 20 percent. This can be directly compared, for example, to Venezuela, which just (a month ago) devalued the bolivar by more than half.
Similarly, the US government provides a stable environment for storing value; US banks are generally in good shape, are generally well-capitalized, and are generally insured against any sort of catastrophic loss that might impact their ability to pay clients. As the recent mess with Mt Gox shows, this is a serious issue with Bitcoins, but it was also an issue with the various Asian currencies of the late 1990s.
In fact, it's precisely the currencies of producer nations that tend to be the least stable, because they are so dependent upon the world economy to sell their goods -- a downturn in the world market means that they lose access to the world market (because no one wants to buy their goods) and can't get an influx of capital; the result is that they have a million tons of bananas rotting on the docks but nothing to buy what they need with.
By contrast, the United States to a first approximation is the world market, and when world demand slumps, that means that people in the USA are not buying stuff and keeping their dollars at home. The effect is that dollars become even more valuable (because foreign suppliers still want them). That's one of the reasons that this recession has resulted in near deflation in the United States and in Europe (also consumers) while producing inflation in Venezuela. No one wants Venezuelan bolivars, so the value drops. Everyone wants US dollars, so the value goes up.
And before you start burbling something inane and ill-informed about the Federal Reserve and quantitative easing,.... no. Quantitative easing did NOT substantially devalue the dollar, which is why prices in the store are roughly the same as they were several years ago. If you want to see inflation, look to Venezuela or Argentina. In the United States, the potential for deflation is actually a much bigger issue, and in fact, inflation has persistently been below the Fed's long-term target. "Partly reflecting transitory influences, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable."
If that collapsed, gold would retain some inherent value, but far below its current prices.
I suspect the "inherent value" of gold would be near zero. If nothing else, so many people have stockpiled it to swamp any resale value.
To put thing in perspective, all the jewelry in the world uses about 2000 tonnes per year. The gold in Fort Knox alone is about 5000 tonnes. The Federal Reserve Bank of New York holds about 7000 tonnes of gold in its vaults. This means that if every jeweler in the world came along and helped himself to as much gold as he could sell, it would take more than two years to deplete Fort Knox and four more years to empty the NY Fed. The total sovereign gold holdings worldwide are 30,000 tonnes or so.
So you can see that if people had no reason to hold onto gold as a store of value, there's no reason a jeweler would pay more for gold than for scrap lead.
The problem with the American dollar is that it relies upon people taking the American government's word that it has value. What happens if they don't? Suddenly, that dollar becomes as valuable as toilet paper.
Gold, on the other hand, has two advantages: First, it is a currency like the dollar, in that it originally was used to represent the economic power of the nation who issued the coin (which is, in fact, its real-world origin as a currency; it was representing bushels of wheat or things like that). It also is valuable in its own right as an electrical conductor and for use in jewelry.
Of course the value of gold used for jewelry and electronics is far below the current value of gold. What keeps the value of gold so high is the same thing that keeps other fiat currencies high: belief.
If that collapsed, gold would retain some inherent value, but far below its current prices.
No disagreement from me. I honestly boggle at the prices of some things compared to their actual value.
This is simply wrong. The American dollar relies on people taking other people's word that it has value, and the US government doesn't enter into it, except that the US government and its behavior is credible evidence for that belief. There are actually cases on record where failed currencies have continued to circulate long after the governments that created them have disappeared precisely because that failed currency was regarded as more valuable (typically, less likely to be debased) than whatever the current government was using.
The other reason that the USD has value is because, legally speaking, it's the only money that the US government will accept for payment of taxes, so anyone who needs to pay taxes to the US government needs dollars. It's also the currency in which oil contracts are written, so anyone who needs to buy oil on the world market needs dollars to buy it in. Basically, the dollar is valuable because people who have something that other people value consider it so -- and as long as Exxon insists on being paid in dollars, dollars will be valuable.
Gold, on the other hand, has two advantages: First, it is a currency like the dollar, in that it originally was used to represent the economic power of the nation who issued the coin (which is, in fact, its real-world origin as a currency; it was representing bushels of wheat or things like that). It also is valuable in its own right as an electrical conductor and for use in jewelry.Except the non-monetary value of gold is negligible. As in, less valuable than aluminum.
Now, the real value is the goods produced.Absolutely wrong.
The value of the American dollar is as a medium of exchange -- that's why Ecuador uses it as its official...
Except that, according to the United States Treasury, Federal Reserve notes are "backed" by all the goods and services in the economy. And the modern dollar is a Federal Reserve note.
Also, who is it that prints the money? Well, the Treasury. Which turns out to be an executive department of the United States Government.
So, you have a department of the United States government stating a currency is backed by the United States economy, and that department is the one that prints the money to begin with. It's a pretty clear-cut case that the American government is backing the currency.
I'll also say that aluminum is actually incredibly valuable. The reason why it's so cheap right now is the recycling processes; it's actually incredibly expensive to pull aluminum out of the ground and refine it. Recycling it uses less resources and produces less pollution (making aluminum rather unique as a recyclable).
The value of the American dollar is as a medium of exchangeExcept that, according to the United States Treasury, Federal Reserve notes are "backed" by all the goods and services in the economy. And the modern dollar is a Federal Reserve note.
Also, who is it that prints the money? Well, the Treasury. Which turns out to be an executive department of the United States Government.
So, you have a department of the United States government stating a currency is backed by the United States economy, and that department is the one that prints the money to begin with. It's a pretty clear-cut case that the American government is backing the currency.
Not relevant. I'm sure the Zimbabwean dollar ZWD -- as well as ZWN, ZWR, and ZWL -- had some similar wording associated with it. The problem is that none of those currencies worked as a store of value, and you could sit and watch the currency inflate away (something like 10^22 times over a three year period). Which is why the ZWD was essentially valueless.
The value of currency, like anything else, is determined by supply and demand. No one wants ZWD -- literally no one, as even Zimbabwe has officially adopted a mixture of foreign currencies -- so it's valueless. Enough people want US dollars that the value remains high -- and the value is expected to remain high, because no one expects the US government to do anything silly that will affect demand for dollars.
I'll also say that aluminum is actually incredibly valuable.
Not really.
The reason why it's so cheap right now is the recycling processes; it's actually incredibly expensive to pull aluminum out of the ground and refine it.
Not really.
Recycling it uses less resources and produces less pollution (making aluminum rather unique as a recyclable).
Yes, but only about half of the aluminum used today is recycled. The rest is "virgin" stuff produced from ore. The commodity price for aluminum is about 77 (US) cents per pound, and companies like Alcoa will happily mine it, refine it, and sell it at that price. In fact, they not only will, but do. Aluminum production from ore worldwide is something like 40 million tonnes per year.
Hardly an "incredibly expensive" process or product.
Not relevant. I'm sure the Zimbabwean dollar ZWD -- as well as ZWN, ZWR, and ZWL -- had some similar wording associated with it. The problem is that none of those currencies worked as a store of value, and you could sit and watch the currency inflate away (something like 10^22 times over a three year period). Which is why the ZWD was essentially valueless.
The value of currency, like anything else, is determined by supply and demand. No one wants ZWD -- literally no one, as even Zimbabwe has officially adopted a mixture of foreign currencies -- so it's valueless. Enough people want US dollars that the value remains high -- and the value is expected to remain high, because no one expects the US government to do anything silly that will affect demand for dollars.
The popularity of currency does not change the backing of currency; it merely affects how accepted it is. The U.S. government has stated, irrefutably, that they back the currency through stating it is back by the American economy. What you discuss with people not using ZWD is the same issue I brought up for if people stopped accepting USD. The fact people continue to accept USD means they continue to take the U.S. government's word for it having value. The fact that people didn't take ZWD means they didn't take Zimbabwe's word. Neither currency is, inherently, any more or less valuable than the other; it's merely the acceptance of perceived value that is at stake.
So neither of us is really wrong on this beyond arguing over a technicality; we both agree that the general-use value, which is the perceived value, is based on people thinking it has value. In effect, we're both saying the same thing for the most part, just we're approaching it from different angles of perception as to what constitutes value and what backs value.
I'll also say that aluminum is actually incredibly valuable.
Not really.
The reason why it's so cheap right now is the recycling processes; it's actually incredibly expensive to pull aluminum out of the ground and refine it.
Not really.
Recycling it uses less resources and produces less pollution (making aluminum rather unique as a recyclable).
Yes, but only about half of the aluminum used today is recycled. The rest is "virgin" stuff produced from ore. The commodity price for aluminum is about 77 (US) cents per pound, and companies like Alcoa will happily mine it, refine it, and sell it at that price. In fact, they not only will, but do. Aluminum production from ore worldwide is something like 40 million tonnes per year.
Hardly an "incredibly expensive" process or product.
Interestingly, checking into it, it turns out we're both wrong.
The market price is for alumina (aluminum oxide), not aluminum. They stopped using pure aluminum years ago due to the sheer cost of extracting it and instead started using aluminum oxide because it's cheaper.
So, uh, turns out my contention to your example is based on a material no longer in use and your contention about pricing is based on a common-use term for a composite. Which, in turn, puts me in the wrong for being off as to term usage and makes my nitpick utterly pointless. I apologize for that.
The popularity of currency does not change the backing of currency; it merely affects how accepted it is.Not relevant. I'm sure the Zimbabwean dollar ZWD -- as well as ZWN, ZWR, and ZWL -- had some similar wording associated with it. The problem is that none of those currencies worked as a store of value, and you could sit and watch the currency inflate away (something like 10^22 times over a three year period). Which is why the ZWD was essentially valueless.
The value of currency, like anything else, is determined by supply and demand. No one wants ZWD -- literally no one, as even Zimbabwe has officially adopted a mixture of foreign currencies -- so it's valueless. Enough people want US dollars that the value remains high -- and the value is expected to remain high, because no one expects the US government to do anything silly that will affect demand for dollars.
But it does control the value of currency. It fundamentally doesn't matter what "backs" the currency if people don't trust it as a store of value.
I could, for example, create a private currency backed by my collection of Cerebus comics. Whether or not you think Cerebus comics are worth reading is largely irrelevant to whether you think that my currency is a good store of value--if you think that other people will want to use my currency, then it's a good store of value. And that would also be true if I were backing the currency with my mad dance skills or a pile of rusty knives.
The fact people continue to accept USD means they continue to take the U.S. government's word for it having value.
Nope. It means that they continue to think other people will continue to accept it and to believe it has value.
The fact that people didn't take ZWD means they didn't take Zimbabwe's word.
Again, no. In fact, Zimbabwe's word was still good (until late 2008) in the technical sense that you needed ZWD to pay Zimbabwe's taxes, and that was (officially) all that Zimbabwe would accept for taxes.
The market price is for alumina (aluminum oxide), not aluminum. They stopped using pure aluminum years ago due to the sheer cost of extracting it and instead started using aluminum oxide because it's cheaper.
Wow. Are you making this up as you go along?
No, the price I quoted for aluminum is for aluminum. On the LME, specifically, which handles contracts for the stuff. The London Metal Exchange specifically defines the stuff as metallic aluminum, more specifically "high-grade primary aluminum," or more formally `Al99.70 in the GB/T 1196-2008 Standard entitled “Unalloyed aluminium ingots for remelting.”' See also here, where it's also defined as "a non-ferrous metal of min 99.7% purity with max iron 0.2%, max silicon 0.1% with impurities no greater than designated P1020A of R.R.A.A.D.C.C."
I don't know who "they" are that are using "aluminum oxide" instead, but,... that's a rock. If you look at a typical sheet of aluminum foil, or a beer can, or for that matter a piece of siding, you'll see that those are made of metal, not rock. If "they" wanted to start making beer cans from rock, I'm fairly certain you would have noticed. Someone -- by which read, Alcoa, Rio Tinto, Rusal or one of the other producers -- typcially takes alumina (which is obtained by mining, often from bauxite) and turns it into metallic aluminum, "a non-ferrous metal of min 99.7% purity," and does so at substantially less than a dollar a pound.
But it does control the value of currency. It fundamentally doesn't matter what "backs" the currency if people don't trust it as a store of value.
I could, for example, create a private currency backed by my collection of Cerebus comics. Whether or not you think Cerebus comics are worth reading is largely irrelevant to whether you think that my currency is a good store of value--if you think that other people will want to use my currency, then it's a good store of value. And that would also be true if I were backing the currency with my mad dance skills or a pile of rusty knives.
It doesn't control the actual value of the currency; the actual value is nonexistent.
It controls the perceived value, which is what is typically used in commerce. That applies to everything on the market, regardless of its actual value. It doesn't matter if it's literally made of manure; if it has a perceived value in the millions, people will pay millions for it. That's the essential way modern commerce works.
Nope. It means that they continue to think other people will continue to accept it and to believe it has value.
I've actually dealt with those who are of the mindset that the USD has no perceived value in relation to their business; they won't accept it, regardless of if other people will. Just like there are plenty of people in the U.S. who won't accept any currency except the USD.
Again, no. In fact, Zimbabwe's word was still good (until late 2008) in the technical sense that you needed ZWD to pay Zimbabwe's taxes, and that was (officially) all that Zimbabwe would accept for taxes.
If Zimbabwe's word was good, then why weren't people using it? You can argue that people saw no value in it... but it's a fiat currency. Value in fiat currencies is inherently linked to the word of the people that mint them. If no one trusts that word enough, the currency simply won't be accepted.
I've actually dealt with those who are of the mindset that the USD has no perceived value in relation to their business; they won't accept it, regardless of if other people will. Just like there are plenty of people in the U.S. who won't accept any currency except the USD.
Yup. And what makes the USD valuable is the fact that the first group are isolated nutbars and the second group make up well over 99% of the population of the United States and a measurable fraction of the world population.
Which means, in turn, that if I should find myself in possession of a USD, I can be assured of being able to trade it to someone for something I actually want without too much effort. Which is to say, it has value to me.
Note that the official position of the United States has nothing to do with that; I probably will not, in fact, give the dollar to the United States goverment, but I will still find it useful and therefore valuable.
Again, no. In fact, Zimbabwe's word was still good (until late 2008) in the technical sense that you needed ZWD to pay Zimbabwe's taxes, and that was (officially) all that Zimbabwe would accept for taxes.If Zimbabwe's word was good, then why weren't people using it?
Because Zimbabwe is one actor among many, and a relatively small one at that. Because while the Zimbabwe government would accept the currency, almost no one else would. If I should find myself in possession of a large number of ZWD, I wouldn't be able to trade them for something I wanted except by going to tremendous trouble. Even when the government was still accepting them.
Which of course is tautological. No one wanted a ZWD because no one believed that anyone else (except the Zimbabwean government) wanted a ZWD. But this kind of tautology becomes a self-fulfilling prophesy.
You can argue that people saw no value in it... but it's a fiat currency. Value in fiat currencies is inherently linked to the word of the people that mint them.
WRONG! It doesn't matter what the minter's word is worth, since I'm highly unlikely to deal directly with the minter. What matters is whether the people that I deal with on a regular basis will accept (and value) the currency. The US dollar is valuable in part, not because the US government stands behind it, but because Exxon will only accept payment in US dollars, and so I need USD to buy gas and oil for my car. The US dollar is valuable because banks (including many foreign banks) will accept payment in US dollars, even if they won't touch the local currency. The US dollar is valuable because I can go into a village in Zimbabwe and give the barman a dollar, and he'll give me a beer in exchange.
This African barman doesn't care about the US government and will never deal with it. But he knows that he can turn around and give that dollar to the butcher for a chicken, and the butcher will accept it because he knows that he, in turn, can use it to buy soap at the local store.
Basically, I value a USD because the people around me -- and in fact, almost everyone else in the world -- value them.
Which gets back to the point I made earlier -- there are numerous historical examples where the money of failed or non-governments continued to circulate and indeed to be preferred to the money of current governments. How can the "word" of a non-existent entity be any good?
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Every currency is a Fiat currency, whether it be based upon gold, land, the word of the nation backing it, or invisible pink unicorns. Gold became a currency because it was relatively rare, easy to refine and mold, pretty, and otherwise completely useless. Not until modern electronics did gold have much in the usefullness department.
Currency only has value as long as someone else is willing to accept that it has value.
The market price is for alumina (aluminum oxide), not aluminum. They stopped using pure aluminum years ago due to the sheer cost of extracting it and instead started using aluminum oxide because it's cheaper.Wow. Are you making this up as you go along?
Yes, actually.
I need to use smileys more, as that entire bit about aluminum after saying it was valuable was actually meant as a joke. I thought you caught on to my joking reply. I thought you were going along with it until you posted those links. Though, I have been told my humor is way too subtle at times.
Then again, considering it is like other absurd arguments I've made...
You have my apology. I should have made it more obvious. I forget, at times, that my tone does not carry well.
For a serious reply, scroll down in this link to the uses for aluminum. That is why I would argue it is highly valuable. The expense part... Aluminum is extremely common, like iron, but costs $0.77 a pound, while iron costs $0.06 (figure may be off) a pound. For an extremely common material, that is a pretty massive price difference. For its commonality, that makes aluminum very expensive. It's not as expensive as, say, natural plutonium, but that's because supply helps keep the price down.