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Re:Global Currency

Please help make the Manifesto better, or accept it, and propagate it!
On 25 Apr 2001, Srinath S wrote:
 Padmanabha Rao <kvprao@igidr.ac.in> wrote: Well, it takes enormous
 amount of energy to extract it and then it doesn't corrupt easily,
 actually pure gold doesn't corrupt at all in the normal earth
 atmosphere. So, if people valued these properties for their decorative
 ambitions (and once dal, kapda and makhan is taken care of decoration
 comes next?), then it would be naturally priced high.
 I had sent an earlier reply, but for some reason it has not appeared.  
 Well, today we have many polymers that don't take as much energy as
 extraction of gold but still are just as robust and uncorruptible as
 gold. So why is gold still expensive?
 And anyway, money is ultimately information. And we have much more
 efficient and robust means of information storage and retrieval than
 physically representing information in terms of an uncorruptible
 physical artifact like gold.

I think there is no case for gold in the economy except as any other
commodity in demand by people for whatever purely consumptive reasons they
have. I think it is expensive, as Abhijeet/Prakash pointed also out,
because it takes a lot of energy to produce it, and then there are people
who find it valuable to purchase it at the asking price. Why they do find
gold and not, say, plastic valuable is perhaps because "it's a metal",
"does not corrode", "does not lose lustre" etc etc all of which suit their
requirements for jewellery and other umpteen uses in their activities. I
think the supply and demand price meet where they do currently. Do you
imply there is some other explanation ? 

In times when gold was used as a monetary standard it was used because
everyone *trusted* its *universal* value and further they trusted in the
issuer's and Nature's integrity to ensure that 10 gms of gold now didn't
become 9 gms some time later. 

I think the problem to be contended with the advent of money, then and now
and in the future, is that of integrity. Whether we do that with cowrie
shells, frogs, gold coins, informative records on a paper or a webserver
or paper notes, the problem is the same: is the issuer's integrity
unquestionable ? In the case of the informative records on a storage
device such as the webserver, the webserver's integrity has to be sound
and it should work alright. I agree.


Padmanabha Rao

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