Text 12077, 60 rader
Skriven 2008-03-08 18:44:44 av Robert Bashe (2:2448/44)
  Kommentar till text 12064 av Michiel van der Vlist (2:280/5555)
Ärende: Something of value
==========================
Michiel van der Vlist wrote to Robert Bashe on Saturday March 08 2008 at 12:34:

RB>> That's a little complicated to explain here, but I read about the
RB>> "reverse Gresham's law" on the Wikepedia website (just look for
RB>> Gresham, it's easy to find), and that apparently is the reason.
RB>> People hoard gold and use paper for payments.

MV> _In the presence of legal tender laws_.

Which exist everywhere nowadays. The article states there is nothing but "fiat"
(i.e. artificially declared) money nowadays. More's the pity, since real money
would keep politicians (more) honest.

I can still remember people going on about how the dime (US$0.10) in my youth
was only worth $0.03 intrinsically... how we would love to have even that
nowadays... (naturally a silver dime is now worth at least a dollar).

MV> I think you misread what the reverse Gresham's law says:

MV> ==== qoute ===

MV> Said in another way, in the absence of legal tender laws, the seller
MV> will not accept anything but money of real worth (good money), while
MV> the existence of legal tender laws will force the seller to accept
MV> money with no commodity value (bad money). Thus, the buyer will always
MV> try to spend his bad money first, but in the absence of legal tender
MV> laws, the seller will not accept money with no real worth.

MV> ==== unquote ===

MV> Which is more or less what I wrote: Why accept Dollars (the bad money)
MV> for the oil when there is gold (the good money) to be had?

Why accept Euros (bad money) instead of Dollars (bad money)? There's your
"perceived value" again... in view of the developments, people see the Euro as
"not as bad" money, and perfer to pay in Dollars. No big surprise, is it?

MV> The answer I postulate is: because there is no gold.

Oh, the gold exists all right... but who in his right mind would spend it when
he can force people to take paper?

MV> But in todays real world "real money" is hardly ever used. If only for
MV> practical reasons. Gold is heavy, transport is costly and full of
MV> risks and the supermarket won't take it.

Anyone with a head on his/her shoulders would kiss your hand if you tried to
pay a EUR 2 bill at the supermarket with a gold EUR 2 piece (they exist, at
least in Germany). But you'd be a fool to do it.

MV> Not only do they trade with "bad money", much more popular these days
MV> is virtual money.

Sigh... you know the old saying, Michiel: "Shit in shit out". I still prefer
gold.

Cheers, Bob

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