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<p>[QUOTE=&quot;Tejas, post: 4226654, member: 84905&quot;]I am professionally interested in the question of the &quot;nature of money&quot;. Some economists and anthropologists argue that money is credit and always has been credit, even in primitive societies. Others - me included - argue that money is an asset, i.e. the exact opposite of credit. Hence, money is what extinguishes credit. </p><p><br /></p><p>In the first view commodity money has no real role to play. It is, if anything, a barbarous relic, that needs to be overcome. In the second view, commodity money is real money and the precursor of all money in existence today. In this view, it is the fact that the dollar once was equivalent to gold, which bestows value even today, although the dollar stopped being as good as gold nearly 50 years ago. In my view, gold or any other commodity that creates a natural limit on the expansion of money is per se a good thing. </p><p><br /></p><p>Somebody wrote that humankind has made all sorts of technical advances, despite leaving the gold standard behind. This is undeniably true. With no real constrains on the money supply all sorts of things can be financed, at least for a while. Good things, like the internet and smart/phones and bad things like world wars and the destruction of the environment. Gold is a decelerator and evaluator. A project financed in gold needs to meet the highest standards. If gold is money and nothing else, you can only wage a war until you run out of gold, which is usually very very quickly.</p><p><br /></p><p>Indeed, the American Civil War was to a large extent not won on the battle field, but on the financial markets. Salmon P. Chase&#039;s scheme to suck all the gold out of the banking system, by replacing it with paper legal tender bills in 1862, gave the North the means to buy weapons and other essentials on the international markets where only gold was an acceptable means of payment.[/QUOTE]</p><p><br /></p>

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