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<p>[QUOTE=&quot;Info Sponge, post: 782696, member: 20538&quot;]I don&#039;t fully understand the arguments for this, but the conventional wisdom in economics these days is that slow, steady inflation is more desirable than absolute stability. </p><p><br /></p><p>One problem is that if money got more valuable over time everyone would sit on it and there&#039;d be little economic activity.</p><p><br /></p><p>Gold doesn&#039;t have the intrinsic value that food does but it&#039;s had the extrinsic value that other people want it across many cultures and millenia. That gives it a leg up in the competition with other media of exchange to be generally accepted as money.</p><p><br /></p><p>Paul Tustain of BullionVault has hinted that there&#039;s a tradeoff between being a good store of value and a good medium of exchange. Since money has to be both, there will be endless conflict. </p><p><br /></p><p>One problem with commodity money is that there has to be enough of it to trade for the rest of the economy&#039;s production. In the old days when there was nothing to buy except crops and livestock you didn&#039;t need a lot of currency. In a world of steel, cars, iPods, and pharmaceuticals that cost more per gram than diamonds, no one storable commodity will get you very far. </p><p><br /></p><p>We have very limited experience with it, but so far it seems that if you take control of the money supply away from government and put it in the hands of an independent central bank with a mandate of price stability, then database entries can be a good form of money.[/QUOTE]</p><p><br /></p>

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