It's been a long time, dear reader (some writers use that term as a way to personalize what would otherwise be the equivalent of a mass email...in my case I well realize that the singular use of "reader" is accurate at best -- you know who you are). I was reading an article over at mises.org and drinking some whiskey (what else is new) and was suddenly inspired to pickup the old pen again and make a few scribbles.
The article was about gold and it's function as "money," and it was generally a good article. That said, while I'm in complete agreement about the fact that paper "money" is a sham, and that commodities like gold and silver can possibly make a good money, there's one key point that I think is either omitted or not considered by the modern "gold bug" and that is this: there's no way in hell I'm going to carry around a pocket full of coins no matter what their fungible properties might be. I don't even carry keys at this point, and it annoys me that I need a wallet -- a very minor upgrade in technology should allow me to use my iPhone for all monetary transactions, identification needs, and God willing a lighter and cigarette holder. You ladies out there might say, "well I always have a purse, so keeping coins is no problem." Yeah, I've seen your purses and they're a wreck. They're a place for lipstick, tissues, assorted garbage, and tampons as needed. If you could do away with coins, your hands would be cleaner in the long run, I promise.
At any rate, while I agree that real assets should underly any "money," the knee-jerk reaction to gold and silver is overblown. Modern technology can render those things largely obsolete -- let's look at the definition of good money as described in the aforementioned article:
"A convenient money will have several properties. For example, it should be physically durable and easy to transport. It should also be easily recognizable and homogeneous across units. Further, it should be easily subdivided into smaller pieces. Finally, its market value should be convenient for typical purchases."
The truly important part about money is the last piece -- convenience. I have goods, and I'd like to get some other goods by exchanging them. Well, as the author of this article points out, if I were an astronomer and wanted to trade one of my hand-crafted telescopes for a dozen eggs, a gallon of milk, a few shirts, and a night out on the town, it would be difficult for me to accomplish that via direct trade. Perhaps it could be arranged, but it would indeed be highly inconvenient. Rather, by inserting some medium of exchange like gold or silver, I can swap my telescope for that and then more readily go buy whatever I want.
Again, great concept when technology is lacking, but for a guy that doesn't even like to carry keys I don't find a pocket full of krugerrands particularly convenient. Okay -- if you insist that it's got to be gold and silver, fine, but I don't want to ever touch the stuff. Put it in my account when payroll does their work, or transfer the balance to my account when someone drops me some dough through PayPal, but don't expect me to trade you 13 coppers for a sandwich. Get real -- it's 2010 and while we're not cruising around in flying cars or living in Utopia, the money revolution need not revert to such old-school concepts.
Let's get back to the point -- convenience is the real key, coupled with backing by tangible assets. So if I want to trade my old sofa for a six pack, a carton of Marlboro Lights, and a porno mag, why does gold need to enter into it? Couldn't, given a very sophisticated global market, I basically post my couch online, get some "credits" when it's sold, and then swap those credits for whatever I want? Theoretically, Sheebu at the convenience store could go buy my old sofa for almost the exact value of the sundries he sold me, but that need not be the case. A "medium of exchange" could well manifest as some strange combination of eBay and Bank of America like some kind of meta-barter arrangement. In a market so efficient, trading goods for gold or silver and then back into other goods would simply be a waste of time, not to mention a pain in the ass lugging all that metal around!
I'm being a bit silly here, and I realize that most likely gold and silver still have their place, but I'd be perfectly happy to have that sitting at a bank (provided I could readily remove that as physical gold and silver should the state of things so move me) and just transfer everything digitally at all times. Don't make me lug around a little man-purse full of metal -- please. Next thing you know I'll have chapstick in there and it's only a step away from metrosexual-city. I want all monetary transactions conducted through my iPhone either at the POS (point of sale) or on a P2P (peer to peer, dude) basis.
So Goldbugs: don't sound like you're from the dark ages -- if you want to sell this idea, let's tell people that there's a way to do away with the wallet and the coint purse once and for all. The youth of today will respond -- they're already so overburdened with mandatory handheld goods and accessories as it is.
