Goldbugs and hard-currency peeps

This has been a recurring motif among various Cryptocurrency aficionados - that the US Dollar was hopelessly debased once it was unhooked from gold.

This is silly. Here's why.

First things first. People only like gold because people have always liked gold. It's pretty. It's a very good conductor (so it's used a lot in electronics), but it's not very useful for much else. Perhaps one might argue that its 'value' went up (relative to dollars) once its worth as a conductor went up? I have no idea. But basically, this is a pretty metal. If you're stuck on a deserted island somewhere with billions of dollars of gold bullion, it's not going to do you any good. So, my argument is, it doesn't have any inherent worth.

Next, go look up "The Money Supply" if you don't know what that is. Here's the wikipedia article on it (for the US): https://en.wikipedia.org/wiki/Money_supply#United_States . The important thing to note is the last paragraph -

As of April 2013, the Monetary Base was $3 trillion, and M2 ... was $10.5 trillion

So that means there's a 3.5x multiplier between "real" money, that has, like, actual dollar bills on it, and "pretend" money, which is created through "the velocity of money"... You could probably nerd it up higher to M0 instead of the "Monetary Base (MB)" and make it worse, but I'll stick with just that for now.

And it's not like that ratio is fixed. It hops around, all over the place. So that means nearly 3/4 of the money that's "circulating" out in the world doesn't exist.

And that leverage and ratio is a powerful engine that helps boost the economy, and I don't think it's a bad thing.

So now let's go back to your gold standard times. I am willing to bet you that the ratio did the same thing, back then. And at any point there were 3-4x as many dollars "in the economy" as there were gold bars back at Fort Knox. So your money was always an illusion.

You know what's not an illusion? When the IRS comes knocking at your door saying you owe xyz dollars in taxes. That means that dollars have meaning. That, and the fact that other people are willing to accept them.

And your precious Bitcoin isn't safe either (nor is Steemit, nor any other currency). I guarantee you that Coinbase, or any other cryptocurrency exchange is perfectly happy to have dollars and/or Bitcoins or any other currency you can think of all sitting in little columns in a database - not living on the blockchain. And so your velocity of money problem is just the same as it was with Dollars. Except, there's no capitalization ratio required at Mt Gox - which means the entire exchange can go belly-up and you can lose everything. And that has already happened, of course.

If you really wanted to solve this at the Blockchain level, you'd want to be able to have some kind of proof that your money really existed somewhere - something where the exchange had some kind of control of the private key (they probably have to for some reason, no?), but they would let you do some kind of 'proof' thing to show that the money existed. I guess that'd be neat, but I'm really arguing that the velocity of money thing, and the money supply having multipliers isn't necessarily a bad thing.

So I'm not exactly sure what my point here is, other than -

• All money is fake
• All money is debased
• Money is only real when you can use it to buy or sell things
• The gold standard was stupid and is stupid
• And who cares