Is gold money?

[Le Libérer]

Ben Bernanke does not think gold is money, according to his testimony this morning in front of the U.S. Congress. During the Q&A portion of the testimony, Congressman Ron Paul asked Bernanke if he thinks gold is money. Bernanke replied, “No. It’s a precious metal.”

Ron Paul then asked why do central banks hold gold in reserves. All Bernanke could say to that was “Tradition.”

When asked by Ron Paul if he monitors the price of gold – which today hit another new all-time record high, of $1,588.90 per ounce, amid speculation over QE3 – Bernanke responded that he does.

Over 5,000 years, as well as the current price of gold, suggest otherwise.

Bernanke eluded the question. But its a good one. Is gold really considered money anymore?


2NJnL10vZ1Y

[Susurrus]

It's worth money, but it's not really used as a currency anymore, so probably not. More like a stock or something.

[AnonymousOne]

Ben Bernanke does not think gold is money, according to his testimony this morning in front of the U.S. Congress. During the Q&A portion of the testimony, Congressman Ron Paul asked Bernanke if he thinks gold is money. Bernanke replied, “No. It’s a precious metal.”

Ron Paul then asked why do central banks hold gold in reserves. All Bernanke could say to that was “Tradition.”

When asked by Ron Paul if he monitors the price of gold – which today hit another new all-time record high, of $1,588.90 per ounce, amid speculation over QE3 – Bernanke responded that he does.

Over 5,000 years, as well as the current price of gold, suggest otherwise.

Bernanke eluded the question. But its a good one. Is gold really considered money anymore?


2NJnL10vZ1Y

No more than oil. A lot of people put money into Gold as an investment, but gold isn't money in and of itself from a proper Economic perspective. Wikipedia writes that:

Money is any object or record that is generally accepted as payment (http://www.revleft.com/wiki/Payment) for goods and services (http://www.revleft.com/wiki/Goods_and_services) and repayment of debts (http://www.revleft.com/wiki/Debts) in a given country or socio-economic context.

Gold currently doesn't function as an accepted payment so it fails to act as a means of exchange. It's not money, anymore than Oil is money.

[Le Libérer]

No more than oil. A lot of people put money into Gold as an investment, but gold isn't money in and of itself from a proper Economic perspective. Wikipedia writes that:

Money is any object or record that is generally accepted as payment (http://www.revleft.com/wiki/Payment) for goods and services (http://www.revleft.com/wiki/Goods_and_services) and repayment of debts (http://www.revleft.com/wiki/Debts) in a given country or socio-economic context.

Gold currently doesn't function as an accepted payment so it fails to act as a means of exchange. It's not money, anymore than Oil is money.
Then why does the federal reserve have large gold holdings as value to the currency? Why not other things, as Paul asked. Surely tradition isnt the main reason it is considered the best collateral over as you said, oil or diamonds. I just dont see it as a fair exchange.

[Decolonize The Left]

Then why does the federal reserve have large gold holdings as value to the currency? Why not other things, as Paul asked. Surely tradition isnt the main reason it is considered the best collateral over as you said, oil or diamonds. I just dont see it as a fair exchange.

The fed holds gold as reserves because of the (now defunct) gold standard. So when the dollar was balanced against a weight of gold, the fed had to hold X amount of gold in reserve to guarantee the value of Y dollars.

When the gold standard was abolished, this reserve gold changed from a guarantee to simply gold in reserve. So now the gold at the fed is only worth it's weight in paper currency, it no longer affects the value of the currency itself.

- August

[Susurrus]

Probably because a. it's easier to keep gold in a vault than oil b. gold has retained value c. easier to acquire than vast amounts of diamonds and d. they already had the gold, so why switch it for something else?

[OhYesIdid]

Don't underestimate the power of TRADITION (http://www.youtube.com/watch?v=QPFuuLVoCrs). Gold's value has been artificialy inflated in recent years, and it's also useless.

Warren Buffet say “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

We only value it because society says we should value it, there's no use to it since we've got paper money. Let's also remember that if the apocalypse were to happen tommorrow, as these assholes seem to want to imply, people wouldn't obey the man with the most gold, they would obey the man with the most food, shelter, water, and weapons. I think that oil is, in fact, a sounder investment, since its value is obviously increasing daily. Gold, however, is a bubble waiting to burst.

[sanpal]

No doubt gold is money. I think money is forming spontaneously, independently from choice of separate person or group of persons. Currency (paper or electronic) is only treasure notes which are printed by state bank to help people to do trade actions and which have to contain gold or another product of human's labour with high containing of concentrated labour. Not tieing of modern currency with "gold", in my opinion,could mean an invention of (international) financial oligarchy to make different schemes of robbing masses of people the results of their labour. (Under "gold" I mean gold or any other commodity suitable or useful for this aim).

[OhYesIdid]

I'm sorry, sanpal, but your post is a bit incoherent, might wanna fix that. From what I can gather, though, it seems you're blaming the financial trickery that caused the 2008 Great Recession on abandoning the gold standard. However, limiting ourselves to the amount of gold around would be limiting the amount of whealth in the world, not to mention giving extreme power to gold-owners. Anyway, banks were fooling industrialists into mad schemes as early as the ninteenth century, the difference is that nowadays the old captains of industry have died and its the shareholders and the financial executives who run things.

[Aspiring Humanist]

Gold is a metal that serves no practical uses that makes it worth as much as it does
It's worth money because we say it does. And the economy got off the gold standard way back in the 30's. Now we're in a fiat economy

[sanpal]

I'm sorry, sanpal, but your post is a bit incoherent, might wanna fix that. From what I can gather, though, it seems you're blaming the financial trickery that caused the 2008 Great Recession on abandoning the gold standard. However, limiting ourselves to the amount of gold around would be limiting the amount of whealth in the world, not to mention giving extreme power to gold-owners. Anyway, banks were fooling industrialists into mad schemes as early as the ninteenth century, the difference is that nowadays the old captains of industry have died and its the shareholders and the financial executives who run things.

Perhaps you are right, money having gold standard don't protect from swindle. How it seems to me, Jamaican currency system let unfair exchange in more degrees. Though I don't understand this question enough what would be better to use as money in the transitional period. But market system will need it.

[Rooster]

Then why does the federal reserve have large gold holdings as value to the currency? Why not other things, as Paul asked. Surely tradition isnt the main reason it is considered the best collateral over as you said, oil or diamonds. I just dont see it as a fair exchange.

Gold doesn't rust or spoil.

[Zanthorus]

Thanks for posting this CotR, it's something I'm interested in myself. I think to get the semblance of an answer we'd have to begin with asking the question of what exactly we mean when we talk about 'money', and more specifically what are the particular yet essential determinations which determine the content of the money-form within capitalist society. For Marx at least, the basic concept of the money-form is implicit in the basic form of value, namely the exchange of one commodity for another. In the act of exchange we are in practice equating the products of labour to some third thing of which they are both incarnations of. This third-thing, the commodities value, takes an independent material existence in the money-form, which represents universal wealth, the commodity to which all other commodities are equated and thus made manifestations of the same social substance, differing only quantitatively. The existence of money as a seperate commodity in which all other commodities are equated is thus inherent in the basic relation of commodity exchange.

For this reason I think OhYesIdid is wrong to say that money is a mere symbol. It's true that it only has value because of society, but not because of an arbitrary decision on the part of society, but because it's existence is necessitated by the basic social relations of existing society. Money is no more a symbol than the commodity itself is such a symbol. I think rooster is correct that the durability of gold in comparison to other metals made it initially an ideal candidate for the money-commodity, although there were other candidates, most notably silver, which didn't make the cut for various historically contingent reasons.

As for whether Gold is money now that's an awkward question. Marx seemed to think (e.g. in the Grundrisse) that even if the central bank abolished the gold-standard and hence the political status of gold as money, and simply issued paper-currency, the status of gold would still be maintained indirectly, since gold would still be a commodity traded against others, with all the features that made it an ideal money-commodity. I don't think OhYesIdid is correct to say that Gold holds back the wealth of society by the way. The ability of a currency to meet the needs of trade is determined not only by it's quantity but also it's velocity. The total amount of money in America is something like 1/9th of it's GDP but every dollar bill gets used 9 times over, i.e. it has a velocity of 9.

There's an interesting piece on the issue of central banks hoarding Gold here which maybe of use here btw:

http://critiqueofcrisistheory.wordpress.com/2010/07/04/a-new-gold-standard/

[Delenda Carthago]

The question of our times is, is money gold?

[S.Artesian]

Gold is certainly still money; nothing proves it more than when the US decided to end the convertibility of the dollar into gold, demolish Bretton-Woods, and inaugurate, in general the modern era of "beggar thy neighbor."

Gold is, and will remain, accepted as payment for any and everything, unlike oil, aluminum, nickel, steel, canned goods, or shotguns.

Bernanke's a hoot, "Yes, it's a precious metal. No, it's not money." Sure. That's why the Fed holds gold reserves belonging to numerous countries in its vaults. Because it's a precious metal. That's why all currencies still relate to gold in establishing exchange rates, as opposed to say coffee beans, sacks of sugar, wheat, or U2 videos [perish the thought, I hate that fucking group. Always have].

[OhYesIdid]

Whoa, good answer, Zanthorus. However...I was referring more to glennbeckian gold hoarding scheme scares. Yet you raise an interesting point: in order to exchange two or more commodities, a neutral commodity is needed to measure their value. But, since we no longer use the gold standard, is money now that commodity? that seems a bit odd, no? Your post also seems to imply that in order to ever exchange goods we must use a third exchange good, be it gold, silver, rocks or cocoa, am I correct? If so, does this not make most of left leftism moot? I don't think so. I think a free association of free people would debate and exchange goods for their usefulness, not for however many coins or seashells someone else is willing to give them for it. Do you not think so? Do you think money is necessary for any economic relationship? I'm genuinely interested in this topic, so answer would be much appreciated.
Also, Greece should default.

[KC]

Gold is, and will remain, accepted as payment for any and everything

How many stores can you go into and pay for the price of your goods in gold?

[S.Artesian]

How many stores can you go into and pay for the price of your goods in gold?


Good question. But.... since governments usually reserve the right to themselves for using gold as the "man behind the curtain" or the "metal behind the man," it's a little bit skewed in a different direction.

Tell you what, go outside any established commercial business; try something like say, drug trade, weapons trafficking, or buying a government-- you think any of that won't take gold as currency?

Now think of paying off in coffee beans, sacks of sugar, pork bellies, even cocaine. There's going to be a bit more reluctance, no?

[KC]

Tell you what, go outside any established commercial business; try something like say, drug trade, weapons trafficking, or buying a government-- you think any of that won't take gold as currency?

Sure, in the same way that it would take diamonds. Just because a commodity is exchangeable doesn't make it money.

[jake williams]

Ron Paul is a fucking lunatic who asked a pretty idiotic question compared to anything else I could think to ask Ben Bernanke. Frankly Ben Bernanke gave pretty reasonable answers.

Gold does not at all have some magical role in the history of money, but it does have some measurable utility. Of course its utility as a means of exchange is dependent on its utility outside its utility as a means of exchange, but it's significant that gold is durable, easy to break up into parts, and so on. The fact that people also appreciate it as being pretty, as well as the fact that it's a valuable industrial commodity in electronics and some other things, and that's rare, still makes it useful as a means of exchange.

That's also true of other commodity medals, including silver, and it's true to an extent of diamond, although diamond causes some other problems.

But it would be silly to say that gold "is" money. Gold has often been used as money for reasons other than tradition, but it makes about as much sense to call it "money" as it does to call T-bills money.

[S.Artesian]

Sure, in the same way that it would take diamonds. Just because a commodity is exchangeable doesn't make it money.

Another good point. Very true, but governments don't reserve unto themselves the accumulation of diamonds.

So does gold still function as the measure of all other commodities' value, and the universal store of value? I think it does. Kind of why central banks accumulate the metal and don't accumulate diamonds, platinum, tin, aluminum, opals, or rights to oil exploration.

[KC]

Another good point. Very true, but governments don't reserve unto themselves the accumulation of diamonds.So government reserves now qualify whether a commodity is money, and not the social relations which treat a commodity as a universal representative of value? Further, it is quite obvious that in terms of money commodities they generally only exist as a singular money commodity, and in periods where there are coexisting money commodities one generally falls out of circulation due to the inconvenience of having two prices. Based on that, are you now claiming that currency is not money?

Does currency not serve the purpose of money exactly, i.e. the universal standard of value and a means of circulation? The problem you seem to have with this is that currency has an exchange value but no value itself (at least, its value doesn't factor into its exchange value), yes? But why is this a problem? One need only to look at the process of exchange to see that this is not an issue, but rather the conclusion of the development of the money commodity itself. Marx himself recognized this right in Volume 1 of capital when he stated that exchange relations mask what is going on behind the scenes. Nobody thinks to themselves "Okay, I'm going to sell my 20 yards of linen to get an equivalent value in gold, and then use that gold to buy a gun." When people conceptualize money, they think of it in terms of exchange value: they think of the value of money as what they can buy with it. It is the same with fiat currency, only the idea of equivalent labour is shrouded not in the individual act of exchange, but in the sum total of exchanges.

For example, when I sell my 20 yds of linen let's say I get $500 and use that $500 to buy a gun. Economic anomalies aside, we can conclude based on the labour theory of value that the 20 yards of linen has an equal value as the gun, even if we mediated the exchange through paper that is worthless. But the paper, in reality, is not worthless, for it has exchange value. Money, like value, is a social relation and as such it is recognized as a universal bearer of value in total.

All this talk about "symbols" seems to ignore the fact that everything we're talking about is socially developed, i.e. are mere "symbols". Value is only recognized in a period of generalized commodity production and exchange, it is therefore a product of social relations and as such exists in our minds. Money, as a special kind of commodity, is the same, as is fiat currency.


So does gold still function as the measure of all other commodities' value, and the universal store of value? I think it does.How can you reconcile this with the obvious fact that gold isn't socially recognized as a universal medium of exchange? You seem to be making claims and not addressing the problems that arise with them.

[S.Artesian]

You don't think gold is recognized as a universal medium of exchange? I disagree. That's what forced the US to suspend the convertibility. That's why central banks accumulate it.

Accumulating gold does not disqualify the social relations of production that give gold this special place. It verifies it.

Gold doesn't have to be used in every exchange, but it does stand behind the totality of exchanges. If fiat currencies could stand alone as money without any recourse to gold, then why the flight to gold during periods of economic disruptions?

No doubt when people think of money, they think of what they can buy with it. However when the fiat currency can't buy things, people think of gold as money. So what does that mean, it's what people "think" that determines whether or not something is money?

When Britain left the gold standard, what 80 years ago, did that mean gold was no longer money?

And when Bretton Woods established the fixed rate convertibility of the dollar to gold, that reestablished gold as money? And when Nixon suspended that convertibility, gold was no longer money?

We're forgetting what accompanies these actions-- not the expansion of accumulation; not the harmonious, beneficent, process of accumulation, but the breakdown in accumulation-- the self-devaluation of capital during which conversion into gold would be the burden the currency issuers could not bear.

The point being it's not a legislative function that makes gold money; it's the process of exchange itself. The breakdown in accumulation requires governments to disconnect from gold as the devaluation of capital is manifested in the depreciation of currency.

The bourgeoisie can never escape their mercantile past. It always catches up to them.

For gold to no longer be a store of value, or the universal equivalent, it's going to take a bit more than the bushels of fiat currency sloshing through the markets-- it's going to take the abolition of value production.

[KC]

Gold doesn't have to be used in every exchange, but it does stand behind the totality of exchanges.But money isn't simply something that "stands behind the totality of exchanges". It is not simply a store of value but also a medium of exchange. Currency serves both of these purposes in the sense that currency is representative of the sum total of all values it represents and at the same time is a medium of exchange.

You are right in a sense when you say that gold "stand[s] behind the totality of exchanges," but only in the sense that gold is a portion of those sum total of values that currency represents, and a significant one at that.

A question for you, then, would be, if gold is the money commodity, then what is its relation to currency? Certainly currency isn't a representative of the value of gold, as we are discussing fiat currency and not the gold standard. What value does currency, as the universal means of exchange, represent?


If fiat currencies could stand alone as money Fiat currencies do not "stand alone" as money they are money because they are representative of the values of all commodities and are a universal means of exchange.


why the flight to gold during periods of economic disruptions?People turn to all kinds of things in periods of economic disruption. Does the increase in US Treasury Bonds mean that they are a store of value or even money?

With that said, I think that the flight to gold is due to the social recognition of gold as a store of value. This, however, does not make it money, as I have already said. Gold is missing the other characteristic of money, i.e. its recognition as a universal means of exchange.



When Britain left the gold standard, what 80 years ago, did that mean gold was no longer money? Yes, of course it did. In order for gold to be money it has to be directly tied to the currency, i.e. the currency has to represent the value of the gold. Once currency is no longer tied to gold it is then tied to the sum total of all values, not just gold.



The point being it's not a legislative function that makes gold moneyYet you were the one that was earlier claiming that gold is money due to its status as a government reserve. :confused:

What do you think will happen when the gold bubble bursts?

[Klaatu]

Is gold really considered money anymore?

NO. Gold is not money, nor has it been money, since 1971. There is no more "gold standard." It is unnecessary.

[S.Artesian]

But money isn't simply something that "stands behind the totality of exchanges". It is not simply a store of value but also a medium of exchange. Currency serves both of these purposes in the sense that currency is representative of the sum total of all values it represents and at the same time is a medium of exchange.

That is correct. Gold does not serve as the medium of exchange



Got to think about this. Strong point in your argument is that gold is not serving as a means of exchange.

Regarding the issue of government reserves-- that's a product of the status of gold, not a producer.

One thing. There are reconciliations of trades between countries that do involve the Fed actually moving gold from one part of its vault-- say the space allotted of country X's gold reserve to the space of country Y. I read about this some years ago in the Wall Street Journal and had this image of employees using fork lifts, moving portions of Colombia's gold over to Germany's square. Had me laughing for hours.

[#FF0000]

My textbook for the econ 101 class i took in community college could have answered ron paul's question. what a dummy

[sanpal]

With that said, I think that the flight to gold is due to the social recognition of gold as a store of value. This, however, does not make it money, as I have already said. Gold is missing the other characteristic of money, i.e. its recognition as a universal means of exchange.


This (possibility of the flight to gold during periods of economic disruptions)
give me more conviction that gold is money.


In order for gold to be money it has to be directly tied to the currency, i.e. the currency has to represent the value of the gold. Once currency is no longer tied to gold it is then tied to the sum total of all values, not just gold.




"Flight to gold" is that "tie" of gold to the currency. Gold is a part of " the sum total of all values", one of the commodity as money is which is the commodity too.

[Delenda Carthago]

While the dollar is going down down down and the euro is one step away from the cliff, gold and (mostly) silver are rising up like crazy.

You do the math...

[Le Libérer]

My textbook for the econ 101 class i took in community college could have answered ron paul's question. what a dummy

Considering the answers to the OP, maybe he should log into revleft. ;)

[KC]

Gold is certainly missing one of the fundamental characteristics of money, that of universal exchangeability, so I think this means that we can conclude that gold is not money. It has been brought up that in times of economic crisis people turn to gold, and that this suggests that gold is money. But what this really suggests is that gold is merely socially recognized as a store of value. People aren't buying gold to exchange it with one another for goods; they are buying gold because they are interested in preserving their wealth in a declining economy. When the economy starts improving, and/or when the price of gold reaches a certain point, individuals are interested in exchanging their gold for currency so they can tap that value reserve to utilize it for the purpose of exchange. Thus the rush to gold in periods of economic decline is strong evidence not of gold being money, but rather the opposite, that the attraction to gold is precisely because of the fact that it is not money.

The primary purpose of money is that of a social lubricant, i.e. as a means of easily facilitating exchange of goods and services by having the value of all commodities represented by it. Its means of satisfying that purpose is what Marx analyzed in the beginning of Capital. When gold is a money commodity this purpose is satisfied by trading your commodity for an equivalent value in gold, and then using that gold to purchase an equivalent value in any commodity. But the means of satisfying this goal inevitably change along with changing circumstances.

Let us take Marx's example a step further. Let us discuss currency in the realm of Marx's analysis. Let's start from where we left off in the previous paragraph. When gold itself is the money commodity, one performs the sale/purchase cycle as listed above. But what about when we introduce currency? Let's say that we arrive at a point in history when currency notes are printed and directly tied to gold, so that a 1 pound note represents a specific amount of gold. Gold here is still the money commodity, but what then does currency represent? How is exchanging your linen for the currency note different than exchanging it for the gold itself? In a strictly economic sense, there doesn't appear to be much difference. The currency note is recognized to be a symbol representing a definite amount of real, tangible gold.

But there is actually a very large difference, a leap even grander and more profound than the development of the money commodity itself. In the development of money, the money commodity is socially recognized as the universal equivalent, i.e. that the value of all other commodities is reflected in it. This is due in part to the fact that the money commodity itself has value, and therefore that it is possible to discuss equivalency in terms of value. Yet currency has no value. The development of currency requires a leap from the recognition of a money commodity as a means of exchange, to pieces of valueless paper being representative of the money commodity. The introduction of currency introduces a further abstraction from value itself. Currency itself is completely worthless; in order for it to have meaning it has to be socially recognized as a symbol of the value of gold.

Yet under the gold standard the value of currency was tied directly to gold. Being a symbol of gold, currency overcame the inherent limitations of the exchange of gold itself. Currency is easily exchangeable, easily produced and the wearing of currency does not degrade the value of that currency as it does in the direct use of gold as a commodity. In the same way that the money commodity overcame the limitations inherent to exchange, currency overcame the limitations inherent to the money commodity. In the trade of gold as the money commodity itself, gold merely appeared as the abstract representation of value; in currency, this abstraction became manifest. Value in its social life as currency was alienated from physical manifestation.

But it wasn't completely alienated. Currency, for all intents and purposes, served as a symbol, a representative, a placeholder for gold. It was still tied directly to a single money commodity - gold - and therefore was bound by the limitations of this relationship. In the development of the global economy, the tying of currency to a single commodity provided numerous problems. This limitation had to be burst asunder; it was burst asunder. The collapse of the gold standard was a necessary development in the history of capitalism in the same way that the development of the money commodity itself was. This alienation had to be brought to its conclusion.

Fiat currency is the complete alienation of value from physical manifestation and its ultimate fetishization. In the development of the capitalist economy it became possible for a valueless piece of paper to represent the value of all commodities in general. The economy has developed to such an extent, has become generalized and universalized to such an extent, that the idea of a single money commodity is not only superfluous, but rather a hindrance. Currency is socially recognized as a symbol not for the value of a single commodity, but rather the sum total of all values of all commodities. Fiat currency (because of this abstraction from the physical manifestation of money in a single commodity) is the most efficient means of exchange and accounting. As a symbol of a discrete portion of the sum total of all values, it represents value in abstract rather than the value of a single commodity.

Fiat currencies have no money commodity because the role that gold previously played is now played by all commodities in existence.


We could study the historical development of the capitalist economy but I don't feel like going into more detail than is necessary because I'm getting lazy with this post. One only needs to think of the integration of the capitalist economy in modern times as opposed to when Marx was writing to know that the realization of fiat currency was impossible in Marx's time because it was not possible to have currency realize the sum total values of all commodities, simply because the economy wasn't integrated to such an extent to make it physically possible.

[Dean]

Bernanke eluded the question. But its a good one. Is gold really considered money anymore?

No. We have fiat currency which allows nations to provide currency whose value reflects economic needs in a much more fluid manner.

The US dropped the gold standard because speculators were manipulating US currency with gold prices. Contrary to what many people think though, US currency is at least partially backed by hard assets - notably land and capital holdings. My macroeconomics book claimed that the money was backed by "nothing more" than government guarantee, but a cursory glance at any Federal Reserve web page will tell a different story.

[agnixie]

How many stores can you go into and pay for the price of your goods in gold?

In fact, entertaining tidbit. One of the crises of the middle ages got so bad that gold was devaluated hard enough that people didn't really accept it. Venice had basically swamped european markets with gold for a short time (iirc it happened towards the end of the 14th century).

Gold is only a stable currency when it's stabilized by a state, and depends on confidence, like all other currencies. It's shiny fiat, no more.

[KC]

Gold is only a stable currency when it's stabilized by a state, and depends on confidence, like all other currencies. It's shiny fiat, no more.

This is masking the issue, to an extent. Commodity prices, and even value, are socially recognized quantities, meaning that they can easily become worthless provided certain historical circumstances permit. I don't like calling it a fiat because that's equating it with fiat currency, which obviously is an incorrect equivalency. But you are right in that sense.

[Klaatu]

Gold is certainly missing one of the fundamental characteristics of money...

Well-written essay. But then money itself is just what is the agreed-upon exchange device.
We could actually declare spark plugs to be the country's medium of exchange, as long as this was accepted by the public.

Hell, the ancient Romans used salt as currency (salarium... hence the term "salary")

[KC]

But then money itself is just what is the agreed-upon exchange device.

Money is most definitely the agreed-upon exchange device, but in analyzing money you have to go deeper than recognizing such a simple fact. You have to study the money form from its establishment as the money commodity through its development and own self-negation. In a very vague, mechanical sense, sure, one could say that spark plugs could be money: in fact, anything can be money from such a standpoint. You could have used an even more extreme example - Rai stones - though it would have subverted your point as they in fact were used as money. A commodity merely need be socially recognized to play such a role in order to become it. ("For instance, one man is king only because other men stand in the relation of subjects to him.") But such silliness completely ignores the real questions, i.e. why does a certain commodity become the money commodity? How does the money commodity develop? What relation does it have to the development of the economy (i.e. capitalism) as a whole? In analyzing these questions, in going deeper and looking at the development of money, it's quite clear that spark plugs can't be money in past or current circumstances because they will never be recognized as such (barring certain post-apocalyptic zombie-horde scenarios where spark plugs play a vital role in one's survival, of course).

The development of gold as the money commodity was necessary to the development of economies. It overcame the profound limitations inherent in barter economies or the implementation of other forms of money. Its physical attributes facilitated its rise to dominance as the money commodity. Similarly, currency, as a symbol of gold, overcame the limitations inherent to gold as the money commodity. Fiat currency overcame the limitations inherent to the gold standard. All of these arose out of historic necessity; these were limitations that needed to be destroyed in order to faster and more efficiently facilitate the expansion of capitalism, and all could only come into existence at a certain level of development of the capitalist system as a whole.

So tl;dr version, yeah, sure, you're right, from the perspective of a sophist anything could be money. But we both know that's not true in reality.

[agnixie]

Except anything can be money, really. Some mesoamerican countries used cocoa beans as money. Gold is an agreed upon medium and its value as currency is based on that, otherwise it's back to just being barter. The gold standard only became standardized in the 19th century, and just barely; a lot of regions only minted silver very late, and the value of gold relative to silver fluctuated wildly at times (from what I recall, it once hit a low of 4:1 and today the value similarly goes up to 50:1 and above because of gold bubbles)

[KC]

Except anything can be money, really.

Not sure what the "except" is for, as I agree with your whole post.

[Klaatu]

KC, I think the criterion here is rarity. Gold is rare. We could not make wood into money, because wood is abundant and wooden coins can be easily counterfeited. The money needs to be rare and impossible to fake. Can't fake gold. It is or it isn't.

(Then again, isn't paper money actually wood?)

[KC]

KC, I think the criterion here is rarity. Gold is rare. We could not make wood into money, because wood is abundant and wooden coins can be easily counterfeited. The money needs to be rare and impossible to fake. Can't fake gold. It is or it isn't.

Sure, rarity is one aspect that made it a prime candidate, but there are of course others, some of which Marx laid out in Capital. I'm not really sure what we're debating here anymore, you keep posting things that I basically agree with.

[Klaatu]

Sure, rarity is one aspect that made it a prime candidate, but there are of course others, some of which Marx laid out in Capital. I'm not really sure what we're debating here anymore, you keep posting things that I basically agree with.

Not really debating anything, just picking your brain, comrade. :D

[Vilhelmo]

"Except anything can be money, really."

No.
Money is not & never has been a commodity.



otherwise it's back to just being barter.
No.
There is no documented case or any society using barter as its primary mode of exchange or as occurring on anything more but the rarest of occasions.



"Gold is an agreed upon medium and its value as currency is based on that,"

Not true.
When gold was used to represent money its value as money was never determined by its bullion value.
Rather they were all debt token whose value was set by fiat,


"The gold standard only became standardized in the 19th century,"

A Gold Standard is an example of government fiat money with self-imposed voluntary constraints.
The government sets the value of gold instead of leaving it to the market & promises to exchange on-demand, currency for gold at this fixed rate.
Government fiat money with government price fixing & on-demand redeemability.
Money still represents government debt & is still valued by fiat.


Commodities are commodities & money is money.