Quote:
Originally Posted by woj
I'm not sure what you mean, one of the requirements for something to be "money" is that it is "a medium of exchange." Gold clearly does not satisfy that requirement, hence it's not "money."
It was considered "money" in the past, could possibly be considered "money" in the future, but today it's just a precious metal like Bernanke pointed out.
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The majority of the world's central banks still keep gold as part of their reserves. Would they do this if gold were simply something precious? If that were the case they could also use diamonds, paintings, rare baseball cards, antique chairs, expensive cars, domain names, designer purses, old postal stamps,.... in reserve.
Gold is still a form of money. The fact that gold is not being used in day-to-day transactions in stores, at the bakery etc is simply because the government prohibits people from doing so. (legal tender laws)
A shovel can be used for digging holes in the ground. If one day the government makes a new law prohibiting people from using shovels to dig holes in the ground and from that day on only government officials will be allowed to use shovels to dig holes in the ground, then that doesn't mean that your shovel suddenly ceases to be a shovel just because you are no longer allowed to use your shovel to do what you would normally (be free) do with a shovel.
The fact that the government prevents ordinary people from using gold as a medium of exchange does not change the fact that
- it is still being used by the government (and central banks) as money.
- it would again be used as a medium of exchange if the government restrictions were to be lifted. (either in physical form or a kind of promissory note or its digital equivalent)
- it is still being used as a store of value (even in countries that have legal tender laws).
- it is still being used as money in other parts of the world.