Re: recent references on 'problem' of money commodity?

From: cmgermer@UFPR.BR
Date: Wed Dec 01 2004 - 13:39:53 EST

In a reply to Paul B, Jerry wrote:

Some time ago (on November 19) you wrote:

As a matter of fact Fred, I know of no one who would not be prepared to
accept a certain quantity of gold for any of their property , ( should
they wish to sell it, even if they later had to exchange it for paper for
other reasons), that is to say that this commodity remains the money
commodity, par excellence..  <<<

Interesting, since I know of no one  (save, possibly, Claus, Akira, or
yourself) who would be prepared to accept a certain quantity of gold in
exchange for their property.  I know that if I wanted to sell property
like a house (which I don't own) or a boat (which I do) I wouldn't accept
gold as payment.  To begin with, I would have no confidence that it was
real or that it was 'pure'.  I certainly wouldn't want to pay the extra
expense and put up with a delay to hire an appraiser. Also, I would feel
very uncomfortable accepting gold from a security perspective (I'd much
rather receive a bank check).  And then I'd have the  hassle and delay of
selling the gold.  And -- given the frequent fluctuations  in the price of
gold (yes, gold _does_ have a price) -- I would feel  uncomfortable
holding on to the gold since I am not interested in gold  speculation. And
-- more to the point -- I know of no one in my  community who would accept
gold as payment for property of any  significant worth.  If someone went
to my landlord's office and proposed to pay for real estate in gold, s/he
would get laughed out of the office.

You might be right in claiming that gold is no longer money today, but
your arguments are unconvincing and don't support your claim. The essence
of your argument is that gold is not money because it does not circulate
as money. Well, such an argument is only acceptable in a quantity theory
framework, because according to this theory money has only one function -
that of means of circulation - and for this reason money cannot have value
of its own. In the framework of Marx's theory your argument is
unsustainable, because in this case the prevalence of the function of
means of payment and the development of an integrated banking system imply
that money does NOT need to circulate in person, without being displaced
from its role as money.
I think in normal conditions I would not accept (and I guess no one would)
an uncertified piece of gold in the example you gave. I wouldn't because
gold coins are not issued for the the usual functions of means of
circulation and of payment. This doesn't prove your point either, because
gold is issued in certified bars which perform very specific functions of
money, allowed by the nature of the global monetary system (credit system
in Marx's terms). Thus, the fact that you and I don't use gold bars in our
activities does not prove that they don't perform functions of money.


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