Gold, Technology and the Death of Currencies

Interesting insight from a guest writer at Baseline Scenario:

But I do know that in the year 2160 (give or take a century) gold will no longer be viewed as money.  Why?  For the same reason that all commodity based money systems have collapsed—technology made their production too cheap. Gold bugs like to talk about how every paper based money has failed (or will fail), but they ignore the equally miserable track record of commodity based money systems.  For example, the cowry shell, which was used in ancient China and India, a weight of barley (the shekel), copper, cigarettes, or that most insidious of monopolistic money systems—salt.

So how did these money systems fail?  Did their cultures implode?  Did their governments fail?  Quite the contrary, all commodity based money systems were destroyed by one simple factor—technology.  At some point, technology enabled low cost production of the commodity, and the currency collapsed.

via The Price of Gold in the Year 2160 « The Baseline Scenario.


  1. Great point. While there are reasons beyond the "one simple factor – technology" that caused hard money systems to fail, I can't imagine anyone believing that money supply should be tied to whether a country just found a new gold mine or not.

  2. From what, seabed mining, sea water deposition, asteroid mining, radioactive fission? Oil has countered this trend for nearly a century, but we may eventually grow or manufacture it rather than drill for it, or just cease using it like whale oil. But any particular prediction is fraught with other possibilities.

  3. Money should be based on the one thing that drives society, energy. Hydrogen, barrels of oil, electricity,… the details can be worked out, but that is the only way to both avoid debasement and have some rational connection to the economy.

  4. one word: bitcoin


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