Gold Is Sterile
Some opponents of the gold standard claim that gold is a sterile commodity with little real value. Gold as money is barren, unproductive, and offers a “yield of nil.” Unlike land, it produces nothing. Thus, it is highly undesirable — that is, it is undesirable in the hands of the people. It is so undesirable in the hands of the people; the U.S. government, like all communist and most other authoritarian governments, denied private ownership of gold between 1933 and 1974. It like other despotic governments tried to monopolize every ounce of gold.
Monopolistic ownership of gold gives a government and its banking collaborators in crime unchecked power to manipulate the money and the people. Such control is what fiat money advocates want, except many would cut the bankers out of their criminal deal. Under a gold-coin standard with unrestricted ownership and usage of gold, the people own and control the money.
Many of these opponents of gold ignore gold’s important industrial uses, such as its use in electronic devices and jewelry. Gold’s nonmonetary uses and its use as a store of value in part gives gold its monetary value. Its use as money also imparts value to gold.
Under the gold standard, gold can offer a yield. Gold bonds pay interest in gold just as fiat-money bonds pay interest in fiat money.
Gold is not sterile because it renders a service to the holder. If it did not, no one would exchange any nonmoney good or service for it. About the sterility or unproductivity of gold as money, Hutt writes, “The essences of all these services [of money] is availability. . . . [M]oney assets are not unemployed or resting when they are in our pockets, or in our tills, or in our banking accounts, but in pseudo-idleness, like a piano when it is not being played, or a fireman or a fire engine when there are no fires.”
Money, whether in the form of gold, silver, or fiat currency, is never idle in the economic sense. Whether being spent or saved, it is always performing a monetary service. Hoarded money merely serves a different purpose than circulating money.
1. William Harold Hutt, Individual Freedom: Selected Works of William H. Hutt, editors Svetozar Pejovich and David Klingaman (Westport, Connecticut: Greenwood Press, 1975), pp.207-209.
Copyright © 2015 by Thomas Coley Allen.