This is terrible analysis in my view from the Khan Academy. Watch this video and read my response to it...
Interesting video on history but flawed logic on what money actually is.
Austrian economics talks about these things extensively: the definition of money, the value of it, what is its marginal utility, why do we even have it?
He’s correct in that gold was a transition from getting people to understand that what backs a “money” is some value of some sort. The process he describes is not new. It has happened repeatedly for a very long time and usually for nefarious reasons. Not because some sort of enlightenment was reached about what money is.
The problem, and Ludwig Von Mises addresses this in his book, “Human Action”, is that governments have never been able to restrain themselves from printing more money than their economies can provide for. Always the debt issuance and the interest that must be paid back grows at a faster pace than the labor of the people can provide for and they end up hyperinflating their currencies and what is there to provide the safety net? Gold and silver.
Watch this video:
James Turk talks about how technology has evolved and how our understanding of HOW to use gold as money must evolve also.
The apologists will always try and downplay the value of gold by saying it does nothing. That guy’s demonstration of a plane landing was ridiculous. Make believe doesn’t work in the real world. I could make a drawing and create any number of instances and lead you to the decision I wanted you to make by creating scarcity. Of course I would choose food over gold. But given an option I would choose gold over fiat. He could just as easily have put a big pile of money on the one island and you still would have landed on the other island. Why did he choose gold? Paper currency or gold both can represent taxes, labor, land, intellectual property, etc. The only difference is that getting gold takes labor and time and capital. With paper I can print a 1 or 1,00,000,000,000 on a piece of paper and the cost is no different.
The next transition for gold is that its price has to be allowed to trade freely. Governments don’t want this because they then have to keep adding gold supply to the reserves in order to grow their spending budgets and how can they buy votes if this is so? Fiat was created as a matter of convenience. Gold was heavy and clanged around when you walked announcing your wealth like an alarm bell. Gold can now be traded digitally in infinitesimal amounts.
And let’s be realistic, the socialist in everyone’s heart WANTS government to overspend. They want a redistribution of wealth and they want other people to pay for it. Especially if they are overseas and don’t look like us or talk like us and we won’t see if they die or not from our actions. Many will resist the truth of that but that’s only because they want to resist evolution. That evolution is the evolution of the mind. Evolution of the mind is a recognition that you are not in communion with God and being in communion with God is THE most difficult thing anyone will EVER achieve in all of their lifetimes. Therefore: paper money!
The possibilities that we can achieve on this Earth are staggering but we are having great difficulty getting there because at one end of the spectrum there is a class of people overcome with a sociopathology where they must have more than everyone else and liken themselves to demi-gods, the “Masters of the Universe”. And at the other end of the spectrum you have a class of people who are overcome with apathy and laziness who would feed off their host and take, take, take and do no work. Most in the middle are confused. But it’s the middle way that can set you free.