Gold-Something Different

Gold-Something Different

In doing research for some DVDs on money it became apparent that many of the economists, even of the Austrian school, had made a fundamental error with regard to the primary function (and origin) of money (gold).

The primary function of money is that it is a good that stably holds its value over time.  Only then can it become a medium of exchange.  Usually this is presented the other way round which is clearly wrong.  ‘Medium of exchange’ is a derivative function.

Some go to an extreme with the error and suggest that a  medium of exchange is the definition of money.  From that error it is possible to deduce many other errors.  At the extreme of such errors would be the idea that pieces of paper could be money.

However, I digress.

Then I got to wondering what made gold a  good in the first place.

Where was the demand for gold as a good?  It had no practical value whatsoever.  That of course was the clue.  The value of gold was not to the man, the value of gold was to the woman.  Gold was, is and always will be the most beautiful substance on Earth.  As it also happens to be the most malleable it was ideal for jewellery.

One ounce of gold can be made into a wire 35 miles long, or beaten down to a thickness less than one five millionth of an inch… at which point it becomes translucent.  Not that the early jewellery makers has such skills of course.

The point is that it was the desires of women that made gold into a tradable good.  Not only was it a highly desirable good, it was utilized in such a way that it continued to exist in a form (ornamentation) that could very easily recovered as money.

Not a single society has been discovered that did not value personal adornment of no practical value whatsoever.

From that point gold began its long journey to being the good with the lowest rate of decline of marginal utility.  Silver was just behind, and for exactly the same reason.

Without this demand from women for the metals that looked beautiful, neither gold nor silver could ever have gained monetary status.  In terms of minimal decline of marginal utility there is nothing else that comes in close.

Without that lust for the beautiful metals by women could anything else have filled the monetary void?

The answer is almost certainly ‘no’.

It was women who determined our money.  Without money there is no means of fair and honest exchange.  Without a means of fair and honest exchange there can be no lasting society, let alone a civilisation.

It is women who have given humanity its money and its civilisation.  Without women we would still be living in the age of barter and running around in smelly animal skins.

Time to go home and buy the wife some red roses, or maybe a gold necklace, or maybe both.

Is this why the first great civilisation of the Celts was Matriarchal?  Did our forebears understand a profound truth that we have subsequently forgotten?