Originally Posted by
Steven Douglas
I don't know if I would phrase it that way. At the most fundamental level, absolutely everything that has value in exchange is, technically speaking, a form of money. It may not be a common 'medium' of exchange, but if it has value in exchange for anything, it is money. That includes anything that cannot be stored or reused, but only consumed, including labor--the only currency that some have to trade in.
Anyone who doubts whether oil is money doesn't understand the first thing about what has kept FRN's the global reserve currency since 1973. Most of the world's oil is priced only in fiat dollars, making oil a fiat currency by proxy. Oil has an exponentially increasing exchange value derived from the facts that:
a) oil is always in demand;
b) the supply of fiat currency that everyone must acquire to buy most oil from its sources is being exponentially inflated, and
c) constant consumption and ever-limited "current" capacity assures constant, continual scarcity
Because demand for oil is not going away, and because the supply of oil on any given day is truly finite, its value "as money"--even by proxy--only increases as more of it is consumed.
What gives silver its value is an amplification of what gives gold its value for similar reasons. Like gold and silver, copper has been used as money since BCE, and that has everything to do with history, and nothing to do with belief.
Aside from whatever amounts have been lost along the way, MOST of the 'junk' coins--gold, silver, nickel and copper--that were minted but are not in circulation, are still above ground and in existence in coin form. Junk coins are constantly traded and stacked, but most are not being smelted into bullion or sold for consumption elsewhere. The ONLY reason these are not circulating as coinage, and therefore in greater demand as current money, is 100% due to government force, and government meddling.
If gold was as plentiful as sand on the earth it would be in use everywhere, of course, and I'm sure highly prized nonetheless. But it would also be valueless as money, owing to its lack of scarcity. The fact that a commodity that is used as money may also be 'consumed' as a commodity (not recycled and kept above ground, like gold), amplifies its value as money for that very same reason, as continual consumption is a sure-fire mechanism for continually assured scarcity.
The less of anything that is in demand there is, and the more expensive it becomes to produce, the more valuable it becomes, regardless of its usage (coinage or destructive consumption).