True -- gold is a mutually agreed upon fantasy. The difference between it and currency is that you can't print gold -- it has real scarcity.

The future money will be grass and Disquis comments. Sorry TypeKey, you´ve been beaten out by another Central Bank.

Lots of things are scarce; that doesn't make their value any less imaginary. Moreover, there's literally megatons of gold in the asteroid belt. It would just take one trip to the belt to destroy the market for gold.

Ralph Borsodi tried a local currency on the MA/NH border about 30 years ago called the Constant. It was tied to a market basket of useful commodities - so much in food, so much in firewood, so much in metals... From what I recall, it was a useful experiment and fed into other local currencies like Berkshire Bucks and Ithaca Dollars. Time Dollars is another currency that is based upon a scarce commodity, time.

Once upon a time, I was flamed mercilessly on the WELL by calling money a virus, a variation of William Burroughs' idea that language is a virus. It's a touchey subject.

What we want is not money but the things that money allows us to trade for. I wonder whether Elinor Ostrom has looked at money itself as a common pool resource.

interesting that so many people are discussing money and its philosophical place these days (though perhaps not surprising). over at "The Archdruid Report", John Michael Greer has been holding forth on the subject, as well:

http://thearchdruidreport.blogspot.com/2009/09/metaphysics-of-money.html

http://thearchdruidreport.blogspot.com/2009/10/metastasis-of-money.html

With respect, I have to say, "Not quite." Money is only a fantasy if you think information is free and effortless. If information is negative entropy, and requires energy, then money, as a form of information, has a physical basis - it's real. I agree with you that tying it to gold is a social convention, but I also agree with A Taxpayer that tying money to something with a physical basis helps us stay real. Otherwise, we can pretend that we can make money from nothing - an idea that has led to disaster, including the recent financial meltdown, many, many times.

Yep, money is pure human fiction.

We're the only species, of 10 to 100 million, that for whatever reason, have invented this fiction.

Well, one argument against the tying the dollar to gold is that in reality it can't possibly work at this point, at least based on the quick calculations I just did.

Please check my math.

From

http://en.wikipedia.org/wiki/Official_gold_reserves

the US has approximately 8134 tons of gold. At $1000 per ounce , that comes to about USD $300B. Thus, to fully back the amount of USD in circulation (which obviously includes the national debt), your choices are:

1. Modify the price of gold by government fiat. Not possible, as it is an internationally driven value. You know, by free market trading. The rest of the world would crap themselves laughing.

2. Modify the value of the US dollar to fit the US gold reserves. We can do this. To fully back the $10T+ national debt, we would need to adjust the value of the dollar to be $0.04. Good luck with that.

3. Get more gold. Currently, the value of all the gold ever mined in the entire world is about $5T. So, mine the asteroids. Count me in!

Am I missing something obvious here?