Vonz90 wrote:I agree, some good stuff overall, but this statement shows a fair amount of economic confusion. All money is fiat money (including precious metals, why use gold vs platinum or palladium or whatever).
No. Gold and Silver are not "fiat money".
There is an easy way to test this: go get a Emperor Franz-Joseph 1 Ducat gold coin and a Yugoslavian 5 million Dinar note.
The Austro-Hungarian empire is long dead. Habsburg princes punch the clock as investment bankers in Brussels. Yet that coin still has value. Probably about $300 at current gold prices. It's purchasing power is still about the same as it was when it was minted - it can buy you a dinner for two with a nice bottle of wine in Vienna, just like it did in 1912. There is intrinsic value in the gold and silver which survived multiple wars, and multiple changes of government.
The country called Yugoslavia, once part of the Austro-Hungarian empire, also is no more. Yet that 5 million Dinar note can be bought for $5, shipping included. That is a piece of fiat money, whose purchasing value disappeared with the State of Yugoslavia.
"Fiat" has a specific definition. It means "by authoritarian order of a king." The word is from Latin, and it is a command: "Let it be done". It is the command of kings. If the king says pieces of paper with his dog's picture on it has value, then it is done. It may not be so beyond the borders of that king's domain, but within the power of his "Fiat Dictum" it is.
As to why gold vs. platinum or palladium, it is a simple matter of chemistry. Sometime about 5000 years ago, by market forces (not by "fiat"), people figured out that gold and silver are, as Goldilocks said, "just right". They are just common enough to have a useful amount for commerce, and just scarce enough to have intrinsic value.
About 3000 tons of gold are mined every year, and about 30,000 tons of silver are mined every year. Platinum and palladium production is more like 100 to 200 tons per year. There is almost no platinum and palladium. No one would make those metals coinage metals or "money" because there is too little for any meaningful commerce.