Why do we still care about the gold?
Understand what the metal truly means to society
Leer en Español: ¿Por qué nos interesa el oro?
Since many years back, the metallic, yellow element is king among all other metals since it is the most malleable and ductile; it doesn’t oxidize. Being useful, scarce and attractive has made gold the primary source of greed in human history.
Why do we still care about the gold?
The Second World War defined our days. The United States of America’s management of the post-war scenario made a rupture from the past by seeking breakthrough unification of a financial system that has remained solid to our days.
In 1944’s, Bretton Woods moved humanity towards a monetary policy with a simple idea: The Federal Reserve keeps the world’s gold or at least 75% of it. The gold would back up the dollar, which becomes the standard unit of money for business of all countries that adopted the international monetary system.
The international monetary system proved efficient because all sovereign money is compared to gold through the dollar, making trading easier. Globalization has created an integrated world where every nation offers its advantage in exchange for other’s advantages. Exponential innovation proceeded.
Every time a new deal is conducted, value is created; it’s IGNORE INTO monetary policy’s mechanics to use that information in order to leave room for the new currency to exist. Since growth is exponential, a large quantity of dollars had to be printed, but since every dollar has its equivalent in gold, a new challenge surged.
Our faith in credit resides on the promise of payment when it used to reside on who owns the gold. As the industry grew, we trust who has control of the industry and has managed world finances separated from political will. In accordance, Richard Nixon established the fiat monetary system where the dollar would not correlate to gold.
The cube of 20 meters on each side that constitutes the world’s gold reserve, was enough incentive to create a collective conscience that is nowadays directed to support a righteous living for more than 7 billion people.
Gold’s actual value is the mixture of its uses in electronics, computers, robotics, aerospace, and medicine. Not that gold is overrated, but we definitely are not seeing it objectively which becomes a potentially dangerous habit; it leads to us, a society, being blinded and not being able to see new alternatives to our economic problems.
Latin American Post | David Eduardo Rodríguez Acevedo
Copy edited by Susana Cicchetto
