Thursday, July 08, 2004

Cards to Replace Notes in Our Affections

Here's a story that ought to make "gold bugs" think a little: credit and debit cards are about to overtake cash as the primary means of payment, in Britain at least; no doubt the changeover's already occurred in the United States. How would this be possible in a world where gold was still regarded as the only legitimate store of value?

I don't know about some people, but the thought of carrying valuables on my person has always filled me with discomfort; if you're of the same mindset, imagine what it would be like to be a manager of a financial institution, having to worry about transfers of huge amounts of physical stores of gold every settlement period. If anyone is tempted to offer the excuse that all that would be necessary would be a transfer of title over gold, rather than of actual gold bars, I must ask why we ought to believe that this would be any better than the system of fiat money we have now: what is to stop the other party from welching on the promise, especially if said party is located in a foreign jurisdiction?