Inducing and Exploiting the Growth of the Intrinsic Value
It has been said that the scarcity of that which is used as medium of payment keeps its value high. But this is based on the fact that people consider it valuable and desirable. And what direct survival value does gold have?
It’s called intrinsic value: the value of the thing for what it is in itself, not the value of something else that the thing represents.
Look at gold again: can you eat it? How useful is it, how many uses it has in everyday’s life? How many actual uses where it performs better than something else?
And it was even more so around stone age. So the people’s consideration of its value has changed in time despite its very low intrinsic value. How come?
Things do not just happen, remember? Things are caused by individuals.
To achieve monopolistic control over a medium of payment one has to own as much of it as possible in the first place. Then one can do something to induce people to increase their consideration of its intrinsic value.
This happened during the first millennium before Christ: the priestly class achieved a status of intermediaries with the gods, and thanks to this privileged position accumulated vast amounts of gold, among other goods, without having to give much of anything tangible in exchange. Then used this privileged position to increasingly foster in the populace the idea that gold had intrinsic value.
To begin with, one exploits this situation with the initial theft: if what one owns has increased its intrinsic value in the eye of people, one’s purchasing power has increased accordingly; if one has not produced and given in exchange for it a corresponding amount of product/purchasing power, one has stolen purchasing power from others.