surely gold and silver are just like notes. theyre only worth something because someone has decided so ?
Just think of why are the Ferarri cars expensive.
i dont see how gold can be so valueable when it doesnt exactly have many needy uses
Its a material for a luxury good(jewellery)! It doesnt need to be needed for one's survival in order to be expensive.
I'm just waiting for the time a large proportion of people holding US dollars ask for their gold. Cue US bankruptcy (and most probably a world recession).
Dont count on it! The gold standart is gone and the nowadays notes are simply tied to level of GDP(the amount of goods that the economy produces). Having said that, a country can allow itself to print more money given that this is in tact with the rate of change of the GDP.
Go read up about hyper inflation in Germany during the second world war, then you'll learn why printing more money is a bad idea
I had the "pleasure" to be in a country with hyperinflation at the time which, despite not from the very very worst ones, was still quite funky with prices being different from one day to the other. Not fun for most people! This is much more than a mere financial crisis as it even changes people's mentality.
Also inflation. Each year we get a pay rise, prices go up etc but where does the extra come from?
There is lots of theory surrounding this but I will try to explain quick and simple. I hope you are familiar with what "demand" and "supply" mean(you gotta be). Well, inflation can occur because of either or both of them. If people have more money but the number of goods/services available stays the same, prices will rise(thats your demand inflation). The supply inflation is sort of the opposite, if the goods offered on the market are, all of a sudden, fewer than before, but population level is the same, that makes each good dearer.
Realisticaly speaking though, most inflations occuring tend to be related much more to excessive printing of money(to cover public debt), rather than the low supply of some raw material. This is the main reason why there were lobbies towards the removal of debt of many developing countries, as their inability to pay leads them to printing money and experiencing inflation levels that bring them to crisis, which itself bring them back to square one of needing to borrow.
Sorry that Im not quoting in order!
