Back when we had gold, that is what represented what was 'valuable' to us... But since carrying around gold was too heavy we came up with PAPER, and put a couple pictures and said it represented 'xxx' amount of gold.

Now paper on it's own is worthless, and the picture with numbers on the paper is just a representation of what we have in the bank, but money is just data stored by the bank... We can not exchange it for gold which is what our system of value was originally based on... Does that make money imaginary? Or am I just really tired and not thinking straight?

US dollars are only valuable because America has agreed upon that. It's not impossible for the US currency to become worthless. It takes a nation as a majority to make it worth what it is.

Heh, the Euro is about .20 cents higher than the American dollar(1.3something). I find that funny.

Money isn't really imaginary, as long as it's a standard agreement. We could just as easily use leaves as currency instead of paper, but then there would be so much that it would be nearly worthless, and to reduce inflation we'd have to burn down all the forests on the planet (Quiz: Where's that from?)

Anyway, Gold isn't worth anything either, it was just chosen because it's rare; much like diamonds and other gems.

It's just a simpler and more convenient way of representing goods, like furs and gems, that we use for trading, I wouldn't see that it is meaningless.

Although I'm not claiming to know a lot about economics, but that's how I understand it all :)

Actually, that's exactly how modern paper money came into existence. I'm not sure about China (they did it aaages ago), but here, bank notes used to be exactly that. A note from the bank. You'd take your gold to the bank, and the manager would write a note saying "I promise to pay the bearer on demand the sum of X pounds". The person who who gave the gold in could then use the note to purchase goods on the understanding that whoever had it could just go to get the gold whenever they wanted. If you look at a British bank note you'll see that they still have "I promise to pay... etc" written on them. Obviously now a pound is worth a lot less than a pound of gold but whatever. You can just see it on this picture, underneath the big 'bank of england' text at the top. It's very small, though.

Here endeth the lesson :P

[quote author=iago link=board=2;threadid=2917;start=0#msg22781 date=1065065328]
Anyway, Gold isn't worth anything either, it was just chosen because it's rare; much like diamonds and other gems.
[/quote]

I don't think diamonds are rare, they are just limited in supply because De Beers has a monopoly on them. In fact, there are companies forming that can manufacture diamonds, and De Beers isn't too happy about that.

Natural diamonds are more rare (and hence more valuable) the bigger they get. Large diamonds are very rare. Synthetic diamonds are used more for industrial things afaik, like diamonds tipped drill bits and saw blades.

[quote author=Arta[vL] link=board=2;threadid=2917;start=0#msg22782 date=1065065477]
Actually, that's exactly how modern paper money came into existence. I'm not sure about China (they did it aaages ago), but here, bank notes used to be exactly that. A note from the bank. You'd take your gold to the bank, and the manager would write a note saying "I promise to pay the bearer on demand the sum of X pounds". The person who who gave the gold in could then use the note to purchase goods on the understanding that whoever had it could just go to get the gold whenever they wanted. If you look at a British bank note you'll see that they still have "I promise to pay... etc" written on them. Obviously now a pound is worth a lot less than a pound of gold but whatever. You can just see it on this picture, underneath the big 'bank of england' text at the top. It's very small, though.

Here endeth the lesson :P
[/quote]
Yes, I have a bunch of olllld $1 bills, which are silver certificates, and say something about paying x amount of silver to bearer upon request or something.

[quote author=Arta[vL] link=board=2;threadid=2917;start=0#msg22794 date=1065070503]
Natural diamonds are more rare (and hence more valuable) the bigger they get. Large diamonds are very rare. Synthetic diamonds are used more for industrial things afaik, like diamonds tipped drill bits and saw blades.
[/quote]

The problem is people won't care/know if their diamond in that ring is real or synthetic. This is why De Beers is so concerned. They are trying to scientifically prove sythentic diamonds are different from natural diamonds, but this is proving to be difficult if not impossible.

Diamonds are rare, but they're not as rare as you think. There are warehouses throughout the world filled with large reserves of diamonds. De Biers controls the diamond market, and the only way they will keep making billions upon billions of dollars off of diamonds is too keep up the fiction that they are super-rare.

Again, I'm not saying they aren't at least a little rare, but they're not as rare as you're led to believe.

Who are De Biers/Beers?

[quote author=Adron link=board=2;threadid=2917;start=0#msg22834 date=1065125925]
Who are De Biers/Beers?
[/quote]

"De Beers is the world's premier diamond mining and marketing company."

Yeah, I read about these two new companies that are starting up. . .

I think it was in Wired magazine. Apparently these guys can make flawless diamonds at abotu $5 a carat. This is why the other diamond companies don't like it, because their diamonds aren't flawless.

~Death_Ryder

[quote author=Death_Ryder link=board=2;threadid=2917;start=0#msg22856 date=1065135575]
Yeah, I read about these two new companies that are starting up. . .

I think it was in Wired magazine. Apparently these guys can make flawless diamonds at abotu $5 a carat. This is why the other diamond companies don't like it, because their diamonds aren't flawless.

~Death_Ryder
[/quote]

Can they combine 3 of their flawless ones to make a perfect one, though?

[quote author=iago link=board=2;threadid=2917;start=0#msg22865 date=1065141085]
Can they combine 3 of their flawless ones to make a perfect one, though?
[/quote]

Priceless!

+1 to Iago for humour.
[me=j0k3r]searches for his cube[/me]