HELLO FRIENDS WHAT'S GOING ON IN HERE
OH BOY ECONOMICS MY FAVORITE
ARE WE TALKING ABOUT GOLD? MY FAVORITE
See: Carl Menger's law of marginal utility
To be sure, there's nothing special about gold as an economic tool. It has prime qualities of money, yes, being easily divisible, and very stable, much like how salt was before societies moved over to the precious metal. The important thing to know is that societies freely choose money based on some commodity to facilitate exchange by making it an easy medium. Granted, gold is scarce, and most often a dual-metal system was employed, say, silver and gold, one for the smaller transactions, and the other for larger.
What gives so many people a hard-on for gold, and why so many people make gold a special thing, is its rareness. It's not only physically stable, but it's monetarily stable, as no large reserves can be found and employed on a rapid basis, and even if someone hits the motherlode they'd be punished for foolish investment by the free market. That gold would be slowly drained away from them and towards more useful and more productive means. The Cantillon Effects are just a description of what happens when the money supply increases, and it applies equally to all forms of money.
Those who are politically well connected are predisposed to dislike gold, since they have a tough, if not, impossible time controlling it as a free-floating currency made from the free interactions of society. Instead of innovate or compete, the neo-merchantilists would rather have relatively risk-free money given to them, since the persons who receive the new money first get a large advantage in the marketplace, as prices have not yet adjusted, via the natural price mechanism, to the increased supply.
Kurogal
