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IPFS News Link • Economics: Austrian

Austrian Economists and the Value of Gold or Sound Money

•, By Joshua D. Glawson

By rejecting the notion of intrinsic value and highlighting gold's unique properties and historical use as money, Austrian economists illustrate how gold meets the seven criteria of sound money—durability, divisibility, portability, uniformity, limited supply, acceptability, and stability. 

This perspective is further supported by the U.S. Constitution's mandate for gold and silver as legal tender, the Cantillon Effect, and the role of market forces, ultimately positioning gold as a reliable store of wealth and medium of exchange.

This article will explain the value of gold and sound money from the perspective of Austrian economists, emphasizing subjective value, historical context, and essential monetary principles.

It will demonstrate how gold's unique properties and historical use align with the criteria of sound money and highlight the relevance of the U.S. Constitution, the Cantillon Effect, and market forces in reinforcing gold's role as a reliable store of wealth and medium of exchange.

Subjective Theory of Value vs. Intrinsic Value

A key distinction in Austrian economics is the rejection of the concept of "intrinsic value." Austrian economists argue that value is not intrinsic to any good but is assigned based on individual preferences and circumstances. This contrasts with the notion of intrinsic value, which suggests that certain goods have inherent worth regardless of human perception.

Carl Menger, the founder of the Austrian School, articulated this clearly: 

"Value is… nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs, i.e., to our lives and well-being."