One of my favourite ways to spend a nice day of living on the dole in Central London is to head down to Denmark Street and casually peruse the guitar shops. Now, I have never owned a guitar costing more than £200 and so it's a real novelty for me to go in there and play the endless amounts of exquisitely produced guitars that play like elixer of the Gods (in guitar form). There is an upward correlation between price and quality of course - a guitar costing £500 plays better than one costing £100. Like, duh. However, if you're really itching for it you can find that price steadily increase to £800, £2000, even pushing £10,000 and of course you can buy guitar costing considerably more from specialist dealers. The problem is that the cost/quality correlation flatlines around about the £1000 mark. I'm not basing that on any particular survey or even experience of playing. It's just that it's simply impossible for it not to - because they're just guitars. And, excusing a few daft gimmicks such as those self-tuning guitars that are all the rage with tone-deaf imbeciles, there is only so much you do to improve the playing and sound quality of guitar before it's just basically becomes perfect.
Guitars that cost the price of porsche then become purely assets with no intrinsic value - but abstract factors such as brand name still add flexibility in price; often, even this isn't an issue. There are a number of factors...one is that enough people simply believe in the price/quality correlation to assume that, somehow, a guitar costing £10,000 must be better than one cost £1000 grand. One might call this gullibility, but it's also not an unreasonable expectation. Another factor is status of wealth - this is a trend which is, thankfully, dying down a bit with the onset of austerity, but that nasty hangover from the 80's which says that those with the money to afford it should actually buy the more expensive option simply because it is more expensive, is still prevelant. Some idiots might see this along the same lines as investing in the housing market - but, of course, it's not because, with a few very rare exceptions, guitars generally lose value once purchased and rarely gain.
What I'm trying to really get at here is that the 21st century is a society where money has become meaningless - intrinsic value, materials which are actually inherintly valuable to their owners, has become a distant memory. A painting sold at auction can go for millions of pounds, but it's not actually worth that, is it? It's only worth that according to the social-historical reasoning of a few experts who have deemed it worth that particular sum. If I was to go and draw a smiley face on it, it's still a painting, but it would suddenly crash in price. Which is nonsense in economic terms (not that I'm promoting the defacing of art, which should have social value beyond financial value).
The lack of physicality in the economy has really hit home since the banking crisis where banks' balance sheets were loaded with non-existent toxic assets based on the income from debtors who simply didn't have the physical means to pay them back. In this age where paper and metallic forms of money are giving way to the age of PayPal, this problem will only accelerate. Money is just a series of shapes on a screen.
The death of intrinsic value has really accelerated since the war, when Keynes was hailing the rejection of the gold standard as providing new horizons of economic freedom. Money has since become more and more detached from reality. Since Nixon took America out of the gold standard (the "Nixon Shock" of 1971) mainly for the purposes of being able to pay to kill endless amount of people in Southeast Asia (see, some good came out of it!) US debt has been able to climb steadily into more abstract heights. As of June 29, 2011, the Total Public Debt Outstanding of the United States was $14.46 trillion - if the USA were still using the gold standard, and using the current rate of US$1500/oz this would amount to approximately 272,231 metric tons of gold - seeing as how, of 2009, the total amount of gold ever mined by human kind equals only 165,000 tonnes, this shows how far gone these kinds of figures are. Gold was a useful stop-plug for this kind of insane financial skyscraping, but, then, most of the world would probably be bankrupt if we had stuck with it.
Now, the notion of the instrinsic value of gold is one which kind of boggles my mind as well. The official line all the smart-arses use for the gold's instrinsic value is that it's so unreactice. This essentially meant, when it was probably first used in around 4,000 BC, that it was a case of "ooh, shiny metal stay shinier than other metals for longer!" This has somehow developed over millenia to put gold as the base level for international trade - but of course, it's not really that useful for anything. It's used in electronics due to high conductivity and, well, jewelry. That's pretty much it. Not useless, but hardly the greatest substance under the sun - essentially it's just a form of unaligned currency that happens to be valued highly pretty much everywhere. But eventually, people are going to snap out of the gold hazed miasma to realise that what they've been hording for all of history is, essentially, big shiny worthless lumps of metal.
The abstracting of money to the point where it loses touch with reality has historically resulted in massive public backlash leading to extremist tendencies - Hitler's rise to power was partially fomented by the collapse of the Germany economy in nonsensical levels of hyperinflation and national debt; in his own words, "The basic feature of our economic theory is that we have no theory at all." When the populace feel lost in an economic whirlwind of meaningless figures, people who claim to cut through all the crap, like Hitler, start to seem much more attractive and sensible.
The decline of physical wealth and physical currency is not as progressive an idea as it might appear - it's that great postmodern horror story in which some bored, amoral clerk somewhere decides to stick a few zeros on the end of a transfer and suddenly a million quid has appeared out of nowhere. Inflation goes to hell, but a computer doesn't account for inflation. It just knows there's more of something than there was before. It's this kind of spectral financial manipulation which lead to the crash and which tore a hole in the global economy. It's this kind of thing which is driving Greece, Italy and Portugal to bankrupcy - and the reason are getting so pissed off is that none of the money that being thrown around is real. All it would take be someone to hit the "delete" key and suddenly all those bonds and loans would just disappear. It would completely screw up the international economic system, but a lot of people would argue that it's screwed up anyway.
So let's not all get hooked to our credit cards and internet banking and remember that there is real security in owning physical assets and currency. It's not perfect, but it's more reliable than ethereal number crunching. Adding more zeros to something, whether it's a guitar, or a painting, a car, a plane, or a solid gold skull, doesn't mean it's really worth anything. It's just another fickle asset to be passed around among consumers, until another meaningless set of numbers somewhere makes it suddenly worthless. Items of intrinsic value are becoming a very rare commodity and, sadly, perhaps the only thing in this world which has genuine intrinsic value anymore is mostly owned by a small group of royal nutters in Saudi Arabia...
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