Random Thought About Money in the Gulch

Posted by $ servo75 2 years, 2 months ago to Ask the Gulch
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Okay maybe I'm overthinking this, but I was watching Part III of Shrugged and in it Galt told Dagny that in the Gulch they only deal in gold. But how do they make small purchases? Galt gives her a few coins and in the next scene she's buying a croissant from a vendor in that market. So let's say the muffin cost $2. At $1500 per ounce, $2 worth of gold would weigh .0013 ounces, or 0.37g. The density of gold is 19.32 g/cm^3, or .019cm^3 of gold.

Now, a penny (just needed a sample coin) measures about 1cm in diameter with a height of, say 1mm? That would give the penny a volume of .907 cm^3. So if you had a penny-sized gold piece, you could by 48 muffins with it! How do they make change? Put another way, a penny made out of pure gold would have a value of $92.02... That's a lot of muffins!

So either there's some MAJOR deflation in the Gulch, or I hope the Mulligan Mint puts out silver and copper coins as well!

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  • Posted by freedomforall 2 years, 2 months ago
    'A small brick structure came next, bearing the sign: Mulligan Mint.
    "A mint?" she asked. "What's Mulligan doing with a mint?" Galt reached
    into his pocket and dropped two small coins into the palm of her hand. They
    were miniature disks of shining gold, smaller than pennies, the kind that had
    not been in circulation since the days of Nat Taggart; they bore the head of
    the Statue of Liberty on one side, the words "United States of America—One
    Dollar" on the other, but the dates stamped upon them were of the past two
    "That's the money we use here," he said. "It's minted by Midas Mulligan."
    "But . . . on whose authority?"
    "That's stated on the coin—on both sides of it."
    "What do you use for small change?"
    "Mulligan mints that, too, in silver. We don't accept any other currency
    in this valley. We accept nothing but objective values." '
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  • Posted by freedomforall 2 years, 2 months ago
    Why are you even considering the "value" of gold in fiat currency that is not accepted by anyone in the Gulch? ;^)
    What is your time worth in the Gulch?
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    • Posted by $ 2 years, 2 months ago
      First, it's just a whimsical thought experiment. I have no other measure other than the fiat currency to go by. I assume that "dollar" is still the unit of currency (as per their symbol). So whatever gold coins exist there MUST have SOME dollar value, regardless of any fiat currency that exists outside, right? And unless all of the currency was mined in the Gulch, the buillion had to have been brought in from outside at some point, right?

      Also gold is valuable in the real world because of its scarcity. Unless the Gulch has many tuns of unmined gold ore, it will be just as scarce, and scarce currency, whether paper or metal, is always going to be worth more. So one would have to assume that even if $1500/ounce isn't the right conversion to use, it would still be in dollars, it has to come from the outside world at some point, and would still have a high worth because of its scarcity.
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      • Posted by freedomforall 2 years, 2 months ago
        Yes, I understand its a rhetorical question.
        No one gets gold in the Gulch unless he earns it in the Gulch. So the value is whatever the Gulch free market barter system says it is, although if Midas is a banker he has some control over supply until it is mined in the Gulch. It's worth what you can buy with it even if its being used as a raw material, too.
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        • Posted by mccannon01 2 years, 2 months ago
          Without going through AS page by page to look for it, I believe one source of gold was Ragnar Danneskjold's activities at sea. He handed a bar to Hank Rearden when Hank went out for a walk even before Hank knew there was such a place as the Gulch.
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        • Posted by $ 2 years, 2 months ago
          True. My whole point was that unless every single ounce used in Gulch currency was mined in the gulch after its formation, some of it had to have come from outside (even if from Mulligan's vaults) and thus had to have a fiat value at some point. Which brings me to the next question... If Midas owns the gulch, how did he buy it? Who did he buy it from? Was fiat money used to buy the property itself? Presumably he used gold coins of his own.
          As for the question of what my time is worth in the Gulch, I'm not sure I can answer that. My most marketable skills are in computer technology, mathematics, statistics, and electronic databases. If we're using the 2016-year-0 timeline then I imagine some of these skills would be valuable relatively speaking, but impossible to put a $GG value on it (I just made that up), but I'm also thinking that if the only money worth anything is money from the Gulch, it can't POSSIBLY have any dollar value at all. It would be the only currency in the world for which there is no exchange rate. Because as soon as you say "this coin is worth $100" you're assigning a fiat value to it, right? Then again, there's nothing wrong with exchange rates per se. The dollar itself is not evil, just the fact that it's not backed with anything. As long as everything's backed with gold I don't see the problem.
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  • Posted by exceller 2 years, 2 months ago
    When I saw the film, I was thinking of that as well.

    Seemed like a very expensive muffin (it actually looked like a croissant...but the point remains.)
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