Alex, Matt and Dave

Found myself reading Matt Franko's Alexander del Mar on the Ages Old Monetary Conflict (7 Sept 2012) at Mike Norman Economics.

I like it. Filled in a few blanks for me on the word "nomisma". But that's not why I'm writing today. I'm writing because of the first comment on Matt's post, a comment by David. He writes:

one of del Mar's important contributions was his ascertaining that gold never pays from the point of view of society as a whole. That is, the "cost of production" is always greater than the value of the metal.

It costs more to produce the gold than the value of the metal. Amazing. But right away, my mind goes to a parallel problem: Because of the cost of interest, it costs more to use credit than it does to use money.

It costs more to use money we borrow than it does to use money we earn. In an economy where there is a lot of debt, there is a lot cost from borrowed money. In such an economy, the "cost of production" of the money is greater than the value of the money. Cost of debt service, in this case.

Excessive reliance on credit never pays from the point of view of society as a whole.