Hi, I'm the author of that post on Mises. Sorry for the verbosity of it.
I think the idea of '
intrinsic value' can be rejected out of hand, because it's basically the idea that the value of a good is objective and not
subjective. Marx attempted to explain how we decide upon prices with his labour theory of value (which is no longer taken seriously since the idea of marginal utility is understood). The idea is that the labour costs that go into producing something gives the product its intrinsic value, and this is how we should price goods. But we know that a mud pie is not as valuable to people as an apple pie, no matter if the same costs are spent to produce it.
We also know that if I produce 50 refrigerators and I only have use for one of them in my personal kitchen at any given time, the other 49 refrigerators are less valuable to me even though they are completely identical to the first. The idea of intrinsic value has to be wrong. So why do people specialize in creating refrigerators to sell? Because there are other people out there who do not yet have a refrigerator and want one for their kitchen. To those people, they would value 1 of my 49 refrigerators just as much as I valued my first refrigerator. So to the refrigerator producer, all of his refrigerators are considered to him to be less valuable than the money he charges for it. To the people who buy the refrigerators, they consider the refrigerator they purchase to be more valuable than their money. This is why we see specialization of labour and this leads to trade for
win-win scenarios.
When people talk about gold having intrinsic value, it's more accurate to say it has intrinsic properties that people value. Its ability to conduct electricity is useful for electronic applications. The fact that it is
intersubjectively perceived as being pretty means that people value it as jewellery. But it has no intrinsic value. Nothing does. Carrots do not either (not that Neilso said that). This is why it's confusing when dealing with Bitcoin, because the same people who attack government money for not having 'intrinsic value' (because it's just paper) are also going to attack Bitcoin for the same reason. Like paper money, Bitcoin also does not have a consumption use case.
But the fact that paper money isn't useful for any consumption use cases isn't the reason for why government fiat money is damaging. It's because government fiat money doesn't have the
intrinsic properties that are required of a good currency, like Gold. Bitcoin doesn't suffer from this problem. Unlike Gold and Bitcoin, fiat currency is centrally controlled and can be printed at will by the government for almost zero cost to them. It is only the use of force by establishing legal tender laws (which basically means that the government will only accept the payment of taxes denominated in their fiat currency) that gives fiat currency its overwhelming demand in our economy. Legal tender laws also provide a means to enforce in the courts that government fiat money has to be accepted for general payment of rents and debts.
It's clear why the government wants to control the money supply centrally. When the government expands the money supply they (and their privileged buddies) get to spend the full value of it before inflation proliferates into the rest of the economy. It is essentially a
hidden tax. Like a counterfeiter, they are essentially stealing value from everybody else's savings and they can do it in such an indirect way that they don't have to cut spending. They can still promise all of the free goodies to the public that get them elected without having to do the unpopular action of raising taxes to pay for it all.
It's the initiation of force that crowds out other competing currencies, and perpetuates its use in our economy. But it's completely unsustainable in the long run. The bubble will burst because we cannot keep inflating forever. It only serves to damage productive efforts, which means there won't be anything left to tax. Let alone all of the debt by deficit financing, which is just like printing money in its effects because they might have to monetize the debt (print money to pay it off) or default on it someday, and either way it is economic ruin. We don't have anywhere near the productive capacity required to pay it off, let alone provide for all of the obligations made by governments.
So government money leads to ruin because it's not a scarce good and it's centrally controlled. It has none of the intrinsic properties that lend it to be good at being money. The demand for it is backed up by the threat and use of physical force by the government, and the cost of applying this force is offloaded to everybody in society through taxes. All of these reasons have nothing to do with the fact that paper money has no consumption use case.
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