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Fermatastheorem comments on Harry Potter and the Methods of Rationality discussion thread, part 26, chapter 97 - Less Wrong
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What if the Galleons are actually fake gold created by Goblins, and they can tell 'fake' currency because it's real?
That way, only the Goblins can test for 'real' vs. 'fake' currency because the wizards all have it backwards.
Griphook says earlier in the fic that "only a fool would trust anything other than goblin stamped galleons", or words to that effect. So maybe wizards are free to trade gold with Muggles, but raw gold is easy to fake, so nobody is interested in raw gold, and only galleons are valuable. The goblins will stamp some galleons for you for a fee, but they don't want to hyper-inflate the economy so they only do small batches. Either its near-impossible to fake up galleons, or the threat of goblin war against counterfeiters is too scary for people to try. Or have I missed something?
I think you're onto something. Specifically, in the books, Goblins possess magic metalworking techniques wizards don't know how to duplicate - and they know how to detect them. (It's a point of contention as part of the whole "give us wands" thing.)
You're suggesting that there are two substances, difficult to tell apart, both called "gold". On what grounds does one decide which to think of as "the real thing" and which to think of as "an imitation of the real thing"?
On the grounds that if the goblins can tell them apart, there must be some difference. Remember, something doesn't need to have a physical use to have value - see Bitcoin, or intellectual property, or stock options. Simple scarcity is sufficient to create value if people decide to value it.
"If people decide to value it" makes that a tautology. Leaving that aside, scarcity is necessary but not sufficient. The only surviving painting by a contemporary of Leonardo da Vinci of little renown will be valued, but less than one by Leonardo.
Silver has two stable isotopes, in roughly equal proportions. I doubt there's much monisotopically refined silver in the world. It would cost more to make it, but it wouldn't be worth more, unless someone wanted some that badly for a practical purpose.
As phrased it's tautological, but my point was the implication - people can choose to value whatever they want, value is not intrinsic to an item. Lack of scarcity does provide an upper cap, though - air will never be valuable on the surface of Earth - so if people have chosen to value something, then scarcity is the remaining factor needed for it to have value. (I phrased it poorly, but I think it's still strictly correct)
Neither air nor water are scarce on Earth; but clean air and clean water have value.
Actually, some cities have featured "air stations" or "air bars" due to smog, historically. I don't know if they still exist, I haven't heard of a contemporary one.
But which is "real" and which is "fake"? "Real" and "fake" are not objective properties of things. If only goblins can tell the two golds apart, why would anyone care? For practical purposes, for everyone else except Harry Potter there would just be "gold the goblins for unknown reasons say is type 1" and "gold the goblins for unknown reasons say is type 2". Harry would be trying to find out what objective properties distinguish them.
The goblins are the central bankers of the wizarding world. They are entrusted with providing a reasonable money supply, and they're free to use methods of their choice to create that(well, subject to assorted speciesist laws). I don't care why the Federal Reserve says to use cotton money instead of plastic, as long as they run the money supply sufficiently well that I trust them.
Fake in the sense that Goblins claim that gallons are made from raw gold, when they actually aren't.
I don't believe that goblins' magical power could outsmart that of wizards in this way. Particularly with the emphasis on wizards having access to wands and spells.
Also: why would goblins do this?
Because the goblins don't like having real gold go out of their hands.
But then goblins would still want wizards to bring in real gold for "minting". And wizards would still steal or trade for all the Muggle gold to give to goblins, and billions of Galleons would be circulating as a result. And we don't observe that.