Comment: consequences

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the stranger's picture

consequences

Mesogen, one answer lies in the second sentence you laid down. Un-backed (fiat) paper dollars are in fact assigned an arbitrary value. Gold and Silver values are set by the market. They can be manipulated, but not indefinitely and not without consequences.

But your main question is to the value of gold (or silver). Gold and silver do not need us, we need them. As metals they are valuable to us; Google ‘uses’ for either – the applications are staggering. Silver is probably not far behind petroleum in importance to modern society. Many tangible ‘things’ have severed as money, but thousands of years of economic exchange have chosen silver and gold.

Here is where a simple understanding gets lost over time. Paper money makes its repeated début as a receipt for something real; typically gold or silver. The backing is removed over time or the ‘receipts’ are simply over printed; fiat or effectively fiat.

Fast forward to now – the difference between gold and fiat money is akin the difference between holding something and keeping score on a note pad. No problem just using the score pad; until someone starts cheating.

It’s clear that if ‘extra’ entries are added to the Note Pad, inflation has occurred. Depending whose column the digits are added, inflation enters the system unevenly; insidiously. The Fed would have us believe that if we arbitrarily erase information from the Note Pad, deflation occurs. I disagree; I think the tracking system becomes fubar and seizes like an engine without oil; depression time.

If you want to stay in FRNs remember, they have lost over 96% of their value the last eighty plus years; this is a bankable trend. Besides, they can even be created without a printing press, countries like China have silos full of them, and they are stolen by the pallet.

Copper is money too; people forget that. That is why most were tricked by copper’s bull run the last few years. Copper was being stockpiled as a stealth dollar dumping play, before the real drive comes in gold and silver. That comes later; maybe tomorrow.

One last thought, gold is the best money to move value through space. Silver is the best money to move value through time. I hope this is helpful.