So you argue that it is MY BURDEN to prove to you that “such a system of intangible money would work.” I am sorry, but you cannot possibly demonstrate that only a tangible monetary system would work when in fact the medium of exchange is solely based upon intangible human desires post-Bronze Age. Before 1650 BC, money was tangible because it was a barter system among people. Money became intangible post-1650 BC (REPRESENTATIVE) and based solely upon CONFIDENCE that others will also accept whatever the form of payment might be.
Gold is a LUXURY — it is not a TANGIBLE based monetary unit for it has no utilitarian value whatsoever. If you try to argue that TANGIBLE based monetary systems are better, that is barter and in that case, the medium of exchange must have some sort of use value such as food or bronze. Never do we see Gold forming some sort of TANGIBLE based monetary system. Gold ONLY emerged as a medium of exchange because it was once exclusively the property of royalty, and as such, it was a luxury with no practical use as food or a weapon. Therefore, gold is not TANGIBLE but it historically also requires CONFIDENCE to exist as a medium of exchange as does paper money or receipts.
You need to get you definitions correct. Any form of a medium of exchange which is TANGIBLE must have some practical utilitarian based value. Gold was a luxury and required the CONFIDENCE that someone else would also desire it for if they did not, then what would you do with it since you could neither eat gold not use it as a weapon.
Paper money is the medium of exchange between two people where one offers a service or something they manufactured, which is no different than a gold or silver coin requiring CONFIDENCE and an agreed value at that moment of exchange. You can no more eat paper money to survive than you can gold or silver. All require CONFIDENCE of a third party accepting it in exchange. For the medium of exchange to be truly TANGIBLE it must have a practical utilitarian value and that historically is the distinction of a barter system vs. post-Bronze Age REPRESENTATIVE/INTANGIBLE based monetary systems predicated upon CONFIDENCE. Gold and food are simply not the same thing.
If we head into a Mad Max event, that is the full-blown control-alt-delete which means the ONLY thing of value will be food/weapons. You can have all the gold in the world, but without food, you die. You will depend upon the other person who may want gold, or perhaps not. He may prefer a gun for protection as they once sought bronze to make swords. Your idea that ONLY gold and silver are the “recognized” mediums of exchange shows that you have been brainwashed by gold promoters and are ignoring history.
Gold will rise in “value” expressed in the medium of exchange provided we are NOT going into a Dark Age after 2032. Gold is an “asset” and it will rise in value against money as will all other assets (stocks) when people lose CONFIDENCE in government. Gold is a recognized worldwide commodity for it is the same everywhere which cannot be said for rice, wheat, or even corn. Your statement reveals you have been brainwashed. If you do not look at everything around you, you will lose everything for what you expect from gold is by no means realistic. History warns you are totally wrong for whatever is used as “money” immediately assumes the opposite side of assets within the economy. This sales-job that money must be tangible and therefore it will retain its value is delusional and has NEVER taken place even once throughout history. There is a time to buy gold and there is a time to sell gold BECAUSE that is true about absolutely EVERYTHING.
https://www.armstrongeconomics.com/uncategorized/gold-5000-why/
QUESTION: You have been really hard on the “gold promoters”, yet you are long-term bullish on gold. Why would gold rise if not for all the reasons put forth by the gold promoters?
ANSWER: I was a gold market-maker. Personally, I prefer gold. I prefer to handle it. But whatever my personal feeling about gold, that is irrelevant when it comes to forecasting. I have learned to separate my “personal” likes and dislikes from the cold light of ascertaining what truly makes the world tick. Gold just “feels” better in your hand than paper – yes agreed. However, that does not mean that is reality. There is a huge difference. It would be nice if we all got along. But we do not. A lion will kill to eat. That is nature. We cannot live in a dream world. Some people are vegetarians. That makes them personally “feel” good. It will not stop the lion from killing you when it is hungry. Understanding gold is the same.
The reason gold will rally is rooted in the debt crisis. Forget the fiat nonsense, hyperinflation, systemic manipulations. Who cares if there is gold in Fort Knox? Do you really think they will admit that anyway? You might as well be wearing your tin foil hat because that is no reason to buy gold. Those that put out those stories cannot prove what they say. It is just nonsense if it cannot be fact. If you buy gold on BS, then you will also not sell when it is time to take a profit. It is a market – trade it. Money is only a medium of exchange. It rises in purchasing power during economic declines and falls during economic booms. That is it regardless of what it might be. Get over it!
We will end up with a new currency anyway and it will not be gold backed or some fixed exchange rate that is anti-freedom. That is what Marx tried. Paint your entire body. You will die because your skin needs to breath. The monetary system is the same. It must fluctuation. Flat-line it and you kill society – you are dead. Cheer up! A new currency is coming.
QUESTION: I have done my own homework and it appears you are correct regarding monetary history and that simply because a currency is “fiat” does not result in hyperinflation, Even the Greenback of the US Civil War did not result in hyperinflation. Is it correct to say then that hyperinflation takes place only with revolutionary new governments?
ANSWER: To be precise, hyperinflation takes place when there is a collapse in confidence that supports a government so it can be an established government such as in South America. The key is the currency is not accepted by the people. That comes FIRST and then we see that they print more and more following the trend and propelling it. This is the chicken or egg dilemma. It is not the REVERSE that the supply increases and that causes the currency to decline as characterized by the gold promoters.
Hyperinflation unfolds when the people no longer trust the government and that can occur with an established government as in South America without war, but it is traditionally associated with revolution such as the American colonies during the American Revolution, French Revolution, German 1918 Communist Revolution, Russian Revolution, Hungary etc.
The British economy peaked in 1914. There was no hyperinflation thereafter despite the abandoning of the gold standard. So both the USA during the Civil War and Britain abandoned gold during war and neither entered into hyperinflation so it is true – fiat does not automatically create hyperinflation. Sorry. I believe in gold as an asset class. I do not believe in gold as the economic savior, exclusive form of money, or any other nonsense that cannot be demonstrated on a CONSISTENT basis in history.
https://www.armstrongeconomics.com/uncategorized/the-untold-truth-about-the-german-hyperinflation/
Many people pay attention to the German Hyperinflation of the 1920’s, yet fail to understand that such an economic crisis followed the German Revolution of 1918. The German Revolution was a politically driven civil conflict in Germany at the end of World War I, which resulted in the replacement of Germany’s imperial government with a Weimar Republic.
Nonetheless, keep in mind that the Russian Revolution was 1917. Consequently, the German revolutionaries were certainly inspired by the emerging communist ideas. However, the German communists failed in their effort to hand power to soviets as the Bolsheviks had done in Russia. In Germany, it was the Social Democratic Party of Germany (SPD) leadership that refused to work with communists who supported the Bolsheviks. Moreover, the SPD feared that an all-out civil war would erupt in Germany between the communists and the German conservatives. Hence, the SPD struck a middle ground and did not plan to completely strip the old imperial elites of their power and assets. The SPD sought a compromise whereby they were integrated into the new social democratic system. The left wing fell into political fragmentation that prevented Germany from turning communist at the time. The Weimar Constitution was adopted on August 11th, 1919. It was this government that moved into hyperinflation, not the old Imperial Government.
Consequently, this was a revolutionary government. All economic activity stopped. The wealthy were scared to death. They saw the bloodshed in Russia in 1917. Capital hoarded and the velocity of money imploded. So while many point to the German Hyperinflation and then say we will enter the same result, are taking only the hyperinflation and ignoring the events that caused it. There were NO gold reserves. There were no lenders to the government. There were no bond markets. There was absolutely nothing. Nobody would dare lend anything for the fear was Germany would go the way of Russia.
This is why I say the hyperinflation of Germany and Zimbabwe are just not even plausible today. Yet these events are touted and used as sales tools for gold and that is dangerous for when the fundamentals do not pan out, confusion and crisis follow. Feeding people bullshit stories is highly dangerous for when the truth emerges, they lose confidence rapidly.
https://www.armstrongeconomics.com/international-news/south_america/venezuelan-hyperinflation/
The Venezuelean hyperinflation is the direct result of what happens when the general population loses all confidence in the government. The current hyperinflation is reminiscent of Germany’s hyperinflation following World War I, which was also the result of a Communist Revolution and the overthrow of the government giving birth to the Weimar Republic. Venezuela’s currency has become virtually worthless as was the case in Japan when the people simply refused to accept any coins issued by the Japanese government. In that instance, each new emperor devalued the outstanding money supply to 10% of his new issues. This led to Japanese accepting Chinese coins, but not Japanese.
As the prices of goods continue to soar, shopkeepers in Venezuela have taken to weighing bolivars and the black market for alternative currencies – namely U.S. dollars — is becoming prevalent.
The key to hyperinflation is NOT the issue of money, but the collapse in public confidence. The drop in confidence then causes the government to print more to meet its expenses. The assumption it is the increase in money supply assumes people blindly just look at the quantity of money. It is the fact people ANTICIPATE the collapse and act accordingly, which then causes the government to increase the money supply.
Governments can devalue gold by making it very expensive to transact with it:
https://www.armstrongeconomics.com/history/ancient-economies/monetary-devaluations-cancellations/
Since ancient times, many times those in power have cancelled their money supply to make a profit or collect taxes by force. It is rather absurd to think gold or silver coins could somehow exempt one from these types of actions by tyrants for they pulled off such maneuvers even in ancient times. Governments have recalled all coinage and demonetized silver and gold coins, declaring them not acceptable in payment for anything. Despite their metal content, the coins were still declared worthless. This is one of the simple truths that demonstrate not even a gold standard will save the day.
...[examples from history are cited]...
This is why, as we move forward, it will be best to hold assets out of banks and out of currency. They can even declare gold a criminal act to possess, which is why I suggest genuine old coins rather than bullion. Just another layer of protection. Whether that would be the case, as it was under Dionysios I of Syracuse, is not unthinkable. The safest asset may simply be blue chip stocks for they would never make it illegal to own corporations unless you had a full-fledged leftist revolution that seized all private assets as in a communist revolution. That risk would naturally alter everything once again.
If governments declare cryptocurrency illegal or want to tax it, we can just leave. We can not take our precious metals with us.
https://www.armstrongeconomics.com/world-news/sovereign-debt-crisis/the-ship-is-sinking/
Keep in mind that the collapse of a financial system has historically unfolded to different degrees. If we are talking about a Dark Age, then you are into the Mad Max situation. Then the only thing that has value is food – not even gold. That was the fall of Rome. People effectively sold themselves as serfs to work the land, retain 20% of the crop in return for protection behind the castle walls. Medieval coinage really appears only in silver and are rarely found more than 20 to 30 miles from where the coins were struck. This illustrated the isolation of city states. Money was not really necessary for there was really no major trade interacting within Europe – hence the Dark Age.
In order for tangible assets like stocks, gold, art, antiquities, etc. to survive, the fundamental infrastructure must survive. That means there must be ample food for gold to have any value whatsoever. So you must stop short of the Mad Max event for anything tangible to have a safe haven value.
You do not see hyperinflation in Britain or China despite the fact that both declined from major economic peaks. Money never becomes worthless in a major core society for if the core were to collapse then everything else must fall as well. Genghis Khan accepted the paper currency of China upon his conquest and did not render it worthless. It continued to circulate and he accepted it in payment himself. That is showing the Moguls wanted the dignity of conquering civilization and merely replaced the emperor.
Human nature does not change with time. It remains consistent and this is why history repeats. With the fall of Rome, the invading barbarians wanted to be Roman. Their rulers initially issued coins merely pretending to be the emperor. One of the great kings was Theodebert I (534-548AD) whose tomb is erected and still standing as if he too had been a Roman Emperor. Thus the invaders wanted to be the head of the civilization both in China and Europe showing confidence did not vanish, just a change in ownership and no hyperinflation.
RE: Facebook’s Libra + Bitcoin + Trump + Israel = 666 Orwellian Dystopia