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So if gold is the only real money (and everything else is just debt)... What does gold’s year-long rally this year tell us?
People need a place to park the vast sums of capital around the world, especially so with long-term government bonds paying nothing (or even having negative rates).
Would you rather stick $10,000 in gold paying nothing, or a Greek 10-year bond paying sub-2%?
Earlier quoted context omitted.
> ... is missing the word 'usury' which was largely agreed to be evil by early religions and societies that experienced its effects... It should be noted that the reasons we borrow money today is different than why it was done in the past. In the past, the "average" person was usually a farmer, and if they needed to borrow money, it was probably because their crops had failed and they needed to money to buy food to f…
> It was unseemly to lend money to someone who, without it, would die. "Medical debt is a uniquely American phenomenon, a burden that would be unfathomable in many other developed countries." "Nearly 60 percent of people who have filed for bankruptcy said a medical expense 'very much' or 'somewhat' contributed to their bankruptcy." https://www.theatlantic.com/health/archive/2019/03/hospital-...
Earlier quoted context omitted.
I was curious about the markets you described--mortgage and payday. You're right about mortgages being a huge market($10.3 trillion in mortgage debt). [0] Payday loans: > In fact, U.S. consumers borrow almost $90 billion every year in short-term, small-dollar loans that typically range from $300 to $5,000, according to a 2018 report from the Office of the Comptroller of the Currency (OCC). [1] > “Right now, 80 percen…
Such usury loans are absolutely illegal in civilised countries, for instance [almost] everywhere in Europe. Just saying. (edit: not in the UK, which is rapidly sailing away).
So if gold is the only real money (and everything else is just debt)... What does gold’s year-long rally this year tell us?
Faith is the only real money. The only thing money measures is optimism about the future - both micro ("I am optimistic that you can repay this loan") macro ("I am optimistic this country's military spending and worker-hostile environment guarantees my investment will be protected"), corporate ("I am optimistic about the contents of this earnings call"), and specific ("I have more faith in this asset class than in ot…
There is, however, a massive qualitative difference between gold and fiat: fiat has an adverse selection problem. The government that issues it can print as much of it as it wants, and it's more likely to do so precisely at the times when the country is in trouble.
Gold depends on faith, but failure of faith in gold isn't as correlated with failure in the rest of the economy.
I did a somewhat similar bit of historical story-telling a few years ago: https://greenash.net.au/thoughts/2013/04/money-the-ongoing-e... And came to pretty similar conclusions, in particular, that modern fiat money is quite worthless!
Debt: The First 5,000 Years is my preferred introduction. Critically this New Yorker account is missing the word 'usury' which was largely agreed to be evil by early religions and societies that experienced its effects...
I read that book and mostly enjoyed it than I got to the last chapter and found it was riddled with errors I could easily spot like the in following sentence: Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other’s garages. Reading arou…
These “evolution of money”-type stories always miss the financial instrument that enabled the gold standard to function in the first place: the Bill of Exchange. A Hungarian math professor by the name of Antal Fekete offers a much more convincing explanation of the journey from gold to paper money: http://professorfekete.com/articles/AEFMonEcon101Lecture5.pd... In essence, the Bill of Exchange was required for gold t…
Bill of Exchange is a form of paper money, and the article mentions Genghis Khan's grandson's paper money in the 13th Century.
So if gold is the only real money (and everything else is just debt)... What does gold’s year-long rally this year tell us?
Faith is the only real money. The only thing money measures is optimism about the future - both micro ("I am optimistic that you can repay this loan") macro ("I am optimistic this country's military spending and worker-hostile environment guarantees my investment will be protected"), corporate ("I am optimistic about the contents of this earnings call"), and specific ("I have more faith in this asset class than in ot…
> Fiat money is just faith-token money without a tangible base.
There is no physical basis for the faith, but a persons interactions with society is a basis for faith in fiat money. If all our neighbors and family and leaders express faith in fiat money through daily actions, then that's a powerful reason to share the faith. Even more so when you realize that faith is the only thing needed to make the system work.
So if gold is the only real money (and everything else is just debt)... What does gold’s year-long rally this year tell us?
How is gold more real than debt? To me debt is far superior. Debt means you have a commitment from a human (directly or indirectly, if the debt is owed by an organization). Gold has no inherent value at all apart from some minor uses of relatively small amounts in the economy. Except by agreement, which debt also has. An example for debt-based I once read somewhere was a kid writing an IOU for garden work. As long as…
I've never understood this argument that gold has no inherent value or no use in economy.
First, lets acknowledge you couldn't even make your comment/post from any computer/smart phone on the market that doesn't use gold. That is gold is a great conductor of electricity, maybe not the best conductor, but when combine with its anti-corrosive properties it is the industry standard. Every single computer/smart phones is manufactured with gold, anyway you cut it, that isn't a small part of the economy.
In addition to being a good conductor gold has anti-microbial and anti-bacterial, and anti-corrosive properties. This gives gold inherent value, especially in antiquity, put your food/wine in a amphora made of gold and made of pottery and see which expires first. Finally, gold isn't made through natural processes on Earth, that we know of, it is made in Stars and so what we have on Earth is what we got, that limited supply, makes it inherently valuable as a medium of exchange. Sure we can also go back to using seashells as a medium of exchange, but the Earth will continue printing money. finally, the anti-corrosive and ease of smelting/crafting Gold also gives it a certain value.
Debt: The First 5,000 Years is my preferred introduction. Critically this New Yorker account is missing the word 'usury' which was largely agreed to be evil by early religions and societies that experienced its effects...
I read that book and mostly enjoyed it than I got to the last chapter and found it was riddled with errors I could easily spot like the in following sentence: Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other’s garages. Reading arou…