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Why Gold Is Money

Tyler Durden's picture


Authored by Alasdair Macleod via,

It is clear that Western capital markets no longer generally regard gold as money. It has been relegated to the status of a risk asset, useful collateral, or simply a commodity with a history of being used as money. This is a mistake.

The great Austrian economist, von Mises, wrote that true money had to survive the regression test. Put simply, it must be established whether or not money had value before it was used as money; otherwise it is only a money-substitute which ultimately depends for its value on confidence. So we need to ask ourselves two questions: what value did gold have before it was used as money, and what value did modern currencies have before they were used as money?

The answer to the first question is clear. Anyone who has seen the Alfred jewel in the Ashmolean Museum in Oxford (over 1,000 years old), the Snettisham torc in the British Museum (over 2,000 years old), or Tutankhamen’s gold mask in the Cairo Museum (over 3,000 years old), regard these fabulous items with astonishment. They are simply priceless, being desirable beyond reckoning. There is therefore no doubt that gold, the major element in all these objects, survives von Mises’s regression test. Furthermore the Aztecs and Incas in the New World, completely isolated from Eurasian values, held the same human view.

Paper currencies do not survive this test. They started as money-substitutes for gold or silver and over time lost all their convertibility. As a result they now depend for their value on confidence alone.

Traders and investors in capital markets are unconcerned about this distinction. Instead of realising that Gresham’s Law applies, that bad money has driven out the good, they regard currency as the only money for modern times. This is understandable, because they draw up their accounts and pay their taxes in currency. They invest to make a profit in currency. And so long as they can hedge currency risk by acquiring capital assets, they can manage investment portfolios without recourse to gold.

For these practical reasons mainstream opinion holds that gold is no longer money; but this complacency is likely to be undermined by events. We already see the four major central banks committed to issuing their confidence-based currency in increasing quantities, to finance their governments and to prop up the banks. We have yet to see how they intend to stop doing so.

The effect of monetary inflation was usually predictable. It raised asset prices first, which we are already seeing. It then raised prices of raw materials and manufactured goods, as people started to spend encouraged by low interest rates, leading inevitably to rising prices and rising interest rates. The sequence of credit-fuelled economic cycles is all too familiar.

This time, given the likelihood of a financial and collateral crisis from falling asset prices, the economic cycle is in grave danger of a short circuit. Rising prices for raw materials and goods are likely to be driven by falling confidence in fiat currencies, instead of rising confidence in the economic outlook.

It will be the ultimate test for unbacked currencies. Everyone wedded to modern currencies will then wish they had been aware of von Mises’s regression theorem.


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Tue, 06/04/2013 - 19:49 | 3624907 UP Forester
UP Forester's picture

Damn barbarous relic, always in the headlines....

Tue, 06/04/2013 - 20:10 | 3624957 DoChenRollingBearing
DoChenRollingBearing's picture

"Money" is a slippery word.  Gold is The Store Value.

Tue, 06/04/2013 - 20:12 | 3624961 TwoShortPlanks
TwoShortPlanks's picture

Gold is far more than just money.

Gold is a financial anchor into physical and mathematical reality, and a financial healer when it is not.

Gold also has unlimited capacity for wealth concentration…given the right set of circumstances.

Tue, 06/04/2013 - 20:15 | 3624972 DoChenRollingBearing
DoChenRollingBearing's picture

DoChenRollingBearing heartily recommends TSP's blog.

Tue, 06/04/2013 - 20:17 | 3624974 TwoShortPlanks
TwoShortPlanks's picture

Cheque's in the mail.

Tue, 06/04/2013 - 20:25 | 3624992 The Shootist
The Shootist's picture

"If you want money, then you want gold." -Jim Rickards

Gold and silver are competing currencies, err, money.

Tue, 06/04/2013 - 20:43 | 3625033 NoDebt
NoDebt's picture

"It's not a lie if YOU believe it."  -  George Costanza

For everything else, there's gold.

I will admit I never was a "gold bug".  I'm still not..... sorta.  But it keeps piling up a little bit at a time around me.  The obvious divergence between "paper gold" like ETFs and "physical gold" like coins should give pause to even the most anti-gold zealot.

A few months ago I wrote on here I was just starting to notice a divergence between the two.  At the time I said that it could be just a temporary dislocation between price and the physical limitations of delivering actual product.  I also said if that was the case we should start to see the "paper" and "physical" gold price converge again in perhaps a matter of weeks.  Well, those weeks have now passed.  The divergence has only grown. 

If this does not make you think long and hard, I don't know what will.

On diversification grounds alone I could justify holding some physical gold.  "End of the world" scenarios are not required (but who knows, right?).

This is not an emotional thing for me.  I go where the facts and circumstances tell me to go.  If it was just an emotional thing, I wouldn't own any.  But reality tells me I should own it, so I own it.

That's as close as you're ever going to get me to saying "I'm a gold bug."  It may not sound like much, but if you understood where I started from on the issue, you'd understand how far my thinking has evolved regarding gold.


Tue, 06/04/2013 - 21:56 | 3625208 dogbreath
dogbreath's picture

Check this out.  Mining costs drop.



Tue, 06/04/2013 - 23:21 | 3625347 Stuck on Zero
Stuck on Zero's picture

They're cool but I'll bet a nickel they never see the light of day.  The side tip is ridiculous and if one goes over the side of the road they all go.


Wed, 06/05/2013 - 00:00 | 3625400 boogerbently
boogerbently's picture

Miners are the first stage.

If they raise their price, everyone else will need to adjust.

It's not like they won

Wed, 06/05/2013 - 00:41 | 3625448 Deo vindice
Deo vindice's picture

In the Bible, the Hebrew word in the Old Testament and the Greek in the New is used interchangeably between "silver" and "money". These ancient societies knew what real money was.

Wed, 06/05/2013 - 01:03 | 3625463 TwoShortPlanks
TwoShortPlanks's picture

My Bible says there are three Elephants STILL in the room.

My simple chart of truth.

Wed, 06/05/2013 - 05:18 | 3625590 Oracle of Kypseli
Oracle of Kypseli's picture

In Castillian Spanish the word for money is plata (silver)

Proverb: Those with the gold make the laws

Bernanke is full of misdirections.

Wed, 06/05/2013 - 07:33 | 3625664 jimmytorpedo
jimmytorpedo's picture

In Central America 'plata' seems to mean cash.

Tienes plata? Bueno, vamos a tomar cerveza!

I love my Libertads because they say

'Plata Pura' on them.

5 in my pocket feel way better than a C note.

Wed, 06/05/2013 - 08:01 | 3625715 Henry Hub
Henry Hub's picture

In a lot of modern languages the word for silver is interchangeable with the word for money. "L'argent" in French for example.

Tue, 06/04/2013 - 23:33 | 3625368 Scro
Scro's picture

But the ETF trucks can only haul paper.

Wed, 06/05/2013 - 00:02 | 3625402 dogbreath
dogbreath's picture

It made ther front cover of a mining magazine I saw.   Look around that site a see what  that thing can do.  

Wed, 06/05/2013 - 09:07 | 3625900 supermaxedout
supermaxedout's picture

Thats an illusion. These trucks are produced in Germany. They dont come cheap for sure. But its a nice thing to look at.

Wed, 06/05/2013 - 10:03 | 3626113 dogbreath
dogbreath's picture

coming soon to a mine near you.  its all about cost per tonne

Tue, 06/04/2013 - 22:19 | 3625263 Silveramada
Silveramada's picture

Physical gold: Est. 2000 B.C!


Wed, 06/05/2013 - 00:38 | 3625446 Deo vindice
Deo vindice's picture

Do you ever post without a link to your site?

Just askin'.

Wed, 06/05/2013 - 02:00 | 3625515 Herd Redirectio...
Herd Redirection Committee's picture

I love ZH for the community, and in many cases, that means the links.   You have to judge people on their merits.  

Wed, 06/05/2013 - 03:25 | 3625559 JOYFUL
JOYFUL's picture

Great point. Those who fail to distinguish between spammin, and the redirection of a comment's thesis to it's off-site source merely throw out the baby with the bathwater... no body is forced to click on a link!

Indeed, as we proceed further down the rabbit hold of the 'all new ZH' it becomes ever more important  to expand the knowledge base, diversity of ideas, and potential refuges for the real resistor... if this place's fate is to become nothin more than a slightly edgy version of MSNBC, there's a whole lot of us who will be lookin for a new nest.

Even within the framework of it's well known goldbug variations meme... ZH needs and deserves a var-i-ety of voices... not all hummin to the same boring tune!

Case in point... was this jewel of a post by the ORI*... way back in Jan\12.... hardly music to a goldbuggers ears, but valuable food for thought! Most of us here have the wit to be equally bored with pumpers & dumpers... and seek nothing so much as a platform for intelligent discussion of the strategies necessary to survive the storm ahead... let a hundred voices thunder!

it's to be hope that the Tylers place will remain a home to that sort of real debate... but as the manipulators shut more and more doors(and mind-controlled minds!) to freedom of expression.., we greatly need places like twoshortplanks new space to keep freedom road open.

*I even miss Slewie... regardless of his over the top 'death match' manias... sometimes you don't know what you got till it's gone!

Wed, 06/05/2013 - 08:08 | 3625730 Henry Hub
Henry Hub's picture

Well we're all still hanging in here. Not that much has changed yet, as long as you don't say anything to hurt the feelings of a particular ethnic-religious group.

Wed, 06/05/2013 - 08:45 | 3625813 Manipuflation
Manipuflation's picture

Well stated JOYFUL.  I thought TSP's blog was well and fine as he clearly puts a lot of effort into it.  Blogging seems like being a hitter in baseball, fail seven times out of ten and you are likely to end up in the hall of fame.  It is much harder to actually do than it would appear.

I do appreciate your observation that our many small blogs do provide an alternative place to write and to develop writing skills should one be so inclined.  In effect, we are practicing that which we preach when we expound on the virtues of decentralization and individuality.  I would also agree that it is refreshing to explore other topics and not focus entirely on narrow horizons.



Wed, 06/05/2013 - 20:54 | 3628220 Silveramada
Silveramada's picture

I did for almost 2 years, just answering... has been only 2-3 weeks therefore many people don't even know about it

Tue, 06/04/2013 - 21:52 | 3625191 logicalman
logicalman's picture

Only gold is money...

everything else is debt.

Google it.

Tue, 06/04/2013 - 22:39 | 3625304 Silver Bully
Silver Bully's picture

'"Money" is a slippery word.  Gold is The Store Value.'

You sir are on the right track.

Here is a basic lesson in MONEY and CURRENCY (two very different things).

Money consists of 2 things:

-A medium of exchange

-A store of value

Currency consists of one thing:

-A medium of exchange

Currency can represent a store of value, but it is not valuable in and of itself.

The American dollar is a currency.

Gold is money.

Plan accordingly.

Tue, 06/04/2013 - 23:09 | 3625333 DoChenRollingBearing
DoChenRollingBearing's picture

And you are 2/3ds the way to FOFOA.  Add "Unit of Account" as the third role of "money" and you're there.

Money really is a slippery word.  Whatever "money" you are able to save, save at least some in gold.

Tue, 06/04/2013 - 23:15 | 3625339 Ness.
Ness.'s picture

The People's Bank of China released this statement by Zhou Xiaochuan, the central bank's governor, on March 23, 2009. It calls for replacing the dollar as the dominant world currency and creating "an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run".

There were various institutional arrangements in an attempt to find a solution, including the Silver Standard, the Gold Standard, the Gold Exchange Standard and the Bretton Woods system. 


I'm with Zhou.

Wed, 06/05/2013 - 02:07 | 3625520 Nehweh Gahnin
Nehweh Gahnin's picture

Bretton Woods was already on this path.  We would be circling around again.  When you see your own footsteps in the snow, it is time to re-evaluate your strategy, and probably best to camp in the snow for the night.

Wed, 06/05/2013 - 00:30 | 3625437 not applicable
not applicable's picture

The reason WHY gold is a store of value is often overlooked: because it cannot simply be printed at the whim of a Fed chairman, and it takes a lot of effort to bring refined gold into existence (mining, refining etc...).


One other thing about gold. One of the main reasons why it became a medium of exchange was because it was maleable enough to be cut into small denominations AND it is far more durable than any currency could ever be; gold submerged in salt water for centuries will be just as shiny when recovered as it was the day it sank. Oh yeah, and it's impossible to counterfit an element.

Gold was not an arbitrary choice. (Just wanted to expand on these little points).

Wed, 06/05/2013 - 07:33 | 3625662 OpTwoMistic
OpTwoMistic's picture

Gold does not care where you live.

Wed, 06/05/2013 - 02:33 | 3625537 green888
green888's picture

Gold is a relic of barbarism ? So is the plough. So is the fishing net. So is the fire lit in winter.

What an inexpressidly feeble phrase for anything one wants to attack- a relic of barbarism !

There is nothing particularly nasty about being a relic of barbarism. Dancing is a relic of barbarism. Man is a relic of barbarism. Civilisation is a relic of barbarism. Some relic, gold as money 

Tue, 06/04/2013 - 19:50 | 3624909 F. Bastiat
F. Bastiat's picture

The Aztecs and the Incas are also regarded as some of the first socialist civilizations, proving that what we know as socialism knows no bounds in space or time.

As Igor Shafarevich pointed out, the primitive superstitions of what we call socialism seem to be the default condition for the most primitive civilizations.

Tue, 06/04/2013 - 19:59 | 3624929 SimMaker
SimMaker's picture

Socialism is for the Un-evolved?


I agree.

Wed, 06/05/2013 - 03:48 | 3625570 JOYFUL
JOYFUL's picture

Praise be to Bastiat for being willing to break the boringly repetitive (non)news cycle on the (all)new ZH, and inject some semblance of lively debate now n agin.

He may be off track more often than not... but at the very least he's movin along... rather than spinnin in circles.

Speakin of spin... what a let down this article is from Alastairs' previous of only a week ago...

the Incas and the rest of the 'red men' not only were anything but 'socialists' in their social organization....

but contrary to AM's distorted historical reprise.... did not valuable gold and silver that highly... in fact, in their hierarchy of precious metals, copper outweighted them both! When Pizarro and the rest of the looters went gaagaa over the gold n silver stuff, the "Injuns" couldn't at first figure out whether the 'white gods' had gone crazy, or were just conducting some elaborate hoax!

But all that is secondary to the announcement in "Big" Jim Willies' latest, that Fekete has seen the light, and reversed course from the 'gold base' iceberg which our favourite superhero -comix-commentator here(MonetaryMetalsMan)had so obviously struck his ship on! Fekete is quoted by the Jackass as saying:

“The price of Gold is headed for extinction. I for one do not believe that the price of Gold is headed for five digits. Long before that might happen, permanent backwardation would shut down the gold futures markets. Gold could no longer be purchased at any price. Gold would only be available through barter. World trade is facing an avalanche-like transformation, flattening out monetary economy into a barter economy. Practically all economists, financial writers, and market analysts have missed this possible scenario. That will pull the rug from underneath the international monetary system. Barter is the ultimate in deflation, and that is what the world economy is getting.”

Case closed. We are on the way to a total reset... wherein not only will the central banks and their hostage governments of the fallen lands be totally stripped of all real wealth -err... money?.... but the golden holders amongst the CAMPFEMA pre-registrants who refused to realize that staying tight in Gulagistan would only lead to tears... will be berift of all that they had hoped would shield them from the storm...

while the rest of the world moves seamlessly into a new age of wealth n plenty... courtesy of Jimbo's 'gold backed trade n barter system'....


Wed, 06/05/2013 - 06:14 | 3625608 Thoresen
Thoresen's picture

I think you have misunderstood.

Read the original Fekete published interview here.

Q. Where is the price of gold headed from here? A. The price of gold is headed for extinction. I for one don’t believe that the price of gold is headed for five digits. Long before that might happen, permanent backwardation* would shut down the gold futures markets. Gold could no longer be purchased at any price. Gold would only be available through barter. (By extinction he does not mean Zero!) From the interview endnotes:
Permanent gold backwardation means that, having been vacillating between contango and backwardation, the gold basis finally takes the plunge into negative territory never to become positive again. When that happens, itwill be a unique historical event. It will mark the ignominious end of the forty-odd year long global experiment with irredeemable currency. Sovereign debt, including that of the United States government, will not be worth one grain of gold.

The whole of the US debt will not be a able to buy one grain of gold. In other words, gold will go to infinity and no amount of fiat will be able to buy gold. Gold will become part of the barter system, i.e. I think that means gold becomes the money and fiat goes.


Wed, 06/05/2013 - 06:45 | 3625618 JOYFUL
JOYFUL's picture

I believe that I have misunderstood what xactly be my 'misunderstanding'...

pls elucidate for me what part of the Prof's quoted words do not compliment and reinforce what I have stated above...

and just to avoid any possible 'misunderstandin' ... in advance... of what I wrote:

gold will be "money"(in the bartering sense) for the rest of the world outsidda the western Gulagistani ZOG-ruled prison plantantions which some amongst us have 'mis'-calculated to be a safe haven in the coming storm.... you(in the general sense of pre-registrant) will not be allowed to either spend, keep, or export your golden holdings....

I honestly don't know how to make this more clear... than the repeated warnings already delivered here...

I believe that the mind-control programs by which the talmudists have distorted peeples reasoning and 'survival' instincts in the fallen lands have almost completely achieved their objective. Otherwise you would know when to go.

Alll the best.

Wed, 06/05/2013 - 10:14 | 3626135 Thoresen
Thoresen's picture


Guess I overlooked the Gulagistani- ZOG safe haven aspects of your comment!

Gold gets confiscated/ isolated.... maybe. Just hope I can sell as it goes through 5 figures on its way to infinity!

PS. I am a great fan of Fekete.

Tue, 06/04/2013 - 20:05 | 3624941 Poor Grogman
Poor Grogman's picture

Incas were also one of the first to invent underwater storage ..apparently?

Tue, 06/04/2013 - 20:09 | 3624956 jcaz
jcaz's picture

I think the Incas also invented the BitCoin......

Tue, 06/04/2013 - 20:13 | 3624967 Poor Grogman
Poor Grogman's picture

The question is.

Would the Spaniards have accepted bit coin or other money substitutes as ransom, or would they have insisted on gold?

I think we all know the answer to that...

Tue, 06/04/2013 - 20:30 | 3625007 nmewn
nmewn's picture


Tue, 06/04/2013 - 21:05 | 3625077 JuliaS
JuliaS's picture

The Fed invented underwater housing.

Tue, 06/04/2013 - 21:12 | 3625092 nmewn
nmewn's picture

I thought it was the CRA...but you can't have one without the one.

Tue, 06/04/2013 - 22:59 | 3625323 mt paul
mt paul's picture

thought it was the mob..

east river estates

Tue, 06/04/2013 - 23:53 | 3625390 Milestones
Milestones's picture

Istanbul has a huge underground reservoir By time time of Constantine (300 ad)I believe Rome also had a large storage system near this samr time.               Milestones

Wed, 06/05/2013 - 09:02 | 3625870 Herd Redirectio...
Herd Redirection Committee's picture

You mean Constantinople  :)

Wed, 06/05/2013 - 16:25 | 3627467 Quonk
Quonk's picture

...or perhaps he meant Byzantium?

Tue, 06/04/2013 - 20:06 | 3624943 nmewn
nmewn's picture

Yeah, there's nothing like cutting out a virgins heart to get the peeps minds right about the intersection of church & state ;-)

Tue, 06/04/2013 - 20:12 | 3624955 Urban Redneck
Urban Redneck's picture

and exactly who all that gold belonged to.  (unlike the cotton precursor to cotton-linen blend)

Tue, 06/04/2013 - 20:29 | 3625005 nmewn
nmewn's picture

Yep, it sure wasn't the poor virgin girls gold.

Tue, 06/04/2013 - 21:17 | 3625108 GoinFawr
GoinFawr's picture

So whose gold is it today? (assuming Indiana Jones was just a character in a movie, natch)

Tue, 06/04/2013 - 22:41 | 3625280 nmewn
nmewn's picture

Yours, if you exchange away from what they pay you with. There is no law (yet) which compels you to save your labor in digital or paper form.

Its an interesting chess match really...why do central banks hold gold and yet try and suppress its price in fiat, in a zero interest rate enviroment, of their own making?

They must know something no one else does.


And no...that wasn't me...I'll tell ya if I down vote ya ;-)

Tue, 06/04/2013 - 20:12 | 3624964 DoChenRollingBearing
DoChenRollingBearing's picture

The Incas had an interesting blend of primitive Communism and Monarchy that we do not see today.  (Except for maybe in much-bloodier North Korea)

Tue, 06/04/2013 - 20:58 | 3625065 Pure Evil
Pure Evil's picture

Are you sure DCRB?

I thought Obama was our God King and Marxism was our religion.


Tue, 06/04/2013 - 21:24 | 3625128 DoChenRollingBearing
DoChenRollingBearing's picture

Obama's innovation was to add Deity...  Run, Mr. Evil!!!

Tue, 06/04/2013 - 21:31 | 3625143 shovelhead
shovelhead's picture

The Inca had a unique method for spreading their empire. The King sent emmisaries with gifts to spread around to the rulers of an outlying area and flattered them while telling them that if the built roads to link with the empire, much more riches and surplus would come their way by trade and all they would need to do was to build a fort as a place for the kings men to rest when they visited.

All this would come to pass over time and slowly the subjects in the region would come to look at the distant king as the real benefactor while more 'visitors' would be staying in the area and the local ruler slowly became more of a funtionary rather than a power himself. At this point the demand for tribute was increased to provide 'gifts' futher down the line.

The original Fabians whose method was "We're from the govt. and we're here to help."

Maybe not so unique a method after all.

Tue, 06/04/2013 - 23:26 | 3625356 Stuck on Zero
Stuck on Zero's picture

Substitute "states" for "outlying areas" and "Federal Grants and Funds" for "gifts" and that's the way the Feds are taking over this country.  Things never change.


Wed, 06/05/2013 - 01:07 | 3625479 Flying Tiger Comics
Flying Tiger Comics's picture

Absolute monarchies with slavery and hideous arbitrary torture are the true fundamental form of socialism?


Been saying it for years.


Fucking muppet.


Wed, 06/05/2013 - 02:15 | 3625526 StychoKiller
StychoKiller's picture

How is being ruled by a king/emperor considered Socialism?

Tue, 06/04/2013 - 19:56 | 3624922 DawgAss
DawgAss's picture

No it's NOT.....Just ask the Head ASS HOLE.....

PS   Fuck You Bernanke


Tue, 06/04/2013 - 19:59 | 3624930 medium giraffe
medium giraffe's picture

It's easy enough to see that every time unbacked currency has been used it has failed without having to name drop von Moses all over the shop. I'm sick of hearing about 'great economists', it's like having someone read out chocolate cake recipes to you as you starve to death.

Tue, 06/04/2013 - 20:00 | 3624931 news printer
news printer's picture
Russia wants Steven Seagal for weapons marketing campaign

Tue, 06/04/2013 - 20:03 | 3624938 Urban Redneck
Urban Redneck's picture

What is "true money"?

The Egyptians did not use gold as "money" -- they used grain.  

Having "value" is different that being used, or viewed, as "money," even if it is a precursor to money backed by anything more than CONfidence.

Tue, 06/04/2013 - 21:23 | 3625122 AgLand
AgLand's picture

I own gold, I grow grain.

I should have been an Egyptian.

Oh, wait, not a Mooslim or into pyramid power.

Tue, 06/04/2013 - 21:58 | 3625214 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"...they used grain."

More specifically, they used BEER made from the grain!

"As Egypt took over from Mesopotamia, in the Land of the Pharaohs beer was the national currency, a dietary staple and even an important medicine. Put simply, without beer, we wouldn't have the pyramids."


Tue, 06/04/2013 - 22:35 | 3625296 TheReplacement
TheReplacement's picture

I brew my own beer.  I'm going to be SOOO rich when the world ends! 


Tue, 06/04/2013 - 23:58 | 3625397 RaceToTheBottom
RaceToTheBottom's picture

Hmmmmm, Chocolate, Oatmeal Stout.


Tue, 06/04/2013 - 22:58 | 3625321 OldE_Ant
OldE_Ant's picture

And does anyone know WHY BEER/WINE was the preferred liquid beverage in almost every region of the world up until recent times?

Tue, 06/04/2013 - 23:24 | 3625351 Jam Akin
Jam Akin's picture

It kills what ales ya....

Wed, 06/05/2013 - 03:25 | 3625561 cynicalskeptic
cynicalskeptic's picture

More like it DIDN'T kill you like plain old water would.

Wed, 06/05/2013 - 05:44 | 3625597 Jam Akin
Jam Akin's picture

As I said...

Tue, 06/04/2013 - 20:09 | 3624951 IridiumRebel
IridiumRebel's picture

I consider it money because you can't just fucking print it. Period. End of story. This is why gas has gone up by a fucking buck per gallon in the last four years...amongst everything else losing its worth.

Tue, 06/04/2013 - 20:14 | 3624970 Praetorian Guard
Praetorian Guard's picture

It is only money with the structure supporting the system does not collapse. Other than that, if this grand ship goes tits up into the sea floor, all bets are off, and you better have something other than gold...

Tue, 06/04/2013 - 21:01 | 3625069 Pure Evil
Pure Evil's picture

Well, I hope oxygen is still available...........

......oh that's right we're tits up on the bottom of the sea floor.

Wed, 06/05/2013 - 00:00 | 3625399 RaceToTheBottom
RaceToTheBottom's picture

"..oh that's right we're tits up on the bottom of the sea floor."

I think I need a photo to assist.

Tue, 06/04/2013 - 21:41 | 3625171 DumpsterFire
DumpsterFire's picture

When gold is no longer money, only beans and bullets will have value. 

Tue, 06/04/2013 - 21:42 | 3625173 IridiumRebel
IridiumRebel's picture

I'd say the 13 horses, weapons, acreage and about 50+ farmers in the wife's family suggest we will fare just fine. I'm still stacking however. 

Tue, 06/04/2013 - 20:12 | 3624962 Praetorian Guard
Praetorian Guard's picture

It is not money, if the global economy becomes insolvent and collapses. At some point, down the road from this scenario, perhaps, but not in the immediate or present during such a scenario. If the system does not implode, then yes, it hedges fiat loses... otherwise it is commod trade for things that keep you alive...

Tue, 06/04/2013 - 20:23 | 3624988 medium giraffe
medium giraffe's picture

This is the other side of the gold coin. I don't disagree with holding gold, but if things go Mad Max, then food, fuel, medicine, alcohol, cigarettes, drugs, firearms and ammunition are going to be the hot commods, anything else will be superfluous.

Tue, 06/04/2013 - 21:02 | 3625071 Pure Evil
Pure Evil's picture

No TP in that mix.......or are we going to go all Muslimy.

Tue, 06/04/2013 - 21:52 | 3625193 Herd Redirectio...
Herd Redirection Committee's picture

No one said gold, and gold alone.  If you live in an area where you fear riots or roving mobs, then yeah, thats pretty high up on the list of concerns.

Gold is for using "on the other side" of a crisis, or, worst case scenario, to get you out of Dodge.

Tue, 06/04/2013 - 23:27 | 3625361 buyingsterling
buyingsterling's picture

The only way gold and silver won't serve as money in a post-collapse economy is if there is _extreme_ scarcity of everything else. As long as anyone holds a relative surplus of anything, some of it will be purchased with gold and silver. It will be the ultimate barter item; the guy who wants to buy your eggs may not have the gloves and shoes you want, but the next guy might, and if you sell the eggs for gold and silver, you can spend the metal for your other needs. People will just naturally use it because other people will take it as a thing of value. Because you will be able to barter it for almost anything, it will quickly become the default currency. I would add 'portability' to the list of virtues that make it money. 

Tue, 06/04/2013 - 21:47 | 3625180 shovelhead
shovelhead's picture


This supposses that nobody anywhere has surpluses. I guess that guy down the road will eat all 500 head of his cattle and his neighbor will eat all 5000 lbs of his produce?

Your gold won't make someone in the city trade their last can of beans but he might let you rent his daughter.

Tue, 06/04/2013 - 20:14 | 3624968 q99x2
q99x2's picture

Bullshit. Nobody believes that Goldman Sachs propaganda. The only media outlets that report that shit are owned by the banksters. Everyone has always known that Gold is money. Cut the GS/FED BS..

Tue, 06/04/2013 - 20:14 | 3624969 Confundido
Confundido's picture

Was it really Von Mises who came up with the regression theorem?

Tue, 06/04/2013 - 20:20 | 3624981 One eyed man
One eyed man's picture

"Money" is a medium of exchange for goods and services. Sorry, but gold is no longer money in the USA. I don't know of anyone who is paid wages in gold and I've never seen anyone exchange gold for food, clothing, or shelter. It probably happens in isolated cases, but the vast majority of transactions in the US do not involve gold.

Perhaps the author has some unusual, nonstandard definition in mind for "money". If so, he should have stated it up front.

Now whether gold should be money is a different question. It certainly has a lot of attributes that make it a very good choice for a medium of exchange. But it isn't being used that way at the present time and to suggest that it is is just silly.

Tue, 06/04/2013 - 20:32 | 3625009 ILLILLILLI
ILLILLILLI's picture

People use the word "money" much in the same way they use the word "car" a generic identifier.

Tue, 06/04/2013 - 21:55 | 3625204 Herd Redirectio...
Herd Redirection Committee's picture

Gresham says USD chased gold out of circulation.  While people accept USD just as much as Gold it makes NO SENSE to transact in gold.  Use the worthless paper.  Hold the gold.  Bad money chases out good.  Its only when the bad money is removed from circulation that you will see gold and silver used as money.

Tue, 06/04/2013 - 22:17 | 3625258 Thisson
Thisson's picture

Gold is, in fact, money here in the US.  Look at a Gold Eagle - it says $50 right on it.  The reason it's not used as money is because it's worth more to the holder (spot) than it's spending value ($50).  If the American Gold Eagle said $5000 on it, it would be used as money in the same was as a $5000 bill.  Obviously, the larger the denomination, the less easy it is to transact in.  In a similar way, $100 bills are used less frequently in transactions than $20 bills.

Tue, 06/04/2013 - 23:31 | 3625365 buyingsterling
buyingsterling's picture

""Money" is a medium of exchange for goods and services. Sorry, but gold is no longer money in the USA"

Only true because we're forced at gunpoint to implement Gresham's law.

Wed, 06/05/2013 - 19:55 | 3628078 lotsoffun
lotsoffun's picture

as soon as somebody wants to start paying me in gold and silver (and maybe platinum) i would seriously consider it.

Tue, 06/04/2013 - 20:23 | 3624986 CheapBastard
CheapBastard's picture

I'm not sure what it is but as long as Central Banks are grabbing all they can get it's a solid idea to have a decent amount in your portfolio.

...not to mention the worlds two most populous civilizations (India and China) buying substantial amounts as a store of value.

Tue, 06/04/2013 - 20:23 | 3624990 ShrNfr
ShrNfr's picture

Gold, silver, and dog turds (Benny Bucks) are only as good as their exchange rate for other products. I expect that the exchange rate for gold, silver and such to have a higher exchange rate in the future than dog turds will.

Tue, 06/04/2013 - 21:33 | 3625080 Pure Evil
Pure Evil's picture

I dunno know.........I had a dog that liked to eat cat turds.

If you polish it up real nice, maybe it can be auctioned on eBay.

Tue, 06/04/2013 - 22:03 | 3625224 SimMaker
SimMaker's picture

".......and dog turds (Benny Bucks) "


I am suprised that the term "Lollars" has never really stuck. Cuz it is perfect.

Tue, 06/04/2013 - 20:25 | 3624993 Rimon
Rimon's picture

If gold was a store of value it's price/value would be sable and predictable which it's not.. Look at the 20yr bear market from 800s in early 80s to 200s 20yrs later.. Or a 20% fall from this year's high.. Gold is a religious commodity which has high emotional value to the faithful but a mere mortal commodity and trading vehicle to everyone else.. Examples from 1000yrs ago are dumb.. 1000yrs ago half the world enjoyed cannibalism, human sacrifice and slavery and didn't know any better.. You also couldn't spend all the gold in the world to buy a nice car..

Tue, 06/04/2013 - 20:27 | 3625000 The Shootist
The Shootist's picture

Thanks for the laugh. Instability comes from FRN's, not gold.

Tue, 06/04/2013 - 21:07 | 3625081 Pure Evil
Pure Evil's picture

Gold is one of the most stable elements in the universe.

Tue, 06/04/2013 - 21:58 | 3625216 Herd Redirectio...
Herd Redirection Committee's picture

Thats real nice, he is using the USD price of gold to imply gold doesn't retain value.  LOL

And the USD has remained stable all that time, hey?  Let me spell it out, you are looking at fluctuations in the value of the USD, and saying its GOLD that is unstable.   When the price of gold changes, its not the gold thats changing, its the value of the currency it is priced in that is changing.

I suggest you compare gold vs real estate, or gold vs commodities, to see whether it has been 'stable' and retained purchasing power.

Tue, 06/04/2013 - 22:16 | 3625256 nmewn
nmewn's picture

" (Rimon) are looking at fluctuations in the value of the USD, and saying its GOLD that is unstable.   When the price of gold changes, its not the gold thats changing, its the value of the currency it is priced in that is changing."

Exactly right.

It gets boring telling the noobs, like Rimon, that his perception of value is not fiat price. Its almost as if he has never looked at the recent history of French or Zimbabwean fiat.

Tue, 06/04/2013 - 22:54 | 3625316 BoNeSxxx
BoNeSxxx's picture

Half of the population may be reintroduced to cannibalism... 

Just sayin'... I hear we taste like pork (oddly enough).  Also, according to Aztec lore, kids would fight over the hands like they do chicken legs today.  Yea, I remember crap like that from college anthropology.

Tue, 06/04/2013 - 20:41 | 3625026 lotsoffun
lotsoffun's picture

rimon - you are a very lucky young man, having never experienced being lied to by the 'respected authorities'.  i'm sure that warren buffet and others like him have absolutely NO interest in precious metals.  infact - he gave becky quick one of those rings us american teens learned to make from dollar bills.  and she was thrilled!  (let's not forget diamonds.  or land.  or cows even for that matter).

if you can't hold it, and somebody else can make as many as they want, forever, what's it worth?  'e pluribus unum?'

best of luck with that.  say hello to bennie and krugie for me.

you'd be very surprised what all these people hold, or else, they truly are fools.  but, i wouldn't bet that.  they talk the assets they want to own down.  why?  i'll let you answer that.


Tue, 06/04/2013 - 20:46 | 3625040 Rimon
Rimon's picture

I have a hard time understanding the meaning of your mumble nor how it relates to anything in my post

Tue, 06/04/2013 - 21:08 | 3625089 Clowns on Acid
Clowns on Acid's picture

rimon - sounds like you have a hard time understanding most things. Fuckwit.

Tue, 06/04/2013 - 21:38 | 3625162 nmewn
nmewn's picture

I'll only do this pay attention.

You're an idiot.

Tue, 06/04/2013 - 21:53 | 3625196 Hulk
Hulk's picture

Double LOL !!! Youa cracka me up...

Tue, 06/04/2013 - 21:53 | 3625199 shovelhead
shovelhead's picture

I'd go as far to say he just may be a professional.

Tue, 06/04/2013 - 22:00 | 3625217 nmewn
nmewn's picture

Guys, I actually started to deconstruct this morons comment on price/value/fiat/time...and then I got to the year 1013 and cannibals in Borneo rowing their canoes to invade and conquer Asia & Europe in order to comprise half the worlds population and my little ole head

Wed, 06/05/2013 - 00:48 | 3625456 Hulk
Hulk's picture

Ah Borneo, home of the supper dupper cooper droopers...

(but they did help our asses out big time in WW II)

Wed, 06/05/2013 - 19:49 | 3628064 lotsoffun
lotsoffun's picture

thanks bud!  maybe i should let him in on some detroit real estate that i own.  it's 'recovering'!! and very hot.

Tue, 06/04/2013 - 21:48 | 3625182 Vooter
Vooter's picture

LOL...what exactly was hard to understand in his post???

Tue, 06/04/2013 - 22:16 | 3625257 Bansters-in-my-...
Bansters-in-my- feces's picture

Hey Rimon....

Whats "sable"...?

And are you and you know.......doin it...???

Tue, 06/04/2013 - 23:16 | 3625341 Pareto
Pareto's picture

You need to learn your economic history boy.  The bear market in gold was actually a bear market in everything else too (assets) - like property, land, tractors, machinery, and what not.  in real terms the exchange value of gold never budged, as you keep FOREVER trying to measure the value of gold with the measuring stick of fiat.  What took gold out (in fiat) during the 80's was Paul Volker (now look you need to look that fucker up and understand the implication of what he did).  Volker brought back sanity to fiat (i suppose thats possible), and jacked interest rates hard such that he restored some credibility to paper currency.  He removed money from the system,  with the effect of a massive decline in the general price level.  Who here remembers people tossing the keys to their house to the banks at 21%?  But he did what had to be done.  And he ushered in the greatest prosperity the US would ever know - the result of a strong, stable currency.

Gold neither decreased or increased in exchange value.  Until you understand this, you will never understand anything, and you will constantly be confused about what value actually constitutes - and not just with gold - with anything.

Wed, 06/05/2013 - 03:12 | 3625553 terryfuckwit
terryfuckwit's picture long at sea no one recognises dry land

Wed, 06/05/2013 - 10:59 | 3626286 Quonk
Quonk's picture

Volker choked out inflation...and just about the entire economy...administering pain in the near term so the dollar could live.  That was absolutely the hardest time of my life...was, until the 2007-2015 depression took it's place. If food stamps were replaced with soup kitchens we would have people lined around the block throughout the country.  

Will there be a new Volker around when Helicopter Ben slays deflation and unleashes the now coveted inflationary Genie?  Hard to imagine anyone currently in power having the integrity or fortitude to do so in this day and age.  Easier to simply let the middle class bleed out.



Tue, 06/04/2013 - 20:33 | 3625004 blindman
blindman's picture

what is the difference between animal and human?
it has been recognized that the distinction, with a
difference, is symbol, which implies meaning and story,
narrative and language. as it turns out gold plays a central role
here, it is a long and often told yet dismissed story.
anyway there in the narrative is the answer; we will see
and good luck and god bless and let us hope the creek don't
rise too much.
gold and precious metals have a unique position regarding the
world we live in, the periodic chart and the history of humanities
estimation of what is valuable and durable over "time",
a very conceptual and deep "spatial" concern with all conductive,
optical and electromagnetic
properties of interest.
dig? .... here this.
what does it mean to the mind?

Tue, 06/04/2013 - 20:40 | 3625021 medium giraffe
medium giraffe's picture

Here's a documentary shown on the BBC a while ago that examines our relationship with Gold, A History of Art In Three Colours: Gold. It's worth a watch, especially for visit to the BoE basement.

Tue, 06/04/2013 - 20:36 | 3625012 TaborKnight
TaborKnight's picture

I suppose homes past this test as well. Thank goodness for our wonderful state for providing security for our homes; I still prefer my own gat doh. 

Tue, 06/04/2013 - 20:39 | 3625020 WTFUD
WTFUD's picture

I know half a dozen companies who spend 10's, no hundreds of millions in fiat funny money, time in months and years, toil and sweat, disease and even death to produce even small amounts of gold and silver. I know one company more than 250 years old and 9 generations of ancestry who commit more resources and time for the next generation of the family in pursuit of gold exploration. For these reasons and the ability of this company to raise 100's of millions from investors i am confident gold is of greater value than just money.

Tue, 06/04/2013 - 20:40 | 3625022 sitenine
sitenine's picture
Why Gold Is Money... Huh. Who needs a reason?
Tue, 06/04/2013 - 20:45 | 3625036 forwardho
forwardho's picture

And to address the backwardation of AU;

Tue, 06/04/2013 - 20:51 | 3625045 JPMorgan
JPMorgan's picture

History tells it's own story about what passes as money.

They just don't want the general public trading in paper promises and digital currency into hard tangible assets like precious metals.

It greatly undermines and diminishes their control when your money is in your possession and not directly accessible at a stroke of a key.

I bet the people in Cyprus wished they had held more assets outside of the banking system. 



Tue, 06/04/2013 - 21:05 | 3625078 Clowns on Acid
Clowns on Acid's picture

Once they admit that it is money.... with all the debt that the immoral, left wing statists and Bernanke has printed.... the price has to be in the 5000 / oz level. Could take 1 to 3 years however.

Tue, 06/04/2013 - 21:11 | 3625091 JuliaS
JuliaS's picture

Gold is money because banks hold it, and not just specific ones. All banks hold gold, or at least pretend that they do.

Bankers sometimes say gold isn't money, but I go but what they do instead of what they say.

Tue, 06/04/2013 - 21:22 | 3625119 Pure Evil
Pure Evil's picture

Western central banks hold the majority of gold for the express purpose of keeping it out of the hands of the mere mundanes.

You wouldn't want the little people to discover what real money is.

Tue, 06/04/2013 - 22:04 | 3625210 JuliaS
JuliaS's picture

The banks are casinos. They collect real currency and give us playing chips. If we play nice and loose alot, they let us redeem some of them back. If we hit a jackpot or violate rules, we get escorted of the premises. Casinos don't doubt for one second where the real value lies.

Banks have "their currency" represented by assets and precious metals. Fiat play chips are what they loan to us. They know what has value - it is virtually everything that they themselves do not manufacture. The only thing they do make - fiat money and synthetic credit to them is actually worthless. If the game ends, which is if the entire world fiat system collapses, they'll actually be the winners (those who loose the least).

All of the sudden, you'll discover bankers disappear off the face of the earth. In reality they'll be standing next to you in soup lines, wearing robes, eavesdropping, hoping not to attract attention, waiting for the next opportunity to come out into the open. They'll be playing pretend victims while quietly siphoning many generations worth of wealth stored in hidden vaults and divided among family members.

We ought to catalogue those parasites before all hell breaks loose, else we won't be able to find them afterwards.

Someone proposed making decks of cards with faces of bankers - like they have in the army.

Tue, 06/04/2013 - 22:05 | 3625230 Herd Redirectio...
Herd Redirection Committee's picture

"Someone proposed making decks of cards"


Tue, 06/04/2013 - 21:17 | 3625107 fijisailor
fijisailor's picture

It certainly is money more than what is in a bank account which is just saved digital files.  Those digital files have to be converted into fiat or converted into a product by swiping a card and accessing those files.  Which is money, PMs or a digital file?  How reliable is that?

Tue, 06/04/2013 - 21:20 | 3625111 essence
essence's picture

Everyone, THINK for a minute.

In the modern world we NEED a digital currency.
Shuffling gold or silver coins/bars about just won't scale up in an increasingly digital, online & interconnected  world of 7 billion people. That's not to say physical money (either paper fiat or PM coins) have no place. Indeed they do. The most robust system would incorporate them all.

PMs can be 'digitized'. The company GoldMoney has a workable concept (I have no affiliation with them). Bitcoin is a modern implementation of digital money. It would be possible to establish clearing houses to handle the conversion between the different forms of "money" and collateral.

Yes,yes ..there is an issue with special interest groups (read banking cabals) that seek a monopoly on the issuance of 'money' & credit. That's an ancillary issue to Gold/Silver being used as transactional currency.

I would say FOFOA has it right (note ... I'm not one of his disciples, although he gets huge credit for his most valuable insights). It's best to separate Gold from being the 'official' transactional currency.  My own personal spin on this is that competing currencies should be allowed. That of course means folks are free to use Gold/Silver as 'money'. It's just that government isn't forcing it or it's own issued fiat for that matter.

Of course there's the ideal, and then there's reality where entrenched interests have bought off politicians, own the main stream media and control the leading corporations of the western world.

That's another topic, one that this site doesn't get into in dept.





Tue, 06/04/2013 - 21:24 | 3625130 Pure Evil
Pure Evil's picture

If you can create it out of thin air, then it's fiat, whether its FRN's or bitcoin.

Tue, 06/04/2013 - 22:01 | 3625220 blindman
blindman's picture

by fiat is by law. it may be repulsive or degenerate
and despised by the population yet become coveted
because of law and the concomitant requirements,
ubiquitous resplendent loathing and contempt evident
in every advertisement. fractal collapse of bad form
at the root, inevitable and ironic, sad and beautiful
here enter the sickness of modern money and man,
love the thing you loath.
gold is different like that , in that regard.
no? it is useful and with natural and universal
value and beauty.
it is what it is.

Tue, 06/04/2013 - 23:35 | 3625370 Angus McHugepenis
Angus McHugepenis's picture

Pure Evil: I was reading your comment and realized I had to run out and take a quick "Bernanke". I'll be right back. Should be lots of paper on hand to finish the job.

Wed, 06/05/2013 - 00:37 | 3625445 not applicable
not applicable's picture

yes, James Turk has a workable concept with GoldMoney, and this should be the template to replace our current monetary sytem. Just don't lose sight of WHY it's a workable concept; because you can actually redeem your digital account with the precious metal; your account balance is backed by something with integrity.

Tue, 06/04/2013 - 21:20 | 3625113 SILVERGEDDON

I have to poop.  Paper sucks, you Wall Street fucks! I'll see you vampires in the sun,
with my loaded silver gun.
Yer goin' down in flames, from Lower Manhattan to the Thames. Your paper is I know not where, I'd rather shit my underwear! 
For, be there bull,
or be there bear, silver is the suit I wear! (With gratitude, and apologies to Dr. Seuss.)


The only paper I own is the stuff I wipe my ass with. Market paper is worthless, because I cannot do a good job of wiping my ass with it.

Gold was worth $28.00 an ounce when I was a kid. Silver was worth whatever was printed on the coin you spent.


Any one else think those days are coming back?

All of the lying bum fucking aristocracy of the Age Of Paper Power can burn in their paper suits soonest.

I won't even bother pissing on them to put out the flames.

I collect gold, silver, lead, copper, real dry powder, food, tools, diesel fuel, and other useful commodities.

There is a community of folks all doing the same, so skill sets and extra eyes and hands can guard each others sixes, and "break on through to the other side, break on through to the other side, YEAH "

This Jim Morrison moment is coming soon to your town, baybee, whether you are ready or not -

I would suggest you get your inner boy Scout into action, and be prepared as best you can. 


HFT ain't good for me. 

Credit defaults far as the eye can see.


CDS's gonna make some messes. 

Boo hoo hoo as thieves confesses. 

TBTF gonna fall off a cliff - REAL NEAT.

Wall Street is a bunch of fucking dead meat.


Banks used to be so overleveraged bold.

Now, they're layin' bankrupt,dead and cold.

Gonna be nothing but prepper people,

All the rest gonna be surprised fucked up Sheeple.

God bless this mess.

I must confess.

I'm a fucking poet,


and didn't even know it.




Wed, 06/05/2013 - 02:22 | 3625531 Herd Redirectio...
Herd Redirection Committee's picture

You have a good rap game for an old guy.

Tue, 06/04/2013 - 22:41 | 3625116 fuckitall
fuckitall's picture

Interesting, not one comment citing the US Constitution's declaration that states must use gold and silver as money.

No, it doesn't limit federal govt that way.  Just states.  Which means state govts couldn't collect taxes in federal currency, just gold and silver.

It means federal currency was illegal in the states.  States couldn't recognize it, allow it to be used in trade, nor collect taxes in it.

So what happened?  Simple, the states were conquered by the federal govt in the civil war.  They lost their sovereignty over the federal govt, hence the original constitution no longer applies. 

The creation conquered its creator.   Frankenstein overpowered his mad-scientist creator, eliminating any rules his mad-scientist creator had.  Frankenstein now makes the rules his mad-scientist creator must follow.

States let the federal govt get too big and powerful, even back in the 1860s.

Think how much further it has gone since then.  States have no power at all over their creation anymore, none.  It's the national govt now, both defacto and dejure, demonstrated by the 14th - 17th amendments, which effectively wiped out the original Constitution.

That's why states recognize federal currency now, use it in intrastate and interstate trade, collect taxes in it, etc.  They're merely federal districts now, not sovereign states anymore, and it's been that way since 1865. 

There are no "states rights" anymore, and haven't been since 1865.  The conquered lose all their rights.

And while we're talking about it, no, you individually have no "constitutional rights" anymore, and haven't had them since 1865.  They were part of the original constitution effectively voided in 1865.  When the federal govt conquered the states, it included all the people in the states.  So yes, you're a "federal citizen" now, under a national govt eminating from Washington D.C.

What?  The "Bill of Rights"?  It still applies?

No it doesn't.  It was incorporated into the original constituion, and died with it.  You may not realize it, but the federal govt does ...and federal judges.

All you have now are "civil rights".  Rights the federal govt gives you.  Not rights in the traditional sense, but privileges ...which can be revoked at any time ...collectively or individually.

So it doesn't matter if you think gold is money.  Federal govt says it isn't.   And states obey.  And you obey.  You don't try to pay state taxes in gold and silver like the constitution says.  You pay them in federal currency like the federal govt says.  Ok, technically FRNs, the central bank currency.

Tue, 06/04/2013 - 23:04 | 3625328 Angus McHugepenis
Angus McHugepenis's picture

I stopped reading after your first sentence. I don't give a shit what YOUR constitution says... it is not in agreement with MY constitution. Now what are YOU going to do about it??. See, I can make LAWS just as easily as writing them on paper as soon as the they pop into my head. I can crown myself KING CheesePope (hat tip, francis) and procede to steal land from the heathens, drunks, mortgage defaulters, and failed Goldman Sachs interns... OHHH... the GS interns... the horror!

I can and will do whatever I want. All YOU have to do is follow me blindly like you were trained to do.

Wed, 06/05/2013 - 00:42 | 3625451 fuckitall
fuckitall's picture

You sound just like Obama, congress, Holder, Bernanke, Wall Street, etc, make up your own laws as you go.

Tue, 06/04/2013 - 21:24 | 3625123 criticalreason
criticalreason's picture

gold is a commodity. gold is not a currency or money because u cant spend it in shoppes.

you can  buy and sell gold but the costs of exchange are expensive.

if your currency fails then gold might b a good store of value but whatever government or PTB will still decide what currency is used.


Tue, 06/04/2013 - 21:34 | 3625152 blindman
blindman's picture

the times
they are a changing." b.d.

Tue, 06/04/2013 - 21:44 | 3625176 Vooter
Vooter's picture

"gold is not a currency or money because u cant spend it in shoppes."

You can in Utah...

Tue, 06/04/2013 - 22:40 | 3625305 Angus McHugepenis
Angus McHugepenis's picture

Really?... gold is not currency? I have personally traded gold for services from an owner of a well known chain of "franchises" (he's a single owner, not the head guy, don't get excited you wankers). As the owner of his franchise, he was quite willing to trade gold for services I needed. I don't care how he handles that transaction with the head office or whatever is in his "franchisee" agreement.


Suck on the teat of fiat until you die, BitCheZ...

Tue, 06/04/2013 - 21:40 | 3625169 Manipuflation
Manipuflation's picture

OK, I scanned the comments for mention of Thier's Law, which remarkably happens to be closely spelled to Their Law, but see not a mention.  In fact, I have not heard much about Thiers' law anywhere for quite a while.  I was once questioned as to which laws are the worst laws that the United States FedGov has and I would still have to answer that legal tender laws really need to go away first.


Reverse of Gresham's Law (Thiers' Law)

In an influential theoretical article, Rolnick and Weber (1986) argued that bad money would drive good money to a premium rather than driving it out of circulation. However, their research did not take into account the context in which Gresham made his observation. Rolnick and Weber ignored the influence of legal tender legislation which requires people to accept both good and bad money as if they were of equal value. They also focused mainly on the interaction between different metallic monies, comparing the relative "goodness" of silver to that of gold, which is not what Gresham was speaking of.

The experiences of dollarization in countries with weak economies and currencies (for example Israel in the 1980s, Eastern Europe and countries in the period immediately after the collapse of the Soviet bloc, or South American countries throughout the late 20th and early 21st century) may be seen as Gresham's Law operating in its reverse form (Guidotti & Rodriguez, 1992), since in general the dollar has not been legal tender in such situations, and in some cases its use has been illegal.

Adam Fergusson pointed out that in 1923 during the great Inflation in the Weimar Republic Gresham's Law began to work in reverse, since the official money became so worthless that virtually nobody would take it. This was particularly serious since farmers began to hoard food. Accordingly, any currencies backed by any sorts of value became the circulating mediums of exchange.[13] In 2009 Hyperinflation in Zimbabwe began to show similar characteristics.

These examples show that in the absence of effective legal tender laws, Gresham's Law works in reverse. If given the choice of what money to accept, people will transact with money they believe to be of highest long-term value. However, if not given the choice, and required to accept all money, good and bad, they will tend to keep the money of greater perceived value in their possession, and pass on the bad money to someone else. In short, in the absence of legal tender laws, the seller will not accept anything but money of certain value (good money), while the existence of legal tender laws will cause the buyer to offer only money with the lowest commodity value (bad money) as the creditor must accept such money at face value.[14]

The Nobel prize-winner Robert Mundell believes that Gresham's Law could be more accurately rendered, taking care of the reverse, if it were expressed as, "Bad money drives out good if they exchange for the same price."[15]

The reverse of Gresham's Law, that good money drives out bad money whenever the bad money becomes nearly worthless, has been named "Thiers' Law" by economist Peter Bernholz, in honor of French politician and historian Adolphe Thiers.[16] "Thiers' Law will only operate later [in the inflation] when the increase of the new flexible exchange rate and of the rate of inflation lower the real demand for the inflating money."[17]

Wed, 06/05/2013 - 01:51 | 3625509 Thisson
Thisson's picture

And that is why we hoard American Gold Eagles ($50 face value) - FIAT says its only worth $50, and we'd rather pay a paper $50 than a gold $50 when we know the seller will be compelled to accept either one we offer.

Wed, 06/05/2013 - 02:39 | 3625539 Herd Redirectio...
Herd Redirection Committee's picture

Bad money, while still accepted and widely exchanged, drives out good (if forced to exchange at the same price).  

But bad money drives out itself, eventually, as it ceases to be a store of value, first, and unit of account, later.  When the USD held by foreigners as 'reserves' flood back into the economy, in seek of any sort of tangible value (everything thats not nailed down, as the saying goes) things are going to get messy.  

Tue, 06/04/2013 - 21:56 | 3625207 SqueekyFromm
SqueekyFromm's picture

Well, this inspired me to write a new poem!


Common Cents

An Epic Poem by

Squeeky Fromm, Girl Reporter


Poor Melvin was in Georgia

Where on business he'd been sent.

His wallet had been stolen,

Lord, he did not have a cent.


But Melvin was a Gold Bug,

And he had a Krugerrand,

Tucked inside his loafers

'Cause he liked it close at hand.


Off to the Piggly Wiggly

Melvin walked without a care.

After all, he had some gold

He'd buy some groceries there.


Melvin filled his grocery cart.

It came to just about

One hundred thirty dollars,

Melvin whipped his gold coin out.


He took his little pocket knife

And then shaved off a sliver.

Just about one tenth he thought,

And this he tried to give her.


But Lulubelle, the checkout girl

Was having none of that.

And thought perhaps he had been

In the sun without a hat.


So Melvin gave the Gold Bug speech

About how Gold IS money.

And Lulubelle, she called the cops,

Who did not think it funny.


"Boy, are you a Communist???"

"Or maybe just a freak???"

"A foreign agitator???"

Or a Yankee con man sneak???"


Sooo, Melvin tried to tell the cops,

About the price of Gold,

And how his little Krugerrand

Would pay his debt tenfold.


Now Melvin thought his logic

Would secure a quick release.

Instead they hustled him to see

The Justice of the Peace.


"Judge, we got this fellow here,

We don't know what to do.

He's got some kind of foreign coin,

That he done cut in two."


Sooo, Poor Melvin, handcuffed, gave

His Gold Speech one more time.

The Judge just shook his head and said,

"In Georgia's its a crime."


"Now theory's nice, young man," he said

"But law is not your sayso,

If it was, the Mexicans

Would pay here with a peso."


Melvin's on a chain gang now

He's a kudzu-chopping man.

He gets a whole two bucks a day

Paid in American.


Sooo, let this be a lesson:

There ain't nothing wrong with dollars.

Use a little common sense,

And, ignore Internet scholars!!!


Squeeky Fromm, Girl Reporter

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