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The Death Of Cognitive Dollar Dissonance & The Remonetization Of Gold
Submitted by John Butler via The Amphora Report,
THE ECONOMIST RINGS OUT COGNITIVE DOLLAR DISSONANCE
Two years ago, prior to travelling to Sydney to present at the Annual Precious Metals Symposium, I prepared an article for the Gold Standard Institute Journal titled Cognitive Dollar Dissonance: Why a Global De-Leveraging Requires the De-Rating of the Dollar and the Remonetisation of Gold (see here). This article highlighted the growing inconsistency between those arguing on the one hand that the dollar’s role in international trade and finance was clearly diminishing; yet denying that it was in any danger of losing the near-exclusive monetary reserve status it has enjoyed since the 1940s.
This apparently contradictory yet mainstream thinking about the future of the international monetary system continues to the present day. Indeed, earlier this month the Economist magazine ran a special feature on fading US economic power replete with dollar dissonance. The experts cited note the accelerating trend towards bilateral trade settlement, say between Russia and China, who plan to finance their multiple ‘Silk Road’ infrastructure projects using their own currencies and their own development bank (The Asian Infrastructure Investment Bank or AIIB: See http://www.aiib.org/). They also observe that Russia, China and the other BRICS are no longer accumulating dollar reserves (although curiously overlook that they continue to accumulate gold). They acknowledge that not only the BRICS but many other countries have repeatedly expressed their desire that the current set of global monetary arrangements should be restructured in some way, although they are not always clear as to their specific preferences.
Note the sharp contrast in these two paragraphs, both on the very same page of the Economist feature:
“This special report will argue that the present trajectory is bound to cause a host of problems. The world’s monetary system will become more prone to crises, and America will not be able to isolate itself from their potential costs. Other countries, led by China, will create their own defences, balkanising the rules of technology, trade and finance. The challenge is to create an architecture that can cope with America’s status as a sticky superpower.”
And:
“Today’s world relies on a vastly bigger edifice of trade and financial contracts that require continuity. Trade levels and the stock of foreign assets and liabilities are five to ten times higher than they were in the 1970s and far larger than at their previous peak just before the first world war… China and America are not allies. The greater complexity and risk involved in remaking the global order today create a powerful incentive for current incumbents to keep things as they are.”
Does anyone else hear the clear dissonance, confusion even? On the one hand we have a complex system prone to debt and currency crises, a growing lack of cooperation between the two largest players and a need for a ‘new architecture’. Yet on the other we are supposed to accept that there is sufficient common incentive to cooperate in monetary matters? Really?
Now consider the developing global economic context. Although the mainstream tend to be quiet on these issues, they cannot possibly fail to notice that, seven years on from the 2008 global financial crisis, following unprecedented economic and monetary policy intervention, dollar interest rates are still zero; quantitative easing has failed to achieve its stated objectives; global imbalances have risen to record levels; emerging market balance-of-payment crises are springing up all over; leading indicators in every major global economy have rolled over; and financial markets, in particular the credit markets, are beginning to tell you that another major crisis may lurk in the near future. It is thus entirely reasonable if unfashionable to hold the view that the dollar monetary reserve system has become unstable and is overdue a fundamental restructuring or reset of some kind. None other than IMF Managing Director Christine Lagarde has hinted at this in multiple speeches over the past two years.
THE PERSISTENCE OF DISSONANCE
But let us ask: Why is this cognitive dollar dissonance so persistent? There are several plausible and complimentary explanations. First, much human reasoning, expert or otherwise, is affected by at least some degree of so-called ‘normalcy bias’, that is, a naïve if not necessarily incorrect belief that the future will resemble in whole or part the recent past. The dollar has been the world’s pre-eminent monetary reserve for some 70 years, so the thinking goes. Why should that change now?
Second, and potentially reinforcing the above, is what one might call ‘The Whig view of international monetary history.’ This is a subset of the better known, general ‘Whig view of history’, perhaps best represented by Scottish Enlightenment philosopher David Hume, that history is the evolution of an ever-more perfect world, of constant if not always understood or appreciated progress. Hence the dollar-centric monetary regime of today is superior to those that have come before, because it is that of today, not yesterday. No further explanation is required or desired. (It is worth noting here that German late Enlightenment / early Romantic philosopher GWF Hegel postulated a more subtle, dialectical process of historical progress. Karl Marx would subsequently adapt this particular strain of teleological thought to demonstrate in his unique way the inevitable replacement of Capitalism by Communism.)
We know such thinking is flawed. History shows us it is flawed: Recessions, financial crises, depressions, wars, revolutions, nation-building, nation-busting, tyranny, despotism, etc, feature with some regularity, including in much of North Africa and the Middle East today. But this facile sense of steady (or sporadic) progress is nevertheless surprisingly common across all knowledge disciplines, not only in economic and monetary matters. Indeed, even in the hard sciences, where presumably only hard facts and evidence should matter, there can be tremendous resistance to new ways of thinking. Thomas Kuhn cogently demonstrated this to be the case in his monumental study of the history of science, The Structure of Scientific Revolutions. According to Kuhn, even in hard science, it is not the facts that matter. Rather, it is the ‘paradigm’, as Kuhn chose to call it. Facts that clearly do not fit the existing paradigm are either conveniently ignored, or those proffering them are persecuted outright, such as with Galileo’s observations of Jupiter’s moons. Given the relative subjectivity of the social sciences, including economics, one should wholly expect that the power of the presiding paradigm to misconstrue, ridicule or simply ignore inconvenient facts and their associated theories would be all the more powerful in stifling real understanding, productive debate and progress.
Kuhn also noted that one reason why paradigms were so hard to break down once established was that those in highest regard within the discipline—akin to the high priests of a hierarchical church—had so much to lose if challenged by unorthodox thinking. We laugh at the Papal persecution of Galileo today but to them it was no laughing matter. His observations, plain to see as they were through a telescope, directly contradicted the venerable, geo-centric or Ptolemaic paradigm of the day, thus threatening the very foundations of Church power.
Today we generally pat ourselves on the back that, atheists or not, we tend to treat science as distinct from religion. And yet quasi-faith-based paradigmatic thinking nevertheless still infects science to a great if underappreciated degree. Take the ‘Big Bang’ theory, for example, which has stood for decades but is still mere theory. This is due in part to the fact that, notwithstanding huge investments in research into the origins of the universe, there is still no convincing data to confirm it. Although I am hardly an authority on this matter, I do note that, in my youth, astrophysicists believed strongly that, due in large part to the Big Bang framework, a Grand Unified Theory of the universe was within reach. All they needed for confirmation was a powerful enough supercollider. Today, some 30 years later, against these optimistic expectations, they are nearing exasperation. All the observational and computing power of which they could only have dreamed a generation ago is today at their disposal, yet they haven’t got qualitatively farther than did Einstein a century ago with maths, chalk and slate? Could it be that astrophysics has become stuck in a paradigm that has outlived its usefulness and is now retarding rather than facilitating progress? I don’t have the answer but no doubt Kuhn would agree the question is clearly worth asking.
Given that in today’s dollar-centric monetary world US Federal Reserve and dollar policies comprise the dominant part of global monetary policy generally, should we not fully expect those in power to resist ideas that might expose their policies as unsustainable or outright counterproductive? What of the anointed academics who advise and are, directly or indirectly, funded by them? Yes there are some scholars who are willing to challenge the paradigm, a few of whom are rather prominent. Nobel Laureate Robert Mundell, the so-called ‘Father of the euro’, speaks openly about the dollar’s gradually eroding reserve status (although he stops short of claiming it will lose reserve status entirely). Professor Kevin Dowd, architect of monetary reform plans through the decades, has also expressed this view. But the mainstream financial media have chosen mostly to ignore them.
Intriguingly, however, the International Monetary Fund (IMF) has begun to promote the idea that the dollar might indeed eventually lose its premier reserve currency status. But here, too, we observe a self-serving paradigm at work: the IMF is proposing in no uncertain terms that the ‘solution’ for the erosion of the dollar’s reserve currency status is to replace it with the IMF’s very own ‘Special Drawing Right’ or SDR. And can you guess which essentially unaccountable supranational bureaucracy the IMF suggests could administer an SDR-centric international monetary regime? Yes, the IMF itself is put forward as the institution to control the world’s money supply and, by implication, global interest rates.
CENTRAL PLANNING SOUNDS NICE ON PAPER BUT WHAT ABOUT IN PRACTICE?
This may all sound nice on paper, but as I wrote in my book back in 2011, it is nothing but a bureaucratic pipe-dream. The idea, amid record global economic imbalances and associated historic, unserviceable debt burdens in Japan, the euro-area and arguably the US itself, that somehow China, the other BRICS, oil producers and other creditor nations are going to agree just how the IMF can take over from where the US Federal Reserve has left off is a non-starter. No, as with the US in the 1940s, the creditor nations are going to insist on an international monetary restructuring that favours their economic interests, even if at the expense of others. The requisite international cooperation required for the IMF to implement sustainably a ‘one size fits all’ international monetary policy is just not there, nor should we be at all optimistic that it will be prior to a meaningful global deleveraging and rebalancing which is being resisted by economic and monetary officials at all costs and by all means.
The recent experience of the euro-area should serve as an example in this regard but, as observed above, facts can be quite an inconvenience for those clinging to a flawed paradigm. Here too, we see cognitive dissonance in the fashionable belief that what demonstrably does not work at the regional level can work miraculously at the global one. The fact is, monetary central planning does not work. It didn’t work for Europe in the 1920s and 1930s, as currency devaluations and outright hyperinflations were used as weapons in the so-called ‘currency wars’ of that era. It didn’t work in the 1960s, as the London Gold Pool struggled to hold the Bretton Woods conventions together. It didn’t work in the 2000s, when the so-called ‘Great Moderation’ in business cycles merely disguised colossal misallocations of capital, exposed as such in 2008. And seven years on from that spectacular crisis, as the global economy again enters a steep downturn, it is not working still.
There is good reason to believe that what is already underway is going to be more severe than 2008-09. This time around, interest rates are already at zero, or outright negative. QE has failed. Confidence in economic officials’ general ability to restore healthy, sustainable growth has weakened considerably. Indeed, at a recent roundtable event at Chatham House I attended, multiple prominent international economists suggested that with ‘conventional QE’ having failed, the next logical arrow in the monetary policy quiver is that of direct money injections into corporations or households, in effect a Friedmanesque ‘Helicopter Drop’ of money. This conversation would not be taking place at all were the macroeconomic outlook not so poor.
Prolonged economic weakness has now fostered the growth and migration of previously fringe parties to what may eventually become a new political centre, attesting to deep discontent with the status quo in many countries around the world. In some places, such as where I now reside, in the UK, the major opposition party borders on advocating socialism. Senator Sanders in the US, a possible Democratic nominee for President, sings a similar socialist tune. Such developments increase the political risks to global financial markets, potentially further destabilising the now-fragile dollar-centric system. In this regard we should take note of a recent article in the Financial Times:
“Investors have long known that markets reflect better than they predict. By nature they are better at pricing existing information than pricing the probability and scale of an unexpected event. But they can fail at both.”
For those who generally prefer free market commerce to socialistic central planning, this can all seem rather frightening. A glance back at history can reinforce these fears. But if one looks carefully between the clouds of the gathering global monetary storm one can discern a distinct silver lining, or rather a golden one as it were.
THE INTERNATIONAL MONETARY FUTURE
If the dollar is indeed losing pre-eminent international monetary reserve status and the requisite cooperation required for the IMF to simply replace it with the suprantional SDR is lacking, then what on earth is going to happen in international monetary relations? Without stable international money, countries will find they cannot trade as easily with one another. What currencies will be held as reserves against external trade (or capital) imbalances? Chronic net importers such as the US have the incentive for the world to hold their currencies as reserves whereas chronic net exporters have the opposite, that is, to keep their currencies artificially cheap in order to maintain or grow their global export market share. But as the imbalances accumulate, as they have today to a record level relative to global GDP, beyond a certain point there is insufficient trust in the importing countries’ currencies as reliable stores of value.
But then if distrustful exporters insist on invoicing for exports strictly in their own currencies, trade will grind to a halt: It is by definition the importing nations, not exporting nations, which must provide the net balance of circulating media for international trade, as these media represent the international ‘IOU’ that must eventually be repaid through a reversal in the trade (or capital) balance or otherwise liquidated (eg via a default).
We all know global trade is hugely beneficial for consumers, who benefit from the associated, evolving global division of labour and capital. A contraction in global trade, ‘globalisation in reverse’ as it were, would thus be highly damaging to global economic growth, implying a general ‘stagflation’ of both weaker growth and higher real goods prices. No politician, socialist or otherwise, wants that; it will force them from office in short order. So absent demonstrably unworkable central planning, how can future international monetary arrangements nevertheless facilitate international commerce with exporters and importers at loggerheads over which currencies to use?
Why, the same way they did so in the 1800s: Just re-monetise gold. While gold may have retreated backstage for a time, it is about to make a spectacular reappearance. For gold is the only international monetary asset that can resolve the exporter/importer dilemma of a lack of trust on the one hand; yet a deep, essential need to trade on the other. Gold is not itself a national liability. It can be neither arbitrarily devalued nor defaulted on. It is real international money, not bureaucratic fiat scrip.
But wait, one might protest, why on earth would governments willingly give up the power to devalue and inflate their way out of debt? Because if their essential trading partners so demand it, they simply have no choice. What if Russia, concerned about the future of the euro, were to demand its European customers pay for imports of oil and gas in gold instead of euros? What if China, concerned about the dollar, made a similar demand vis-à-vis the US? How about the Gulf oil producers? What if they were to insist that China pay for imports of their oil in gold? The fact is, if just one exporting country, even a relatively small one, begins to demand payment in gold, then their trading partners must supply the gold. For each incremental move in this direction gold’s share of international monetary reserves grows exponentially due to the ‘network’ or ‘node’ effect. Conversely, the dollar’s share exponentially declines. And as those familiar with game theory will note, while there is no doubt a ‘first mover disadvantage’ associated with demanding trade settlement in gold—a possible loss of market share—there is a far larger ‘last-mover cost’, that is, the last exporter to switch from dollars to gold will find they have accumulated the residual dollar reserves from the rest of the world at a greatly reduced if not worthless value.
GOLD IS THE NATURAL INTERNATIONAL MONEY FOR A MULTIPOLAR WORLD
As Nobel Laureate Mundell wrote a few years back:
“We can look upon the period of the gold standard as being a period that was unique in history, when there was a balance among the powers and no single superpower dominated.”
The Economist and the IMF recognise that the US is no longer the sole global economic superpower that it once was, able to dictate terms in monetary matters. A new, multipolar balance of power is forming. Gold, the only internationally-recognised non-national money provides the game-theoretic international monetary solution to an economically multipolar, globalised, competitive world. It represents the Nash equilibrium. Whether or not this is ever formalised in a de jure ‘gold standard convention’ or not is beside the point. The classical 19th century gold standard was never de jure formalised as such. As renowned monetary historian Guilio Gallarotti observes, it arose spontaneously from below, catalysed by the rise to economic power of the United States and the German Zollverein in the late 19th century, thus transforming what had been, following the Napoleonic wars, a nearly unipolar British imperial world into a clearly multipolar one.
As gold again begins to circulate in order to settle cross-border balance of payments, it resolves the perennial floating fiat currency (ie Triffin’s) dilemma of ever-growing imbalances and the associated ever-growing debts to finance them. As gold moves physically, from place to place (or simply from vault to vault in London or New York, as it did once upon a time) imbalances are settled, then and there, at whatever price gold commands at that location and time. No arbitrary monetary expansion or contraction is necessary; no central planning required.
By implication, as the demand function for gold shifts due to de facto remonetisation, the price of gold is going to rise. By how much depends largely on the degree of confidence in the dollar and other currencies that circulate alongside gold. As long as the global imbalances and associated debts remain large relative to incomes, confidence will be low, implying a far higher gold price than that observed today. One way to benchmark the order of magnitude price increase for gold would be to allow the price to rise to a level that would back a substantial portion of the narrow or perhaps even broad money supply of major currencies. At current prices gold only backs about 5% of the narrow major currency global money supply and barely 2% of broad money. A substantial price increase would thus be required to restore gold backing to where it was under the Bretton Woods system, for example, when it exceeded 20%.
Not only will gold rise in price. Once gold is remonetized in some way at the international level, there will be an international interest rate imputed from the price of gold forward contracts or swaps. While gold itself pays no interest, these derivatives will, and that rate of interest will be as close an approximation as one can come to a ‘risk-free’ interest rate, the purest possible expression of the time value of money. Henceforth, no national or supranational central bank will be required to tell the international marketplace what the time value of money should be at any given point. Rather, the international money (gold) market will determine spontaneously what interest rate clears the market for gold delivery today, or tomorrow, or next year. This information will then flow into international commerce generally, where it will provide a robust basis for the sensible allocation of international capital in all forms, financial and real, across both time and space. The escalating boom and bust cycles of modern times will become a thing of the past, and the natural, occasional recessions that do occur will allow for the Schumpeterian ‘creative destruction’ required to qualitatively re-order the capital stock so as to clear malinvestments and incorporate new technologies.
GOLD AND THE INFORMATION THEORY OF FREE-MARKET (NOT CRONY!) CAPITALISM
As George Gilder demonstrates in his masterful work on economics and information theory, Knowledge and Power, “Capitalism is not primarily an incentive system but an information system.” Prices are the information. And the price of time itself is the single most valuable piece of information. Time, as we intuitively know, is money; they are two sides of the same coin. Mess with time and money, and you mess with everything else. Yet as with central planning in general, the central planning of either money, or time, cannot possibly work. Hayek warned the economics profession of precisely this in the 1970s. They didn’t listen, ensconced as they still remain within their interventionist Keynesian paradigm. Well that paradigm is about to be blown apart, time and money are about to return to the market, where they belong, and real, sustainable economic progress is about to restart once again.
Having begun with a timeless quote from Lord Acton, it would seem apposite to so conclude. He also once wrote:
“The wisdom of divine rule appears not in the perfection but in the improvement of the world.”
At first glance, this might seem a teleological Humian or Hegelian statement. Yet when juxtaposed to Acton’s eponymous dictum on the corruption of power, it provides for further understanding both for the understanding of retrograde socio-economic cycles and of hope, that with each such setback eventually comes a great, qualitative improvement in the human condition. If I may be so bold, I predict we are on the cusp of precisely this today. If it requires a global monetary crisis as a catalyst, then bring it on.
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The dictators guide to global domination?
Sadly one failed cognitive dissonance is soon buttressed by reinforcements. A (group) mind in deep denial is rarely roused from its slumber by the failure of one set of beliefs, particularly when another set is quickly force fed into the distressed mind in order to quell the cognitive pain and control the body.
Nice. Good to see you again Cog.
Yes, the present vested interests will not allow the present system to fail unless it collapses. The recent totally obvious and blatant manipulatioin of the Gold price via the dumping of naked paper shorts o Globex at 3AM being a case in point. They will fight this to the bitter end until there is no more road for the can to kicked along. And, frankly, even then, they will attempt to create a new system which is essentially the same as what is in place now, using an SDR or equivalent.
Precisely why history does not repeat, but often rhymes. The best con is usually the previous (comforting) one renewed and reinvigorated. An anesthetized mind will nearly always seek alternative (self) medication when the main IV is removed. 'We The People' are the ultimate socioeconomic junkies.
And psychopaths love to feed on socioeconomic junkies. A willingly free person is rare.
Mortality has it's pluses & minuses. Just ask Uncle Warren.
How's those Berkshire Hathaway, A class shares treating you Warren? The Chicken coming home to roost?
Bit off moar than you could chew after you used the Fed. to parlay all those BAC warrants?
Uncle Warren is till running the show?
My guess is that the Whiz kids have done their best, and come up wanting something different than what they have built.
"The fact is, if just one exporting country, even a relatively small one, begins to demand payment in gold, then their trading partners must supply the gold. "
Didn't Iran already do this and hence the desperation of TPTB to stop this?
Then there were Libya and Iraq but Iran was a tougher nut to crack and negotiation was required on the part of the banksters even though they would rather invade.
I'll take my payment in Platinum.
Check out this upstart - Platinum Group Metals NYSE: PLG
Thanks .
"real, sustainable economic progress"
What he means here is growth. But growth is what blew this system apart (or will soon.)
Why is it that all these economists get stuck with the Jungian duality? There are systems other than communism and capitalism. Maybe it's time we try one of those.
Right straigt out of Mises and Hayek. Suppression of the time value of money by massive creation of new money distorts the yield curve. The longer the capital project, the greater the distortion, and the greater the risk that the project will not be completed or be cash-flow positive if it is completed. Projects that appear to be bullet proof on paper when interest rates are suppressed cannot be justified when interest rates are allowed to be set by the free market and other uses of the funds are more appealing. Moreover, when government creates massive debt out of thin air, it never accounts for the future cost of servicing that incremental debt. It always expects to just continue to roll the notes with more new debt. This is madness and unssustainable.
Welcome to the insane asylum where the insane are the inmates AND the guards. There are no innocents in the asylum, just those who are more or less insane. If we do not acknowledge our own participation, however minor we may percieve it to be, all we do is help perpetuate what we claim to detest. Insanity doesn't care if we are more or less, just that we are.
Welcome to the PANOPTICON !!!
Another member of the Mises Mafia? I noticed he used the word multipolar and hinted China not accepting dollars. NWO schedule appears to be China into SDR(Sept. 2016) using their gold. This leads to new gold-backed trading.
What the author does not say, is that there is way too little physical gold available at the current price to be used for international settlements. Should this idea to come true, the price of gold would have to be something like 10-20X its present dollar prices.
I think you answered your own question. Yes, there isn't enough gold at the current spot price. It will have to climb substantially. That's what happens when central banks destroy their currencies.
yup. only 2 ways out of this debt mess. Write it off, which is unthinkable to the elites, or collectively revalue something else to be used to settle it. Now, even if that aint gold being repriced and they opt for currency hyperinflation, gold rides of hyperinflations coattails.
theres no escaping this with gold in 4 figures, and silver in two.
Nope. Pure fiction.
The world could go on a gold standard if needed although I prefer freegold instead but:
World Population 1900 , 1.8B, total gold in existence - 24,000 mt or about .42oz per person
World population 2000 , 6.0B, total gold in existence - 165,000 mt or about .88oz per person
Most of the world was on a gold standard in 1900 but in 2000 there was over 2X as much gold per person with no gold standard.
Conclusion: With twice as much gold available per person there is no reason we could not use gold again as a standard, with silver also of course.
The author specifically said that the value of gold has to go up to serve that role. It was right there in the article...
Gold and silver is money. Nothing else is.
From Butler's mouth to God's ear.
Okay, we know this and some good responses have come up...
Yes, the buyers can request gold and be paid in lead instead; so GANGS of buyers will have to demand gold and have their own lead at the ready. This is part of history.
Wrong - there is ALWAYS enough gold for international transactions IF the gold is valued correctly. You should know that by now, silly.
It boils down to what is an hour of a person's life worth; something tangible, or a promise?
Why would anyone give their life for a promise made by liars?
Ebbie, you are so brilliant, and intelligent.
You're in a league of your own. You've been around the proverbial block, and have so much wisdom.
It's one thing to experience a situation, as opposed to how you decipher, and share your experience.
You, of all the brilliant contributors on Zero Hedge, have the mental articulation/coordination and gravitas of a professor.
If liquidity is really that pathetic. It Is.
Shoot the gap on emerging markets tomorrow. Not the F/X open in Auckland. I'm talking the Tokyo FIX.
I'm going to hammer the BOJ just before the interbank fix. ;-) I'm also going to be hedged with calls on aud/usd, and eur/jpy.
From downright nastiness to sycophantic ass licking of ZH contributors in one weekend. You need some professional help my man
They who have physical gold in their possession and successfully defend themselves from the filth that try to steal it from them, make the rules.
Price is like dice but also like lice if it sells a disease.
For the poor like golden ice for the rich like rotten mice.
But for the money changers like enticing vice.
What makes information of no value is when the price is of no use to anyone; like a lamborghini. Remove the social value of something and it becomes a Midas touch.
Medusa's head was priceless. Amazing. Helen's tits were worth a thousand ships and ten years of war.No kidding.
So if price is the philosopher's stone which decides what is true and what is Keynesian falsehood, how come a Van Gogh was worth nothing during his life and worth Millions once he was dead. Love's labours lost! The man's life, he who created masterpieces, was worth a kopeck.
Price cannot define the value of something as truth is free and lies are priceless.
Thats what capitalism proves as the markets are all lying most of the time in oligarchy capture.That is the other price in life : that of Power which allows you to tilt the table if you concede the political whores some bread crumbs from your bunga fest! And its a constant disease is power. Power vacuums are like black matter : UNKNOWN !
Have a Guernica on the rocks! Its about war and thats worth all the gold in the world.
Hayek knew that serfdom was what hoi Oligoi always reserve for the unwashed. The price of their blood is like Syrian money today. It has nothing to do with truth everthing to do with power.
A Hayek is a physician who liked to bleed his patients with leeches as in the days of true Serfdom.
One solution for all ills : Too much blood ! Bleed him and put the leeches on him.
Keynes was for blood transfusions to the anaemic not for leeches.
So who is more modern ?
Maybe we should ask Von Miserly ! He worships Midas!
Say what...?
de nada
love your work, especially after a few cocktails like this time
even better while high...
ummm,NO,NU,NON,NYET,NEIN.
Before we get to the point of a restructure of the monetary system a lot of people will have to die. No nation gives up holding the global reserve currency without a fight. And a dirty one at that!
I have been waiting in vain for years now for the shit storm to begin. I have become a laughingstock to many and a pariah in certain social circles. I shut up about a year ago. I hope I am well enough prepared to withstand the entreaties of "friends" who may be looking for lifeboats if/when the end does come to pass. Meanwhile, that old normalcy bias still has the upper hand. It's tough to be called Chicken Little.
you're not alone
Imagine in the 1960's you described ,to friends and family, American history exactly as it was from 9/11 until present... The descent and degeneracy is slow and incremental and fails to get noticed as it stretches through generations. Time will prove all things... perhaps not all in one lifetime.
Frogs in a pot.
The improvement in the human condition is in the complete implosion of Ponzi Casino Capitalism, the superstructure that supports it, and the parasites that promulgate it. Mass genocide will wipe out nearly the entire civilization, and enclaves of survivors will build an upper paleolithic hunter gatherer lifestyle if they survive nuclear winter which is highly doubtful, at best. Frankly, the present system is fraught with criminality & fraud. Rome always ends because of fraud. This time is different, and there will be no reset for a dying empire that has fleeced civilization out of existence. The bottom line here is that the one per cent decided to take all the disposable income gains of the entire population for over 40 years back-to-back. At this juncture, Friedman's Helicopter drops would have to be dumping money into the working class neighbourhoods 24/7/365 non-stop. In brief, they are not going to give us anything except an increase in the erosion of our right to our own disposable income they happened to appropriate from us over the last 40 years.
My share of the Helicopter drop money amounts to $30 trillion in physical gold bullion payable immediately upon receipt of this post.
Pay up, de Rothschild Bank, or else.
Catholic primary school teaching: God always was, is and always will be.
Substitute God with light, energy, matter or even gold. There is no beginning or end. Infinity is no longer difficult to understand.
I like the barter system. It should work fine for producers. Let the others starve until they learn to work in some productive way.
Andy, you are a generous guy.
The problem with starving peeps is that they just need more (of your stuff).
Some of lifes lessons are hard. The sooner they all learn there is no free lunch the better.
I am suprized most gold bugs dont get this part. A gold standard could only grow out of a barter system.
Let me repete that. A gold standard could only grow out of a barter system. Because of the actual real value issue.
Please stop thinking in fiat terms.
The actual value of things is distorted today to a great extent. That would need to be resolved before a gold standard could be put in place. You need a stable price structure for gold to work as a coin for trade. Even then it would be better used as a form of long term saving wealth.
The values of energy and labor must be corrected and true barter is the only way that could ever happen.
And yes I am a generous guy. With the truth as I see it. Its my way of showing respect to others.
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When will the "intellectual" goldbugs learn?
1) GOLD IS A BELIEF SYSTEM ITSELF! There is no god of any sort shouting down from the heavens "Hear me. I am god and gold will now be $1,000 per oz!" This means MAN dictates the price of gold based upon what HE/SHE BELIEVES its worth! Ultimately, its not any different from a paper fiat currency.
2) Gold is a cumulative asset. More is mined every year that adds to the total amount held. This means the nature of ongoing gold is DEFLATIONARY to an economic system based in gold. There is no way around that! How much gold is mined? Noboby knows in advance because its a natural resource. That said, in a single year somebody may find/mine/deliver ~100mm tonnes which will savage and distort a gold economic system. It's the classic "snake swallowing a porcupine"
3) Nobody even knows how much gold is in existince -- above ground and widely held. There are estimates but people don't actually know. There is NO as in ZERO way to base an economic system on a resource when you dont even know how much there is -- OR -- that you are going to be adding large quantities to every year
We could go on, but 1-3 is alone is enough to sink dimwitted "gold standard" nonsense which is c o n s t a n t l y put fort by numismatic and bullion dealers as sexed up sales pitches for "the way forward"...
Pontificating like this after just five weeks here? When do you do the "walk on water" thing for us?
/sarc off
Your level of ignorance is quite comical.
Looks like you are confusing gold coins as a means of payment with a gold backed currency. In the latter the Gov determines the POG. How much is being mined or available doesn't matter.
Gold vs Fiat currency...
It is like starting a game of monoply with the Chinese....they give us all the cash but we give them all the railways,property and utilities in the form of gold.
Eventually they own everything.
No you are wrong.The paper fiat price of gold does not relate to the limited physical market.And yes,we do know exactly how much is in existance and it isn't very much.Physical gold does not have any counterparty risk and cannot be printed to infinity like paper in order for government to keep lowering your standard of living.(inflation=slavery to government)
http://demonocracy.info/
Here's how much gold exists:
http://demonocracy.info/infographics/world/gold/gold.html
Coming soon to a theater near you: Blazing Currency. "Dollars? We don't take no stinking dollars!"
He does not mention a cash ban and negative 5% interest rate.
What will gold be worth if it is monetised?
There are about 180 million tonnes of gold above ground in all forms and global money supply is around 70 american trillion USD. So there is about 388,888 USD for every ton. There are 29,167 ounces of gold in an american ton of gold. So you're looking at an ounce worth 13,333 USD. 1,150 USD my ass. Simple exercise, simple conclusion.
You are welcome to disagree on exact figures but I think my point will be proven nonetheless.
Shouldn't you base the value of gold on the value of everything in existance? Everything has a price. And valueing USD at any amount of gold is absurd. USD are toilet paper. I have a tonne of toilet paper in my bathroom closet. I think gold is the wrong way to go. We'd be tearing the shit out of the Earth if gold was valued at 13k an ounce.
Inventory does not directly translate into usury revenue anymore.
Yes valuation in USD is arbitrary in the end game, but its the easiest way to communicate value right now. Try do a valuation of everything in existance on the back of an envelope lol. Good luck with that exercise in any form actually... price discovery is the only way.
... on the cusp we actually might be if I look at these 2 FRED charts:
http://investmentresearchdynamics.com/a-liquidity-crisis-hit-the-banking...
Nice.
Good chart and discussions.
September 16...
Buy PHYS & NGD, and physical and take delivery.
Gold Standard??
Oh my, we need to open up Fort Knox and count our stack pronto!
Oh... well, forget the gold standard then. We'll go on the nuke standard.
Sell it to us for this scrip or reap the mushrooms!
The bullets will start flying long before the gold starts flowing...