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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: The Vet who wrote (98869)6/24/2009 1:50:46 AM
From: Hawkmoon  Read Replies (2) of 116555
 
explain to us all just how small pieces of paper printed in unlimited quantities, with pictures of dead presidents on them, have any bearing on the economic and/or productive capacity of the human being?

Because they are a proxy for physical productivity, mutually agreed upon by the participants.

If I raise cattle and you raise sheep and we want to trade live animals, I can't very well carve up my steer in order to arrive at a fair exchange price (presuming a steer is worth more than a sheep). Using currency, backed by gold or Fiat, just makes the transaction easier and faster (economic velocity).

And money is NOT unlimited. If it were, then we'd have people unwilling to accept it as a viable medium for trade. If people have that perception the currency collapses and they move to hard assets and a barter system. This would be the situation we would be facing today where it not for the corresponding debt destruction that is diminishing the money supply.

Now think about this.. Since the world's governments/CBs control most of the physical gold on this planet, isn't it true that they are the ones more likely to benefit from an increased POG??

In fact, if I recall correctly, the gold we possess in reserves is valued at $42.22/ounce.

Hawk
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