Is anyone suggesting a return to the gold standard? dd
Actually, unless I have misunderstood some of the comments out here, I believe I have heard folks calling for backing Fiat money with gold, mainly as a percentage.
And yes, I believe the systemic shock would be devastating, as gold attacks the value of the global reserve currencies (rightly or wrongly). And the result would be vast debt default, unemployment, credit cruches, and political disruptions affecting human lives.
So I say, we've been in tough times before, most recently last August. But the financial system is about enabling human beings to relate and carry on exchange and trade in a manageable manner. It exists to make people's lives more convenient.
And just as people accepted and had confidence that gold was a substitute for barter, they have been gradually weaned from that to confidence in paper currency backed by their respective gov't.
And people will continue to accept fiat money so long as a nation has a strong reserve banking system headed by central bankers who possess discipline, but also the flexibility to deal with economic disruptions.
Call me stupid, but the only reason I choose to believe in anything is probably because others believe in it also. We all know the stock market is a ponzi scheme that works because others believe also.
Destroy the belief, and you will destroy the system.
I'm saying that any surge in gold prices at this time will destroy the "belief" in the Fiat system. In exchange, surging gold prices would strenghten an alternative and "superficial" belief in gold.
Thus, my argument that the CB's will sell their gold to keep the gold market down until their ready to let it go up.
Regards,
Ron
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