Seems to me its like ripping the crap out of your life jacket before you go boating so if you fall overboard that pesky lifejacket wont interfere with your death.
Don't worry.. I'm a fair swimmer... <VBG>
I'm not trashing gold as a metal. I agree it's shiny and my wedding band is made of it. What I've been trying to make clear is that, IMO, a gold standard for currency has a history of inflexibility and severe economic disruption in its use and is not the panacea you hardcore goldbugs think it is.
Nations at war kiss it goodbye so they can deficit spend and boost economic capacity to their fullest extent.
And when they try to re-establish the standard in peace, the economic contractions and high interest rates (from shrinking money supply), distort the economy to the down in a severe "hard landing" with significant social disturbances.
If all currency fails to hold value against each other, then there will be two scenarios... a rush to gold/silver/diamonds... etc, as mankind reverts to ancient beliefs in the "intrinsic" value of gold, or they'll be so hungry that they revert back to a barter based system.
Gold, like Fiat paper, is not very nutritious.
Finally, I have also argued that until the US economy stumbles severely, the safe haven of choice and convenience is still the US dollar.
As long as foreign economies are facing their problems, assets will flee and find safety, if only fleeting, here in the dollar. So to push a higher valuation on Gold TO EXTREMES above $300/ounce would shake the confidence in the dollar and people would fall back upon the next psychological storehouse of value, gold. Thus, I see no reason to exacerbate the current economic crisis by forcing a squeeze in gold.
But gold, like any currency, is only valuable if the psychology focused upon it believes it is valuable.
And as I said, when people are hungry enough, you won't have gold enough to convince a starving person to give up his food to you.
That's when it's "Katie bar the door"... and visions of Mad Max spin in your head.
Regards,
Ron |
