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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Robin Plunder who wrote (99478)	11/8/2008 2:52:20 PM
From: Hawkmoon	2 Recommendations Read Replies (3) \| Respond to of 110194

Robin, The problem with gold is that tying the financial and economic growth of a nation to an increasingly rare shiny metal just doesn't make logical sense. For one, it take economic resources to mine gold, thus there is a cost involved in its discovery, exploitation, and refining. Secondly, there is a limited quantity of it available, yet there is no limitation on human population growth. One of the reasons that gold fell out of fashion as a currency is due to the tremendous population growth seen over the past 100 years. When population levels drastically outpace the ability of gold miners to increase the monetary base through new discoveries, the financial system become inherently unstable. Thirdly, it's just inane in principle to dictate economic growth by tying it an increasingly rare element, especially one that has industrial uses beyond monetary. Economic growth should be dictated by the productivy and innovation of a nation's populace. That said, I certainly understand why gold bugs are so fond of it given their historical distrust of the Fiat system. But let's not forget that the Spanish discovery of Incan gold led to one of histories greatest INFLATIONARY spirals during the 1500's. It stifled economic diversity and manufacturing and created tremendous and long-lasting dislocations of the economy. Military force has often been used to conquer, colonize, and exploit a natural resource to increase a nation's financial wealth. And that's not a direction that I think we should encourage. Hawk