As money is a medium of exchange, it must therefore have a unit of measure, and a store of value. It should be durable, exchangeable, divisible, have a store of value, scarce, portable, and universally acceptable. Gold has always been valuable, and has all of the previous needed characteristics. The dollar and all other currencies have some of the needed values as stated previously, such as having a unit of measure, but certainly are not scarce. The new Facebook “Libra” will not be scarce, as it will be regulated and coined out of base metal, as often as Facebook needs to make them. Currencies such as the Euro, Dollar, Yaun, etc, are never going to be scarce, as their progenitors print them or create them electronically at will. The prefix ‘crypto,’ means ‘hidden,’ if you were ever curious, but that’s not the point of this. Let’s get back to ‘money.’
Currencies, and especially the dollar, are based on debt. The government owes you $5.00, and issues you a federal note for it. It owes you, therefore the $5.00 is debt, value of which is dependent on the assets of the creator of that debt. Does the U.S., with a current debt of $22 trillion, and a future pledged debt of $200 trillion, make a valid note to back its dollars? An ounce of silver has no debt by anyone. Dollars and other currencies, created out of thin air and based on debt, can’t logically be used to purchase anything, or have any value of any kind, any more than Monopoly money has any value, other than when playing Monopoly. If you are playing “United States” or “Europe,” you buy and sell with their play money. Fair? To enforce this use of world-wide play money, they have legislated ‘legal tender laws,’ which enforce this sham and fraud. Cyrpto-currencies try to avoid these laws by being free of government intervention and control, although it appears as though the ‘libra’ will not be free of government intervention. Who cares? Not me, because no crypto money is made of anything valuable, and therefore has fake value, not real value.
The dollar, paper and coin, was originally backed by, and made of gold and silver, and as a result was immune from highs and lows, counterfeiting, or manipulation by governments and other entities, because gold and silver need no backing. They need no ‘backing,’ as they have value in themselves, due to the fact that to produce them, requires capital, exploration, mining, milling, smelting, manufacturing, and distribution. All other currencies require nothing more than cutting down a tree, making paper, pushing a button on a machine or a computer entry. Gold and silver backed currencies, would prohibit over-issuing of credit by banks or other lending agencies, because endless printing of paper money creates inflation, and wild fluctuations in the ‘value’ of ‘money,’ which is in reality fake money with no real value. Is it possible to create any gold or silver backed money like the United States used to have? Possibly, but highly unlikely, and there isn’t enough of either metal, even in the U.S., for this to happen, much less in the entire world.
How long can this ‘fake money’ situation exist, not just here, but around the world? That is difficult to predict, because the entire world exists, buys, sells, and trades with ‘fake money,’ which has no real, tangible value of any kind, other than tradition, plus legal tender laws. When one nation’s fake money, such as perhaps the dollar, begins to fail, the prices of gold and silver and every other item priced in the dollar will rise, just as the same thing happened when other fake currencies failed. In Germany after WW I, it quickly took a wheelbarrow of Reichsmarks to buy a loaf of bread, and the same thing is now happening in Venezuela. Those who saved in Reichsmarks found themselves utterly broke. It happened in Germany quickly, because for the first time in history, a defeated nation was forced to pay for the damages it caused, so they paid in reichsmarks. On went the presses, and Venezuela is quickly approaching that situation currently.
Is inflation, or Trump’s quarreling with Iran and China, responsible for the dramatic rise in gold and silver of late? I don’t know. No one knows. In dollars, at least currently, gold and silver, oil, and pistachios, all go up and down due to supply and demand…or maybe the public’s concern about whether the money is as fake as is the news everywhere, but on Fox! If it all comes down in a tragic heap, here or anywhere else in the world, guess what? People will barter or trade with VALUABLE things such as labor, food, or tangible, tradable, desirable things such as gold and silver. Silver especially, because currently, gold is 90 times as expensive as silver, so silver will without doubt, always be a barter metal. At any rate, DO NOT STORE SURPLUS ASSETS IN DOLLARS! don@coloradogold.com