look at the classic quantity theory of money. The supply of goods and services always has to be balanced against the available money. If the amount of available money (or credit) doubles and the supply of goods and services remains unchanged, prices should double, too. Not immediately. But often suddenly. Gold is distinct in that it cannot be mined easily. The costs of mining tend to increase with GDP and general price levels. So the supply of this type of money tends to rise more or less in line with the supply of goods and services. Prices remain roughly stable. There is no custodian you have to worry about. It is a trustless currency. You can see above how gold’s dollar price remained fairly stable until the new money system was put into place in 1971. Since the custodian – the third party – came into the deal, the value of the greenback has fallen from $40 per ounce of gold to $1,200 per ounce. This is something to worry about, especially as debt levels are reaching new
In an ideal, honest money system, you cannot lend money you don’t have.
records and the custodian’s commitment to maintain the value of the dollar is demonstrably weak. The feds actually want a weaker dollar and don’t hesitate to say so. But at least that threat is understood, if not fully appreciated. It is “textbook.” Add to the supply of money and, other things being equal, you will raise prices. You will not increase wealth levels nor GDP; you are only changing the relation of available goods and services to the available money. Also textbook is this: In an ideal, honest money system, you cannot lend money you don’t have. You couldn’t lend out gold unless you had gold to lend. No lending in excess of available savings = no artificial increase in the money supply = no price
inflation (neither in assets nor in consumer goods and services). No artificial boom
= no consequent bust. So, you see, there are
obvious benefits to gold if you want to run an honest money system. And while the pre-1971 money system did not meet this ideal, the dramatic unreliability of the post-1971 money is well demonstrated in the chart above. Its dishonesty is illustrated by the amount of credit created since it began – about $59 trillion worth. This is textbook, too. This is credit in excess of available real savings. It is a fraud, and it produces fraudulent, unsustainable growth. WHY YOU WILL NEED GOLD What troubles my sleep is
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