This is in response to “Five Reasons Why Gold Will Be Worthless After The Collapse of The Dollar” (found here). The article fails to reach the level of sophomoric. The writer displays stunning ignorance by equating gold as mere currency. Gold – and silver – is money. Aristotle was the first to define money and he defined it as a medium of exchange and a store of value. The dollar is currency and it is so only by governmental decree and therefore has to be accepted as payment for debt, but it does not qualify as money as it is not a store of value. At least not a good one. Currency should be backed by something of value. Money is value. Your check is currency and must be backed by dollars in your checking account. The dollar is currency and should be backed by something of value as it is only a piece of paper with a dead man’s picture on it. And it is backed. By faith, not the biblical faith of substance and evidence, rather, a dead faith lacking the work of vigilance and held together by the American dream, a dream which is slowly morphing into a national nightmare. Gold doesn’t need backing. It is valuable in and of itself just as are my shoes, tractor, lawnmower, toothbrush and my wife. See? All these things take labor to achieve and make my standard of living increase. I threw my wife in the mix as her worth is far above rubies. But,I digress.
Many things could qualify as money, but historically gold – and silver – come out on top because they meet the five Aristotelian qualifications of good money better than anything else. Those five requirements are: durability, divisibility, consistency, convenience and intrinsic value. It must be durable is why we don’t use wheat or tulips. They might wilt or rot. Good money must be divisible. That is why we don’t use artwork or diamonds. Imagine dividing the Mona Lisa or one of Kincaid’s paintings to make change. Obviously, when you divide a perfect carat, you have messed up big time. The parts are worth less than the whole. It must be consistent and that is why we don’t use real estate or diamonds. Every piece of real estate is different from each other and the same can be said of diamonds. In other words, good money needs to be fungible; meaning, being of such a nature that one part or quantity may be replaced by another equal part or quantity. For example, all nickles, dimes, quarters and dollars are the same so they meet the consistency test. It must be convenient. That rules out elements like steel. Consider how much steel it would take to make a large purchase. And finally, it must have value within itself. If by now I have demonstrated that gold is money, I can proceed with this fly swatting.
The writer’s first mistake is to say that gold will skyrocket from now until the dollar collapses, implying gold increasing in value and then claiming gold will become as worthless as the paper it has been appreciating against. He purports to see through something but fails to see something through it. Gold is not appreciating against wealth, rather it is increasing against an unbacked currency. To be more precise, gold is stable while the currency is decreasing on an ever steepening continuum. Gold was $20 the ounce when my father was a teenager and $35 when I was a teenager. It is now $1700. The amount of above ground gold has approximately doubled in my lifetime. Wealth in the aggregate has probably doubled as well, however, gold priced in dollars has gone up by a factor of 50. If the supply of gold has increased in relative equal amounts as wealth – houses, skyscrapers, roads, factories, cars and congressmen etc. – then it’s relative value measured against all that wealth should remain stable. And it has. I repeat; it has. The same relative lifestyle can be enjoyed today with the same amount of gold to purchase it with as was the case centuries ago. It’s value to society hasn’t changed. It has maintained it’s store of value. It is the proliferation of dollars that has made them worth less over time. Gold is simply holding its own. So gold will not skyrocket in value, but will do so in terms of dollars. Dollars are becoming worth less and less until one day they will be worthless due to the fact they have no inherent value and are being added to the currency supply at a faster rate than wealth is being added to the economy. And now to refute reason # one as to why gold will be worthless when the dollar collapses.
Our teacher asks: “With no currency, with what are you gonna sell your gold?” Remember, gold is money. Hey class, gold IS money. You don’t sell money, you spend it. The amount of dollars I had to use to exchange for something of value such as gold is irrelevant after the dollar is gone. We are further informed “no one will want it because it won’t really have any purpose during this time.” Then how, pray tell, did paper EVER have any purpose as money? OK, so we go to the barter system. I have a dozen eggs more than I need and you have an extra gallon of milk to exchange for my eggs. But, I don’t want your milk. What now? Barter is a wonderful thing when it works, but that is precisely the rub; it doesn’t work efficiently. We both need a medium of exchange to facilitate the purchases of what we need. I can then use this medium to purchase what I want which is the gallon of orange juice my neighbor stole from a FEMA camp. Everything according to it’s utility. Horses, planes, bicycles and cars are the utility of transportation, food, the utility of nourishment, a store of value and a medium of exchange the utility of money and fools the utility of bad advice. Next, he claims that most people will be forced to sell $1000 worth of gold for $5 worth of food. Continuing with the untangling, he is placing a dollar value on gold and a dollar value on food. Second grade math informs me I would get $995 back in change. So what exactly is he saying or attempting to say? To be fair, I believe he is saying that what used to be valued at some time in the past as $1000 gold and what used to be valued as $5 food would at future present be valued equal. This portion of the knot unravels easily. Per the rest of his “dissertation” he insinuates a severe food shortage. That is not a valid argument against money but a condition of supply and demand. No amount of gold is inordinate if I am starving to obtain even one meal. By the same token, I would give everything and promise to be your slave for life if I were drowning and you drove such a bargain before rescuing me. In hell, what would you give for one drop of water? Incidentally, most people don’t have any gold and why talk in terms of dollars. The dollar has collapsed at this point, remember? Might as well say $1000,000,000,000,000 as $ are now meaningless. And that is the point.
To refute reason # two is beneath me as it would be akin to arguing with a three-year old. But hey, if there is anyone out there in paradigm control land that really wants it straightened out, I will humble myself as a little child and dip my pen in the quill.
Moving right along to reason # three I learn that the government will not create a new currency. Really. If only he were correct. He views that as a bad thing and the fact that there will be no currency exacerbates an already bad situation. I say it would be a good thing for governments the world over to allow the people the freedom to determine what is sound money. Let currencies compete whether they be precious metals, fruit loops or basketball scores. I then wouldn’t care if the government entered the fray as they would have to compete and not merely legislate. There goes your entitlements since government could no longer live beyond it’s means. Back to his premise. Why wouldn’t the government create a new currency? On what basis does he make such an outrageous statement? Control of money is what wicked governments are all about. It is pure power and they have the power to define legal tender. A collapse of the currency will allow government to renege on it’s promises and obligations (they’re already doing that through inflation) but won’t allow the citizenry to do the same as their debt will be recalibrated to the new currency. Whether or no we have a new national currency, the present one will lose it’s reserve status and the past profligacy of the American people will be just that. Past. Debt is a claim on future labor and we have a lot of debt to work off. To obtain the wealth of other nations we will have to do more than print worthless dollars. Ask them and they will tell you: they gladly accept gold. And that is the point.
In reason # four the writer asserts that in the past when one country’s currency died, another would simply take it’s place, but now that won’t be the case because never before has one country held the world’s reserve currency as is the case presently with the USA. This is very poor logic and irritating as it takes too much space to refute as I am already over the limit with the average attention span. Unlike reason two however, it is worthy of discussion and I would be glad to delve more into the meaning of reserve status and why losing it is no guarantee another would not take it’s place. Another will take it’s place. It may be an international currency controlled by a world body but there will be another reserve currency. One should ask how the dollar became the world’s reserve currency? It acquired that status because it had enough gold in Fort Knox and West Point to back the dollar. The dollar was redeemable in gold. FDR broke that contract with the American citizens but kept it with foreign nations. Nixon broke the contract with foreign nations and the dollar subsequently became a purely fiat currency, a floating abstraction kept afloat by the sheeple’s faith at home and military intervention, intimidation and threat abroad. But times, they are a changing. One thing that won’t change is the golden rule. He who owns the gold makes the rules. And that is the point.
I have tried to be brief but the soul of wit has been sorely challenged. I can only hope that PC readers are a word picture or two above average. There isn’t much I can do with reason # five without repeating myself so I’ll just give it the wrap. A total reset is coming. Interesting times await us. The time for real faith is now. Oil in the lamps type faith. The majority of preppers are in for a rude awakening. Gold indeed will not save us. I concur, this time will be different, however, for different reasons than this denigrator of a true weight and measure understands. If he had known in this his day that the wise will understand, he would have asked wisdom of God who would have given to him liberally. God owns the cattle of a thousand hills. He also owns all the gold. And that, dear reader, is the point.
John P Shepherd