There is no rush like a gold rush. The dye is cast. Three thousand years of history is shouting from the rooftops and making its way into our living rooms. The rush is on. Does it really matter that we have all these primitive thoughts? After all what is it that the barbarians knew that we don't? Every system in history was based on the gold standard, and when most empires removed the gold content from their coins and replaced them with lesser metals, they proceeded headlong into mediocrity.
How did all of this get started? Once upon a time some fellow came up with this idea which he designated as a bank. He was prepared to take in all types of gold and silver, lock it away in a safe place and issue a certificate stating that he was willing to exchange that certificate for gold at any time or place. That, ladies and gentleman, was your first currency note with a gold standard.
As time went by, we invented the telephone, TV, motor vehicles and computers. The brilliance of mankind knew no boundaries. The powers that be landed a man on the moon. Imagine that?Confidence was brimming, and gathered further strength with the collapse of communism. So then along came another fellow by name Nixon and convinced us (who needed convincing?) that as long as we had the almighty American Dollar, who needs a gold standard. After all, a nation's economic power is measured by the strength of its currency, and the dollar had swept all before it. Basically, the power to create money had been removed from the limitations of a gold standard and placed in the hands of Congress and The Federal Reserve. Like placing a cat in charge of the cream. Simple but true.
It has often been said that there is a thin line between self esteem and arrogance. Somewhere along the way that line was crossed. So self esteem changed to arrogance and then greed was added to the mixture. Central banks had no need of this non-yielding asset and sold their gold, in hindsight, at ridiculous prices and replaced it with goverment debt. Everybody was coming to the party. Euphoria drowned out the solitary voices of warning. Who were these people trying to interrupt our party? Humanity has developed past this primitive ideology. Quiet! Great minds with great theories are at work here. Do not interfere. Everybody has a home, a car and a dog to prove it. Sweet talking politicians joined in the celebrations.
Fast forward to today. Central Banks have ceased gold sales and are now buying gold at a much higher price. The developing economies are now part and parcel of the same family. None of them are buying the American dream. There is a manouvering for power and new candidates are raising hands. Diversification is the name of the game. Gold is on the rise, and the once mighty US Dollar is in decline. We now ask ourselves what we have done to future generations, while the idiots in Washington hang onto power by the skin of their teeth. The chickens are coming home to roost.
Uneasiness takes hold as the markets dictate a new order, and show us that we are human, after all. History is repeating itself whilst we observe in high definition or even in 3D. Nothing glitters like gold. This was correct for centuries, and it is correct today. Despite claims to the contrary, gold remains the only "Honest Currency". Some folks legitimately ask the question "what is so special about gold?" The answer is simple. It represents the shortcomings of humanity.
Any intelligent fool can make things bigger and more complex... It takes a touch of genius - and a lot of courage to move in the opposite direction - Albert Einstein
I am amazed and I really loved the article and the way to have brought sarcasm to the facts.
ReplyDeleteI liked the Idea of your title KISS.
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because I found it worth it!
Thank You.
DeleteThe continued use of the gold standard in economics is not practical for many reasons. These are often presented in the more serious texts about money and banking.
ReplyDeleteEasy as it is to introduce feelings and emotions into this rather human and personal subject, in fact when you step away from all the subjectivity you will find that the claim of having exchangable money for gold is not going to stop inflation nor economic "business cycles" nor many of the other macroeconimic ills that we presently endure.
This is due to the fact that macroeconomics is a very badly understood subject which certain parties have deliberately allowed to stay in a confused state. I have manage to separate my thinking from all this subjective feeling and emotion and I find that in fact macroeconomics can be regarded as a cold scientific subject with a large degree of logic that clearly shows the way that government policy statements can be investigated and decisions made. Unfortunately politics and techniques for analysis do not go well together. What at root we need is better knowledge made more popular about how our social system works.
The author has cloaked his serious veneration for the yellow metal in the veneer of levity and this under-statement rams home the point the author admirably makes. at a time when the world over people have been losing faith in avowed investment portfolios that fetch next to nothing in troubled times like this, gold, described by Keynes as the relic of a barbaric era, has demonstrated its pristine worth and value to people with disposable income to spare to enliven the evening of their life by investing in gold with the secure thought that their last days in life would not be a lost and wasted existence, shorn of the wherewithal! g.srinivasan from New Delhi (India)
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