Saturday, February 20, 2010

Mean Green

This is the artwork of David Dees.

Alan Greenspan used to be one of Ayn Rand's Inner Circle and even penned more than a few essays on why gold is the only honest money. Ayn Rand used to call Greenspan "The Undertaker" because of his quiet, glum personality.

Clicking on any of the pictures will make them bigger. This one brings to mind something about "draining the swamp".

David Dees thinks as much of Greenspan as I do. Bernanke too.

One thing that vexes me is why anyone would be against a gold standard money. And their opposition is never lukewarm or diffident, it's hostile. If you have no problem with Federal Reserve Notes, why would gold money bother you? 

Here's a post by Dependable Renegade. I like Dependable's blog. I read it daily and highly recommend it. But this particular post bothered me. Here's some snips from the comment section:

I never understood that whole "buy gold when the collapse comes" business. I mean, big deal, it's gold. Can't eat it. Can't burn it. What the hell use is it?

I don't understand. You can't eat a Federal Reserve Note either, even though I agree you could burn one. But I don't know why that would make an FRN superior to gold coins. One of the uses for gold is money. It makes the best kind, a solid store of compact wealth.

If you're that worried about collapse you should be stocking up on bullets, canned food, and porn - you know, actual commodities.

Gold is not only intrinsically valuable, it is finely divisible and universally accepted as a value. In a Shit-Hits-The-Fan situation, you might not find anyone to barter with if all you've got are cans of rhubarb and 44 magnum ammo. I'll concede the point about porn.

The value of the gold in a $5 gold piece today may be $5 today, but it will be $2.50 tomorrow, and $10 the day after that. We'd essentially have to go back to weights and measures. Otherwise, a metal coin is no different than paper currency, except that it costs a lot more to make, which is why there is talk periodically about dropping the penny. I have a vague recollection of hearing it costs three cents to make a penny.

The value of the $5 gold piece doesn't change, but the value of paper money sure does. A $20 gold coin now costs $1200 in FRN's. Paper is not money--it's a money substitute, and easily inflatable. You can't inflate gold unless you discover a cheaper way to dig it out of the ground. That's its beauty.



  1. I think what he meant is that one should have a stockpile of food, ammo, tools, etc. before they bother with accumulating gold and silver. I agree. There will be a period of chaos when the system collapses where no amount of gold will buy food from panicked people who won't turn it loose. It will take some time for the new economy to develop...

  2. Hi Mayberry,
    Excellent point, and you're right. Preps first is prudent. But I'd still like to hedge my bets with some gold and silver, just in case I have to move fast and light. Like you, I'm optimistic enough to think that a new economy will certainly spring from the ruins. I'd like to have a little of that "inedible" gold and silver to get things rolling.



All comments are welcome.