What the goldbugs know
I've LONG and terminally rejected the "advice" from the goldbugs - the idea that "hoarding" gold as an investment opportunity.
Primarily there's not enough gold to go around. So this means anyone who BUYS gold wants others to buy gold too, because this increases the demand for what they HAVE!
Secondarily, gold is NOT an investment that creates anything. It just sits there waiting for someone to want it.
Thirdly, if there was a depression or something like high inflation, and the value of gold skyrockets, its value means you have to PAY someone to protect it! And even if you can store it, how do you spend it?
No sorry, I just can't defend "individual ownership" for gold, at least for investment. As a government, there's value because it can be used for collateral for paper money.
If it comes to "physical investments" that "just sit there", my first and last choice would be land and property. Property can devalue as well as anything, but at least it can be USED while you're holding it. You can live on it. You can start a business on it. You can grow food on it. You can make it beautiful as you like.
Thinking of the value of land, and seeing it impractical for a gold-backed currency, perhaps a "land-backed" currency is meaningful.
Let's say the U.S. Government own X acres of land, with a claimed value of say $Y. When the government prints money, that money can be backed by the value of land. If the U.S. wants to borrow money from a foreign government, it can print an IOU note which promises land (specific land) for that note if it can't repay it. Just like a home mortgage - fail to make the payments and lose your property.
I'm not saying this is GOOD, although effectively this is what many levels of government are doing - selling off public assets to private hands for cash. At least borrowing keeps the property under public hands.
Anyway, shallow thoughts, unsure of real meaning, but for me it explains why there is a meaning to printing money and a limit to it. I mean in a good system.
The "what goldbugs know" is that money is a risky investment - greedy bastard bankers can take huge risks and huge profits when they succeed and know if they fail the government will bail them out, inflating the money, and hurting lifelong investments of individuals.
It is curious to listen to "investors" versus the average person without great assets, or even net debt. Inflation is good to anyone with debt, at least with fixed interest rates. It is hard to believe anyone would be willing to invest in a fund making money from a fixed-rate 30-year mortgage.
Someday perhaps I'll understand how this works - WHO LOST money in the 1970's on mortgage "investments" when inflation destroyed the value of money?
Primarily there's not enough gold to go around. So this means anyone who BUYS gold wants others to buy gold too, because this increases the demand for what they HAVE!
Secondarily, gold is NOT an investment that creates anything. It just sits there waiting for someone to want it.
Thirdly, if there was a depression or something like high inflation, and the value of gold skyrockets, its value means you have to PAY someone to protect it! And even if you can store it, how do you spend it?
No sorry, I just can't defend "individual ownership" for gold, at least for investment. As a government, there's value because it can be used for collateral for paper money.
If it comes to "physical investments" that "just sit there", my first and last choice would be land and property. Property can devalue as well as anything, but at least it can be USED while you're holding it. You can live on it. You can start a business on it. You can grow food on it. You can make it beautiful as you like.
Thinking of the value of land, and seeing it impractical for a gold-backed currency, perhaps a "land-backed" currency is meaningful.
Let's say the U.S. Government own X acres of land, with a claimed value of say $Y. When the government prints money, that money can be backed by the value of land. If the U.S. wants to borrow money from a foreign government, it can print an IOU note which promises land (specific land) for that note if it can't repay it. Just like a home mortgage - fail to make the payments and lose your property.
I'm not saying this is GOOD, although effectively this is what many levels of government are doing - selling off public assets to private hands for cash. At least borrowing keeps the property under public hands.
Anyway, shallow thoughts, unsure of real meaning, but for me it explains why there is a meaning to printing money and a limit to it. I mean in a good system.
The "what goldbugs know" is that money is a risky investment - greedy bastard bankers can take huge risks and huge profits when they succeed and know if they fail the government will bail them out, inflating the money, and hurting lifelong investments of individuals.
It is curious to listen to "investors" versus the average person without great assets, or even net debt. Inflation is good to anyone with debt, at least with fixed interest rates. It is hard to believe anyone would be willing to invest in a fund making money from a fixed-rate 30-year mortgage.
Someday perhaps I'll understand how this works - WHO LOST money in the 1970's on mortgage "investments" when inflation destroyed the value of money?
posted by Ares Olympus at 9:58 PM
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