Your money should be a store of value. Yet the dollar has lost 87% of its value since 1971 with no relief in sight. Now, five states are doing something about it, enacting Constitutional gold money.
I applaud the enactment of these laws, and I'm pleased that my state and its governor (Ron DeSantis of Florida) are among the "plankowners." :-) Looking at a map, if we could add Alabama and Mississippi to the mix, we'd have the makings of a tidy little "Gulf Republic"! :-)
That said, I'd like to add a few thoughts.
First and foremost, money is primarily a means of exchange, not a store of value: fairy tales to the contrary notwithstanding, none of us is Scrooge McDuck, literally swimming in his gold-filled vault, nor Smaug the Dragon, ditto :-)
Here is the question I ask my prepper friends about all that gold they've bought and carefully stored: when the apocalypse comes, how do you plan to use all those gold coins or gold bars or whatever in a transaction? "Hey friend, I see you've got some cabbages (or goats, or whatever). I'd like to trade some of this shiny metal for some of them!" "..."
You see the problem: the core of commerce is that you have to have something to exchange that has value to the other person in the transaction. When we're reduced to squabbling over rusty cans of beans at the wreck of the supermarket, it's doubtful gold will figure into the equation.
The truth, as I advise them, is that in prepping for Mad Max, it would be best to use that money you've invested in gold to buy something that will be of value when global commerce collapses. It would be best if it were cheap to buy now, have a long shelf life, and be volumetrically efficient. My recommendation: spices, which in the middle ages and the early modern period were literally worth their weight in gold.
But perhaps this isn't in support of a catastrophic collapse. If we're worried about digital currency and de facto global debanking...how will those places in Switzerland help? Won't the United Nations of Globaloney just make those transactions illegal...as FDR did in the US after he took office? I note that you glossed over that part: Nixon's not the bad guy here...FDR is. He made it illegal for private citizens to own gold (or use it to perform transactions, obviously).
Also, note that there is a huge (YUUUGE) difference between a commodity-backed currency, which is what you're describing, and an actual specie-based currency. The only helpful aspect of gold-backed currency is that it (theoretically) restrains the government from flooding the zone ad libendum: but it can only do that if the underlying asset is limited, like gold...and if the government restrains itself from ignoring the limitations it's accepted...as both the Union and Confederate governments did during the Civil War (see: greenbacks).
Even a specie-based currency is no panacea: look at what happened during the 49er gold rush. Or--more spectacularly and catastrophically--what happened when the Spaniards began extracting literal mountains of gold from the Americas. And of course there was the debate over gold versus silver as backing for the currency, a debate sparked by the government (incorrectly) pegging the gold-to-silver exchange rate and thus instancing Gresham's Law.
Again...I am not pooh-poohing the idea of a commodity-backed currency. I just think it needs a bit of perspective.
2. Your prepper friends may be talking about Mad Max, but I am not.
3. I think I've written a reasonably enormous amount on the evils of FDR, including a new book. 1971 is the key date here, for a variety of reasons well expressed in Kevin Freeman's and George Gilder's books.
4. I completely disagree regarding the nature of the currency described.
5. Perhaps I am misunderstanding you, but you seem to completely gloss over the mechanism of action in this system: harnessing the existing credit card networks to spend specified quantities of literal gold electronically. Again, this isn't about the end of the world.
6. Finally, yes, money has historically been BOTH a store of value AND a medium of exchange. It isn't really money if it is not both. And the store of value aspect enables its utility as a measuring stick rather than a floating commodity.
7. It is the dollar which is a commodity, if not just an IOU. It's not infinitely-divisible, entirely mobile, electronically-spent but actually physical gold. I'm not spending a currency "based on" the gold. I'm actually spending the gold. And being paid in it.
The preppers have bullion. That's a commodity. It is, in fact a raw material. Monetized gold is a finished good. This is a means by which they may re-monetize their commodity and use it in the existing economy, anywhere in the world, not after some apocalypse.
Well, perhaps you're right. And I appreciate your clarifications of your argument. But I confess I remain skeptical.
Let's start with an issue that I thought was part of your overall thinking but evidently not, so forgive me for beating the dead horse: the preppers I know don't keep bullion: they've bought actual gold coins--in many instances right from the US Treasury!--but I still don't imagine it would be easy to use those in ordinary transactions.
I appreciate you have clarified that's not the scenario you have in mind, but I'm curious to know how you propose to have your gold-backed transactions accepted by merchants? I'm sure some would be fine with it: others...perhaps not.
I also still don't understand how, if the gold is in one place that's not easily accessible (Switzerland) and you're making expenditures against it, it's not very different than the pre-FDR world of gold certificates and silver certificates, when the metal that backed the paper was stored in a big vault under the NY Fed building.
(I actually have a handful of silver certificates: when I was a pup they still circulated. You could easily tell them because the seal was in dark blue ink rather than the Kelly-green of the later bills.)
But the system you describe seems far less secure, since at least with the silver certificates you could (in theory at least) exchange them for specie at a bank. With electronic transactions, perhaps that would still be possible, but what would be the mechanism?
And--I repeat--I see no way to keep the government from making that illegal. Unless you've got some way to keep the government from exercising control over the financial system altogether, I don't see how you protect yourself from debanking, gold or no gold.
So while you've addressed some of the issues I've raised, there's others where I still feel less than clear on how you connect the dots.
I think if you check out GlintPay.com, you'll understand all these things pretty quickly. I can walk into a Pizza Hut and buy a pizza right this instant using my Glint app or Glint debit card, spending only gold, which MasterCard conveniently converts instantaneously to dollars.
Texas, Florida, and the other states that passed this legislation will do likewise, only it will be legal tender.
As to security, do you use a debit or credit card? Because this is exactly that secure.
I applaud the enactment of these laws, and I'm pleased that my state and its governor (Ron DeSantis of Florida) are among the "plankowners." :-) Looking at a map, if we could add Alabama and Mississippi to the mix, we'd have the makings of a tidy little "Gulf Republic"! :-)
That said, I'd like to add a few thoughts.
First and foremost, money is primarily a means of exchange, not a store of value: fairy tales to the contrary notwithstanding, none of us is Scrooge McDuck, literally swimming in his gold-filled vault, nor Smaug the Dragon, ditto :-)
Here is the question I ask my prepper friends about all that gold they've bought and carefully stored: when the apocalypse comes, how do you plan to use all those gold coins or gold bars or whatever in a transaction? "Hey friend, I see you've got some cabbages (or goats, or whatever). I'd like to trade some of this shiny metal for some of them!" "..."
You see the problem: the core of commerce is that you have to have something to exchange that has value to the other person in the transaction. When we're reduced to squabbling over rusty cans of beans at the wreck of the supermarket, it's doubtful gold will figure into the equation.
The truth, as I advise them, is that in prepping for Mad Max, it would be best to use that money you've invested in gold to buy something that will be of value when global commerce collapses. It would be best if it were cheap to buy now, have a long shelf life, and be volumetrically efficient. My recommendation: spices, which in the middle ages and the early modern period were literally worth their weight in gold.
But perhaps this isn't in support of a catastrophic collapse. If we're worried about digital currency and de facto global debanking...how will those places in Switzerland help? Won't the United Nations of Globaloney just make those transactions illegal...as FDR did in the US after he took office? I note that you glossed over that part: Nixon's not the bad guy here...FDR is. He made it illegal for private citizens to own gold (or use it to perform transactions, obviously).
Also, note that there is a huge (YUUUGE) difference between a commodity-backed currency, which is what you're describing, and an actual specie-based currency. The only helpful aspect of gold-backed currency is that it (theoretically) restrains the government from flooding the zone ad libendum: but it can only do that if the underlying asset is limited, like gold...and if the government restrains itself from ignoring the limitations it's accepted...as both the Union and Confederate governments did during the Civil War (see: greenbacks).
Even a specie-based currency is no panacea: look at what happened during the 49er gold rush. Or--more spectacularly and catastrophically--what happened when the Spaniards began extracting literal mountains of gold from the Americas. And of course there was the debate over gold versus silver as backing for the currency, a debate sparked by the government (incorrectly) pegging the gold-to-silver exchange rate and thus instancing Gresham's Law.
Again...I am not pooh-poohing the idea of a commodity-backed currency. I just think it needs a bit of perspective.
1. I did not suggest that anything was a panacea.
2. Your prepper friends may be talking about Mad Max, but I am not.
3. I think I've written a reasonably enormous amount on the evils of FDR, including a new book. 1971 is the key date here, for a variety of reasons well expressed in Kevin Freeman's and George Gilder's books.
4. I completely disagree regarding the nature of the currency described.
5. Perhaps I am misunderstanding you, but you seem to completely gloss over the mechanism of action in this system: harnessing the existing credit card networks to spend specified quantities of literal gold electronically. Again, this isn't about the end of the world.
6. Finally, yes, money has historically been BOTH a store of value AND a medium of exchange. It isn't really money if it is not both. And the store of value aspect enables its utility as a measuring stick rather than a floating commodity.
7. It is the dollar which is a commodity, if not just an IOU. It's not infinitely-divisible, entirely mobile, electronically-spent but actually physical gold. I'm not spending a currency "based on" the gold. I'm actually spending the gold. And being paid in it.
The preppers have bullion. That's a commodity. It is, in fact a raw material. Monetized gold is a finished good. This is a means by which they may re-monetize their commodity and use it in the existing economy, anywhere in the world, not after some apocalypse.
Well, perhaps you're right. And I appreciate your clarifications of your argument. But I confess I remain skeptical.
Let's start with an issue that I thought was part of your overall thinking but evidently not, so forgive me for beating the dead horse: the preppers I know don't keep bullion: they've bought actual gold coins--in many instances right from the US Treasury!--but I still don't imagine it would be easy to use those in ordinary transactions.
I appreciate you have clarified that's not the scenario you have in mind, but I'm curious to know how you propose to have your gold-backed transactions accepted by merchants? I'm sure some would be fine with it: others...perhaps not.
I also still don't understand how, if the gold is in one place that's not easily accessible (Switzerland) and you're making expenditures against it, it's not very different than the pre-FDR world of gold certificates and silver certificates, when the metal that backed the paper was stored in a big vault under the NY Fed building.
(I actually have a handful of silver certificates: when I was a pup they still circulated. You could easily tell them because the seal was in dark blue ink rather than the Kelly-green of the later bills.)
But the system you describe seems far less secure, since at least with the silver certificates you could (in theory at least) exchange them for specie at a bank. With electronic transactions, perhaps that would still be possible, but what would be the mechanism?
And--I repeat--I see no way to keep the government from making that illegal. Unless you've got some way to keep the government from exercising control over the financial system altogether, I don't see how you protect yourself from debanking, gold or no gold.
So while you've addressed some of the issues I've raised, there's others where I still feel less than clear on how you connect the dots.
I think if you check out GlintPay.com, you'll understand all these things pretty quickly. I can walk into a Pizza Hut and buy a pizza right this instant using my Glint app or Glint debit card, spending only gold, which MasterCard conveniently converts instantaneously to dollars.
Texas, Florida, and the other states that passed this legislation will do likewise, only it will be legal tender.
As to security, do you use a debit or credit card? Because this is exactly that secure.
"As to security, do you use a debit or credit card? Because this is exactly that secure."
That's exactly my point. Thanks for clearing that up! :-)