2019 and 2020 books are in the
Odds and Ends
It's important to know what you like
23 5, 10:12pm
1) Road to ruin
Gold will help and it is easy to transport. Gold by today’s prices are very expensive, too expensive for many, but it allows a great deal of wealth to be stored in a very confined space.
Hast thou seen a maple leaf gold coin with the newest lazar engraving, it is every bit as secure as a modern central bank note.
And one maple leaf gold coin that fits easily in a coin purse (thou can have 10 with no problem) contains more wealth (1250USD) then the largest central bank note the 1000 switch frank (1028USD).
So no gold is not difficult at all to transport. And if we want to pay with it online we can use a bailment service like goldmoney, that also offer prepaid credit cards. So it is actually easier to pay with then bitcoin.
Gold, and to a lesser extent silver, is properly the only thing that is really going to help us in the coming great deflation.
Real estate while also real (and not imaginative like USD and bitcoin) is still overvalued due to the vast leverage that everyone in the market uses.
People don’t borrow money to buy gold like they borrow money to buy real estate. There is also the problem of transport.
Real estate can’t be moved, so if the political situation in a country becomes untenable thou could lose thy farm to government confiscation (all real estate always rest on a governments guarantee to protect and honour the ownership).
South Africa is moving towards white genocide (inspired by the brilliant example of Zimbabwe).
Let us imagine two white people in south Africa that are at great risk of being killed and having their assets seized Al and Ben. Both are worth 1 million dollars. Al have his farm and Ben have it in gold (about 3,7 kilogram).
They are both inside hostile territory but Al can’t take his farm with him so he is screwed, but any adult man can easily carry less than 4 kilograms, so if only he can get himself across the border him and his fortune are safe.
2) “Zimbabwe used fiat money
, US used fiat money. Zimbabwe almost hit an all time high inflation figures, US - not so much. Guess that gold standard wasn't the difference you're looking for.”
The difference is that the US is a lot bigger then Zimbabwe, so it will take longer for the effect to play out. The USD is also more interconnected to the world economy, it is the hub of the world economy so when it goes everything goes.
These places are just a little prologue about what is going to happen globally soon.
3) The Great Depression, did not hit everyone, the soviet union was spared, and gold proved itself to be the primary safe heaven in the west. In the US gold went from 20 dollars an oz to 35 dollars an oz, and in Germany, oh boy these who had kept their savings in gold marks came out of it a lot better than the majority that used the paper mark, the later got destroyed, the former could buy prime real estate at extreme bargain prices.
4) “For medium of exchange volatility is not an issue as long as there are no significant fluctuations in exchange rate during the time it takes you to accept payment and convert to reserves and currency you use to pay suppliers, wages and taxes”
No because then we aren’t using it as a medium of exchange, then we are treating it as a hot potato to get rid of as soon as possible. Thou hast to imagine that people want to be paid in it, but no employee, supplier or customer would want a salary or contract in bitcoin. Because these people don’t want to gamble they want something they can count on. The most important aspect of a currency is short time price stability.
“Greater adoption and capitalization, technological maturity will lead to a decrease in volatility.”
That is just a postulate, or what can be called “wishful thinking”.
But why would there ever be greater adoption when it don’t fulfil the primary need of a currency. In a time of greater and greater uncertainty, people desire security. The only reason why it have the size it have now is because people have excess money they are willing to gamble with.
“No. Same goes for gold. That accountant figured it out the hard way.”
Gold have maintained a very stable purchasing over thousands of years.
In ancient Rome one could buy a toga and a pair of sandals for one ounce of gold, today a fancy suit and a pair of designer shoes can be bought for the same.
“Same goes for gold. Demand for industrial applications is nowhere near justifying it's current price”
That is because gold is not just a commodity. It is first and foremost money, and it is the best kind of money there is it is power money
It have industrial applications, its demand for jewellery is a lot greater, but its primary use is as money.
“Ok, in next five years artificial beef, GMO wheat, increased automation and improved logistics decrease the price of Big Mac to 2.5 inflation adjusted dollars per unit. Congratulations on your investment in Mac Standard, hope you had diversified portfolio.”
We should have a diversified portfolio, and it might be true that the Big Mac is going to become cheaper, but is that really a bad thing? If everything else in the economy keeps up with how more efficient McDonalds at making burgers, we will be able to buy the same things with the mac in five years as we can today, If we had invested in gold we would be able to buy more, as the greater efficiency will be deflationary for gold. But the mac would do what it is supposed to do, keep the same price.
Now artificial beef and GMO wheat will decrease the quality of the burger, which might drive people away from McDonarlds. If nobody buys their burgers the company will default and with it of course the mac. But that is the risk, because there is always risk.
Personally I am glad I don’t live in America, these things are not legal in my country, so if McDonalds wants to operate they have to guarantee that their products are GMO free and contain real beef. (and we also don’t allow corn syrup, and transfats)