Is the dollar more effective at facilitating daily exchange?
Is the dollar more effective at having the greater population unknowningly finance projects, both public and private?
Does the dollar preserve wealth and purchasing power over time?
Over time, every fiat currency has a destiny of zero. Now, if you cherry pick certain periods of time, you can find periods where the dollar has outperformed gold. Gold detractors love cherry picking the inflation-adjusted return of gold since 1980 or since 2011. Those gold peaks occurred because of dollar devaluations. The devaluation of the dollar precipitated a gold bull market in each the 1970’s and in the first decade of this century. At the end of each market, speculators (not believers in gold, but people trying to make a quick buck off of it) along with those panicking about the state of the dollar, caused an overshoot. It would seem that the lesson from this is to buy gold when it has gone sideways for awhile, and not when it is ballooning and everyone else is trying to buy.
If an ancient Roman family stored in a chest what at the time were equal portions of gold, fiat, and certificates of ownership in businesses, only the gold would still have value.
Now, because the dollar is more effective at facilitating daily exchange, and not necessarily because it has any particular qualities, but because the government forces us to use it at gun point, it would seem wise to have cash, but never more than to meet short-term obligations. Unless you have insight as to why gold might be cheaper in the near future- but that is a speculation. In the long run, gold will always trump fiat.
So you might say “That’s fine, and you are free to do that. So what are you arguing about?”
I bought a book called “Investing for Dummies” about 3 years back. I was still over $65k in student debt at the time, and had not yet bought my rental property. The book explicitly denounces gold as an investment. In fact, most mainstream investment guides will shit all over gold. “If only we can convince everyone to buy index funds, we can paper over the horrific losses from decades of malinvestment- thereby passing along the cost of that malinvestment from Baby Boomers to Millennials.” No way, man, I don’t want to hold the bag. Demographics is destiny. The longer we go without a major correction, the more we will become like 1980’s Japan. And no amount of Chinese ghost towns, expensive networks from Sacramento to San Francisco, or digging of holes to fill them back up again, can undo that damage. That wealth “invested” is gone, lost forever. And I cannot see how such gross errors can occur where gold is a standard, and deflation is a real threat.
Now I’m still relatively new to this investment thing, and quite probably on the wrong side of Mt. Stupid, but there is no way
, having taken 8 years to climb out of over $150,000 of student debt, that I will trust what the mainstream tells me. Gold might go up or down, but at least I will be assured of owning something
. With the stock market or the US dollar, do I have any such assurances? With the former, no, with the latter, I will eventually be assured of a loss. And looking at current stock market valuations, unless you can unblinkingly say “We have a new paradigm!” I would stay away from stocks at their current valuations. Every time people thought the stock market could go up forever regardless of price and of earnings, they met the fate of Humpty Dumpty.
Maybe this all seems tangential. But I see everything, the cost of education, healthcare, housing, all of it is tied to the problem of central banking. Where is the manufacturing in the US? The creation of real value? What wealth do we actually possess? We are living off of the legacy of the country’s great wealth accumulation, but we are quickly dissipating it, fueling our lifestyles and retirement portfolios with debt. America used to be the world’s greatest creditor, now it is the greatest debtor. That way leads sorrow. The financialization of the economy can be linked straight back to the ending of the gold standard. We used to create and build things; now, we “financially engineer.” The masses don’t care because they look at their 401(k) balances and feel like they are getting richer, even as they are actually getting poorer. And the multinational CEOs are selling out the future of the United States so they can take massive undeserved payouts. It all reads like Edward Gibbon.
https://www.forbes.com/sites/mikecollin ... ef1dad5783
https://www.forbes.com/sites/stevedenni ... 9cd1464cd1
https://www.forbes.com/sites/stevedenni ... c29bfe1abc
https://www.forbes.com/sites/briandomit ... da4ea86ec3
That this should be plain to see, and yet we have no leadership trying to stem this dismal tide, and a culture of people who do not see this as a problem whatsoever, is what I mean when I talk about a decline that is not only economic, but spiritual. Dishonest money is part and parcel to a dishonest society. We cannot trust the means of exchange, we malinvest, we mortgage the future to live for the now.
So yes, the dollar is stable, in the same way that someone slowly dying in a hospice could be considered stable, as long they are not convulsing, screaming, and bleeding out of every orifice. As long we can “ease the pain” as you said..... “everything is fine.”