300 Country

THE GOLD STANDARD

Well, it's been quite a while since I updated this page. I thought I'd address the current craze of buying gold as a hedge against the collapse of the dollar. The gold standard is a monetary system in which a region's common medium of exchange is paper notes that are normally freely convertible into pre set, fixed quantities of gold. The gold standard is not currently used by any government, having been replaced completely by fiat currency. There is a very good reason for that. 

The total amount of gold that has ever been mined has been estimated at around 142,000 metric tons.  Assuming a gold price of US $1,000 per ounce, the total value of all the gold ever mined would be around $4.5 trillion, or approximately 1/3 of the Gross Domestic Product of the United States alone. Well, where does that leave you? Let's find out. You're the gold owner. Yeah, we know, here he goes again. this whacko has told us stuff before that rivals testimony from the Son of Sam trial, and his best friend drove a Charger into two other cars at 150 mph. Why should we believe him? Oh ye of little faith. Read on.

Nobody really understands what money is. As a follower of Ayn Rand, I do. Here ya go. Money is a medium of exchange developed by prospering nations whereby individual citizens could freely exchange their labor or goods for the labor of goods of others. Without it, we're stuck with the barter system, which only works on a small scale, mostly agrarian. That means farmer for those of you who reside in Rio Linda. (Thanks, Rush) So what? What difference does it make what you trade? Let's see. Let's go back to 1955, and impose the gold standard.

You walk (or crawl, depending on whether or not you spent the previous evening with George Riehl) into the local Chrysler dealership, enthralled by the sight of the first muscle car, the C300. Here it sits, a Tango Red demon shod in chrome wire wheels, waiting to tear up the new highway system at 140 mph. It'll do it, too. Now, all that remains is that you pay for it. It goes like this.

"Hi, I'm Joe. I want that 300."

"Great. My name is Mike. I'm your salesman. We can't discount these, because they are limited production cars."

"I don't care. I want this car. I want to drive through town at 140 mph and flip off the police. I'll pay window sticker."

"Great. Let's go to my office."

Once ensconced  (don't you love my vocabulary?)  in his office, you plunk down a 200 ounce gold bar on the desk. At the then rate of about $35 per ounce, you're in. With change. Or so you think. Mike looks at you.

"What's that," he says.

"Gold," you say. "I'm paying for the 300 in gold."

"Uh, we want a check. We don't accept gold."

"No?"

"No."

"Why not?"

"Well, first of all, we don't know that this is real gold. It could be Iron Pyrite. You know, fool's gold. Or it could be lead painted with gold paint."

"You can have it assayed."

"What did you say about my ass?"

"No, assay means analyzed. Take it someplace that does that and they'll tell you it's real."

"No, you take it there, and have them buy it. Then bring me a check. This is a car dealership, not a whatever you called it office about somebody's ass."

"Assay office."

"Whatever. We don't do trade. No gold."

"How about peaches?"

"No."

"Corn? Potatoes? How about lumber or booze? You look like you like booze. Or drugs. I can get marijuana."

"You can get the hell out of here," Mike snaps. End of transaction.

See what happens? The accepted medium of exchange is now a check or some form of currency transfer, based on the dollar. You have gold. Too bad for you. All you can do is, what's that, exchange it back for dollars and spend the dollars! So the value of gold does what, it goes up and down based on what, the dollar? Then why have gold? Why have the dollar? Why have anything? take a load of peaches to the local car dealership and buy a new ugly Chrysler. 

The basic problem is that we don't do barter. Money is the universal exchange system, and it it worthless in and of itself. If you don't believe me, take a tractor trailer load of hundreds to Mars and see what you can buy with it. What it represents is the labor of you and your fellow man, converted into a symbol. Don't like the symbol? Exchange it for somebody else's symbol. Try Rupees or Drachmas. Take that to the local dealer and try to buy that ugly Chrysler. Sorry, Chrysler, I call them then way I see them.