The Defacto Gold Standard

Gold is money.  It is that simple.  Other assets that trade could be considered, at best, currency.  The difference between money and currency is that money must store its value.  This intrinsically.  Nothing but precious metal does this.

Water, oil, and other goods are important assets, and they can trade as currency, but even they lose their intrinsic nature over time.  We can consider these things currency, but how fair of a currency are they?  Water and oil is heavy, and not easily transportable.  Gold can be carried in your pocket.  This is why gold trumps other valuable resources as a currency.

When it comes to trading for goods such as animals then we get into the basic Island Economy.  Just because you take a pig to market does not mean anyone will want it.  Let us run through a simple exercise:  you bring a cow and I bring a pig to a market.  You want a pig but I want a goat.  So now you must trade your cow for a goat.  Let's say you leave and go to another market, and do find a goat to trade your cow for, but by the time you come back to me I have already found a goat for my pig.  This is the time value of money, which is why it is important to find a fair medium of exchange.

Is paper money really more convenient than precious metal?  Why not carry a few silver dimes in your pocket for your meals of the day?  Why not trade silver rounds for cars and gold rounds for houses?  Why rely on banks who loan your wealth out against their practices when you could buy a safe and keep your wealth at home?  If we did then we would probably have a better relationship with our neighborhoods.  Instead of not knowing anyone on the street we would be forced to meet our neighbors and find ways to get to know each other.  This in the same way that if our "living standard" went down we would not watch as much TV, and we would not drive two blocks to get food.  We would be more physically and mentally active.

Paper money has not only stripped us of our wealth but of our sanity as well.  We no longer have a sense of community.  We no longer have a tribal sense to us.  We have no sense of urgency.  We think everything relies on the State - the money, the jobs, the opportunity.  Not only is it a shame we live this way, but it is not true.

The fact is, we are still on a gold standard.  The Federal Reserve issues the dollar, as all Central Banks issue paper currency, and they all hold thousands of tonnes of gold they keep on their balance sheets as reserves to balance their debt liabilities.  Gold backs the debt of the banks, and thus their paper currency.  This is the biggest secret ever, as no one now thinks gold is money.  It is, and the books of the Central Banks prove it.