"Try buying a used car with 6oz of 24ct gold and see where it gets you."
Not, I think, your best example. I would estimate that it will get you a BMW 320, 2003 model right now. Of course, you'd have to go down the local pawnbrokers (or as they say these days, "money shop") to check the details and possibly assay the gold, but it's quite fungible stuff. I've added in a 10% charge for the assaying/exchange/etc, but on the whole the problem with paying in gold isn't that it's not fungible, it's that it's a freaking pain to carry around.
Which is fascinating, in a way.
Fiat currency is without a doubt the best we have (and anybody who wants to return to the Gold Standard is a loon. The example of Zimbabwe - substituting the world reserve currency for gold, which I think is fair in this case - suggests that you only do this when you are desperate. The example of Argentina in the 1990s (substitution, ditto) suggests that no matter how desperate you are, it's still possible for it to blow up in your face. In ways that would probably have happened with a fiat currency, in fact.
But gold, like many other commodities (scale it and platinum is probably even more reliable), is an excellent parallel or shadow currency; rather more so than government bonds, I would suggest.
Anyhoo, where was I? Oh yes, the can. Can we find somebody to carry the can?
Three years ago, I'd have agreed with your analysis. Surely the entire collective intellectual might of European bankers, politicians, and macro-economists in think tanks - approximately in that order of worthiness - couldn't be so ferociously blind?
Apparently they were. No amount of dressing this up is going to work. Greece is out before the end of the year, not as a sacrificial goat, but just because it has to be. Spain is probably next, which is a little unfair on Spain, but there you go. Whether it's Spain or Italy, however, the whole thing is up for grabs after that. It's going to take about five years to sort the initial mess out, and only after those five years can we begin to look forward to the Japanese two lost decades.
You, Peter, are eternally young. Me, I'm too old for this crap.
no subject
Date: 2012-06-05 02:40 pm (UTC)"Try buying a used car with 6oz of 24ct gold and see where it gets you."
Not, I think, your best example. I would estimate that it will get you a BMW 320, 2003 model right now. Of course, you'd have to go down the local pawnbrokers (or as they say these days, "money shop") to check the details and possibly assay the gold, but it's quite fungible stuff. I've added in a 10% charge for the assaying/exchange/etc, but on the whole the problem with paying in gold isn't that it's not fungible, it's that it's a freaking pain to carry around.
Which is fascinating, in a way.
Fiat currency is without a doubt the best we have (and anybody who wants to return to the Gold Standard is a loon. The example of Zimbabwe - substituting the world reserve currency for gold, which I think is fair in this case - suggests that you only do this when you are desperate. The example of Argentina in the 1990s (substitution, ditto) suggests that no matter how desperate you are, it's still possible for it to blow up in your face. In ways that would probably have happened with a fiat currency, in fact.
But gold, like many other commodities (scale it and platinum is probably even more reliable), is an excellent parallel or shadow currency; rather more so than government bonds, I would suggest.
Anyhoo, where was I? Oh yes, the can. Can we find somebody to carry the can?
Three years ago, I'd have agreed with your analysis. Surely the entire collective intellectual might of European bankers, politicians, and macro-economists in think tanks - approximately in that order of worthiness - couldn't be so ferociously blind?
Apparently they were. No amount of dressing this up is going to work. Greece is out before the end of the year, not as a sacrificial goat, but just because it has to be. Spain is probably next, which is a little unfair on Spain, but there you go. Whether it's Spain or Italy, however, the whole thing is up for grabs after that. It's going to take about five years to sort the initial mess out, and only after those five years can we begin to look forward to the Japanese two lost decades.
You, Peter, are eternally young. Me, I'm too old for this crap.