Copernicus, Galileo and Gold. Part II

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From the Archives : Originally published June 14th, 2013
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Category : Gold University

The development of Economics and the development of Astronomy share interesting parallels.

Aristarchus of Samos – the Greek island that produced Pythagoras – was born in 310 B.C. Aristarchus set Astronomy on the path that would have led to its correct development by postulating the Sun as the center of the Universe, with the Earth revolving around the Sun while revolving around its own axis; he also set the planets in the correct order of their distance from the Sun.

Unfortunately, the preconceived notions of Aristotle derailed the acceptance of the theory of Aristarchus, and he was soon forgotten. We only know of his existence because other writers, notably Plutarch (c. 46 – 120 A.D.) mentioned his work.

Ptolemy of Alexandria (c 90 AD – c 168 AD) compiled an astronomical work, the Almagest, which based itself on the geo-centric system of Aristotle and his plausible notion that the celestial bodies, being perfect spheres, necessarily had to move in perfect circles. The Almagest provided a table which allowed the fairly accurate prediction of celestial events such as eclipses and the future positions in the sky of the planets. In Ptolemy’s system, the movements of the Sun and the planets were described through a complicated system of 54 circles and epicycles, which were circles upon circles.

Ptolemy’s system was accepted as the principal authority in Astronomy for the next 1500 years, though it was a totally false representation of reality.

Ptolemy’s system was only questioned, and then quite cautiously for fear of provoking the wrath of the Catholic Church, by Copernicus (1473 – 1543). His work, On the Revolutions of the Celestial Spheres took up the theory of Aristarchus (1800 years after his time!) and placed the Sun at the center of the Universe. Copernicus received a copy of his published work on his death bed.

Galileo (1564 -1642) supported the theory of Copernicus. According to Arthur Koestler, in his book The Sleepwalkers, Galileo was a highly temperamental man and though in his time the influential order of the Jesuits was already generally in agreement with Copernicus, Galileo needlessly offended Pope Urban VIII, who reacted by having him placed under house arrest for the rest of his life and proscribing his writings on Astronomy, which were placed on the Index of Forbidden Books.

Finally, Kepler (1571-1630) put Astronomy on the path of correct development. He was an assistant of Tycho Brahe, an eccentric but careful observer of astronomical data; when Tycho died Kepler took the compiled data gathered by Tycho, and through hard work, supplemented with intuition, developed his three laws of the celestial movement of the planets in their orbits around the Sun. It is curious that he was apologetic in the presentation of his seminal finding that the planets do not move around the Sun in circles, but in ellipses, at one focus of which is the Sun: he excused himself, saying he was forced to conclude that the orbits were elliptical and not circular because the data would fit no other explanation.

Enough said, about the battle of astronomic facts with preconceived notions in the development of Astronomy.

Turning now to the development of Economics compared with Astronomy, we are today witnessing, in the field of Economics, an intellectual battle that resembles the conflict between Ptolemy with this 54 cycles and epicycles, with the Earth at the center of the Universe, and Aristarchus with his Sun at the center of the solar system and the Earth and planets orbiting the Sun.

One has to wonder: Will it take centuries for mankind to accept the truth in Economics – the truth that gold is the center of the economic universe, and currencies (as they are today) circle gold, the monetary Sun?

On the one hand, we have Benjamin Shalom Bernanke of the Federal Reserve, a latter-day Ptolemy with his Keynesian paper-centered monetary universe, and on the other we have Carl Menger (1840 – 1921) who set gold at its center, now seconded by Antal E. Fekete and his New Austrian School of Economics, who views the facts of human action objectively, as Kepler viewed the data of the planetary movements.

Human life is hardly altered, if at all, if we believe that the Sun circles the Earth, or on the contrary, if we believe that the Sun is the center of the solar system. However, human life and civilization itself depend on the acceptance of the correct initial economic theorem, that gold is the center of the monetary system and the acceptance of that theorem’s corollary, that the paper currencies of today are mere intellectual constructs, whose value is entirely based on plain faith.

The science of Economics cannot develop and cannot possibly be of use to humanity, unless it takes as its starting point the fact that gold is money and the center of the economic universe. Unless we start from this fact, no Economic Science is possible and all order in human life is overthrown.

Unfortunately, all accepted and recognized academic authorities today are as misguided in Economics as Ptolemy was misguided in Astronomy back in the 2nd Century with his 54 cycles and epicycles. Our academic “economists” are baffled and cannot offer a coherent theory to deal effectively with the economic world. They can only experiment upon a helpless humanity as they attempt to make the world function according to their expectations. They are not scientists at all.

What will it take, and how long will it take, to overthrow the pernicious influence of a mistaken Academia?

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Hugo Salinas Price is the founder of Mexico's Elektra retail chain. Hugo Salinas Price currently is retired from retailing and focuses on being a proponent of a sound financial policy for Mexico[1]. Salianas Price is President, Mexican Civic Association Pro Silver, A.C
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I did not get as old as I am by running around making stupid arguments, thinking everyone would blindly accept my arguments as fact. How anyone can claim on one hand that they stack PM's yet at the same time argue against its usefullnes as money just flabergasts me.

Vox your arguments are about as sound as someone arguing that rubbing cow manure on your face will keep the flies away. But since you won't use common sense in your argument, allow me to try to convince you with another approach.

In the Bible, God said, I give you gold, as value. Yet for thousands of years, the nations of Egypt, Assyria, Babylon and Persia had no knowledge of the Hebrew God yet they all used gold as money. Did the authorities of those nations ever devalue gold ? No. Nor did they devalue silver or copper. If they had, the would not have risen to become the powerful nations that they were.

Greece was the exception in that gold mines were scarce but silver minds produced more than enough for their monetary needs.

It was only when government authorities got it into their heads that they should dictate what the value of gold and silver should be, that those nations began to fall.

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Part 1

As there have been quite a number of responses since last writing, my intention is to deal with some of what are viewed to be the more serious concerns raised by those of you good enough to have left more than a down arrow in your wake. Should there be both the time and energy left, an attempt will be made to deal with some of the matters not pertaining to the use of precious metals as money that were tossed in my direction; the odd one deservedly so.

Most of us would seem to be in agreement as to the cause of a good 98% of the cases where a gold and/or silver based monetary system has suffered either a large fluctuation in its purchasing power, or its outright collapse. The causative agent in these cases was government action; specifically, running up an unsustainable debt burden. (We need not concern ourselves here with a discussion of whether or not running a debt of any sort should be within the purview of government.)

That leads us to the remaining 2% of cases. On this page i have only made reference to the Spanish situation under Phillip II. Arguments made against the legitimacy of this case have included that a functioning world economy did not exist at the time, labor was controlled by guilds and the inflation really was not that bad, certainly nothing like experienced in modern day Zimbabwe. All of those things are true and all are completely beside the point. Also true is that Phillip inherited not just the throne, but quite a substantial debt. None of these things alters the fact that the gold pouring into Spain from the new world had the twin effect of reducing the value of the gold (as reflected in the 500% rise in inflation during his reign) while raising his borrowing costs substantially. If gold really is the best representation for money, time and place would not matter. Having more gold would always be better than having less gold. But Phillip was forced to default on four separate occasions even though the gold kept arriving by the boat load.

Let us leave poor Spain behind and cite further examples noted elsewhere. In the past i referenced how at the end of the Western Roman empire, the very concept of money itself vanished. There would not be a gold coin minted for 600 years. As OTE might explain, in the Dark Ages, with Maslow's hierarchy of needs in mind, gold became a pretty useless object. Japan also endured a similarly lengthy period during which not a single new coin was minted. A standard sized bag of rice became the currency. No amount of old coins could be traded for a bag of rice. The final example referenced --and the only one to receive comment--had to do with America being forced to demonetize silver in 1873 after large new deposits were located in the American west. The criticism received over this final example was supplied by OTE. As I recall, he had two objections. The first was that the American dollar of the day has nothing in common with the dollar of today. The second prong was that it was the government and not the market that set the price of silver. With the first part, whether they are totally different animals as claimed or not is immaterial to what happened back then. Silver was one of the two precious metals that the dollar was based on and large new discoveries drove the market price down to such an extent that the silver dollars being put out by the government were not worth the denomination stamped on them. That is why people spent them and hoarded their paper dollars. It was a case of bad money driving out the good, just as Gresham's Law says it must. As for the second prong, it made even less sense. The market showed in a most emphatic manner that it, not the government, would set the price of silver. The government had to capitulate to the market. It had but two options as to how to do so. It could have either chosen to redefine the silver to gold ratio, or it could have chosen the path it did, which was to demonetize it. Even if we want to imagine that the government had never defined the amount of silver in a dollar but through mutual agreement, silver was being used to represent money, the large new discoveries in the west would have destroyed those who had their savings in the form of silver. It really is another case of too much of a good thing wiping out the value of peoples' savings.

Of course, fluctuations can work in either direction. While silver had long been demonetized in America, it was still being used as late as 1964 for circulating coins. But with the market price of silver rising in 1964 to $1.29 per ozt. and there being 1 ozt. in every 5 quarters, America was again forced by the market to do something about the situation. This might be thought of as another response to OTE's second objection in a case where the government was not basing the dollar on silver. The public was all too happy to trade in their paper dollars to buy silver at cut rate prices from the government. It was a no lose situation for those who bought, for their coins would never be worth less than what they paid for them, but it could not be tolerated by the government

In the first of these examples from America, savers were hurt as was the government. In the second case, (had silver still enjoyed the status bestowed upon it by the Constitution) savers would have benefited and the government would still have lost. As (at least in theory) the government is really the people, we are in a no win situation when items with a significant intrinsic value are used to represent money, for market forces that the government is unable to control will dictate value. This very problem is again raising its head with both the American penny and nickel.

Let me address one of the more common arguments coming from you before moving on. It has to do with gold having thousands of years of being both treasured and used as money. Those statements are mostly true and entirely so if we disregard that 600 year interregnum known as the Dark Ages. But neither is a good reason as to why they should be used as money again. We should want as money that which is best able to maintain its purchasing power, not something that is subject to large fluctuations. Both gold and silver have experienced such fluctuations both in historical times and in our own. As well, that most people through the ages have seen gold and silver as the best form of money is quite beside the point. Did not countless generations believe our own planet to be not only flat, but the centre of the universe? It was common sense and it was also wrong.

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Part 2

Let us agree that the most desirable qualities that money should possess are that it should be easily divisible, that it be accepted everywhere as final payment for all goods, services and debt, that it can be used as the unit of account in all matters and that within a very tight band, it retain its purchasing power forever and a day. Let us also agree that money firstly arose as an idea which led to many different physical representations of the idea. This shows that we can choose what we think will best meet our needs. Gold certainly meets the first 3 of the desirable qualities. However, if honest with ourselves, we will admit that the value of both gold and silver have experienced quite volatile moves in the past (as well as today) and there is no reasonable argument saying that it will not do so again before forever and a day.

Using paper to represent money removes this problem entirely and does so precisely because it has so very little intrinsic value. With paper there is no reason to fear that the discovery of vast new forests would do anything to the purchasing power of the dollar (aside from being able to buy more trees for your dollar). Nor, given recycling technology, do we need to concern ourselves unduly over the ongoing deforestation of our planet; well, at least insofar as being able to maintain the money supply goes. (It would also be possible to make each bill with shorter physical dimensions and/or reintroduce larger denomination bills such as the $1,000 if supply tightened, thereby maintaining the dollar supply with smaller/fewer bills.) The point is that by having for money a representation that cannot as a direct result of its physical composition have its all important purchasing power altered, paper is superior to gold, silver, copper, nickel and bronze. Indeed, it is superior to anything of greater intrinsic value for the very obvious reason that it is the least subject to fluctuations in value and has the ability to easily adapt to any conditions short of a barren planet that forgets how to recycle old bills.

Paper only addresses those few instances from the past when the currency either underwent great change or suffered total failure for no other reason than the actual stuff that was being used to represent money. On its own, paper can no more avert the abuses of government than gold or silver have shown themselves capable of in the past. And those are 98% of the cases. My solution for this vast majority of cases would not be quite as severe as the remedy proposed by OTE, but it would certainly consist of placing grave constraints on the ability of government to show a current account deficit. Those constraints would have to be immutable, with the harshest penalties allowed by law the automatic sentence for anyone trying to circumvent them. (Though a separate issue, it would be somewhat of an added layer of protection if our leaders got but one term in office and that no term be longer than 3 years.) Were it that we could actually get this part right, 98% of the problem would be solved. Paper solves the remaining 2%.

Not to put too fine of a point on this, but it does bear mentioning that regardless of what we choose to have represent money, its purchasing power vis-à-vis any particular good or service will vary over time due to such factors as improvements in production and the value placed on it by the marketplace. So, while the dollar may buy more of item A, it may not purchase quite as much of item B. The objective is that overall, it is worth in a thousand years what it is worth today. And that is what this has all been about. What is the ideal representation for that idea first formed millennia ago?

When first getting involved in precious metals, i was like many of you in that it seemed quite obvious that there was something very wrong going on and that the powers that control such things were playing fast and loose with our money. Gold offered a good port in the storm and it was not a difficult leap from there to believe that having a gold standard would be better for the discipline it would impose. But like OTE, i do not mind being wrong. What i mind is remaining wrong. And so by nature i find myself questioning the validity of my beliefs (as well as those of others). That process has led me to the understanding that something very wrong is indeed going on and that precious metals do offer a measure of protection from the frontal assault taking place against the purchasing power of the dollar. But i also appreciate that neither gold nor silver could have prevented the abuse we have been witnessing; not with these leaders who have no vision beyond the next election and not without immutable laws to curtail the harm they are capable of doing. Realizing that fluctuations in the market value of the substance used to represent money would have deleterious, possibly catastrophic effects on the money itself; it became clear that paper, by removing this wild card, is actually superior to gold for this purpose.

Other considerations are currently demanding my attention and so some of the unrelated things that came up and which i wanted to address will have to await another opportunity. It may be that i let it slide though, for this was the stuff having pertinence to the subject matter we come here for and the remainder is just side show.

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Gold - the monetary Sun. Nice.

Gold need not be the centre of our monetary universe, true. However I believe it does possess the intrinsic requirements of money better than almost anything. The analogy here is fitting in some ways since the orbiting currency planets DO follow an elliptical path - i.e drifting further away from some form of gold standard and then returning closer to it. Historically currency has undergone a similar ebb and flow - debasement of coinage was often followed closely by erosion of empire which then paved the way for political change - often accompanied by a movement back to a stable and valued currency.

As humans we have the ability to make anything we like as money - in that sense it is an abstract concept. But the further away from the "sun" our currencies drift, the more open to misuse it becomes. I agree that it has been government/political misuse of money that has been its ultimate undoing, not the chosen currency itself. But that is precisely why gold is good at being money, it places a constraint on misuse that is not easy to overcome.

As for failures... yes gold has "dropped the ball" once or twice in human history but this was usually driven by factors of locality, in the absence of a global economy. The Spanish flooding Europe with gold from the new world, the Venetians playing games with gold and silver standards in Europe and Asia - not going to happen today. We're also not considering severity here. Sure, the Spanish may have pushed up prices (in gold) of staple goods in Europe by double or more over several hundred years. But that can hardly compare to price rises of the magnitude that we've experienced in less than 50 years of a fiat currencies.

The fiat currency system allows government to create an almost inescapable slavery trap for its citizens by keeping them firmly glued to the inflation treadmill. Mandated inflation targets have removed all notion of the "store of value" from money. The only way to retain its value is to keep risking it to make "more". This is seen a "productivity" to the bean-counters in high places with high salaries payed by debt left to our children. The most amusing part is they also seem to have convinced almost everybody that this system is a superior one. Sigh.

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"But that is precisely why gold is good at being money, it places a constraint on misuse that is not easy to overcome."

It has always been easy as pie to overcome. You cannot point to even a single example passim recorded history when it was not overcome.

"As for failures... yes gold has "dropped the ball" once or twice in human history...."

No Dom, gold has proved a failure each and every single time it has been used to represent money. There are no exceptions that you can point to because none exist. If there was even one such example, then gold would still be used in that location. After all, nations act in their own self interest and it is absurd to believe that a nation would willingly abandon their monetary system when it was working so very well for them.

Your notion that the failures of gold in the past had only to do with locality in no way disproves my point. Indeed, it underlines the second point i made; when gold did not fail because of government action, it got wrecked because of a sharp fluctuation in its market value. That there are many hundreds of times more gold just waiting to be recovered from the oceans and below them than has been mined throughout human history makes a mockery of your argument. And that says nothing of asteroid mining that will begin to happen in our life time.

In your example of Spain, prices did not merely double over several hundred years as you claimed. During the 42 years that Phillip II sat on the throne, prices rose 500%. In the 42 years since Nixon took America off the gold standard, prices have risen by a very similar amount. So there is no order of magnitude difference that you have claimed there to be.

Penultimately, there is no structural reason why a fiat currency requires inflation to work. It does not. That governments abuse the printing press does not mean that they must. If they would only live within their means, there would be no reason to print. That is what it always comes down to. If the currency is to survive, regardless of what it is, government must be constrained.

And lastly, a paper money regime is superior to a gold standard. Yes, both are subject to failure due to the misdeeds of government. But only gold is subject to sharp fluctuations in its value as a result of physical supply dynamics....Last year a planet twice the size of earth was discovered. It is a giant diamond. Why should we blithely assume that a three trillion ton asteroid made entirely of gold will not be discovered and brought back to earth?

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vox, you are correct in that I should have stated classical science. I made the wrong assumption in thinking folks knew the difference between classical physics (hard science) and quantum mechanics (philosophy). Might I suggest that you do some serious reading on Werner Heisenberg's Uncertainty Principle.

Then you make the mistake of:
"....Last year a planet twice the size of earth was discovered. It is a giant diamond. Why should we blithely assume that a three trillion ton asteroid made entirely of gold will not be discovered and brought back to earth?"

There was no planet found that was a diamond. It was purely speculative. Science is about hard evidence. Never mind that the forces required to make a planetary sized diamond is nonsensical at best.

You further present evidence of your lack of scientific background by speculating that a 3T ton asteroid of gold could be discovered and then moved to Earth orbit. This is roughly a sphere 8 kilometers in diameter. Do you have any idea of the amount of energy required to move a mass this size? Then you have to move the men, equipment and the power source to the asteroid. You are talking out your ass. Never mind that a asteroid this size of gold would present an albedo of such intensity that it would have already been discovered.

Then there is this:
"That governments abuse the printing press does not mean that they must. If they would only live within their means, there would be no reason to print. That is what it always comes down to. If the currency is to survive, regardless of what it is, government must be constrained."

And this:
"... gold has proved a failure each and every single time it has been used to represent money."

Once again, you confuse correlation with causation. Gold NEVER failed, government did. You stated it here, "... government must be constrained."

Dragging in the excesses of Phillip II as your example of the failure of gold just adds further evidence of government excess.
Where you really failed is your poor knowledge base of history (I'll blame it on our pathetic educational system). The supply/demand curve of the time was constrained by hand-crafting and the guild system that prevented the membership from using any labor saving technology or techniques. Anytime you have more "money" chasing severely limited goods, prices will rise substantially.
However I do agree that the current gross weight of gold above ground limits its ability to act as the operative currency of the day. As you stated several times, "government MUST be constrained." There is only a few mechanisms capable of effecting that possibility.
1. Government must be denied the creation of any financial instruments.
2. Government MUST be starved financially.
3. No internal taxation may be permitted under any conditions.
4. Consequently, there can be no bail-outs for financially entities or safety nets for the citizens.

We exist to type our questionable thoughts because savanna/ice-age economics culled the herd. Our ancestors learned those harsh lessons and complied. Greed is good. Greed is NOT to be confused with obsessive compulsive disorders. Greed fosters savings. Only savings has presented compelling evidence as to its efficacy as a source of investment capability. Example: You dry a haunch of elephant meat. This is savings aka hoarding. Your buddy Gruk want to plant watermelons, but needs to eat during the meantime. You tender an armload to Gruk in return for 1/3 of the watermelons he produces. Handing Gruk a piece of bark with the notation, "worth armload of dried elephant meat" doesn't feed Gruk.

All commerce begins at the bottom tier of Maslow's Hierarchy of Needs. Most all of these are commodities. And if we add in the oldest profession, all of them are. Profits permit luxuries and we move up Maslow's pyramid.

The study of philosophy can be a good thing. In can lend insight into the way other folks think. But it is just an opinion. You argument reminds me of the Hegelian Dialectic. Conflict to consensus to slavery. It is B.S. He who holds the gold makes the rules.

Gold is just 1000's of years of opinion. I pay close attention to that level of elder-ship.
It ain't what you know that gets you in trouble, it is what you KNOW that AIN'T so.
We were born without knowledge. Some freely choose to remain that way. Belief systems absolutely require disbelief in contrary evidence.
edited to correct the diameter of the asteroid. Formula for sphere uses radius. Diameter is 2X the radius. I don't mind being wrong so much. It is staying wrong that I refuse to do. Of course this makes a golden asteroid's albedo really stand out against the dark background.
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Vox, your opinions are as ugly and twisted as your avatar picture.

So long as your siting the worst examples here, lets look at Zimbabwe not so long ago. I am holding a wad of 100 trillion dollar bills that I bought on eBay for 20 bucks. That's 99.999999998% loss of value in just a few years. Clearly orders of magnitude greater than Phillip II. When confidence is lost in fiat it becomes worthless while gold has NEVER becomes worthless.

"there is no structural reason why a fiat currency requires inflation to work" Yes there is - a big one - its called the human element. Humans simply can't be trusted. The temptation for abuse is far too great. People "with the mentality of gangsters" cannot resist such a honey-pot.

China was on a paper currency long before Europe, did that "work"? Heck no. But lets look more closely at what "works". Lets say we give 1 point for every generation where a currency has provided a stable economic environment in the past 5000 years. How many points does fiat get - 0? How many points does gold get? Lots.

Hundreds of nations have been on the fiat experiment for as little as 2 generations now and NOT ONE of them has got it right. Not even Switzerland. Not one nation can maintain some semblance of stability for its currency. With all our "philosophies" of economics and the culmination of all knowledge and experience of human history at our disposal NOBODY has succeeded to make fiat "work".

What it HAS managed to do is to create more avenues for abuse of power - which in turn has often attracted the worst types of people to our leadership roles. Hence we have the mess the world is in today.

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"The science of Economics cannot develop and cannot possibly be of use to humanity, unless it takes as its starting point the fact that gold is money and the center of the economic universe."

This is no more fact than is the statement that Mickey Mouse is God incarnate. Utter pygmy twaddle!!!

HSP is out of his flippin' mind. He has ignored thousands of years of history with its myriad examples of failed commodity currencies. How bloody stupid does he think we are? Bloody twits like HSP really piss me off, passing off his idiotic BELIEF as proven fact. He should be flogged. And I say that only because I do not believe in capital punishment.

It has hardly ever been about what was used to represent money that wrecked the currency. It has almost always been about how governments wreck the currency by spending more than they take in. And on those few occasions when it has not been so, the currency was wrecked because the commodity upon which the value of the money was based experienced a major fluctuation in value. You may not like the facts, but they are what they are and no amount of blind belief will change them. So deal with it.

Think i'm crazy? Then answer the question: why has every attempt to use gold to represent money ended in failure?
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"Think i'm crazy? Then answer the question: why has every attempt to use gold to represent money ended in failure?"

Let me ask you this instead, why has everything man has ever used as money ended in failure? You know the answer as does everyone frequenting this forum. Gold more than any other substance has been associated with 'money' in the human psyche for thousands of years and it will remain so for many years to come. No matter what the government of the day decides to use as a medium of exchange, humans in the modern world and most of the third world still value PM's above all else. You may not like it but that's the facts so deal with it. Shells, rocks, and corn husks have been and may be once again used as money along with paper but we always end up going full circle and come back to gold and silver. No matter how you try to intellectualize this the collective still longs to own and hold PM's, to collect wealth and ultimately use them as a medium of exchange. Humans have for centuries worn precious metals as a symbol of status, being wealthy enough to wear money and show it off at the risk of being robbed and if robbed they could afford to lose it. That's wealth.

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i have already answered your question. Just read my post. But you have not answered mine.

i have no problem whatsoever with people valuing precious metals and do so myself. Precious metals are a hedge against government and given how enormously irresponsible governments have become in being good stewards of our money, now is the time to own them. No question about it.
That being said, many different things represent wealth and they are no more suited to being used as money than is gold.

There will be no apology from me for trying to "intellectualize" the subject. If you do not wish to be presented with logical arguments backed by irrefutable facts, my suggestion is that you stick to the dumbed down notions of HSP. You might also enjoy the work of Nathan Lewis.
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Actually I did answer your question. But I am interested in what you believe would be more suited to being used as money and why you hold this belief? Was I looking for an apology, did I ask for one? Not at all as I know full well that in your mind you possess all that is need to run the universe so when a mere pond dweller like myself questions you I know that there is no hope for any kind of consideration on your part. But please do present some logical arguments about what you believe is more suited to be used as money that is backed by irrefutable facts but do not include any circular reasoning, your own beliefs, or any Ockham's Razor BS this time.

You claim to hold metals yet at every opportunity you dismiss them, almost to the point of being useless. Your posts are flavored with a leaning towards anything but metals as a medium of exchange yet it is this one item, being used as a medium of exchange combined with it's scarcity giving it value, that has kept bringing PM's back as money for thousands of years.

You have clearly over thought the matter. Your logic gets away from you're beliefs it seems when you post here.
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If you would go back and read what i have already posted on this page, you would have the answer to your question. A more detailed account of my reasoning may be found in my response to the last article published by the aforementioned Nathan Lewis on gold (not cowboy movies). If truly interested, go back and read it.

You have made the mistake of confusing my belief that gold has further to fall at this point with the notion that precious metals are almost useless. My claim has always been that precious metals are an excellent hedge against government. But like anything with considerable intrinsic value, gold makes for piss-poor money. Always has, always will. Any comprehensive reading of monetary history will demonstrate that truth beyond all doubt to anyone not blinded by their own beliefs.

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I read your posts here, no indication of an answer to the challenge I gave you exists.

Just to be clear, here's what I asked you - "But I am interested in what you believe would be more suited to being used as money and why you hold this belief?"

Please back it up within the constraints you would want to see someone else would be confined to, as posted earlier "with irrefutable facts but do not include any circular reasoning, your own beliefs, or any Ockham's Razor BS this time." And did I miss something? You post as if you have some sort of authority and are in fact in mental possession of the type of wisdom we're talking about but I have a hard time getting past the matter that if you were as wise as you wish to appear you wouldn't be hanging out here spreading manure, you would be off celebrating and enjoying the good life of a wealthy individual.

Your posts always lack details and are generally nothing more than your feelings, opinions with little real data to back them up, most certainly in this case. Yet you demand others provide information you won't provide.

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If Vox was a wealthy individual he'd be more interested in money being a store of value.
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Well the irrefutable facts here are that whether you like it or not people have strayed and returned to gold time and time again... thus the analogy holds well enough and I continue to like it. Gold is and has been a monetary sun for humanity.

How frustrating it must be for you that you cannot change history to fit your view of the world. You seem to form opinions first and then try to make the facts fit them afterwards. Let the facts speak for themselves and allow the opinion to come later.

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I agree. Vox states "But like anything with considerable intrinsic value, gold makes for piss-poor money". Piss poor money? He likes to think his opinion is worth more than 6000 years worth of other peoples opinions. Arrogance to the max.
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"The science of Economics cannot develop and cannot possibly be of use to humanity, unless it takes as its starting point the fact that gold is money and the center of the economic universe. "

There is no science of economics. Nor politics, sociology or psychology. They are by definition: philosophies.

Evidence? Science begins wit the hypothesis; the question. Next it must be tested using the scientific method. Replicability of the test is absolutely mandatory.

Finally after overwhelming evidence is complied through testing of multiple hypothesis is a theory developed.

Statistics as a tool is worthless for science, but integral to philosophy.

Science depends on causality. Statistics relies on correlation.

Philosophy with all its step-children is nothing more than opinion. Science doesn't care what your opinion is.

Making predictions based upon philosophy is akin to augury by goat entrails. Science identifies each organ and its function in the goat's former life process.
Claiming any segment of philosophy as science is just a desperate measure to legitimatize opinion. Oh and let's not forget the need to earn an income by reading goat entrails. That PhD wasn't free.
Otherwise an excellent analysis. After all, gold is what it is based upon 1000's of years of opinion. Or you can trust the opinion of the last 40 some years by pseudo-scientists reading goat entrails.
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While in general agreement with the gist of your post, there are a couple of points worth making. With regard your statement "Statistics as a tool is worthless for science, but integral to philosophy"; it would have been more accurate had you inserted the word "classical" in front of science. Since the advent of quantum mechanics, it has been necessary to employ statistical methodology when making predictions about outcomes.

The other point worth making is that thousands of years of experience has irrefutably demonstrated that all monetary systems based upon a gold standard have ended in failure of the currency. If one is to advocate for a return of a gold standard system, one must ignore history. Ignoring previous experience only leads to a repetition of the same mistakes.

Once again let me state that in general, monetary systems fail not because of what we choose to represent money, but how we spend it. That is the clearest lesson of all to be drawn from monetary history.
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And here I thought that this Roman gold coin hoard, reported by the BBC, might be worth a fair bit.

I guess, as these coins were created by a system that failed, they're worthless, right Vox?
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I did not get as old as I am by running around making stupid arguments, thinking everyone would blindly accept my arguments as fact. How anyone can claim on one hand that they stack PM's yet at the same time argue against its usefullnes as money just f  Read more
Methuselah - 6/19/2014 at 3:55 AM GMT
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