 Vox, money is nothing more than what any society will accept in any barter situation. Barter can be the interaction you face when buying something at a market in Mexico, Greece, Spain, India, or any other country where you need to come to terms on how much you will pay to have the merchant hand over what you want. Purchasing from stores is a more formal interaction and the store will limit the item it takes in trade (barter) for its goods to something it can easily place in the bank or use to pay suppliers, employees, utilities, and taxes. I know you feel gold makes for poor money but it is the only universally accepted item that can be used to purchase goods. For instance, if you were to try paying for groceries with US dollars while in Germany you would get a blank stare just as you’d get if you tried using a gold or silver coin. However, if you were to purchase from merchants in a less formal market place you could conclude the transaction with gold or silver and probably pay a little less in terms of overall value that you hand over. This comes from personal experience having traveled and had the opportunity to try various methods of payment. Agreed, the market merchant will be more likely, possibly even eager, to take US dollars in place of the local currency, at times but the reasons for this will change and possibly not exist.
Allow me to recall a personal experience. PM’s are more stable in many cases and therefore more likely to be accepted. Many years ago while traveling through what was Yugoslavia I was stopped for speeding. They tagged me going 10 Kph over the limit with radar (Radarska Controla). The fine was to be paid on the spot. We had Swiss Franc’s, Deutsche Marks, Lira’s, British Pounds, US dollars, and a few other countries’ currencies but none of their Dinars. The only thing they would accept for this pittance of a fine (about $2.00 US at the time) was local Dinars, or my gold pinky ring. Given that these officers knew very little English, German, or French the conversation took quite a while but resulted in me getting off with a warning. I never thought about it much at the time but looking back it makes a lot of sense. If the police officers were taking advantage of a tourist and wanted a few bucks for their pockets then taking foreign money would be bad idea. It could be seen as “they were bribed”. However Dinars would be in their pockets already and a gold pinky ring couldn’t be traced to anything or anyone. Universal money.
No matter what any government declares to be money the fact is that if people agree to use shells in parallel there is nothing to stop them from doing so. Ultimately we need to pay our taxes in fiat but outside of government transactions we really can conclude a purchase with whatever medium we and the seller/buyer agree on. Of course the governments don’t like that they are not getting their tax cut off the transaction but the reality of life is that a very large percentage of all trade in any country is done on a barter basis and they will never collect on these transactions.
So is gold money, yes. It’s universal money. Silver enjoys this same acceptance. While in Yugoslavia, besides the chat with the local police we also experienced huge inflation. We never exchanged more dollars or Marks then we needed for the day as tomorrow they would be worth 20% – 30% more. In this two week period of time that we stayed in the country, you could still exchange a silver quarter (CDN) for a cup of coffee, croissant, and have enough left over for a tip. I know this because we did it on a few occasions when the café owners knew how to identify a silver coin and it’s worth.
So again is gold or silver money? Yes. These metals are the only universal money. I know there will be many that will try to tout the benefits of US dollars but in many country’s you could actually be tossed out of an establishment if you tried to purchase with US dollars so this invalidates it as a universal money. Are gold and silver widely accepted as a unit of exchange today when conducting business in North America or western Europe outside of market places or personal transactions, no. Does this detract from PM’s being money, no. We can though in recent history find instances of when gold was used as money. When APMEX leased space off of Trump (I recall it was in Manhattan) both parties agreed to use gold instead of fiat to conclude the agreement. A local auto dealer a few years back ran a promotion to accept gold for cars. I’m sure there are many more.
In today’s society when we think of buying something at a store or paying a dentist there isn’t much of a chance we’ll be able to use silver or gold but the problem is we’ve got to a point where we take this same attitude towards every purchase even when it’s not in a formal establishment. Fiat is convenient, folding money is lighter to carry but when an economy starts going bad wait to see how long it takes people to fall back to using a stable money such as PM’s, or if you’re on an island somewhere possibly shells. I wont delve into the world of what will be exchanged in an SLAE, things like ammunition for food, as this is not part of what the discussion is about and is an extreme situation and not part of a more 'normal' every day routine.
Technically any gold or silver coins stamped by a government mint with a $ value are money. Of course the value stamped on the coin is a ridiculously lower value than the metal is worth but the coin is none the less money. I certainly wouldn’t hand over a one ounce gold Eagle or Maple to pay a $50 bill but legally I could. It’s this last item that completely nullifies your attempts to persuade anyone that all gold and silver are not money. You yourself state that you own PM’s as a hedge against government stupidity. This means that you have placed a value upon the metals and expect that some other human will want to accept them in payment or exchange for fiat or something like real estate at some future point. It’s this transaction you expect to happen in the future that again proves that your PM’s will be used as a medium of exchange, money, to conclude whatever business you might wish to undertake in whatever country you happen to be. Gold and silver equal universal money.
 Commented 3928 days ago |
