Monday, December 26, 2016

Jelly fish make lousy cash

Koning has too much central banker pedantics in his take down of  gold.

Golden Misconceptions

These conclusions are based on very limited historical experience, and it is not clear how relevant that experience is for contemporary circumstances. The argument against a gold standard not so much that a gold standard could not in principle operate smoothly and efficiently. It is that, a real gold standard having been abandoned for 80 years, recreating a gold standard would be radical and risky undertaking completely lacking in a plausible roadmap for its execution. The other argument against the gold standard is that insofar as gold would be actually used as a medium of exchange in a recreated gold standard with a modern banking system, the banking system would be subject to the potentially catastrophic risk of a flight to quality in periods of banking instability, leading to a disastrous deflationary increase in the value of gold.

Let me shorten the discussion. The real problem with gold is that the cash register needs to be metal furnace to make change.  Hence, gold is a very poor digit system to compute probability distributions.

Get real.  We live in a system where good, pure honest cash can tell you the national GDP in about a minute, and you will have he most accurate estimate at that moment..

No comments: