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Valueless Valuables.
Ok, I'm feeling like today is a day when I should try and vex as many readers as absolutely possible, and there's no better way to maximize the hate mail than to deride gold and Bitcoin in the same post.
Last night, we excerpted the latest from Eric Peters, who offered the following exceedingly hilarious and exceedingly accurate characterization of carefully-polished doorstops (gold) and make-believe space money (Bitcoin):
James Marshall discovered gold at Sutter’s Mill on Jan 24, 1848. Th
I like your spot-on reality adjustment closing.
Goldbugs, Bitbugs, and Bears…Oh my!
I certainly understand why everyone is confused about why gold and silver have historically been used as money. But as a matter of perspective lets consider something a bit different. SALT.
Is salt currency? Of course not, it’s ubiquitous, it’s worthless. You can just pull it out of the sea.
But of course it has been used as money and quite effectively and the reasons parallel those of gold and silver and even BTC.
So why use salt if it’s so cheap and easy to make or mine?
If you are given salt, it’s very easy to know if you got salt and how much you got (A). You lick it and weight it. It’s so cheap nobody is going to bother to sell you fake salt so it can be exchanged easily between parties that do not trust one another (B). Yet salt isn’t free it takes energy, labor, to produce it in a usable form even if all that means is putting salt water on flat sections of land and letting it evaporate. Anyone can get together some energy and make salt, all the salt they desire… but you have to put the work i(C). Then add in the utility factor as salt is a staple prior to refrigeration (D). Food needs salt, not for flavor but to keep it from rotting.
Why not use salt as money today? It’s value is too low to make carrying meaningful quantities around practical. Nobody wants to manage my rent payment of 1000 lbs of salt per month. Nobody wants to operate a salt bank and salt armored transports or do the accounting in grams of salt. It’s tedious.
But, SALT was money and probably the most perfect money the world will ever have known for its time. If nothing else you could always sit around and print money for a living.
So let’s compare Gold, Silver, USD and BTC to salt
Gold: easy to verify, doesn’t degrade, tedious to handle, anyone can mine more, no economic utility
Silver: easy to verify, doesn’t degrade much, tedious to handle, anyone can mine more, economic utility
USD: hard to verify, degrades if physical and requires effort to maintain digital integrity, easy to handle, FED can mine more, no economic utility
BTC: easy to verify, doesn’t degrade, easy to handle, anyone can mine more, no economic utility
There aren’t any clear winners until someone shows up with a gun and says… you WILL use the USD and it alone. If no one with a gun shows up… everything but the USD looks pretty decent.
Meh. Rant all you want Heisenberg, but it’s a demonstrable fact that in the history of the human race, there has been a 100% mortality rate amongst fiat currencies. The US dollar is doomed. So is the Euro, the Yen, and so forth. However, just because an event is “inevitable” doesn’t mean it’s “imminent”. In other words, gold bugs and Bitcoin bugs shouldn’t put all of their eggs in one basket.
Gold is worth approximately the same today as it was 5000 years ago. A loaf of bread in the time of Julius Caesar cost about the same amount of gold (about 1/10 gram) as a loaf of bread costs in gold today. A ski lift ticket at Vail when it opened in 1962 cost $5, today it costs $160, but if you were paying in gold the price has not changed.
Nothing unwise about owning some physical gold. Most of the planet’s Central Banks agree, as many (Russia, China, for example) have been buying all they can get their hands on for the last decade.
Will owning gold make you rich? Probably not. But NOT “definitely not”.
As Will Rodgers said “Buy land, they ain’t making no more”. If you have EVEN a small place, you can feed yourself, shelter yourself, defend yourself. It’s tangible, historically inflation proof and in the right location it can be a new start.
How’s the island ?
The realheisenblahblah has obviously stepped beyond his pay scale. I’ve bought and sold physical silver and gold for 40 years…NEVER…not even once have I..or anyone I know.. “bartered gold or silver. It was never my purpose in buying to use it in place of US Dollars..it was strictly a store of value that..in EVERY case…returned me more dollars than I paid when I eventually sold.
I know far more stock fanatics than I know precious metal nut burgers. Ever try talking rationally to someone who it’s IMPOSSIBLE for Apple to ever substantially fall..or MY God..CRASH????
Gold and silver are insurance..insurance against a lot of dangerous crap that no one thinks can happen until it happens. Bitcoin is a different animal. Lots of things are translated into Euros..Dollars..Yen..Yuan etc at some point…Real Estate far beyond gold and silver. So what?
H- just had to rub the salt (another use for it) into the day’s wounds. Thanks so much. As the dollar loses it’s buying power by the day (some more of that non-inflation inflation again) and countries who are dumping them as fast as they can a little insurance just could be a wee bit helpful in the coming months and years. Of course you have all kinds of recommendations when this whole “fiat currency” scam blows up and hurts potentially millions of people. Right now that Silver Certificate…..oops….. I mean that Federal Reserve note is backed by 20+ Trillion…oops…. I mean $20,000,000,000,000 plus whatever else that’s hidden by that same Fed Reserve scam still going on day after day. So just keep up the good work!