Why Gold Can't Displace Fiat? || Peter Zeihan
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- Опубліковано 26 лип 2023
- At the start of the Ukraine War, many of the world's advanced central banks placed sanctions and embargos on Russian financial assets. As Putin tries to repatriate gold reserves from these hubs worldwide, what does this mean for the leprechauns who think we should switch to an asset-backed currency?
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#gold #currency #fiat
The moment you add subtitles, and the wind dies down.
THATS WHAT IM SAYIN!!! i commented on his last vid that he should get a small clip on mic with windcover but this definitely works lmao
Hahahaha
Right lol
This is about as real time as you're going to get. You can't hear?
Typical
If there isn't enough gold to back a currency in a growing economy, wouldn't that be _deflationary_ rather than inflationary?
You are correct.
No. Think about it.
Deflation is usually worse than inflation
@@jackjones4824 I think what Peter was getting at is that if money itself becomes hard to obtain, everything that you need money for is hard to obtain, as in more expensive. Gold cannot support growth. If the only thing you have of value to purchase bread with is gold, and you can't get gold, then bread is going to be "expensive".
@@mikehansen233 The growth of supply of things to pay for outpaces the growth of supply of the instrument you use to pay for these things, so the relative value of the monetary instrument increases. Deflation. The reason so many financial people cringe at the prospect is because banks and politicians tend to think in inflationary terms: funding from the federal bank, loaning new money as a growth mechanism, high liquidity, and debt and overspending as a more sensible option than saving money. In a deflationary situation from the consumer's perspective, it's far better to save your money than it is to spend it since if the currency continue to deflate, your saved dollar is worth more tomorrow than it is today. That leads to lower liquidity, lower expenditure in the market, and lowering prices as the currency gets more powerful and businesses work to attract more customers. There will be fears of a 'deflationary spiral' - although all examples I can find of this ever happening in history all refer to economic bubbles bursting, not actual 'deflation' so I think that that doesn't actually occur that way.
I’m not a gold bug. But I have admit one hard fact niggles at me. The divide in wealth inequality the year the US went off the gold standard. The resin is that all of a sudden money became a terrible way for the poor to save their wealth. This meant that people who could afford hard appreciable assets got to save and build their wealth, while the power saw it eroded by inflation.
They didn't have wealth they were poor
The gold standard was already steadily falling out of fashion after the First World War. It was in 1933 that it was abandoned in practice for the US. 1971 was just the final blow. In the years leading up to 1971, the US was already experiencing high inflationary pressures. Then the 1973 oil crisis came and combined that inflation with stagnant growth. Then the 1980s and the laissez-faire policies of that period. Arguably it was fiscal policy and external shocks to the system, not monetary policy, that led to things turning out the way they did.
the point is the common man was frozen in time so to speak. earning potential has not kept pace with inflation. however farmers did quite famously if they could keep there land. just and example.
It also coincides with the ending of the G.I welfare, the lowering of taxes on the wealthy, and anti-union laws. You can't focus on the gold standard and ignore those other three factors.
This is only true if you put your money in a savings account or under your mattress. The stock market has consistently out-performed inflation by a wide margin.
I’ve never understood the argument that “there isn’t enough gold to support a gold standard”. What the statement is really saying is that it’s impossible to (honestly) expand the supply of a gold-backed currency as fast or as much a fiat currency to meet the needs of an expanding economy. But wouldn’t the demand for such a currency increase it’s value and thus its purchasing power requiring fewer currency units for a given purchase? Repaying loans with an appreciating currency could present a problem for debtors but couldn’t loans be structured to take this into account?
The real problem the establishment has to alternatives to the fiat Dollar system is the loss of control it affords the US government and it limits the importance of the financial industry having first bites of newly created money and profiting before the money leaks into the real economy and raises prices.
Your summary is the best but Peter is part of the system that profits from the current system.
Wouldn't it be deflationary if there's was a lack of currency (gold)? Low amount of money circulating -> same amount of goods and services available -> value of gold increasing -> value of goods and services decreasing. What have I misunderstood?
You haven't misunderstood anything. You are correct.
@@npcknuckles5887 Right. I don't understand why Peter says it's inflationary.
@@pistolen87 Peter is talking outside of his area of expertise (geopolitics), and thus showing his ignorance/error in thinking.
Peter is not all-knowing, all-wise. He is only good at geopolitics.
Peter doesn't stick to a definition. Sometimes he calls it currency, other times money. Sometimes he's talking about real assets, other times pieces of paper. He's using the same confused, fraudulent language that the banks and governments use. So, yeah, it often makes no sense.
Fiat is not money, it's currency. Peter doesn't seem to comprehend the distinction.
With a limited amount of gold, there's a limited amount of Credit. If you're the only one who can afford to produce something, you're the one who sets the price. If nobody else could afford to build a car, Henry Ford could charge whatever he wanted. Competition is stifled, hence inflation.
Fiat currency is backed by an asset, actually. It's backed by power, however you have it. Even if it's backed by metal or some other material good, it's really only backed by power at the end of the day
Yes we have 33 Trillion Dollars of Power! I mean Debt.
You nailed it. It's why the Euro never displaced the dollar and why nobody needs to be concerned about the impending BRICS currency. (BRICS-Bucks?)
Yes, we are forced to pay taxes in fiat currency
@@Ironrodpower 🤓
Fiat currency is backed by confidence in that currency in effect the country or system underpinning that currency
Love how this doubles as a travel channel. Constantly getting ideas for vacations.
Ikr. When I move to the US I'm going to have such a long bucket list of places to hike and visit.
Thinking and talking with coherence and no junk words and no loss of breath at that altitude is a daily thrill
Guys a beast
I think Peter needs to have a 2nd Channel - "Peter Zeihan's Great Walks". Most of the places he does his monologues from look really interesting and got me thinking I;d like to do these walks too. I would never have known about these places without his videos.
So funny if he in fact has been releasing full nature documentaries with 0 politics and just blogging on the side
He’s got Colorado (I actually owned a house and land in Trinidad, literally had a mountain behind the house to climb) I’ve got West Virginia now. It’s not bad outside of the fact that infrastructure here isn’t built out like other states, but the hiking is phenomenal. The people are not the dumb yokels they are always seen as on TV (that’s Kentucky lol) but they are incredibly close knit. Very large mining companies took advantage of them for years before they took back some power so they had to lean on each other. Houses and land is fairly cheap.
big props for adding subtitles, Pete. Thank you!
Yes, the subtitles make it clear that he is unambiguously wrong.
@@SuperCulverin It is uncertain whether the USD will continue to be used as a trade currency. Factors such as the legal system and the bond market support its use as a trade currency. However, it is important to note that the administration and the senate are working tireless to undermine the USD. The weaponization of the dollar and a trade and budget deficit may eventually lead to the consideration of other solutions. One scenario that has been discussed is that investors may gradually move away from the dollar. As a result, the dollar could lose value compared to other assets such as gold, EUR, ruble, yen, silver, etc. This could initiate a gradual process where the devaluation becomes self-sustaining.
I guess the subtitles were added to prepare for that windy saddle. Lucky the wind gave him a respite today.
Peter needs a decent microphone (he can easily hide it in his lush hair) and an audio recorder in his pocket. Then he will have a good sound and no need for subtitles.
@@SuperCulverin people who don't understand the subject think that Peter is wrong. They should be more modest and try to learn something rather than run to comment section writing nonsense.
It's not about gold, it's about trust.
It's about value. How do different people value different things, the convertible commodity used to back a currency among them?
I trust the fact that you can't eat gold, but you can eat bread and if you have a grid down situation which one will fill your stomach first? In that situation I'll laugh at your gold if you try to give it to me for some of my bread. Preppers don't understand that concept, try eating it because if you hoard it you'll have to at some point if the world unwinds.
which no one should have
@@michaelfried3123If you think the first thing a prepper stocks up on is gold, you are a fool.
@@ughthedestroyer every prepper I personally know talks about gold and how its "currency". thanks for another laugh...ya'll are so far down the rabbit hole its insane.
Enabling a central monetary authority to regular the money supply is THE problem of the current world monetary system.
Everyone should be able to print as much currency as they want
Exactly, central planning is always a shit show. Did we learn nothing from watching the Soviets starve for decades? You can't plan an economy and trying to control it's flow (the currency) is likewise an exercise in insanity. Nobody is perfect, mistakes will be made and WHEN the central planners make mistakes, tens of millions suffer.
i would say there is not a problem at all
@@ryansauchuk7290 We tried that in the beginning of the Republic. It did not work well if you traveled from one state to another. Each had their own currency and no one could tell if the money was real or fake when presented outside the issuing location. That is what forced us to create one currency.
If there’s a collapse…the 3 mediums of exchange will be.
1: Clean Water.
2:Chickens.
3:Ammunition
Gold doesn’t grow , can’t be eaten and what are you going to do , saw some off a brick to barter for water, eggs and ammo 🤷🏻♂️
stop eating meat consuming to much energy grow your own food
I see I struck a nerve …what you and your family will need to survive , food, shelter, protection…lugging around a heavy metal that may or may not have value in a barter economy..ain’t it.
This is Peter Zeihan being an apologist for the paper-money rapers of the middle class.
"Chronic poverty"? "Income inequality"?
A gold backed currency will lead to hyper deflation, not hyper inflation.
capital trimming coming in USA in 2025 and economic depression thanks to bricks trade 😂 also less salary no more 100k jobs
WRONG!
@@AdityaJapeBRICS is a useless organization. They have achieved nothing
deflation for the basket of currencies that are backed by gold. Currencies that are backed by nothing that is the result of money printing will go into hyper inflation. Learn and study Weimar Republic
@@art-ux5ff you dint really pay too good attention to the book . and are making apples with oranges comparisons
The Eurodollar system is the worldwide banking system that creates loans in usd outside of the US jurisdiction. The only restriction these banks have is counterparty risk. In a fixed gold rate these banks could wipe out the gold reserves easily.
Excellent point. I’m not sure if Zeihan is aware of the Eurodollar system. He’s never mentioned it in any of his books.
Probably already has happend for the most part, we've only ever been shown one vault in fort Knox. Wouldnt doubt if its the only vault full of gold in the place.
This was why the gold window closed in '71.
how? lets say these bank has $5billion as capital. they made $50 billion loan out of it. $45 billion wont magically appear in hands of bank. they have to borrow it from someone.
"Regulate the supply of the currency " You mean print ad infinitum Peter!! Gold can be revalued , blockchain can be integrated into precious metal trading and problem solved.
This is one of the reasons why the Bretton Woods system, which fixed the price of gold at $35 per ounce, collapsed in 1971. The US government simply did not have enough gold to cover the loans that had been made in the Eurodollar system.
The collapse of the Bretton Woods system led to the introduction of a floating exchange rate system. In a floating exchange rate system, the price of gold is not fixed, and the value of currencies is determined by the forces of supply and demand. This system has been in place ever since, and it has helped to prevent the kind of crisis that occurred in the Bretton Woods system.
The US dollar has lost 87% of its value since 1971 based on inflation data. Based on gold prices, it has lost 98.25% of its value ($35 to $2000).
@@mraso30what happens if it reaches 100%?
Peter any way you can speak about Nixons 1971 speech about suspending, the convertibility of the dollar into gold or other reserve assets
Explaining the history of economics would expose the fraud he is perpetuating. So, no.
Peter is not going to explain how we got here, because that would implode his narrative of "fiat good" for the lie that it is. He might lie some more, spread the narrative that the banks want, but he is not going to tell the truth of who/what/when/where/why. That would be a "conspiracy theory."
Swapping to thr gold standard would not cause inflation. It would likely cause deflation; when the money supply expands slower than the market you get deflation not inflation. Inflation had been caused under the gold standard before when a huge amount of gold or silver was mined without adding to the actual economy, this happened to Spain with their mining in South America
@@musa7606 How is falling prices for goods/services that consumers need/want, a "bad" thing? You've fallen for the propaganda, pal. Everything getting more expensive is not a good thing, especially for poor people. We need prices to fall dramatically.
Governments have brainwashed people, for generations, into believing that falling prices is a bad thing and that rising prices is a good thing - because governments want money printer go brrr, so that they can keep spending spending spending, without having to face the wrath of the electorate, by raising taxes. Governments have a 2% inflation target, because they want to steal 2% out of the economy every year, to go on a spending spree.
@@npcknuckles5887I think the argument that is made by the deflation is worse than inflation group is that it stifles trade when I have to trade my goods for potentially less than it cost to make them.
For example if I planted grain at the higher price but would lose money when I harvested it. So I might store it instead in hopes of a better price later. Why pay to move something I would lose money on?
But yes generally lower prices are good for consumers.
@@npcknuckles5887 lookup deflationary spiral
@@npcknuckles5887 It's a bad thing because encourages overconsumption. Higher energy use leads directly to Global warming. Increasing food supplies leads to obesity. We have giant mounds of garbage everywhere.
Gold has a bigger problem: at scale, it can not be audited.
1) validating each gold bar may be technically possible, but the process exposes the gold to parties that can steal said gold. Third parties can only trust or not trust that process. They are not likelyngoungbto be allowed to duplicate the validation.
2) issuing notes for gold can not account for lost notes. Aligning gold reserves with only existing notes is not possible.
3) gold reserve currencies do not fail for the reason Peter claims (i.e. the money supply must increase to match economic activity). They fail because backs cheat, issuing more notes that the reserves justify. Say to fight a war. Vietnam killed the gold standard for the US, for example.
4) deflation that reflects a restricted money supply in the face of higher productivity and greater technology is NOT a break on the economy. Quite the opposite, economic deflation more fairly distributes wealth and preserves wealth as people age. Deflation reduces the concentration of wealth.
Economic deflation should not be confused with deflation from economic collapse. In that case, failures occur by a shrinking money supply as defaults on debt wipe out reserves and assets.
As prices fall, economic activity increases. This is why stores have sales. A common lie is that economic activity decreases with lower prices. We have zero data that supports this assertion.
In olden days of Europe, the golden standard was rather silver standard (very few places had access to at leas some gold deposits, but silver was easily available) and there was (and perhaps is) fixed "exchange" rate between gold and silver, and today we have platinum so amount of available reserve metals could be higher and with the benefit that silver is byproduct of other mining operations.
I think the price of silver would need to go up a great deal for it to be considered on par with gold (reflecting its relative scarcity). Right now I think you could buy all the silver bullion in the world for around $200 billion which suggests it's largely valued at its industrial utility not as a store of value
@@mattclark6482 and thank god as the economic activity related to the industrial uses of the metal is off the charts...
I miss the Florijn days
We could set up a cobalt reserve currency.
This is Peter Zeihan being an apologist for the paper-money rapers of the middle class.
"Chronic poverty"? "Income inequality"?
This is going to trigger so many people who have been lied to for decades.
given debasement of currency has happened for millennia, us gold bugs probably won't be triggered by arguments we've heard before
@@apsoypike1956 gold wasn't picked as a store of value for no reason. It has properties other assets don't due to physics
@@apsoypike1956 banks do hold assets, and if they issue they’re own currency that’s fine. But a country has to have its own standard, and gold is the best anyone’s come up with so far
@@apsoypike1956 The problem with tying useful assets to currency is hyper inflated asset prices. He covers that in the video. It has happened 100% of the time historically.
Locking up an entire _element_ for something as useless as backing a currency is an act of madness, especially an element as useful as gold. Now every time you need to make something out of gold (infrared optics, electronics, catalysts, etc.), the total amound of money in the world is reduced, so now it's prohibitively expensive to make, for example, catalysts for producing certain pharmaceuticals.
Okay Peter, explain what I am missing. If fiat disappeared, we wouldn't need 100 trillion or more gold. Instead, all of the gold would be worth equal to however much we needed. Therefore, it would be massive DEFLATION because the currency (gold) would have more buying power. Explain why you think there would be inflation pls
I learned a lot from this video. Thank you. Hope you had a good hike.
Thank you for enlightening me.
I'll give financial advice. Don't invest into anything without purpose. If the plan isn't specifically hedging against the global economic collapse and a future without fiat currency, then investing in gold as a currency has little purpose. If you invest into gold expecting it to be a key ingredient in dilithium crystals, its a great financial move.
I will also add to this with my own financial advice. Buy low, sell high
@@andyvasist418 This isn't even univerisal due to options, selling short and buying bonds at high discount rates to sell at low discount rates.
@@andyvasist418 Or do it the WSB way and buy high and sell low.
Except thats 100% factually incorrect
I will absolutely want to invest in dilithium crystals!!! Lol
I'd like to hear Zeihan's opinion on cryptocurrencies/digital assets (present & future) vs fiat currencies.
cryptocurrencies are not currencies.
He doesn’t like them. He says that no one is using them for paying for stuff and are therefore useless
If it ain't fiat USD, he ain't buyin'
He would hate them because Joe Biden does not like.
Central banks won't let them every succeed. Governments won't ever let you pay taxes in anything but the government's currency also. Currency is power and no one is going to let go.
I am a gold prospector. The hikes you take I'm always looking behind in your videos wanting to gold pan. Hahahaha. Good video!
Asset-backed currencies like gold don't lead to hyperinflation, if anything the opposite happens. When an economy increases in wealth but you don't find any more gold, then the supply of gold is low relative to everything else in that economy, so you get deflation as the currency's value increases. Most of the times when countries experienced hyperinflation before 1970 (for example Weimar Germany), it was because the government temporarily went off of the gold standard.
He's saying you do experience inflation though because you have no way of creating more gold. Think about it. If your currency is "backed by gold" and you have 1 dollar worth of gold. Then your economy becomes so super charged that you now need two dollars worth of gold to keep everyone monetarily happy and keep production/innovation going, AND you don't have any more gold, then you have to INFLATE your currency by now saying that 1 dollar worth of gold you had is worth 2 dollars. You have INFLATED your dollar and you can't really go backwards or put the break on that process. Also by putting your money in gold you are now at the whim of every other gold holder and their decision to release or retain their gold reserves. It's just better to be the best country in the world and base your monetary system off of that, rather than a commodity we all use for various things.
@Alverin If you have no way of creating more gold, then the supply of gold is low and thus the value of gold goes up. If everyone wants more money to be monetarily happy and keep production/innovation going, then they demand more money than otherwise, which increases its value. Since gold is the currency, an increase in the value of gold is an increase in the value of the currency, which is deflation. Governments may want to inflate the currency, but they can't just say "a dollar used to be worth 4lbs of gold, but we declare that it's now worth 2lbs of gold", since people could just go to the bank and start exchanging their paper money for physical gold and just start using that instead The same for if the government just decides to print paper money anyway without changing the gold supply, people would just start using physical gold.
In fiat economies, only paper money and coins are legal tender. If the money supply is low, then money can just be printed without the government worrying about running out of gold reserves from the people taking it out of the banks.
Also from the distant past i.e. 80s when people got excited (some of them are still around!) when Gold was selling for $800/oz, Central Banks all over the world started to sell a little bit of their gold. After the prices dropped, it stayed around $400 or so till 2007 when it came back up again to $800/oz. That's two decades and you would have done so much better doing the most easy strategy of putting your money with Mr. Bogle. Today, the price of gold just dropped over one percent. Must be that Zeihan! 🙃
Because Mr. Bogle’s stocks and bonds did quite well from the fed continuously injecting money into the banking system (especially after 1987 and 2008). Meanwhile, inflation was hidden as much of the dollars were exported overseas, largely on cheap imports. I may have a shit job but I can buy this Chinese wide-screen TV. How long can that continue?
Gold will always be money but it will not always be the most useful economic instrument for exchange and that's the key. Even at it's worst point you can put gold on a plane and trade it and every country knows what it's worth in any currency. It is however supply limited so allowing currencies to float relative to gold is really the only way to operate once you surpass the limits of physical gold quantities.
you can do gold with blockchain technology
The problem with hauling gold to convert into usable currency is that you always end up getting fleeced by the local pros. You never get full value when sitting at the table across your central bank official , or worse, dealing with traders.
@@serafinacosta7118 : Yeah. Have you ever dealt with those gold bullion scammers?I know as mate won $10k of gold and it's value rose so he bought $5k more. Then the price reached a high and started to drop, he wanted to cash-in for a car. He got back slightly over $12k. Basically he blew almost $3k.
@@serafinacosta7118 we can combine gold and blockchain. with the Internet people are aware what the spot price of gold is. And if there is an official link people will know $2500=1 oz gold.
"Always" until we begin asteroid mining and suddenly all kinds of minerals and elements become way way more plentiful
This feels so counterintuitive. I’ve thought for a long time that switching back to a good standard would alleviate the inflation we have, the ridiculous way the government just prints more and more money. Peter’s given me a lot to think about.
Also, in regards to Peter’s point about how there’s not enough gold in the world to match the net worth of the global economy, what about using more than one asset? I’ve heard people say that there’s nothing stopping us from having our currency being backed my gold and silver and maybe even platinum as well, so wouldn’t that solve that issue?
HUGE QUALITY UPGRADE. Nice job Peter!
One thing that wasn't mentioned.
For the new world to use gold as a standard means that those countries/states/whatever, must AGREE to use gold.
It could well be that because X country has all the gold everyone else is going to start using platinum.
OR... And here is the real kicker, some countries could insist that, if you want to trade with them, then you must use their own monetary system.
This isn't a problem until they hold a monopoly on a globally required item (cobalt or lithium for example).
I'm not saying they would, but they might.
It's the US Treasury as reserve asset that is losing ground to gold. Not the currency.
Thank you for this amazing insight.
Thank you Peter audio sounds alot better.
Wait, wouldn't a gold system have massive deflation?
It would also stagnate growth.
@@BeechandBookBut it would now. If you tie Gold to your currency (example: 1 gram of Gold= 100$) you limit the amount of 100$ bills because you actually need 1 gram of Gold. There's ~36.000 tons of Gold available worldwide so you could print 3.6 trillion $. After that thats it.
Against that stands a current global economic output of 100 trillion $ that'll grow to ~130 trillion $ in 2028. So either we inflate Gold to absolutely insane values like 1 gram of Gold equals >10.000$ or we accept the finite amount of money thats backed by Gold and 1$ gets you more and more value each year the economy grows which would be deflation
Probably the most confident half-informed person out there.
Again WRONG!
You shouldn't talk about yourself like that, Josh.
its worse. he's propaganda.
if you listened to him you probably would have sold all your assets back in 2015.. being so confident about liquidity shortages with sweeping genralisations has been proven incorrect, and well tbh its a claim that can never be proven wrong because we never know the future price movements.
So then he focuses on minor countries idiosyncrasies that in his opinion don't influence anything, yet its 80% of his focus content. Maybe at this point hes just content farming. Social blade says hes doing well talking.
Case in point, making a video explicitly stating something thats 'baked in' to the zeihan on geopolitics core model.
All the information he talks about can be verified. I've never thought that gold will save your ass if everything collapsed. You would have to have at least two or three years worth of gold and probably more. Fiat currency would probably have face value for some time but would not be controlled by the Federal reserve. Whether it's gold, silver, dollars or food, we live in a barter system.
3:30 having a block chain back by a certain amount of gold, gives you the ability to continuously have smaller and smaller, fractional shares of the currency. Traditionally, you couldn’t divide a penny 1000 ways but you can divide a penny I think up to 1 million ways using something like that XRP which I use as an example because it is already in existence. I suspect the technology that is currently used could get even smaller than this and the track transaction times are already at under five seconds. So while what you were saying is true or more the point was true historically we are technologically at the point where it no longer has to be true, and therefore it really doesn’t matter anymore.
Love the subtitles!
If there is a static amount of gold backed currency while also economic growth, the effect would mirror DEflation. More and more economic activity will be looking for the same amount of gold, driving up demand and its relative worth.
If a central bank decides to keeps printing currency without obtaining more gold, that is the definition of inflation.
Also the central bank not having control over the value of my wallet is a big plus, not a negative.
I think he meant inflation in the monetary asset itself, ie the value of money increases. Peter doesn’t have a good grasp of econ theory like this and malapropisms like that show it clearly.
There wouldn’t be growth past the value of gold,this will result in a depression. Demand is not infinite.
Somebody will have the control over the value if your wallet.
Even with bitcoin, the miners (in interaction with the system, long story ^^) maintain the value of your wallet.
It's just the choice of "WHO is more trustworthy?" ❤
The central bank not having control over an individual's wallet is probably a plus, but having control over ALL the wallets provides stability to the system as a whole. It's the only real advantage of governments being involved in anything.
Correct. Deflation of the price level of goods not inflation.
I do enjoy seeing the historical arguments presented beside the modern ones, and given context for discussion of future options. For example, gold, platinum and many other elements that are not commonly available on the surface of planet Earth will become accessible in much larger quantities from elsewhere in the Solar System during the next several decades. Yet, even if we collected quadrillions worth of such stuff at a convenient financial hub, could it replace fiat money? Think about Peter's practical observations. Does having more gold make it easier to move? Is it just as easy to lock down a bigger vault? Fun ideas! Thanks again, Peter, for making us think again.
"elsewhere in the solar system"....get to bed early please.
"Will become accessible in much larger quantities from elsewhere in the solar system in the next several decades?"
Maybe you know something that I don't. Are there any projects currently underway in that field? Because to me that "Will" feels like it should be a "Might" and "The next several decades" rather "Near the end of the century".
@@breadbread4226 Yes, there is a very important mission with a spacecraft on its way to the asteroid 16-Psyche right now.
en.wikipedia.org/wiki/16_Psyche
Why is that important? Psyche is very large, very dense and may be a single source location for some the largest quantities of the denser metals available off planet anywhere in the inner Solar System.
Meanwhile, SpaceX is attempting to launch their fully reusable Super Heavy Booster and Starship stack in the second half of November, 2023. Deep space missions like a minerals extraction project on Psyche are enabled by the cargo volume and mass of Starship, while other targets inside Jupiter's orbit will be similarly accessible because of the fueling infrastructure SpaceX is contracted by NASA to construct in Earth orbit to support missions to the Moon.
"Will become accessible," happens before 2030, unless you believe SpaceX will fail with Starship after succeeding in all their previous launch vehicle projects. "Will become accessible," is a simple observation put forward by the visionaries of the early Space Age. Men like Robert Heinlein and G. Harry Stine pointed out that, "Once you can reach (Earth) orbit, you're half way to anywhere in the Solar System." My understanding of that is it takes roughly the same Delta V to go to Pluto from Earth orbit as the Delta V required to achieve Earth orbit from Earth surface.
SpaceX is committed to achieve both the capability of reliably launching reusable rockets to Earth orbit and enabling in Earth orbit a robust fuel supply infrastructure to support Lunar exploration and also support Starship's intended colonization missions to Mars.
I consider a successful Starship journey to Mars, landing on Mars, refueling on Mars, launching from Mars and returning to Earth orbit to be a full proof of concept for asteroid mining missions anywhere inside the orbit of Jupiter. I'm confident we will see the landing on Mars by 2030 and the rest will follow before 2040.
Of course, then you have to come up with the money to back such a mission. It won't be cheap. Hence, the importance of our current spacecraft travelling out to study Psyche and determine what the assay of valuable minerals might be.
"Near the end of the century," while NOT impossible, is very likely to be the sort of gloomy pessimism one prefers to forget, during the ebullient celebrations of successful Mars landings, colony establishment, exciting discoveries and other space adventures of the next two or three decades.
Peter has no clue what he is talking about. The quantity of monetary metal available is completely irrelevant. Modern currencies are in fact backed by assets. Economic crashes are caused by changing interest rates not by a shortage of money.
@@coonhound_pharoah Could you elaborate on how modern currency is asset backed?
Q : In our indebted world, did economic & trade growth lead currency growth OR the other way around? 4:10min -4:30min
I’m no economist, but I do know that every society in history has used a gold or silver or (rarely) a bronze based currency system.
Problems with this system were due to governments reducing the amount of precious metal in coins, i.e. debasement.
The reason why the United States unilaterally repudiated its obligations under the Bretton Woods agreement was because it was spending far too much on the Vietnam war and on social programs.
I can’t see that the current system in which money is based on nothing of any intrinsic value is better, considering the titanic amounts of debt that the system seems to rely upon, and this is why things of real value, like property, equities, healthcare etc have exploded in value and price and are excluding increasing numbers of people from society and into poverty.
It seems that either the system will collapse or the population will become increasingly impoverished as the inevitable inflation destroys wages and savings.
You're right! Gold was used as currency for the past 5000 years for a real good reason! Anyone with authority can print a paper, and with that paper, power is accumulated not based on merit!
Imagine trying to explain to aliens why humans go to such great efforts to dig gold out of the ground, only to lock the vast majority of it away in vaults and never touch it again.
there is a good chance they did the same with gold or something else.
Consider gold was only form during super nova.. they might be interested.
As far as heavy elements go it is one of the most unique ones in several categories which is why Aliens would most likely use their technology too.
tell that to the Annunaki hahahah
I would say all advanced civilizations would use precious metals as a store of value at some stage of their history, quite like humans, as it just makes sense. So the aliens would probably be like: "Huh, we used to do that too."
Then why have so many fiat currencies collapsed throughout history while we still have gold?
Oh let's not get into the nitty gritty and let facts get in the way of Pete's delusions shall we? The fact that the US dollar has already lost over 98% of it's value since it got off the gold standard since Nixon already shows that the federal reserve has absolutely NO discipline what so ever in trying to maintain the value of the dollar - and it will continue to devalue the dollar until it is worthless just like every fiat currency up to now. They will do whatever is politically expedient. And everyone who puts their faith in the government to maintain the value of their currency... well, you're going to deserve what you get. Which seems to be about 90% of the people in this chat.
An inconvenient truth that was not answered by Peter the Great.
Gold currencies didn’t “collapse” either. They were abandoned because the monetary authorities printed beyond the gold backing in WW1 and couldn’t re-establish the exchange rate because the devaluation would have been too severe.
Because gold is money as it is a valuable commodity that is generally not consumed and is easy to verify integrity of the asset and does not degrade with time. Gold always remains money, but not necessarily the easiest means of exchange day to day. Credit cards are easier to use than gold, even if the associated organizations might go out of business some day. Similarly dollar bills or Disney Bucks might be more useful when operating within a given economic system or theme park.
@@markcalhoun8219 It's never been easy to verify. the integrity of gold. Hence why you get so many cases where mints would cut the gold with other metals and claim it's still worth the same amount as we saw in ancient Rome and the 30 years war being two of the bigger examples.
thank you so much for adding subtitles, I always struggle to hear what you are saying
Gold - or rather the gold standard - was in fact one of the main causes of the Great Depression. When the stock market crashed, people panicked and rushed to exchange their dollars for gold, which was fixed at somewhere around twenty dollars or so per ounce at the time. To defend the currency and stem this unwanted gold rush, the government was forced to hike interest rates. This contracted the money supply and dampened borrowing, which added fuel to the fire of the unfolding economic crisis.
There were other factors at play as well - as the downturn deepened, trade tariffs were hiked with the Smoot Hawley Act which led to the collapse of international trade, when banks started collapsing, people panicked and raced to withdraw even more money due to lack of deposit insurance which caused even more banks to fail, and so forth. The gold standard remains the primary causative factor, however.
Gold and currencies serve opposite purposes; gold exists as a debit-based medium of exchange, where ownership and value is one in the same, whereas currency is a credit-based medium of exchange, where the owner of currency does not actually have value, but is instead owed it.
I am holding in my hand a $5 gold piece from 1915. At that point, it was equal to a $5 bill, and was a days wages for a top industrial worker. Now the gold in the gold piece (1/4 ounce) is worth $500, and is still the wages of a top industrial worker. The five dollar bill will buy a loaf of bread.
The paper currency has lost 99% of its value in a century.
As J.P. Morgan said in testimony before Congress, while urging the creation of the Federal Reserve: "Gold is money. Everything else is credit"
I like PZ, but here he makes no sense.
@@jamesburke3803Gold will still never replace fiat currency. He was correct in his explanation and I guess that went over your head.
Exactly, gold actually has the value it's worth, the US dollar is an IOU saying you are owed that sum. They quite literally say this on them. Back before FDR nationalized gold ownership, US bills used to say you could trade them in for gold or silver. Ya know, the metals that are specified in the Constitution. Fiat currency is literally unconstitutional and no one has batted an eye about it at all. The Framers had loads of problems with fiat 'script' from the revolution becoming worthless nearly instantly, so they knew full well what they were writing when they said "No State shall make any Thing but gold and silver Coin a Tender in Payment of Debts". Barring of course the blatant fact the Constitution still says gold and silver are the only way to pay debts, nothing actually pays the debt in our fiat system in the first place. There is no repayment of the debt by holding US dollars, it's a giant ponzi scheme, a debt backed by another debt backed by another debt and so on. It's only value is in the 'faith' we put into it, hence the word "Fiat" (It's literally "Faith-backed" money).
@@LambertBowden56 The argument FOR fiat currency goes over everyone's head, because ultimately it's a magic trick that no one understand. It's all smoke and mirrors. It's literally in the name Fiat, Faith. There is nothing giving value to this currency besides belief. Economists and politicians have spent decades trying to justify this idiotic system, kept trying to reanimate the zombie of keynsian economics. Fiat allows them to keep throwing money at things (cause they can just turn on the printer) even when it never works, and of course it has to be so over complicated by design because then why would anyone ever need to hire economists? I find it hilarious that the most popular theories proposed by economists all correlate to governments needing to hire more economists and keep them employed. If world peace was achieved tomorrow, Zeihan would be out of a job; if we threw out John Maynard Keyes' government bloating system we'd make a lot of economists unemployed over night too.
When there’s not enough gold, it simply means it’s valued too low.
well said 👍
if gold was valued at or above the world debt, then it can reset it...
You literally missed the whole point of the video.
THANK-YOU FOR THIS!
Others have pointed this out already, but Peter is wrong on this one. If your currency is backed by an asset that has a finite supply - in this case gold - it is impossible to have "more and more and more of the currency" unless you have a commensurate increase in the supply of the asset backing it. Instead, what you get in a system limited by currency availability is deflation. That may be good for some (consumers) and really, really bad for others (particularly debtors). So it will never happen in our highly indebted economy.
Unless you shut down gold mining, the "asset" is not in finite supply. There is more gold in the California Sierra Nevada still to found than has been mined in human history. When you consider the rest of the planet, well, that is one big heap of gold. Gold is not even a scarce element.
All currency that have been backed by a commodity or a small basket fail. the US dollar is backed by the whole economy. how hard is it?
@@REICapital Actually the USD is backed by the US Military. Anyone dares step out of the petrodollar system, they end up like Gadhafi and Saddam. Nothing backs the currency, just belief. So to keep the world 'believing' in the USD and it's imagined value, we ask nicely then if that doesn't work, we apply a regime change, tomahawk missiles and maybe an invasion and 20 year occupation.
The Federal Reserve system was created because there were times (around harvest) where there actually wasn’t enough money to go around. So much money was sent out West to farmers for their crops that Northern cities had no cash left, and they were stuck writing IOUs.
This is Peter Zeihan being an apologist for the paper-money rapers of the middle class.
"Chronic poverty"? "Income inequality"?
The over financialisation of everything, devalues everything that is not a physical asset.
Gold and energy are primary physical assets= reserve assets
Thanks for the insight Peter
The elites be like "Ohh you guys don't need Gold! Here let me take all the Gold away from you. Here you can use these Bank Notes to buy your crap from companies we also own!"
Peter always has an interesting, if simplistic and definitely entertaining way of talking about the world..
overly simplistic to the point where it is useless
@@glovesforsocks4603 agree
agree
There is a blind faith that there are no actors on the global stage that would be willing to destabilize the fiat system and FORCE a German, Venezuelan or Zimbabwe level ultra inflation. The thing is, there are groups now that are willing to kill that fiat system, and now because of American weakness (think Afghanistan and screwing over OPEC) that group is growing mainly in Asia and Middle East
I like how passive-aggressive the dimwitted armchair economists of UA-cam get whenever the gold standard is called into the question lmao. No, the reason you're broke is not because of FIAT manipulation. You would be a poor bum regardless. No, the reason inequality exists is not because of FIAT manipulation. Inequality has been much more intense in nations with their currencies tied to precious metals. No, the reason inflation exists is not because of FIAT manipulation. In fact, historically the gold standard has led to more intensely volatile inflation than FIAT ever has. FIAT is, in nearly every way, superior to the gold standard.
Now get mad over it & go watch another UA-cam video from some dork talking about how much you'd be able to save if only we switched to gold lmao
AS I tell people: Gold Standard, price stability, economic growth. At most you can have two of the three.
Except, that's not really true. Most countries have used gold or silver as their currency for most of human history, and still experienced price stability and economic growth.
Curious your thoughts on Viveks proposal where the US dollar is backed by a wider range of comodities?
Amazing explanation sir.
I placed $1,900 in fiat ($100-dollar bills) on one side of the scale, and an equal value of gold on the other side (ie. 1 ounce), and the scale tipped vigorously towards gold. Gold wins!
Great facts that people should understand. I read a short story long ago about how if I remember correctly a carpenter, baker and a farmer shipwrecked on an island. They were constantly fighting over bartering with each other, until the day a banker shipwrecked with them. Luckily he had a wooden barrel full of gold and began making currency they could use. It all worked great in the beginning but of course he started making a little extra for himself. Eventually the others rioted and chased him down, the barrel broke open and it was full of rocks. Hilarious parody.
In other words, what … gold only has value if people believe it does, otherwise it’s just a rock?
your lack on insight and knowledge about money are interesting. One does not need a debt system to have a monetary system. After all, for thousands of years money was printed in precious metals. It was not until AFTER Marx that governments decided on fiat currencies. And look at the debt created.
@aklimar2208
Rothbard explained this. The currency unit can be anything, as long as the supply remains finite.
Read, "Man, Economy and State", by Murray Rothbard.
@@CB-vt3mx It was a long time after Marx - About 120 years, so it's a bit rough to blame everything on him. It was also after Adam Smith and Keynes. Early 1970's I believe. But look at the growth since then. The opportunities and productivity. Billions of people raised out of poverty. We can't go backwards mate. I'd blame Milton Freidman way before I'd blame Marx for any problems today.
@@tsubadaikhan6332Keynes is to blame. Friedman’s monetarism is only marginally better. Any economist worth his salt would agree it’s best for the marketplace to determine what should be used as money, not governments.
We drove by your James Peak overlook location on the way through the Kingston Pass route... about 4 days ago when you made this:)
I appreciate the subtitles
It is true that asset-backed currencies slow economic growth and create periodic depressions. However they can endure for centuries--you can still spend a Roman gold solidus. Fiat currencies have been tried countless times, but so far they have always died of hyper-inflation. I am told the longest a fiat currency has ever lasted was 60 years. The current fiat experiment has lasted 52 years.
The depressions were usually war related or were from an exogenous shock that also would have rocked a fiat system.
@@KevinBalch-dt8ot Thanks; I will look into that.
Asset-backed currencies require constant conquest and asset theft. Hence why the Rome expanded endlessly. The onyl way to grow was to conquer more resources. Asset backed currencies are horrible.
What’s up with your account name bro?
They only added 4 numbers to my name that I’ve had for almost 20 years…
@@LaFonteCheVi - Bullshit! The Swiss Franc was gold-backed until recently. The Swiss have certainly not been colonial expansionists.
Every fiat currency loses its entire value due to endless and exponentially increasing devaluation. There are no exceptions.
Oh really?
Hasn’t the British pound been around for centuries?
Pssst... don't tell em that the US dollar has already lost over 99% of its value since it abandoned the gold standard.
And yet gold keeps its value...
@@omegajoe7014 and somehow people in America are enjoying way more modern day luxuries than in the 50’s with “99%” devaluation on the dollar.
Go figure
@@samrandall7595The pound was gold backed for most of its history, well technically silver backed because the “pound” was a pound of silver, then was indirectly gold backed through the Brenton woods system. Global fiat has only existed for about 50 years and he’s right about historical fiat currencies. The temptation to spend more than you take in is far too great
Peter should offer remote hiking/camping retreats with geopolitical discussions during the breaks/meals. He could combine two of his obvious passions. That said, maybe he likes hiking and camping so much for the solitude.
Thank you for a succinct explanation gold vs fiat.
I realise I must be missing something. But I'd have expected hard limits on monetary supply to be deflationary. Less gold "dollars" relative to all stuff.
In the initial change back, all the gold that people got at low prices compared to its value as a money would flood the market with gold. It would create a lot of inflation (increase in the money supply). However, once the market settled out, constant prices or deflation would be the norm as long as new gold mined was roughly equal to the increase in value of the goods and services available for sale.
If a money supply is constant, increases in productivity and finding more valuable uses for existing resources results in dropping prices. If the money supply stays equal, up or down, to the value of the goods and services for sale, prices stay the same (we're talking general prices - there are many things than can affect prices for a specific industry or region). If the money supply increases faster than the value of goods and services in the market, then prices go up.
You mentioned that gold-backed currencies have caused depressions. But this is only because the elites refused to change the gold/currency peg when it was needed to print more currency. (This is because the elites have the most to lose when their savings are devalued.) What you didn't mention is that all fiat currencies eventually go to zero value, throughout history, some fast and some slowly. So that's the other side of the coin.
If you can change the peg, then it's not pegged, which means it's just a fiat currency.
@@fwiffo Not true at all. Almost all gold-backed currencies got peg changes sooner or later. And the fact that currency is exchangeable for gold at any peg makes it better than fiat, which is completely floating at all times.
Usually gold standards fail due to wars. Fiat currencies do wars much better. For a while. We’ve got to do something about these damn wars.
@@KevinBalch-dt8ot As long as humans exist, there will be war. Unless AI ends up just managing us like an ant farm.
Fiat goes to zero when the civilization collapses. So not really a problem because if our civilization collapses most of us can kiss our butts goodbye.
Huh. I didn't even know that about with gold and all that jazz. Thanks for the video Peter.
very good info. thx. note, wind or some sort of Mic noise.
I think this is what Peter meant when he said inflation in commodity based currency: ( source investopedia)
Commodity money has intrinsic value but risks large price fluctuations based on changing commodity prices. If silver coins are used, for instance, a large discovery of silver may cause the value of the silver currency to plunge, resulting in inflation.
That's why it's good to have more than one commodity as the basis for exchange, whether it's gold and silver and copper or something else with equivalent physical properties and inherent value.
This happened with the Spanish empire in the 16th and 17th centuries.
He described government debasing currency without using those words
No, see... you don't understand. They were *forced* to debase the currency *for our own good*. The economy would have collapsed otherwise 🙄
@@benjamindeesNope, it's _always_ happened throughout history, as a matter of fact. I refer you to _The Law of Civilization and Decay,_ by Brooks Adams.
You can edit the audio manually using a cheap DAW like Reaper, or automate it with iZotope's RX 10 plugin in Reaper. You could even replace it by recording new audio in "post production."
Great video.
Gold has never failed as a currency or as a store of wealth, whereas most currencies have failed.
all fiat fails. It's the math.
Gold fails as a currency, though you can store wealth with it - because it is bad as a currency.
Why? Because you have a economic growth a lot more, then finding more gold. Thus a gold backed currency would have massive deflation, which is not health for an economy. But if you just buy it and let it sit, obviously it will perform better than a currency because its volume cannot rise.
Agree with all of what you're saying, but I'd like to point out that you get big deflation problems in a gold-backed currency system where the economy expands faster than the gold supply, not inflation. There are more goods chasing the same amount of gold so goods must become cheaper relative to gold. An example would be the late 19th century.
Though one often sees Hyperinflation, right after countries are forced to switch to a fiat system. E.g. during and after WW1.
You have a lot of explaining to do in regards to the hyperinflation in Germany caused by none other than Mises himself due to the gold standard.
@@kiuk_kiks No I don't think that the hyperinflation was caused by going off the gold standard. Just that the two can come together time wise. The cause is, however, a traumatic event that forces the government to go off Gold and to continue printing. In Germany this was WW1 followed by reparation payments and political instability. The war was expensive so they went off Gold during the war to finance it. And since not paying the reparations was under threat of invasion in the 1920s and the economy and politics was too weak to raise taxes a lot, they were forced to print.
Fascinating observation.
When gold is the currency, silver is also accepted. Then when the relative metal values change, people melt coins of one metal and sell it back to the government for coins of the other metal. And then there are various forms of physical attacks, like shaving a hundred coins to get enough metal for a new coin. Since money, representing fiat currency, or gold, is just bits flying back and forth, we have a defacto cyber currency.
Thank you for explaining that, I have been saying this for years
I suspect India, China (maybe Turkey) can get gold at a discount from the sanctioned and then sell it at a premium to the western financial system. So gold is going to go down if you're a russian seller (less demand) and up if you're a western buyer (less supply).
Almost certainly true. Just like Russian oil and gas is being sold at discount to China and India, and then refined products (e.g. diesel) produced from Russian oil in those second countries are sold at open-market prices to the west etc. Apparently, Ukrainian tanks are running on Turkish diesel that is being made from Russian crude. Putin makes a dollar at the cost of who knows how much when Russian military assets are blown up by Ukrainian military assets running on Russian oil one step removed.
The cost of mining and refining gold is a smaller margin than most might think and the amount available from "sanctioned sources" is relatively small. In the big scheme of things this is a very small fish.
@@dw620 I suppose it depends on where you are mining and smelting the ore. I worked in gold mining and exploration in Venezuela in the 1990s when gold was around £380 per ounce. We were able to prospect, exploit, smelt and sell gold for profit at those gold prices. Now it's up above $1,900 per ounce. However, production costs will certainly have risen since the 1990s. But, I bet somewhere like Venezuela can still make a nice margin on their gold, especially since they have their own oil and gasoline supplies that must help keep costs down.
How would you know whether or not there is actually enough gold to back a given currency?
There is always enough gold. The only question is the price. That is Econ 101.
0:14 is this “gooold” an austin powers reference??
Your general point on fiat is correct (not enough gold to grease the skids of today's global economy). However, it's *deflationary* if you have a physically constrained resource (gold) backing a currency and thus can't increase the currency to accommodate the economic need.
What I find interesting is that in ancient times they thought to turn lead into gold. Atomically they are adjacent but they had no knowledge of this so it's a curiosity how they managed to pick lead.
Of course we have the technology now but it would cost more than you would get out of it. Also it's technically easier to turn gold into lead which is much less interesting to most people!
They chose lead because it has a similar weight to gold, and it is abundant
It doesn't take a genius to guess that the heaviest metal we knew of in those days might be closely related to the second-heaviest metal we knew of. The fact that there is a hell of a lot more lead around than gold makes this a "fact" that you would so LOVE to be true that you can easily convince yourself it is true.
Similar density which is similar because of being adjacent atomically.
Similar weight, as mentioned by others. Another factor is the way they can be worked. Lead and gold can be beaten flat, drawn into wire and melt at low temperature.
The abundance of lead back then was great for those making lead balloons..The market for them however never really took off..😅
Very good explanation.
What about a weighted basket of commodities? I've always thought that would work well.
You would want figure out a way to include things that are perishable like food and oil. This would give smaller counties a commodity in the basket.
I think it's viable on a very local level if SHTF.
Maybe for the first few days. After that people would likely find essentials like food, medicine, fuel and weapons far more valuable than gold.
If shit does hit the proverbial fan, people will not be looking for shiny metal. They will want food, water, medicine, guns, ammo, and other things of intrinsic worth and utility.
@@Earaldurin the yugoslav wars Selco Begovic would trade cigarettes for food and work for cigarettes.
He said that if he had his time again he would choose to carry a fake wedding ring with a hallmark that said it was 10kt or 18kt but really it was worthless. Why?
Say you come to a vehicle checkpoint and the armed men want something valuable to let you through.
If you have a gold coin and you show it, the people at the checkpoint will take you aside, hang you from the rafters with electrical cable and beat you with baseball bats like a pinata until you give up a location for "the rest of the gold."
If you pull off your gold wedding ring and start to cry, they will accept it and wave you through. They may die tomorrow to sniper fire, you may never see them again. They will never know that you have more fake "gold" rings sewn into the lining of your coat.
@@adamc2378 Got to agree with that assessment 100%. While you can buy and sell gold, and the price rises and lowers accordingly, just like the stock market, should the world go to shit in a second, people will need food, water and something to protect themselves from others with bad intentions. That won't be gold bars.
Gold is NOT portable or easily verifiable. Gold is dead as money. When the SHTF there is no trading. It’s just a matter of who has more bullets and people.
Studying tea in China convinced me that precious metals as currency had some fatal flaws.
Historians recently have stated that one of the reasons for the collapse of the Qing and its inability to defend itself against foreign aggression is because the Qing retained their use of silver while the West moved to a harder currency… gold. Therefore, the price of silver plummeted as the Qing’s enemies benefited from a harder currency and therefore more purchasing power.
What would stop gold from just inflating in price?
Hello Peter, from what ever paradise you happen to be at, keep spitting that mad knowledge.
Zeihan mentioned previously that he thought that Russia would start targeting Ukraine's Grain and agriculture infrastructure and this appear to be happening. What was less clear is what the benefit for Russia would be for this.
There is no gain for Russia except to the extent that since war is almost as pure an example of a zero sum game as exists, Ukraine's loss (of revenue from grain sales) is Russia's gain.
By destroying the Ukrainian grain supply the world could be forced to buy Russian grain in order to avoid a global food crisis. That means cash for their war chest.
It's total war: crippling the opponent's economy and ability to feed themselves is the name of the game.
Zeihan even said that these challenges would mean Ukrainian farmers will be unable to afford planting for next year. Business channels are starting to say the same.
Because it hurts Ukraine. Russia gets off on that.
Very short sighted on Russias part since grain will keep growing and ports and infrastructure can be rebuilt. It's a very temporary solution for them and more likely than not to only piss off the rest of the world. Ukraine isn't going to starve. The west can ship food as well as military stuff. It's not as if we're running out of it.
Gold is not the problem. Its the price of the currency that is the problem. If there is not enough gold to covert the amount of transactions, that simple means the price of gold is too low.
Prices in a commodity backed system are set in terms of that commodity, not the pieces of paper than can be converted to that commodity if desired.
True, you can't easily trade or use gold internationally from outside the traditional _gold hubs._ But traditions change sometimes and also sometimes they disappear.
Every currency that was debased from the Gold/ silver standard or cut corners by fractionalizing, solely to use fiat, has failed.
For the USA,Look at the charts from 1971 until now.
Yes it can. You peg the currency to gold. You don’t use gold for day to day transactions
When you peg currency to gold, you still have to have enough gold to fully back the currency. No nation on earth has enough gold to back the amount of currency currently transacted on earth.
@@jerrykahn6894 If the price of the gold is allowed to adjust upward, then what's the problem? It's only a problem if you artificially keep gold at the exact same price, rather than allow it to appreciate.
@@musa7606If an economy grows in size, that's not an "artificial" inflation in the price of gold; it's a natural one that reflects the supply and demand of gold. An "artificial" inflation is if the central bank just prints trillions of dollars (or some other currency) out of thin air.
@@musa7606 you do not try to price anything. Its simple: if 1kg of gold is now worth lets say 1000 of X, and you have growth, then it simply means that 1 kg of gold is now worth 1200 of X. There is no problem if you do not set exchange rate. Ergo you do no try to set the price. Just like you do not do that with any other good.
By pegging the currency to Gold that is exactly what you are doing. The currency can only be pegged if you open a window to convert it, that's how the French forced Nixon to abandon the Dollar peg after Vietnam. So just like America if BRICS for instance want's to peg their currency to Gold, they have to open a window to convert their currency, otherwise it's just noise and that's why it will never happen. If there is no convertibility then that "peg", whatever it is, doesn't really exist.
The really “bad thing” about a gold backed currency is that governments can not print money at will to finance wars.
Yeah, the world so peaceful before the 70s, of wait…
Most US dollars are printed outside of the US as what's called "Eurodollar" and that market is massive and allows you to have your iPhones etc
I am trying to like this guy but he appears way to plugged in, way too invested in the current system working out forever. Or at least until he can stop selling himself to the highest bidder.
@@GoodmanMIke59 Agreed.
Keep some salt in reach, and you'll find him worth listening to.
By the same logic, they also can't print money to defend themselves.
Good video.
People who don't understand this simply don't understand money and modern economies... Also, when a gold or silver based economy crashes, it takes generations to recover instead of years/decades... It also makes war a zero sum game and overly incentivizes the more powerful military to be the agressor... That boom sound will also mean crushing poverty until your great grandchildren are your age...
3:23 wouldnt it be deflation there? Since you get more and more goods relative to the same amount of currency. This would lead to prices going down since money becomes scarce relative to goods.
This would also fit with being a brake on economic growth due to for one with falling prices means you get sweeter deals the longer you wait to buy something, which reduces demand so thats often not good. I could continue the list, but I'm too lazy....
waiting with buying? thats nonsensical. Do you know how big and fast would have to be change in value for that to occur? and why such cange would occur? only when everyone would be developing like crazy. How, if they all wait for prices to go up? It would have to have dynamic of a bubble. In reality people would make their decisions independently of deflation because it would be so slow, measured in terms of decades. But lets say you are correct. Extend that and arrive at end point of that thought. If everyone waits with transaction because they expect value to go up it means no exchange happens. If no exchange happens economy stops. If eocnomy stops, value does not increase. And thus they will run transaction. In reality this effect is instantenious, and thus transactions will run as if it already happened. No one will wait indifinately with starting business, factory, or buying a car and oranges. When you have tooth ache you wait year or so for value of gold to go up? What a nonsensical concept.
@@BeechandBook Ye in the roaring twenties there was a massive boom in cars, communication technology etc. but this all came to a close with the great depression that was greatly exacerbated by having the gold standard.