However, advocating abstinence has not proven very effective as a method of changing other people’s behavior.

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A few things have real value in that they help us survive physically, but they are difficult to transport. We need food and water to survive, but it is not very practical to carry around food or water as a means of exchange, though in a situation such as Katrina, food and water literally become a medium of value.

Most of the time we agree (without really thinking about the agreement) to use symbols of value. In times of social breakdown (as we are having currently experiencing), the underlying symbolism becomes more apparent. One of the weaknesses of the money system is that it is easily undermined by “inflation” and “disbelief.”

The value of gold is that a limit is set by supply by nature. There is only so much gold available in the world. Except as a item used in industry, gold has no “real” value. In a time of famine, you can’t eat gold.

Humans have such an immense capacity for self delusion, they jump from the natural scarcity of gold to thinking it has “real” value.

The “best” scenario I have for our present crisis is that we are going into a Second Great Depression, which I (as a compulsive smart-aleck) call the Greater Depression. The worse scenario I have is that we are in the initial stages of the collapse of human civilization.

Although I don’t consider Mormonism as a very serious belief system as a religion, the “survivalism” aspect of that particular belief system has a practical value. Romney may not have been a candidate with much traction, but if he’s got his survival stash of supplies, he may end up having the last laugh.

Although I consider the belief that the world will end on 2012 as superstition, I do have to admit that the coincidence that we find ourselves in immense international crisis only three years or so from 2012 an amazing coincidence.

Your mileage, etc.

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That is a very perceptive question! I always get a chuckle when people advocate return to a gold standard because “gold has value” whereas paper currency doesn’t. People who argue that line of reasoning basically would flunk any introductory course in monetary economics.

Even with gold as a standard, most monetary balances that people have – checking accounts, savings accounts, what have you – exist as numbers in the ledger books of banks and other financial institutions.

I can still remember the quote at the beginning of one of the articles we had to read back in the day (Trade Credit and the Money Market, by Arthur B. Laffer © 1970 )

We must have a good definition of Money
For if we do not, then what have we got,
But a Quantity Theory of no-one-knows what,
And this would be almost too true to be funny.
Now, Banks secrete something, as bees secrete honey;
(It sticks to their fingers some, even when hot!)
But what things are liquid and what things are not,
Rests on whether the climate of business is sunny.
For both Stores of Value and Means of Exchange
Include among Assets a very wider range,
So your definition’s no better than mine.
Still, with credit-card-clever computers, it’s clear
That money as such will one day disappear;
Then, what isn’t there we won’t have to define.

(my emphasis)

Presently, of course, we find that bonds and derivatives backed by pools of mortgages are pretty much illiquid.

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If this guy could really estimate future stock value he would be a billionaire.

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So, my question to you financial types is, Why should gold have any intrinsic value? It only has value because someone wants to buy it. Land has intrinsic value. Gasoline and food have intrinsic value. But, gold?

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I hope this helps, but I’m afraid it won’t.

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Speaking of buying gold, Glen Beck’s radio program was on drive-time in my area (until it mysteriously disappeared a few weeks ago) and he was advocating the same thing. And then he’d do promo spots for gold dealers. Nice.

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