May 3, 2020, 11:32 AM
—“GOLD IS MONEY!”–
No. You are confusing unperishability, collateral, commodity, and money. If gold was money it would not be priced in currency (which is liquid). It’s illiquid and volatile for the purpose of commerce and trade – particularly in imputation of prices and organizing production cycles – and that is why it’s not money: the transaction costs are ridiculous. And that’s why gold bugs want to sell it: to profit from the transaction costs of selling a commodity that is barely consumable but universally valuable by virtue of it’s demand, scarcity, unperishability, by false promise, fear, and doubt to suckers who feel out of control of their lives and the societies and their polities, and are desperate for psychological sedation by some sense of security – despite the fact that between purchase price and sale costs, they lose at least ten percent of its value, and the vaunted collapse never comes – because it can’t come under fiat currency targeted to maintaining price-inflation stability. Which is why we use fiat currency instead of gold: (a) we can maintain stability, (b) which increases the duration of the hierarchy and network of complex production cycles, (c) which decreases costs, and (d) continuously expands the sustainable networks of production and trade. (e) and gold isn’t insurable on deposit, and can’t be used as credit money in fractional reserve, so the price of credit would skyrocket.
Gold is free to circulate. People don’t do it because THERE ISN’T ENOUGH OF IT. It’s possible to use gold as a backing for a physical currency money, but not for credit money. Almost every cent in circulation is credit money not money.
So, the way we solve this problem is the way we do today: buy silver and gold as a hedge against volatility in the currency and use currency as a hedge against the volatility of the precious metals.