Originally Posted By: Drew99GT
You know what Buster? I'm starting to come around "a little" to your modern monetary theory. In fact, I'm starting to come around to the realization that any precious metal based currency would never work. Doesn't mean we don't need currency and banking reforms or that commodities won't return their long term uptrend and finally bubble out, but in the short term, it looks like deflation (at least in core commodities) is again a bigger threat. I hope that trickles down to the gas pump and the grocery store some time soon.
Given that PMs, besides some relative lack of abundance, are really as arbitrary as anything else, I dont know that their "value" as a currency (besides that it is neat to collect old coins) is that great, so long as free printing of money is disallowed, and if money is printed, it can indeed be hastily reigned back in.
But what PMs, or coal, or any other arbitrary store of value does is provides a relatively consistent valuation point, so that if zeros, or fractions of a zero get printed on the currency, what you are holding is constant. The ratio of currency to the item changes, but the holder of the item still holds the value.
The issue with gold is that supply and demand makes this not as direct, as speculation and desire to acquire the item drives a price structure change that can effectively make the "constant" valuation no longer exist. Then it is just more money chasing less goods, which is inflation all the same.
So then one is playing ratios and lesser evils.
The real money bought in 98 when the central banks were dumping. Its just collecting dust in a safe deposit box someplace. When I worked in that, there were a ton who would buy many ounces each time I saw them. Collectible US $20s in AU/UNC could be had for $400!