Gold is not Money

From Martin Armstrong debunking the bad history and economics of the goldbugs.

There seems to be a deep misunderstanding about MONEY. The fact that gold has traded as a medium of exchange does not make it the EXCLUSIVE money. MONEY has been everything from sea shells to slave girls as noted by Saint Patrick when he arrived in Ireland…
To say that there always was a GOLD STANDARD is not true. There was no fixed value for gold and there was no period of such a standard except that of Napoleon and post-WWII. That is a different statement compared to: Was gold a generally accepted medium of exchange? The former is NOT true while the later WAS true. Just because gold was used as MONEY on a nonexclusive basis does not make it a “gold standard.” The gold standard setup at Bretton Woods in 1944 was that $35 equaled one ounce of gold. That made it a fixed standard. Wage and price controls have been attempted thereby FIXING values between MONEY and wages, commodities, and goods (e.g. Diocletion, Nixon). But these attempts have always failed.
Those who claim a return to a gold standard would somehow solve the problems of the world are mixing facts and fantasy. The Bretton Woods gold standard collapsed because (1) we printed dollars without limit, but (2) kept to the gold standard at $35 an ounce. The problem of using gold as a fixed standard and the exclusive form of MONEY is simple. If there is only 100 ounces of gold and 100 people, the value gold would have is clear. If the number of people increases to 1,000, but we still have only 100 ounces of gold, we get DEPRESSION. Assets would DEFLATE instead of INFLATE. The value of GOLD would rise and everything else including wages would decline against gold since everything would increase in supply against a fixed amount of gold. There has NEVER been a successful gold standard that ever lasted for
this very reason.

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