We live in a fantasy world. However, it’s not just an ordinary fantasy world, it is a crazy fantasy world. Regular readers know it as “the Wonderland Matrix”, a realm where nothing ever has to make sense. Yet another illustration of this insane realm comes via looking at our money (or, at least what the bankers call “money”).
For many, many years, if you asked any banker what monetary instrument should be used in order to store our liquid wealth, you would always get the same answer: use the bankers’ paper currencies rather than humanity’s oldest and most-trusted monetary instrument(s), gold (and silver). And each time a banker expressed this preference, he/she would supply the same reason: “gold generates no income.”
Gold generates no income, meaning it pays no yield (i.e. interest). What was implied, but never stated, was that the bankers’ paper currencies always produced a yield, and thus paid interest. Of course, conveniently, the bankers always omitted one detail when they made their cute comparison: “inflation.”
Why, historically, have the bankers been forced to pay a yield to depositors, as compensation for storing their paper currencies on account? Because unlike gold (and silver), the bankers’ paper currencies are relentlessly devoured by inflation. Let’s make a comparison which bankers never make.
Two thousand years ago; in ancient Rome, with a one-ounce gold coin a man could purchase the finest, tailor-made toga, along with the other accessories of that era, a belt and sandals. In the Middle Ages; with a one-ounce gold coin a gentleman could purchase a finely-tailored suit, along with the accessories of that era.
Today, despite the price of gold being severely and perennially suppressed, a gentleman can still purchase a suit and accessories with a one-ounce gold coin – but today you would be forced to purchase ‘off the rack.’ Still, that’s a pretty good track record for wealth preservation over a span of two thousand years.
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