There Will Never Be A Sound Currency System

As the gold market takes a break in its journey to much higher levels, it is good to step back a bit and understand why gold has appreciated so dramatically in the last 100 years and why this will continue for many years to come.

Most people have no idea what money is. They believe that if they have 100 dollars or euros, that this represents real value as well as durability. Few people realise that their currency which they call money has nothing to do with real money at all. All paper currencies are ephemeral and return to their intrinsic value of zero. This is because reckless governments cling on to power by printing or borrowing endless amounts of fiat money in the hope that they will placate the people and buy votes. Fiat money as the name indicates, can never be real money. It is issued by edict and is not backed by anything but debt and liabilities.

Power corrupts and money corrupts. 
It is a lethal combination which not only destroys people but also nations. And sadly, we have now reached a point in history when the unlimited amounts of fiat money that have been created will also destroy continents.

Zimbabwe type hyperinflation to hit most currencies

To understand what money is and isn’t, we can just look at the example below.

Most people in Zimbabwe believed that their currency was money and that it represented reward for labour and or production. But as the irresponsible regime started to run out tricks to cover up their total mismanagement of the economy, they had to print endless amounts of money until the point when even the 100 trillion-dollar note was totally worthless. Inflation in Zimbabwe rose exponentially. In 2008 annual inflation was estimated at 90 to the 21 percent (or roughly a 10 with 40 zeros).

What happened in Zimbabwe is an excellent example of how a prosperous country can be destroyed by total mismanagement. The country had a very successful agricultural sector, mainly owned by Brits from the South Rhodesia era. It also has considerable mineral resources. But the value of this was gradually destroyed when the country became independent. And during that tragic decline of Zimbabwe, private land was expropriated and enterprise was nationalised.