Inflation is a necessary consequence of the way money is being created. The central bank creates it (out of nothing, and with no backing) and loans it to the government. They expect the loan to be paid back -- with interest. But they never create the money to account for the interest. So the debt grows exponentially. Such growth starts slowly at first, but then explodes, eventually. The National Debt is in its explosive phase now. Gold has nothing to do with it.
John, you've nailed the math. Debt grows exponentially because interest is created but the money to pay it isn't. That's the trap.
And that's exactly why J.P. Morgan—the man who saved the U.S. banking system in 1907—said: "Gold is money. Everything else is credit."
Gold doesn't magically fix the debt spiral. But when money is tied to gold, you can't just print your way out of a hole. Gold always does the accounting for debt. The discipline is built in. Morgan's words remind us what money looks like when there's no counterparty risk.
Wendy, the education you have provided in today's essay is priceless in the truest definition of that term. Why, because price by today's standards is so arbitrary and counterfeit in reflecting true value. A mind boggling effort would be required to set prices right and that is much too painful to confront. I don't see this casino game ending any other way than in shambles. We are somewhat stuck in a paralysis by analysis moment. See no evil, speak no evil and hear no evil because naming it is the price no one is willing to pay. Pretend and extend is running out of rope. Maybe the meek will truly inherit the earth after all? Thank you Truth-weaver, wandering no more.
Barbara, thank you for this beautiful and thoughtful response. "Pretend and extend is running out of rope" — that's going to stick with me. You're right that naming the problem feels like the hardest part, but maybe that's also where the shift begins. I also see it unraveling into shambles, but not in a negative way. Change is something the world desperately needs to evolve, and there's no easy road to get there. For some reason, when I mention collapse, people assume it's negative (not you), but I don't see it that way at all. I welcome the coming. Grateful to have you reading and reflecting alongside me, as always.
Wendy, I like that you choose to see what's coming in a necessary and positive light. It reminds me of that very famous painting which captured the essence of "Creative Destruction". This painting sold not that long ago for an amount exceeding the expected amount by multiple millions of dollars. No surprise there given the premise of your essay, ha!! Its only paper dollars stacked to the moon.
The famous painting I referred to above is The Scream by Edvard Munch 1893. It sold for $119.9 million dollars. I remember long ago it was featured on the cover of Forbes Magazine with the headline: "Creative Destruction" which the editors explained was often necessary to make progress. The agonized face in the painting has become a pop culture symbol for our age of anxiety.
IMO, I think it was Maurizio Cattelan's message of contempt for the current state of the art market having lost its way in determining the inherent value for any object of art. It had become a racket.
Inflation is a necessary consequence of the way money is being created. The central bank creates it (out of nothing, and with no backing) and loans it to the government. They expect the loan to be paid back -- with interest. But they never create the money to account for the interest. So the debt grows exponentially. Such growth starts slowly at first, but then explodes, eventually. The National Debt is in its explosive phase now. Gold has nothing to do with it.
John, you've nailed the math. Debt grows exponentially because interest is created but the money to pay it isn't. That's the trap.
And that's exactly why J.P. Morgan—the man who saved the U.S. banking system in 1907—said: "Gold is money. Everything else is credit."
Gold doesn't magically fix the debt spiral. But when money is tied to gold, you can't just print your way out of a hole. Gold always does the accounting for debt. The discipline is built in. Morgan's words remind us what money looks like when there's no counterparty risk.
Thanks for the comment. And there's a pretty good series that explains gold quite well here: The Hidden Secrets of Money by Mike Maloney https://www.youtube.com/playlist?list=PLE88E9ICdiphYjJkeeLL2O09eJoC8r7Dc
Wendy, the education you have provided in today's essay is priceless in the truest definition of that term. Why, because price by today's standards is so arbitrary and counterfeit in reflecting true value. A mind boggling effort would be required to set prices right and that is much too painful to confront. I don't see this casino game ending any other way than in shambles. We are somewhat stuck in a paralysis by analysis moment. See no evil, speak no evil and hear no evil because naming it is the price no one is willing to pay. Pretend and extend is running out of rope. Maybe the meek will truly inherit the earth after all? Thank you Truth-weaver, wandering no more.
Barbara, thank you for this beautiful and thoughtful response. "Pretend and extend is running out of rope" — that's going to stick with me. You're right that naming the problem feels like the hardest part, but maybe that's also where the shift begins. I also see it unraveling into shambles, but not in a negative way. Change is something the world desperately needs to evolve, and there's no easy road to get there. For some reason, when I mention collapse, people assume it's negative (not you), but I don't see it that way at all. I welcome the coming. Grateful to have you reading and reflecting alongside me, as always.
Wendy, I like that you choose to see what's coming in a necessary and positive light. It reminds me of that very famous painting which captured the essence of "Creative Destruction". This painting sold not that long ago for an amount exceeding the expected amount by multiple millions of dollars. No surprise there given the premise of your essay, ha!! Its only paper dollars stacked to the moon.
The famous painting I referred to above is The Scream by Edvard Munch 1893. It sold for $119.9 million dollars. I remember long ago it was featured on the cover of Forbes Magazine with the headline: "Creative Destruction" which the editors explained was often necessary to make progress. The agonized face in the painting has become a pop culture symbol for our age of anxiety.
Oh yes I remember that, and I agree it depicts our age of anxiety. What do you think the duct-taped banana depicts? Maybe our age of complacency brought on by cheap money. Was it worth $6.2 million? To me it foreshadows the dollar’s worthless, symbolic of another Weimar. https://www.npr.org/2024/11/21/nx-s1-5199568/a-duct-taped-banana-sells-for-6-2-million-at-an-art-auction
IMO, I think it was Maurizio Cattelan's message of contempt for the current state of the art market having lost its way in determining the inherent value for any object of art. It had become a racket.