Weimar Republic Inflation: What The Gold Bugs Don’t Understand About Deflation – July 3, 2021,
I’ve noticed that when I listen to most Gold Bugs (People who expect Gold prices to skyrocket based on current market conditions) is that they confuse Fiat price inflation with economic DEFLATION.
Fiat money or money not backed by anything tangible should never be taken seriously, just because we have confidence in the dollar now, doesn’t mean that the U.S dollar isn’t already being viewed as worthless. When the Weimar Republic defaulted on its loans, it printed money, straight from its central banks, the U.S Federal Reserve system was designed to prevent that very thing from happening in the United States.
Although many of us, myself included like to call the Federal Reserve a central bank, it’s really not and it’s not even central. Most gold bugs either don’t know or don’t care about the Eurodollar system. The U.S dollar is more decentralized than most people understand, I’ve often argued that it wouldn’t surprise me if the Federal Reserve outlived the United States.
The reason Gold prices haven’t rallied is that they already rallied, Gold prices have been rallying, the problem with gold is that it’s actually used in the economy and there’s a pricing point in which some people aren’t willing to spend money to buy it.
Unlike Bitcoin which is a derivative of fiat money, fiat money is derivative of Gold, with that said, when does the price of gold rally? It will be hard for the price of gold to rally while the economy is deflating because Gold is for kings and queens, not for peasants and non-believers.
Historically the price for gold has always been on sale, you get the gold out of my hands by offering me something I can’t refuse. the distribution of Cash is currently reliant on the private banks, which as presently constructed don’t have to lend if they don’t want to.
The Federal Government can spend money it doesn’t have and grow the government if it wants to, but as we’ve already seen, the larger the government gets, the less productive society gets which again is DEFLATIONARY. Now, if you don’t have a rich mind, you will not be able to see that Gold is on sale, you might not even be able to afford Gold at these rock bottom prices.
I personally know of a lot of businesspeople drowning in fiat hampster wheel USD debt, buying gold would be a gamble for them, in fact, many of them have told me, they’d rather gamble on Bitcoin. Gold is insurance, gold is like going to the doctor, whereas bitcoin is like going to the candy store, people still have a lot of confidence in the U.S dollar.
When does this end you ask? When it becomes apparent that without free GOVERNMENT checks the global economy is dead, which would also signal a lack of productivity. Now for me, I hope this will lead to austerity measures or the shrinking of government, but if I’m to be realistic I think we get something in the middle, I’ve often called this central bank digital token as the new food stamp dollar, which might equate to tax right off or tax credit of some kind.
The people working at the Federal Reserve are well aware of the Weimar Republic, they’re not that dumb. However, when you have all of these government dependents, what’s the realistic solution, to dealing with this problem and I’d argue a means to bypass taxes by using some sort of digital food stamp, meaning that even using U.S dollars might become a privilege for working-class folks.
But as is the case now, you might see businesses willing to accept food stamps or a fed token to ease their tax burden, and possibly that fed-coin might have a positive interest rate attached to it. Sure I might be way off with my prediction, but that’s what I see.
Regarding the price of Gold, it’s insurance, you shouldn’t be buying gold with the expectation of getting positive returns in fiat money, your gold is a family heirloom, I’m not sure why this is, but most of the people I know who HOARD gold attract a lot of fiat money even if they’re miserable.
When prices for goods and services go up because of a new government law, rule or regulation, that leads to DEFLATION, the only way for the government to stop deflation is to DEBASE their fiat money. The cost of government employment never deflates, in order for government costs to deflate they must sell their workforce and sell their assets, if Government is unwilling to sell portions of itself any inflation it creates will be met with deflationary forces, which will force the government to print more fiat money FASTER.
Interesting times ahead