The Dollar Meltdown

By on 5 January 2012

This book from Charles Goyette is another piece suggesting exiting all other forms of markets such as equities (stocks), bonds, and other forms of “paper” or electronic savings, and of course real estate, and invest instead in gold and other precious metals.

In it, he details the historic use of gold and silver as currencies, and how governments (kings, emperors, etc) have shaved off small amounts of gold from coins, to mint new coinage to finance wars and their extravagances; how gold exchange certificates were used as a medium of payment instead of the actual gold coin, and thus how goldsmiths became the first bankers. This led to them issuing promissory notes rather than exchange certificates, like “I promise to pay the bearer $20 in gold”, leading to the first fractional reserve banking system.

This isn’t trying to play the blame game, demonstrating that both sides, Republicans and Democrats alike, are culpable. However, he has too much of a belief in the “free market”, which would be fine, if markets were truly free. The irony is that markets need to be regulated if they are to be truly free, to protect the freedom of that market from predators and abusers of that freedom (corporate monopolists). Typically, wages are a part of this. However, it is a one-sided relationship, where wages are set by the employer, and the employee has little to no say in the matter.

Thus, a minimum wage is necessary to stop a spiralling “race to the bottom” of wages, and is not there to “forbid people whose skills are worth less than the minimum from working”. This even contradicts earlier statements in the book, where he (correctly) identifies wages as lagging far behind inflationary increases (if they increase at all). The result is that real wages are decreasing, because prices of typical consumer needs increase at rates larger than the official inflation statistics.

Ok, what to do about it? Well, it’s the same answer as the previous books. Invest in gold and silver. Also invest in funds of commodities, such as oil, and agricultural products (ie. food). Also, investigate online gold payment services (think PayPal but using gold as the unit of measurement rather than dollars or pounds). … see next post for more of my thoughts on this.

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