Gold, Silver, Money, Inflation, Stagflation, Deflation, Hyperinflation
OK this post is a little more advanced as far as explaining my thoughts go. I am by no means an expert, and I'm often humbled by other fools that seem to know things on these subjects that I did not, despite a concentrated effort on my part. I'm just gonna lay a little more down here in a blog post and let others dissect it.
Not money. It's better than money. It holds it's value and money does not hold it's value. It's hard to destroy. We still pull more of it out of the ground than we consume. Even the gold that we consume can be recycled cost effectively a majority of the time.
Not gold. It's better than gold. It's being manipulated more than gold. It's hard to destroy. We use it at a faster rate than we pull it out of the ground. It's cost effective to recycle in a few cases, but not in a lot of cases.
Controlled by the State. What it's really worth depends on the state controlling it. It can be destroyed fairly easily and created fairly easily. The only reason that it has value is the the State gave it value. The only way it can maintain value is if others maintain confidence in the State.
A devaluation of money caused by a lack of confidence in the State. It's good for debtors and bad for creditors. It normally spurs growth in the State if it can be kept at a controlled velocity. The price of that growth is a transference of debt from the current generation to future generations. It requires even more more inflation to be sustainable in the future.
A failure of the State to create jobs with inflation. This leads to fewer consumers with weaker dollars. It's bad for both creditors and debtors. Creditors make less money over time and debtors are fearful to spend or borrow because they fear losing their income stream.
A decline in trust in lending money to a State. It's good for creditors in the short term and bad for debtors in both short and long terms. In very little time, debtors realize that borrowing money is a losing proposition and stop borrowing and creditors can no longer make money on loans. Creditors concentrate on collecting money from debtors that had contracts before deflation and productive money is pulled from the system.
TSJHTF! (The S*** Just Hit The Fan!) Hyperinflation is a secondary reaction to Inflation, Deflation, or Stagflation. It's a choice by the State to print themselves out of the problem when they really don't understand how big that the problem is. This leads to a lack of confidence in both the State's money and the State's credit. Most States that hit this point have to default on their loans and force deflation. The problem with this solution is that confidence from the outside needs a growing State economy and investment to grow the economy from the inside is hard to come by with forced deflation.
Silver- Gold loses. Gold is not manipulated to the same extent. The Gold/Silver ratio favors Silver. The scarcity of Gold is going down while the scarcity of Silver is going up.
Money- Gold wins. Gold is stable, but money is not.
Inflation- Gold wins. The more that you try to prop the economy, the more that gold wins.
Stagflation- Gold wins even more! Gold = an accumulation of wealth as wealth is being destroyed.
Deflation- Believe it or not, but Gold wins here in the long term. The problem here is that most people don't want to buy anything today, when it will be cheaper tomorrow. Consumers don't think long term and eventually a currency has to get weaker to recover from deflation. Consumers hoard cash when the only path to prosperity is making that cash worth less tomorrow than it is today.
Hyperinflation- Despite what some gold bugs want you to believe, gold loses in this scenario in the long term. Hyperinflation requires you to immediately spend money when it hits your hands. The focus on survival makes other commodities more important than gold. Gold is valuable in terms of saving unspent money, but if you really experience hyperinflation, the other commodities become much scarcer than gold fairly quickly. Gold is good to prepare for hyperinflation, but once it hits, you need to buy guns, ammo and canned food. A rancher will not trade the last family cow for a wheelbarrow full of gold.
See the above for gold. Everything above applies to Silver too. Silver is better than gold in my opinion, because it's under-valued and can be used in smaller transactions. The whiplash effect will be higher in both deflationary and hyper-inflationary times. Silver stands a chance of people realizing manipulation as well. Silver can therefore increase on any given day despite what the market puts out there on the table.
If this thread becomes popular, I'll add 2 more posts. One will be specifically on PM theory. The other will be on global-economic theory.
This thread is already long, but it's a small amount of info on the subject bouncing around in my head. I know that most of my posts are long and rambling. I know that somehow these posts get recced by a few people and trashed by a few based on politics.
Like it or hate it, it doesn't matter. If you think that I put my thought process out there and it helped you agree or disagree, then rec it. If you think that I have any agenda, then don't rec it. I'm unpopular anyway, because I don't totally agree with anybody.