I’m sure Keith is plenty smart. He has a Ph.D. and all. A doctorate in economics is not that easy to come by because you have to do two things. First of all you have to pay for it and secondly you have to find people that agree with your thesis enough to give you the Ph.D. while simultaneously introducing some new version of their same idea that they agree with but you can’t copy them.
Let’s get back to the insanity part of this argument. Keith says that we shouldn’t measure gold in dollars because dollars are an elastic measuring stick.
I can buy that. It’s tough to establish the value of anything outside the human consciousness and especially if it’s something as volatile as the world’s reserve currency turned non-world’s reserve currency. You might choose to measure things in barrels of oil or gallons of clean drinking water or blue fin tuna. It’s your choice… how you establish value but the market tends to impose how those values exchange for other products because of competition for those valuables… if someone else values them too.
So we have established insanity as doing the same thing over and over and expecting a different result. So what does Keith does with his Ph.D. He tells us a pretty good idea. He says don’t measure your net worth in dollars anymore. He says measure it in ounces of gold. That seems like a good enough idea to Dave. That is if you value gold, say more than oil, or drinking water or the chicken of the sea. Of course you can’t eat it, but you may be able to trade it with your neighbor or an oil shiek or a local fisherman if you’re hungry. I’m okay if you want to use gold as your non-elastic measuring stick.
Then what does Keith turnaround and tell us to do? He says to measure the value of your gold in dollars again by saying that since the price of gold went up (in his example) and your net worth as measured in dollars relative to gold went down, then your net worth went down because you have your net worth held in dollars. Which is it Keith? Are we allowed to use your monetary metals conduit to measure the value on an ongoing basis or is this a one way street where you example only works when the price of gold goes up as measured in dollars or are you trying to convince people to exchange their dollars for gold to avoid gold-flation as measured in dollars, but net worth can only be measured one way?
Dave’s lost. Either you’re allowing for the free movement back and forth between dollars and gold and folks can make that intellectual trade just like they trade their time with Dave or they can’t. Is Keith suggesting that there’s a time limit to this trade and therefore the dollars for gold window is going to close in a Nixon 2.0 version of capital controls through the outlawing of gold purchases or is this simply a form of cheerleading for gold relative to the dollar? I don’t get it.
If you don’t value dollars and you value gold, then fine… buy some gold and hope for inflation. If you value dollars and you don’t value gold, then save your wealth in dollar denominated assets and enjoy much of the deflation we’ve witnessed in the past few years. How can Keith suggest that you measure your net worth in ounces of gold as your benchmark for value (being ounces) and then turn around and suggest that you should measure the value of those ounces in elastic dollars wherein the supply is overtly manipulated by the Fed and velocity is impacted by the media’s message and its impact on consciousness and ultimately the outward expression as manifest in the price discovery and establishment of value?
There is a catch for those dollar denominated savers though. If by chance the Fed decides to experience its own debt-induced modern jubilee, the dollar denominated savers out there would be taking the hit. Let’s say the Fed decides to commit harikari on itself and its TBTF brethren. Does a modern debt jubilee sound like a long shot? Well so did the first time we wrote about Senior Soros “We don’t need no stinkin’ equity” solution in the form of platinum coin seignorage. You see how far that idea has come in less than a week. Would the dollar and euro loose Chinese goods purchasing power in such a scenario? Most likely, but there’s a Fedex for that and it’s called Krugmanian robots are coming, the robots are coming. We’ll make our own goods assuming we’re not too busy fighting the Occidental/Oriental global non-currency hot war.
If you ask Dave, this is commonly referred to as the three body problem in physics. Keith even goes as far as to invoke relativity in his interview below on RT’s capital account which I believe is Lauren Lyster’s final episode. Hmmm? What are the three bodies that Keith is attempting to nail down by hurling them into Ph.D. orbit? The first would be the value of the U. S. dollar and for lack of a better metric Dave will say the value of a dollar measured in barrels of oil. The second would be the price of an ounce of gold as measured in elastic dollars. The third body in Keith’s three body problem would be what you value within your human consciousness and that probably depends on if you’re hungry, out of gas, passing silver eagles to your grandkids, or questioning the full faith and credit of the U. S. Government’s latest platinum Top 40 hits.
Does anyone else see the irony that Keith Weiner had the last word on Capital Account, a show that has been very much focused on 3m (the metals manipulation meme) since its inception? We span the fiscal cliff with a platinum trillion dollar coin, the show is cancelled with a final reminder that gold, no matter how much you might value it or not, will always be priced in dollars just as easily as dollars being priced in gold or as suggested by Keith… six of one is half-a-dozen of the other. How does Dave explain Keith’s charts? If you ask, at least in terms of dollars and gold, they’re not explainable. Then again in terms of a trillion dollar platinum coin seigniorage, they make perfect sense.
Keith’s portion of the interview is in the second half.
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