“All the gold which is under or upon the earth is not enough to give in exchange for virtue” – Plato
I remember hearing a joke once upon a time in church, I’m sure it was before the offering, about a rich man who insisted on taking some of his money with him when he went to heaven. (He, apparently was unaware that “you can’t take it with you”.) So, on his way he grabs a satchel with some gold bars in it and takes them along. He gets to the gate and St. Peter asks “what’s in the bag?” The man proudly opens the bag for St. Peter to look inside. St. Peter’s response: “why did you bring pavement?”
I’m a fan of a “sound money” policy. I prefer a gold standard. The reasons are simple. Money is simply a store of excess production, that you wish to consume later. (And a simpler medium of transfer than barter – it performs both functions quite well.) A non-sound-money policy does not allow you to efficiently store excess production. You are forced to either consume everything you produce immediately, which is obviously inhibits your ability to save for a rainy day, or you are forced to see your stored production diminished by “inflation” – and effectively consumed by someone else.
And, of course, “someone else” means the wealthy and politically connected. Fiat currency and central banking is the means by which the poor are plundered by the rich. It is a “changing standard” decried so often in the Bible.
So why gold? It’s not that gold is, in and of itself valuable. I mean, it has some cool non-corrosive properties and is shiny, but this isn’t enough to justify it’s massive value in the current exchanges. The reason for gold is that it is not easy to change the supply. Ben Bernanke can print money (or “lend it into existence”) any time he wants to. He can’t very well print gold. Yes, he can go dig some up, and people do, but this isn’t very easy to do.
Ben is apparently an alchemist who’s gotten wise. Unable to simply change the supply of gold, which has absolutely no impact on the value of goods produced but does have an impact on the relative stored wealth of the person who figures out the trick, Ben and the boys have simply gone away from gold to something that they can produce. They have figured out how to turn thin air into money to line their pockets.
It’s clear that the alchemists had no great desire to improve the productive capacity of themselves or their fellow men – they simply wanted to get rich quick. They wanted to consume the production of others without producing commensurate amounts to exchange in trade. They wanted something for nothing. They wanted to be central bankers before it was cool.