More wisdom from Armstrong. QUESTION: Mr. Armstrong, I have been following you for a few years now and am impressed with your historical perspective in all areas of finance. We are currently in some interesting times indeed. I see so many bloggers stating that there is going to be either an outright gold standard, or some form thereof. I really don't see that happening in any form. The powers that be all across the world love the current system (faults and all). It allows them to skim profits in so many aspects of our lives that I can't see them allowing any other monetary system to be established. If you were to gaze into your crystal ball, what will be money out into the future? How will the monetary system be structured (if any different than currently in place)? You have mentioned the possibility of a two-tiered system in the past. US $ for local transactions (either paper or digital) and another for international transactions. Perhaps backed by gold? I am most interested in your view for the U.S. Regards, DI ANSWER: The Goldbugs hate my guts for saying this, but money is like a share. Its value depends entirely upon safe and contented capital. Money rises and falls in value depending upon CONFIDENCE, not what it actually is. It has NEVER been tangible and it never will be. That is a pipe-dream that is totally unrealistic. Even Jean Baptiste Say (1767-1832) argued that people would not hoard money because states routinely debased their coinage. This was Gresham's Law, that bad money drove good money out of circulation, meaning debasement. Henry VIII (1509-1547) was notorious for his debasement. Gresham advised his daughter,Elizabeth I (1558-1603) and made the observation how people did not recognize the debased coinage and this forced prices to rise. These people do not even understand that when money was gold, it still rose and fell in purchasing power with the business cycle. Just because gold coin was money, did not stabilize the economy. There is absolutely no empirical evidence that the nonsense they preach is even true. We have a gold standard under Bretton Woods starting in 1944 and it still collapsed. So what is this obsession with a gold standard? Pure ignorance? Money is really the productive capacity of a nation. Proof of that statement was that Japan became the second largest economy in the world without gold and with importing raw materials including oil. Their landmass was tiny, but it was their productive capacity that proved to be the Wealth of the Nation not gold. The future of money is purely digital. Look at the younger generation. They pay at Starbucks with their cell phone. I myself find I am using cash infrequently. It is easier to pay with plastic and I do not get pockets full of coins. Cars displaced buggies. EMail is displacing letters. Digital money is displacing cash. Sorry but that is the trend and there is no reason to return to a gold standard that never worked. Gold will be a private hedge not governmental.
So how are they travelling lately then? And their productive capacity was based on what? ie where did the money come from - they didn't dig it up out of the ground (or out of a CPU, or is it GPU ) We are seeing the fruits of the Japanese productive system now. Edited in acknowledgement of the crypto age.
How can you trust Armstrong who spent several years in jail for fraudulent dealings. http://blog.milesfranklin.com/i-despise-martin-armstrong
I'm not sure about this Armstrong fellow but he sounds correct about all of us wanting to use a fiat based digital transactional currency for daily and weekly needs. The free market has spoken, fiat wins the medium of exchange utility of money hands down. He is also correct about the gold standard not working, it didn't work then and it won't work now. No-one will trust government to keep their currency fixed to gold, as seen many times over history and also the past hundred years, when the going gets tough more fiat will be printed or coinage debased even on a 'solidly fixed' gold standard. Therefore we can forget about having a sound money economy, printing will always happen in unrestricted amounts as required and demanded by the people for economic lubrication. Armstrong does seem confused on the difference between money and currency. Thinking that saving the lubrication flow is how we will continue to store wealth is so last 40 years, no-one in the future will save in fiat currency when physical gold works better as long term savings. Indeed when savings are placed in physical gold which floats when priced in unrestricted fiat currency we get Gresham's Law giving us a misunderstood and yet inevitable consequence. Fiat currency becomes honest currency, exposed in value by it's floating relationship to physical gold. No more printing beyond what the economy specifically requires, I'm looking at you Bernanke with your extreme excess printing and hyperinflation tail. Risk free physical gold savings for everyone and a digital fiat currency transactional utopia is coming, just after the global currency reset of course.
Armstrong has been far more accurate regarding Gold price smackdowns and rises more than anybody I know or looked at. He was saying years ago that there would be no Hyperinflation to speak off in the future. He was not wrong here as was his assertion that it would not affect the Gold price. On the other side of the coin how many so called experts pushed for higher and higher prices due to Hyperinflation around the corner, QE to infinity, Government debt, Chinese buying mania and so on. Gold has not gone anywhere. He has stated on his website when the next move will come in higher prices and why in Gold and Silver.
When the lights go out I wonder how digital anything will hold up. Yes everything is going digital but bugger all thought is going into a back up plan for payment in a shtf / black swan event imho. I'm not a doomsdayer but everyone needs a back up plan or as I like to call it ( A bet each way )
I am grateful for all of Armstrong's posts over the years, including all the ones that he sent out from his jail cell. Even in jail he still understood what was going to happen to the economy. His teachings have saved me a lot of money and heartache. All these preachers that seemed so accurate for a time have in further time shown that they only had half the picture. One by one I have slowly crossed them off my list and I am fortunate that I did not heed their advice. I am waiting for the bottom and I will look for Armstrong's opinion as to when the turn in confidence is occuring.
