I'm really impressed how the meme that Bernanke is going to print money into oblivion has so readily been feed and fully digested by the investor community. It's like Rogers "no refineries in 30 years" line. People have been parroting that justification like it was some American Idol hit single. Be careful what you read in the media. 100 years of trading and people still have not come to their senses that the public news is the last place to get any valid information. Like Jan05 when Buffet, Soros, and Gates all were publically advertising that they were short the dollar. One of which has freely admitted that he used public media to generate interest in the opposite direction he is trading.
Gold is naturally hoarded it isn't consumed and with that it is dilutive. But that is besides the point. I've mentioned this before. Gold is not flexible enough to be used as a currency. The current economic expansions in China, India, Eastern Europe and most other parts of the world could not result from using a metal as a currency. For the basic understanding that a metal cannot be mined fast enough to keep up with demand. The metal currency's value would outstrip its usefulness.
If a population explosion or a wealth explosion does occur in the world as it is happening in Asia, the value of the currency would vault out of the hands of the poor. A $5 gold coin would vault to $50. The net result would be that employers would have to force pay cuts as the value of the currency went higher. People would as a result hoard their currency in lieu of buying consumer goods. Some as much as refusing to buy staples. It would be a Charles Dickenson world.
The currencies the world uses should be floatable and should be allowed to be diluted as much as they should be allowed to be reigned in. The problem is not the use of fiat money as a currency but the politicians that have taken advantage of it. Don't blame the gun. Blame the shooter.
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