Quoted By:
Gold is money, everything else is credit.
This the most piercing and profound statement ever made. I think it is good to ponder this statement and pair it against other goods in modern society. What is the true value of a $200,000 sports car if credit collapses? What is the real value of collectibles such as old school magic cards?
It is only when credit is propped up with liquidity that this can ever seem normal. I doubt people would have these cars paid for in cash. I also doubt that people see the absurdity in a $25 magic card being the same as 1 ounce of silver.
Credit is the great distorter of the supply/demand curve. It's so normal that most of us don't even realize how much stuff is attributed far more value that it would if forced to be settled on a cash-only-basis. Once the purchasing power of credit implodes then real capital and sensible valuations of the cost of commodities will prevail. The cost to fill a tank of gas, the cost to heat your two-story McMansion will suddenly be putting strain on people as they try to downsize from trucks to cars. From McMansions to ranches. Everyone desperate to sell, with no bank on the other end giving out loans.
It's going to be pretty fucking crazy for possibly decades as people work low paying service jobs desperate to stash away a tiny pittance of savings. The future will be low-paying low-capital intensive jobs and a slash-and-burn of the service economy as people desperately pinch pennies to get by. There won't be any way around it either.
