As we lead into the August launch for the second episode of Hidden Secrets of Money, there are still a couple of important points that are worth recapping before we continue our journey of decoding the monetary matrix and sending Keynesian Economics to the dustbin of history.
In the following flashback, let's discover why governments around the world give gold such a hard time in the media.
To get to the bottom of this, we need to step back in time. In fact, we need to rewind time way back to a period before the Earth existed at all. As you may remember from Episode 1 of Hidden Secrets of Money, Mike Maloney reported that gold is only formed when a star explodes - a supernova. Recent research indicates that the process of gold formation may be even more extraordinary, more amazing, and more mind-boggling than that – it may be that gold is only formed during the collision of two neutron stars. The chances of this occurring are minuscule to say the least.
These immeasurably energetic events scatter metal-laden dust throughout space, which gravity then acts upon to form brand new heavenly bodies. In our neck of the galactic woods, this cosmic dust condensed to form all of the objects that became our solar system - planets, moons, asteroids, and eventually… you and I.
As Carl Sagan said long ago:
“The nitrogen in our DNA, the calcium in our teeth, the iron in our blood, the carbon in our apple pies were made in the interiors of collapsing stars. We are made of starstuff.”
? Carl Sagan, Cosmos
Now here's an interesting part of the story that doesn't often get a mention - the Earth was molten when it was formed. Since gold is a very heavy element, this means that almost all of the gold particles on our planet sank to its liquid core. The gold we have been mining from the Earth's crust and using as money for thousands of years was actually delivered to us via billions of years of asteroid impacts. But I digress, and now I hear you asking ‘Just what the hell has all this star stuff got to do with government stupidity and my retirement account being in the dumpster?’ Ok here it is:
The very fact that gold can only be formed in such a near-impossible, cataclysmic, star-sized event is one of the reasons that it is the ultimate money. No central bank or government in the world has the power to create gold. They can't flick a switch and print it, they can't type it into an account, they can't conjure it out of thin air as they can with unbacked national currencies.
But this certainly doesn't stop them from trying, and in Episode 2 of Hidden Secrets of Money we will be looking at how practically every government in history has done their best to cheat gold. Once you learn that the process of trying to cheat gold is usually the beginning of the end for a society, you can see that trying to do so again is pretty stupid.
Alas, over the last 140 years nations around the world have progressed on a steady decline from quality money to quantity currency. History will record this as a very stupid move, as well as being the catalyst for the greatest financial chaos that the world has yet seen.
So what is the real reason behind government's disdain of gold?
Gold is the ultimate money, and governments can't create it out of thin air. It is once again starting to be seen as a financial lifeboat by folks all around the world who can feel the debasement of their currency supplies. Governments know that gold prices are the canary in the coal mine for confidence in fiat currencies. It is in their best interest to talk gold down at every available opportunity because as we know, the only thing holding the financial system together is confidence. If the only thing we have to fear is fear itself, then economically… the only thing we need to have confidence in is confidence itself. This will not be a smooth landing.
Gold always holds governments accountable for their actions. It always has, and always will... until a time comes where the mass consensus of human opinion overturns thousands of years of trial and error, eons of cosmic collisions, and finds a better form of money than gold. I'd love to see that happen - but I'm afraid that on an evolutionary timescale we've only recently come down from the trees. We’ve proven time and time again that as a species we just aren’t ready to depart from true money having intrinsic value, and in this battle of Cosmic Fundamentals vs. Government Stupidity - I know which horse I'm backing. I hope you do too.