Two events, one in my personal life and the other in the global news, have brought me to the conclusion that we need and will soon return to the gold standard.
First off, I see investors pouring money into energy “technologies” that are known to be unworkable. To combat this problem, I have been working on a training course and video to teach investors about energy, energy physics, and energy products. I think it is quite conceivable that we are close to an energy revolution that will create the “Rockefellers” of renewable energy and drive technical society to new heights. The market exists, the energy exists, and the technology does not seem out of reach. Achieving this energy revolution is as simple as avoiding investments in totally unworkable energy projects and instead funding the development of energy systems that can work.
In the news, it is the growing instability of unbacked currencies that has caught my attention. It is fair on its face that unbacked exponential monetary systems eventually fail catastrophically. From an engineering point of view it is very simple. The Earth is a spheroid and the unbacked exponential monetary system creates an unbounded exponential function. Plotting these on a graphing calculator reveals that the spheroid stays on the screen and the unbounded exponential function goes off the screen.
The “off the screen” event is of course the failure of the monetary system.
Unlike bridges or aircraft systems, our current monetary systems are not designed for reliability or long term stability. They are negatively stable systems by their nature. One only needs to look at the history of hundreds of unbacked currencies to understand the final outcome of these systems.
I have been very frustrated watching the slow creep toward total failure of today’s currencies and the “investment” in energy “technologies” that are not only fully known not to work, but accelerate our energy decline. I now believe that monetary system failure and doomed energy investments stem from the same lack of understanding some basic rules of nature. Several generations of humans that have been raised without seeing the failure of an unbacked currency. This has created the situation where people now believe that money has power over nature.
This is not true.
Mankind’s ability to print money that works is a result of his success with manipulating the physical world. The reverse is not true. Money cannot be printed that will manipulate the physical world.
At this point, is appears likely that it will take a catastrophic currency failure and massive disruptions to return people to the understanding that moneys lacks power over nature and that nature has power over money.
The gold standard solves all of this. You can consult any “Gold Bug” for a run down of all of the reasons that gold always returns to money as a result of monetary failures. They are all real and true. But there is another advantage of the gold standard that is not frequently discussed. Gold ties the money to the physical world. With gold, there are no “off the screen” events. Gold by its very nature of existing in the physical world, directly ties the monetary and the physical worlds. This has implications that go far beyond what they may seem. Instead of investors needing to learn about energy, energy physics, thermodynamics, and having to speculate about technical societies’ ability to negotiate the problems that arise as the universe ages, just to understand the status of the monetary commitment on the physical world, they can just count the money.
This is indeed a good thing, and solves a lot of problems.
As the instability of today’s monetary systems continues to present itself and crisis ensue, it should be very comforting to all of us that there is a way forward that will eventually solve not only the problems we are seeing with failing monetary systems, but will also help us get to a workable energy future.