GoldVsCapitalism (ThoughtStorms)

What a lot of goldbugs don't seem to acknowledge is that gold is the natural money for a feudal society but antithetical to capitalism. You can be a goldbug or you can be a pro-capitalist, but you can't be both.

Capitalism needs money to be a bit unstable and insecure because this is what nudges people into investing their money into risky things like trading companies and factories. If there were no inflation and money held its value then it would be far more secure to bury it in a hole in the ground than to buy shares in enterprises. In fact, any growth in productivity combined with fixed money equals deflation which has a massive chilling effect on investment (and consumption).

Of course, entrepreneurs could just offer their investors higher interest rates / share dividends, but this would be a higher burden on them. Maybe impossibly high.

If I understand correctly, companies like Apple pay very little cash dividend to shareholders. Shares are not bought because they deliver an income but are bought because they are a more reliable store of wealth in an inflationary economy than the proverbial sock-under-the-mattress.

In this light, we can see that inflation is really the government's way of (cheaply) pushing people to put their money to "work" in the market rather than stash it in inert forms like bullion and jewellery. And it's no surprise that capitalism, and the massive productivity increases it brought about, ONLY took off in Europe when nation states started to give their blessing to paper money. (See the history of people like John Law for the western nations' first troubled flirtations with this principle.)

A permanent reversion to a stable commodity-backed currency, far from enabling economic growth, would be the beginning of the end of the capitalist experiment.

Value would start to congeal in stocks rather than circulate in flows. Wealthy people would invest their money in land, grand houses, goblets and gold plate rather than hedge-funds. Perhaps we'd all think this a fine thing : those of us who feel the pull towards a neo-medieval world of guilds and independent craftsmen, city-states and Hanseatic leagues, monks and druids, degrowth and environmental recovery. But it is emphatically NOT capitalism.