This message which is included in quotations below was shared with me by a reader who received it from a financial journalist for a major media outlet. Since it was not clear if this was intended as a private communication or public statement, I will not attribute it by name.
I wanted to use the word ‘modern’ in the title, since this pronouncement below smacks of modernism. You know, the belief that all those who have come before us were ignorant primitives, and those who are not of the same received insights now lack sufficient wisdom and piety. But since those two words combine to describe a particular and unrelated school of thought, modern monetary theory, whose adherents have already excommunicated me for my stubborn and profane disbelief in their sacred tenets, I think I will skip that and use ‘current’ instead of ‘modern.’
I could not resist sharing this with you because it is such a nice, compact expression of what the modern financial media thinks about gold and money. Or at least to the extent that they think about anything, and do not just read their thoughts off the teleprompter provided by the moneyed interests that sustain them. Or what is considered ‘acceptable’ by the very serious people, those who are described by Larry Summers as ‘insiders.’
It starts as many of these things do, with a few simple statements that seem reasonable and ordinary enough, and use a sort of formalistic style to make it seem ‘scientific’ and contrast our modern thought with the ignorance of prior days.
“Why do you invest in anything? Because you want to extend the duration of your surplus earnings, the sort of stuff that would have been perishable in olden times.
There are two ways to do that:
1. Share your surpluses today and run a credit exposure to the counterparty that is obliged to pay you back in the future an absolute relative rate that compensates you with respect to income lost and potential earnings made.
2. The alternative is to sell transform your surpluses into something more durable, but which maintains market risk exposure.”
Ok, fair enough. If you have an excess of some presumably perishable asset, you want to do something with it to extend its usefulness to you. Or else it ends up like the neglected lettuce left in a damp plastic package in the back of the fridge.
This post was published at Jesses Crossroads Cafe on 20 NOVEMBER 2015.
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