by Alasdair Macleod
The New Year should see some major changes in how gold and silver are regarded in the West, if it becomes obvious that confidence in government-issued money as a medium of exchange might be misplaced. This concern is for the moment essentially limited to economists of the Austrian School.
Whether they are right or wrong only time will tell; but it is worth considering their basic argument, which goes something like this. The role of money in a transaction is to act as the objective element, which is the way people automatically think: hence an item or an asset costs so-many-dollars; if the price changes, it is normally assumed it is the value of the item or asset that has altered, not the purchasing power of the money. The moment ordinary people become alive instead to the possibility that prices are rising because the value of money is falling, the currency is doomed.