Comedian Michael Connell Explains: Money Vs. Currency
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I really like this guy, I watched some of his other material and he's a very good comedian and also very young. I would absolutely kill to be able to engage like he can with body language. He can't help this skit for being dry, he is talking about the monetary system after all...
As an accountant his speech is pretty spot on, our system of currency is only valid as long as people are willing to accept it as "money" and lately our government has been running the tab up on its debt and printing out more dollars to do it, giving it a fancy name "quantitative easing." This is to make people feel more secure and to help pass it along, but all it really means is "we are printing the money and lowering the value of your currency." There is a real reason why our government lost it's top financial rating and it scares me every time I think about it.
As an accountant his speech is pretty spot on, our system of currency is only valid as long as people are willing to accept it as "money" and lately our government has been running the tab up on its debt and printing out more dollars to do it, giving it a fancy name "quantitative easing." This is to make people feel more secure and to help pass it along, but all it really means is "we are printing the money and lowering the value of your currency." There is a real reason why our government lost it's top financial rating and it scares me every time I think about it.
I have a few friends who buy gold coins thinking that they're a hedge against doomsday. I always ask them what restaurants will acept them as payment? And furthermore, what do expect in the way of change? Gold shavings? Silver dust?
All currencies are based on faith. What makes gold valuable or any more so than sea shells? Nothing but general concensus.
All currencies are based on faith. What makes gold valuable or any more so than sea shells? Nothing but general concensus.
Gold will always have a value since it is in high demand for jewelry (and other applications) and it is very rare, if "doomsday" does it, it would raise in value by around a thousand times, however if it doesn't come, it will decline in value considerably from what it is now. The reason why "currency" has no value is because it is printed on paper in the form of notes, the paper is relatively worthless. If the "shit" really did "hit the fan" then you would actually have your precious metals weighed off into small increments which would be sell-able and have an established value. It could be solid, dust, shavings, just don't loose it lol...
I'm sure a business would pop up that would melt the impurities from your gold or silver away and then put them into tiny coins or bars for you with a marking for a fee so you could use it for purchases, although more than likely there will simply be a bank that deals in precious metals and will issue paper notes for your precious metals. As long as they don't carry too much debt, it works (run on the bank).
The problem with buying gold coins is a lot of the value isn't the gold, but it is the design of the coin itself (which no-one will pay extra for) their actual value in pure gold is far less than what people pay. The best way to buy gold is more likely to buy it in plain bars from a distributor (which probably requires a significant investment). They will likely charge you around a 20% commission.
This is the only video I’ve seen of his...I’ll try to look at some others when I have time.
Eric made a lot of good points. I would just add that, obviously, the natural scarcity of gold, as opposed to something like sea shells has much to do with its perceived value...and has been universally recognized as such for thousands of years across all cultures/societies. But I would agree that ultimately it is just metal. The big problem these days is that gold and silver have been sold so many times over in paper/electronic form that their values have been artificially suppressed. Most people who buy either one, but especially gold, do not actually take physical possession...consequently MUCH more has been sold than what actually exists. It has become just another form of fractional reserve banking.
Very very good point! Just about every monetary system created has this issue, and it is the major reason why they all fail eventually over time. Our dollar was doomed to die the day it was created just the same way a human being was destined to return to the ground the day he or she was born. Effective regulations can serve to slow the degradation down, but ultimately our greed ensures its eventual collapse. The only way they get away with it is because as long as whoever does take physical possession back is lower than the amount they have in storage, then it doesn't matter how many notes are actually circulating, the problem is when panic sets in, too many have been sold, there is not enough to go around when it's time to reclaim the underlying assets.
With the US government the underlying asset to treasury debt is a printable dollar, so they just devalue the dollar every time they need to pay up by printing more and by lowering the interest rate when there is a lot of outstanding debt. The issue is there is nothing real to tie into the dollar, so when that devalues enough... We are in trouble. While some people say they don't care what happens to the value of the dollar because they are not trading it overseas... What they don't realize is, it's causing issues for the holders of treasuries overseas, China alone has a third of our entire debt because the entire country pegs it's currency to ours and therefore has to buy more debt whenever ours declines in value. It also causes severe inflation domestically for them as a result. If they should drop the dollar, it could very well indicate a huge way we live our lives, and that prospect worries me.
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