Banking 17: What happened to the gold?

Banking 17: What happened to the gold?


I think now might be a good
time to address another question that is probably
circulating in your head– and that is, what happened
to the gold? Remember when we started this
reserve bank, all of these national banks or whatever we
want to call them, they had gold as a reserve. And then at some point, they
said, well, why are we each holding gold? Why don’t we just all
concentrate our gold in one reserve bank? And then that reserve bank can
issue– and it was the only person that could issue– it
could issue bank notes that could be tradeable into gold. And then we said, over time,
people just got used to the notion of using the bank notes
themselves as reserves. And that’s what the reserve
ratios were all based on, based on the bank notes
themselves. And we talked about that if the
Fed or the reserve bank wanted to increase the money
supply, it could essentially just print new notes and it
would have offsetting notes, outstanding liabilities, and
then it could use those to perform open market transactions
and it essentially allows it to grow
the monetary base with the economy or with the needs of
different projects out there so that those projects happen. And in that whole discussion,
you might have noticed that this yellow stuff was
just sitting here. It had nothing to do
with the economy. It was just sitting there and if
you really wanted to force me to say what it was doing,
well, it was giving a little bit of confidence behind what
this thing was, right? It gives you a little
bit of confidence. Because at first, at least,
when we said that it was backed by the gold– there was
maybe a similar amount of gold as there was there. Maybe a little bit later, we
said, this could be exchanged for gold at some rate–
maybe $35 per ounce. I think that’s what it
was when we were last on the gold standard. But if you think about
it, it’s a couple of weird things here. First of all, almost from the
get-go when we did this, the whole purpose of having this
flexible money supply is so you can grow and contract money
with the needs of the economy and we would, for the
most part, have notes outstanding because this was a
fractional reserve system. We would have notes outstanding
more than the actual amount of gold. And this has been the
case even when we were on the gold standard. You had more dollars than you
actually had gold, but you had to keep a little bit of gold
there just in case people wanted to call your bluff. In case X percentage of people
wanted their gold back. So they would come back to
the central bank and say, give us our gold. But the gold fundamentally–
it had no other function. It wasn’t in the economy. It wasn’t helping transactions
happen. It wasn’t doing anything. It was just sitting in Fort Knox
or wherever it happens to be sitting and to some degree,
it’s more of a pain than any kind of real value because you
have to keep up this notion that these things, these
dollar bills, could be translated into gold, it kind
of forced a reserve ratio requirement on the central
bank itself. And that reserve ratio
requirement– if you think about it, it’s kind
of arbitrary. It’s dependent on how
much gold is found in the world, right? In order to increase the money
supply with GDP because people are inventing computers and
railroads and cars and highways are being built and
we’re all becoming more efficient– in order to keep the
money supply up with that extra economic activity, if we
stay on the gold standard and if we want to keep these ratios
between the money and gold, we’d have to grow our
gold with the economy. And that’s kind of arbitrary. Maybe we’d find a big bunch of
gold or maybe we’d find no gold– and that really should
have no bearing on our technological progress and
how hard we’re working. And it makes a lot of sense. You could imagine in a world
where all of a sudden, an asteroid made of gold lands in
the middle of the U.S., does that all of a sudden– because
gold is less valuable, should that make the dollar
less cheap? Or in another world where for
whatever reason we can’t find any more gold, should that all
of a sudden decrease our ability to circulate
money around? And when it becomes– and I
said three videos ago that these dollar bills aren’t just
the liabilities or the obligations of this
central bank. They’re actually obligations
of the U.S. government. So let me ask you a question. Would you rather have something
backed by gold or backed by the U.S. government? And I know many of you, your gut
reaction is to say, gold. Gold is real value. The U.S. government– what
are they good for? They’re a bunch of crooks. They lie, cheat, and steal. They misallocate wealth
all the time. But think about it. Gold really isn’t wealth. It can be used to represent
wealth only because it’s pretty, only because
at some period– and it doesn’t corrode. At some period in the past,
someone says, I’m willing to plow your field if you give me
that cool rock that you found. That’s the only value
gold has. It can’t do work. It can’t be eaten. It doesn’t make us
more motivated. It doesn’t make us happier. It’s not real wealth. Now what about the
U.S. government? Well, it has the right,
the authority, to tax. I know taxes are bad words and
I don’t like them myself, but it essentially– can extract
these rents from the U.S. economy, right? Tax the U.S. economy. And U.S. economy– that’s
real wealth. That’s labor, ideas,
land, resources. Everything that makes us tick. Our labor, our goods and
services, our ability to educate ourselves, and innovate,
and come up with technology, and become
more productive. That’s real wealth. So if you really think about
it– I know I’m getting a little abstract here, but I
really want to hit this point home because a lot of people,
I think, are still under the notion that somehow something is
somehow tradeable for gold, that it is of a sounder
currency, while if it’s an obligation of a government with
a very dynamic economy, but not gold, it’s somehow
backed by less wealth, but I’d argue that this is
actually a more profound amount of wealth. I mean, we’ve had currencies in
ancient history that were backed by gold, but
in a lot of cases, you still had inflation. When the Spanish currency in the
15th century was backed by gold, but all of a sudden they
discover that Central America had a lot of gold and you had
a ton of inflation and that gold really didn’t give any real
wealth to the Spaniards of the time. It just made everything more
expensive for them. It did allow them to buy a
little bit more from other countries, but it really didn’t
create any innovation. It didn’t really make their pie
that bigger, except they did steal some pie pieces from
other parts of the world– but we’ll leave that
aside for now. But this is real wealth– a
currency backed by a whole nation’s ability to generate
wealth, in some ways, is a lot more valuable. But gold was a stepping stone
and it was necessary because in order to get this whole thing
started and in order for people to really have trust in
this currency, just the way people are trained to think,
you had to originally sell them on gold, right? So if you think about it, gold
didn’t play any role. So in 1971, when Richard Nixon
decides to go off of the gold standard, if– and this is a
big if– if you trust the government’s ability to manage
the money supply effectively, that they’re not going to print
so much money that we have hyperinflation or they’re
not going to print so little money that we end up with
a deflationary spiral. If you trust the government’s
ability to do that, it really doesn’t matter that we went
off of the gold standard. And it really just kind of gets
rid of a little nuisance. And if you actually look at the
Federal Reserve’s balance sheet today, there still is
some gold sitting on their balance sheet because it is
really not obvious what they needed to do with it so
they just kept it. Anyway, we’ll we’ll talk a lot
about this– what is wealth and what isn’t wealth
in the future. One example I often tell people
is– let’s say your plane is going down– you’re the
pilot of a plane and it’s it’s going down. It’s burning and you see two
islands in the horizon and you have to ditch your plane on
one of those islands. So one of those islands
it just has a big pile of gold on it. And then another island– you
can see with your telescope from the plane, it has cows on
it, it has– I don’t know– all these random fruit
trees on it with these luscious fruits. You see– I don’t know– it has
a big random pool of– I can’t draw oil because oil
is black on a blackboard. It has a pool of oil. It has another big nice lake
of fresh water that’s away from the oil so it doesn’t
get contaminated. And you can see from your
telescope that it has a bunch of hard working, innovative,
smart people on it who can– I don’t know– do all sorts
of interesting things. They have roads and
they have horses. They have all sorts of stuff. Which island would you ditch
your plane on, assuming that you’ll never be able to get
back to civilization? Well, the obvious answer is
you’d rather ditch your plane on that island because that
island has more wealth. And so when we went off of the
gold standard– I know it seems like this big horrible
thing in the whole scheme of the world– and gold has become
a lot more expensive. It’s no longer $35 an ounce. It’s whatever– $700 or
$800 an ounce now. So you might think, there’s
been all this inflation. It would’ve been great if we
were on the gold standard. But think about what’s
happened since 1971. Other than some of this excess
credit that was given out maybe over the last 10 or 15
years– other than these bubbles, we’ve seen a
tremendous amount of innovation and we haven’t seen
hyperinflation and that’s all in the world of– you can call
it a fiat currency, a currency that’s not backed by any
kind of hard asset. It’s backed by people’s trust
in the ability of the U.S. economy to support debt
to pay off the value of this currency. We’ll talk more about
that in the future. I don’t want to get too circular
in my conversations. But I’ll see you in
the next video. I just wanted to touch on that
point that we are now off the gold standard.

100 Comments

  1. Sal is wrong on a at least 2 things:

    One, with all the inventions and increase in productivity, if we are still on the gold standard, the prices of goods will drop accordingly. You don't need to discover more gold because every dollar that you get will keep getting you more stuff as prices drop. Are you afraid of the prices of iphone and ipad dropping so you will wait out and not buy it? Eventually, you will buy it even though you are well aware that you will be losing money.

  2. Sal is wrong also on:

    Two: true, gold is pretty and is just sitting there doing nothing. But so are the pieces of paper. They are not even pretty!

    Gold is scare. It has intrinsic value. It has all the qualities that make it the most desirable commodity to use for transaction. Govt hates gold because they can't print gold. We are so used to the paper that we even condemn gold or "goldbugs" as Keynes said: "barbarous relic". It is the product of 100 years of brainwashing in govt schools.

  3. Sal is wrong also on:

    Three: Taxation is at best a redistribution of wealth and at worst outright theft.
    Printing is a form of invisible tax which you will realize when you can only buy half of what you used to. Borrowing is to steal from the future generation to gratify your present wants.

    If gold is just sitting there doing nth, how about we use oil as money? Who can store oil in their basement? Gold is the most time-tested commodity to be used as money because of its unique qualities.

  4. Sals is wrong #4:

    We haven't seen hyperinflation despite the fiat money and excess credits, exactly because of what Sal said: innovations and productivity! They keeps prices down !!! (BTW, definition of inflation is not rising prices, it is the increase in money supply!)

    Just imagine if we don't have govt fooling around with our money supply, like Peter Schiff said, we have to look to another solar system to find any places that can equal our living standards!

  5. Sal is wrong #5

    It is a VERY big deal when Nixon finally cut off our last link to gold. It is tantamount to declaring US bankruptcy – we cannot fulfill our obligation of redeeming US dollars with gold like we promised. Trust me, Nixon wouldn't do it if he has a choice. He was cornered by France who called our bluff! Please read Rothbard, and even your friend Mish's recommendation. Apparently, he is a libertarian.

  6. Sal is wrong #6

    Gold is money. Money is not wealth. Money is a commodity like any other commodity. We save gold/money so we can exchange for other commodities that we desire; or invest in businesses that would earn us more money and get more stuff that we might want. That's why you don't want that pile of gold in the island. You want food, clothes, tools etc.

    Bottom line is, no one can mess with gold like they can mess with paper.

  7. @limey36 Gold is more often an asset, – a very liquid one, a very safe one, one which take a lot of interest, but, most of the time, it's still use like a bond. Just look the language: to protect against devaluation of $, this is the same as collecting interest rate due to a double negation (not not B -> B).

    This said, it could act as money sens some place will accept to trade goods against gold, but I can't go to starbuck&McDonald with a bullion without a "Sorry, dollar or credit only".

  8. @AlainGTO You sound like an inteligent, educated young man who knows what he's talking about. I think the bold letters really help to.

  9. @thegoldislanders

    I'll tell you a simple paradox, if gold, platinum…(the rearrest materials) are money, then why is Africa the poorest continent yet its blessed in abundance of this yet its poor? And that is reality (& yes Im aware of the political factors that hinder it), but have you thought that?

    @thetruth
    Anyway, the meaning of money (be it anything), is what someone is willing to work for it. Besides that it has no value. **That's the meaning of the gold island paradox**

  10. @quantumG Gold isn't a good currency because it can't expand to suit growing productivity (due to science & population growth). That scarcity will cause a deflationary spiral in this age… (see the inflation, deflationary spiral, stagflation vids).

    Anyway what you are hoping for a system where productivity can always match money supply but gold doesn't do that.

  11. @quantumG Are you coming from those Zietgiest videos that "expose the government for the crooks they are"?

    Just a word of advice, I used to be hooked on those guys, but a little rationality/skepticism is important, I mean very important. But regardless, you can't have the best of both worlds, you either get "Immalleable /open currencies" (weak to no government) and the side effects… Or one which attempts to adjust the money supply to productivity & "the dishonesty".

  12. @quantumG the economy of 200 years ago isn't like today and can grow as aggressively as today. Plus the gold isn't enough to cover the population today…(hence the deflationary spiral argument AKA the nightmarish "low prices miracle".

    your "I'm coming from reality" statement kind of means you haven't understood the Zietgiest because they say exactly what you are supporting. And of cause they have fancy vids explaining it.

  13. @quantumG BTW, I'm not oblivious to the gold standard (the modern variant is the 100% reserve system) currency since I used to be a supporter of it. It all seemed perfect and basically the desire for stable/static prices was sole reason for the heavy attachment to it.

    And no doubt, I still have this desire in me, but a little rationality & knowledge has lead me to accept that these alternatives are all utopia & even PHD students fall victim to the reality.

  14. @quantumG You've dropped to ad hominem attacks and straw man arguments thus ending any rational emphasis in the argument.

    I'm sure we all know that holding a professorship title or writing a book won't make your argument hold water, especially since words can be deceptive. But Regardless I'm actually interested in learning understanding various theories (the hard part is separating the utopian bias, especially with radical alternatives) and eventually testing my own one I've been developing.

  15. Who the heck would trust the government today,especially with 15 trillion in debt?
    Gold and silver are honest means of exchanges(money). Paper is not honest,it's counterfeiting.

  16. As I watch this whole series, I am starting to think that it's useless because it doesn't address the most important question of all: INFLATION which diverts resources and is a tax. Inflation is a big problem (even not hyperinflation) because it compounds wildly.

    Gold did not become more expensive. The $ became cheaper.

  17. @DaniFazeres Not for ordinary people. It's good for those who get to create the money out of thin air and use it at its original value first. Also, the way that CPI is calculated is a massive fraud. All that should be considered is the money supply, and then you see that the real inflation (inflation is the increase in MONEY SUPPLY) is like >5% per year.

  18. How did I know this video would stir up a ton of controversy.

    I did like the quick explanation of why we went off the gold standard. Convenience? lol no. It was a way for America to welch on its obligations.

  19. @ybulldog14 Wrong. Inflation is in the increase in money supply. That usually leads to an increase in prices, but prices can rise and fall independent of the money supply.

    Read about how the CPI is "calculated" and you'll see what I mean. It's no secret, just look into it.

  20. @IvanAndreevich That depends. An economy naturally is inflated in order to grow. The gold standard doesn't allow an economy to expand because the amount of actual gold in an economy is finite and based on external factors on the price of gold.

  21. @lugankid It's a transfer of wealth. Increase in the GDP is not the end goal of existence, and it's not necessarily a good thing either. It could be, but not through inflation. If you have a 5% growth with 5% inflation that's just terrible.

  22. @IvanAndreevich There indeed was, but this was due to the fractional reserve system which had to inflate the actual amount of gold.

  23. @IvanAndreevich
    5% RGDP growth +5% inflation wouldnt be terrible. It wouldn't be awesome either. Essentially it would expand the pie and keep your purchasing power constant. 5% NGDP growth and 5% inflation would be terrible because that would mean no real growth and a decrease in your purchasing power.

  24. @lugankid And right now we have 5% inflation and 2% NGDP growth. Amazing shit right there.

    When blowing up bombs results or destroying perfectly usable goods (cash for clunkers) is seen as "economic growth" you can tell how much good that is – none at all.

    Also, you forgot to explain how there was good economic growth on the gold standard. So how?

  25. @IvanAndreevich

    Stop throwing numbers out of nowhere.We have 3.5% inflation (completely normal) and roughly 1.5% rgdp growth. I made a mistake in my preivouse post. 5% rgdp growth+5% inflation is actaully great because rgdp is already inflation adjusted. 5%NGDP +5% infaltion is neutral. The economy was in a horrible state in the past two yeaars becasue we had no inflation. Inflation keeps the economy rolling along and can induce production. I'd look at Keynesian model

  26. @lugankid Out of nowhere? Google "real inflation rate". The CPI is a fucking scam of an index twisted to lie.

    Now with the real inflation rate of over 5%, the economy is shrinking in real terms. Look around, people are worse off than they used to be in real terms.

    Yeah, sure it can. It can give you a 10% inflation rate which will wipe out the savings of everyone and rape the elderly and the poor who are on fixed incomes.

  27. @AdversusHaereses Are you saying there was no economic growth before fractional reserve banking was invented? LOL.

    Nonetheless, even with your flawed understanding you just admitted that inflation is not necessary for economic growth.

  28. @IvanAndreevich The reason that Nixon took the US off the gold standard was that one British Ambassador appeared in the US treasury with the amount of money to purchase a third of the physical gold held. If the 1929 depression was caused by the contraction of only 3% of gold in the money supply, imagine what removing 33% would cause. The gold standard does lead to growth or else it would never be used. But the question is whether it is worth it when the currency is so volatile. cont…

  29. @IvanAndreevich …cont. The US dollar can be purely paper and backed by the US government if the people had the right to own it. Unfortunately that is not the case today due to the fractional reserve system which is the machinery of inflation and not the fact that the dollar itself is paper. The Spanish Empire had a major crisis in the new world when they discovered gold because its intrinsic value slumped. So the price of gold will always be based mostly on global uncertainties.

  30. @IvanAndreevich

    1.Can you please tell me where you got this 5%+ number and what metric was used to calculate it?
    2. The economy is not shrinking in real terms because there is RGDP growth.
    3. 10% inflation rates would hurt the hoarders and the creditors more than the savers.

  31. You made me think of 'Money is not Wealth' again. I like the example you used in this video.
    In the past,I thought money is important (actually,it is), but now I know that the wealth is more important.
    We all chase for money, but sometimes we can only see the money but ignore something that deep inside.
    What is money for? It is for our real life, not just the number in our deposit accounts.
    And I think inflation made us know that money is not that important, because the wealth is shrinking…

  32. He said it! metals never lie, steal, cheat etc. + people DO want to return to markets based on metals, commodities + barter. Quick History lesson:
    South american gold + silver didn't enrich spain because
    a. more than half went on venture capital repayments to banks of london + amsterdam.
    b. spanish aristocracy's cowardly system of favours meant that the remainder wasn't properly accounted for + was squandered.
    c. london is STILL the bankster capital of europe. metals ARE the standard.

  33. The spain example why the gold standard did not work is a horrible example. 1. Spain at that time was a monarchy. People did not have freedom and more gold (plundered from the americas) actually made Spain poorer not wealthy. It like when a poor person wins the lottery. most of the time those people go back being poor bc they did not know how to manage their own personal finances correctly. Same goes with Spain.

  34. He mentioned that getting off gold is good if you trust the gov't to do a good job. He said it was a big if. He never answered the other part of the if – I don't trust the gov't to do a good job.

  35. @MrIKnowNADA Not to mention that it is very unlikely for us to suddenly find El Dorado 2.0 now. But I do understand his point that inflation starts being more like a natural unpredictable phenomenon, rather than an orchestrated action like it currently is.

  36. "there hasn't been hyperinflation"
    What about in the 80's? What about the dinar? What about Zimbabwe? What about the current situation where we're clearly headed into such an event?

  37. Money must has something with 'intrinsic value', not just blind trust to any government. Government itself is govern by greedy peoples. They show only their good side, on the back, they just sitting, eating, drinking, smoking, laughing with the richers. Never care about the poors. Then we must trust them.

  38. /if we treat Gold as money…humans will begin hoarding it and will start allocating valuable resources to make/find more of it…for no good reason. At one point Aluminium was one of the costliest metal on earth… that's why the Washington monument top was Aluminium plated. And then the Hall–Héroult proces came along and we could make more of it cheaply and now we dont value it anymore.

  39. Companies like Goldline, say that the dollar is about to become worthless and gold will hold it's value. It does seem odd that such bussiness are willing to trade their valuable gold for your soon to be worthless paper money. Something does not seem quite right.

  40. Do you need your laptop to live? Now you may have a value to that laptop, but that is apart from saying that you need it.

  41. I'm afraid we would see hyperinflation one day sal. The way money is created need an exponential amount of new currencies. Plus, it's susceptible to boom and bust due to the loan cycle

  42. I suppose that you've moved on to other topics by now, but if you ever decide to come back to this, I'd be interested to hear your take on internet currencies like Bitcoin. Seems on the face of things to give you the advantages of both worlds, as long as everybody is willing to trust the currency.
    Then again, what are the odds that they can get the rate of money creation perfectly? Besides, how do they make money?

  43. you asked the question if I trust the government with my money? WELL DO I TRUST A DRUG ADDICT WITH MY MONEY? same question pretty much.

  44. In a perfect world, with just and democratic government, where the government obeys the law, the right choice would obviously be that you have gold backed currency. Gold has been a strong currency for many hundreds of years. Even the paper bank notes and checques were redeemable in precious metals.

    take a look at the gold confiscation by F.D.R during 30s. Or Nixon Shock in 1971.

  45. US Government does not have full ownership of labor, land, resources, and ideas.

    They can't force you to work, that would be slavery (well they cant force you unless you're in prison, or the conscription for war happens)

    Can they really force you to give up land, resources or ideas? Certain legislation exists to steal land from private owners, but it falls under eminent domain law doesn't.

    And that eminent domain law differs state by state. Federal govt is more restricted in eminent domain?

  46. Utah and Arizona apparently have already passed bills to seize federals lands inside their respective states AWAY from the FEDERAL Govt.

    Way to troll the Federal Government, seize their lands! xD

  47. MrIKnowNADA: Another point with Spain: 70-80% of the countries Artisans was Jews. A lot of Jews was educated Scholars. So at some point, they kicked them out.
    So they have all these talented people, who has attached themselves to the top of the system… And they get kicked out. So suddenly, there was a extreme shortage of Scholars, Artisans was almost extincted, etc.
    So why was things expensive? Because they had to hire external labour, if it even was possible, due large distances.

  48. such great videos to understand the basics, one question I want to ask though is that when the FED prints notes, it adds to asset side, but how come it has liability as well. The money is from the printing machine, not from the market. Appreciated if someone can explain that , thanks!

  49. He talks about it in the next video (18). They have notes outstanding where people or banks that are in possession of these cash, can come to the FED and "get something" as Khan says! The cash actually end up in an account for the bank that function as a reserve, i.e. base from which you can borrow money from. This is how it works to my understanding. Search for: "Richard Werner: Banking & the economy" good luck

  50. Fiat Currency has no intrinsic value aka ZERO and it is based solely on faith to the Government, thus you as its citizen has/forced to trust our government to do the right thing. If the Fed prints enough paper currencies, the numbers in your bank accounts will be useless because of debasement. Gold has intrinsic value and keep its value because it can't never be turned to ZERO, fiat can. As long as it not oversupplied like in the Spanish empire days, we are good as gold if you have the stuffs.

  51. I don't trust the U.S. government. Gold for me please. At least it's pretty and won't fade and wrinkle if I accidentally wash it

  52. A Gold standard acts like an anchor, it restrains government and bankers using the fractional reserve system. If we were still on the gold standard we would never had the explosion in the money supply and the debt that goes with it.

  53. Sal would you rather have an oz of gold from 1935 or 35 dollars. Gold!!! Asset of kings now worthless… Yea right.

  54. They have debased the currency if savers because the gift prints the money and is first to use it. Therefore it is an inflation tax on savers. Only the govt benefits from fiat currency.

  55. Yes but I think you missed a point (if I understood you right) –> Paper money has also an intrinsic value (for example we can use the paper to write something on it or for anything else)
    So every subject has an intrinsic value and an exchange value, even green paper money

  56. but I would argue that the Fiat currency has some intrinsic value, even if its intrinsic value is very very low, you can use it for example, to whip your *** off with it

  57. Khan is totally missing the point of gold backing. When a currency is backed by gold, it prevents the money supply from being severely inflated because there is a finite amount of gold in the world. Having a currency "backed" by the federal government does not do the same thing.

  58. Wait, fiat currency is directly related to a island rich with resources, while gold-backed currency is related to a gold-only island. The analogy makes no sense.

  59. in the end, gold does not have any value either. It does not benefit a person like any other resource or service does. If you were on an island, things like water, food, building materials etc have value. Gold does not have intrinsic benefit. It is only to exchange for an actual resource or service. Just like……….dum dum dum, fiat money. Gold is fiat money.

  60. I don't understand. Are you telling me the government stole all of our gold? And that everybody is okay with that? And that you truly believe gold has no value? 

    Watch in a few thousand years we'll end up killing all the blue avatar people trying to get more gold. 

  61. Terrible comparison with the islands at the end.  Of course anybody would want to land on an island with food and water instead of an island full of gold. Gold haters love using this comparison. It is comparing apples to oranges. The real comparison needs to be this: Would you rather land on an island with piles of gold bars or piles of paper currency. I'm tired of people thinking gold bugs don't want to own productive assets. That's not true. Pro gold people are just saying that gold is better than paper over the long term. You can't eat a stock either. Internet stocks crashed with most losing 99% and most went bankrupt with real estate yet gold that is up 600% in that time is somehow bad. Terrible video. Keynsian colleges definitely propagandized this guy. Warren Buffet was right. The more degrees you have from fancy colleges the worse of an investor you are. 

  62. if people's work  land resources and taxes are supporting assets behind the money in these banks,why the profits of all these loans do not go back to people and bankers get all the benefits of this system, because people and government are bailing out these banks as they ve done in the past , there should not be any private banks anymore

  63. I like the part when he said the reason why gold is money its because it is pretty….. oh and it doesn't corrode, which is the most important reason why gold is the real money in this world, but unfortunately paper money now is not backed by gold, and we say it is better, go figure.

    I like you khan, and of course you are allowed to share your opinion, but I know many people would disagree, especially when you try to make gold sound like a cute little nothing next to paper money and try to let people think it is better for our advancement in technology.

    The world for thousands of years were using gold, but now we are told that we are better off with paper money, and then we will be told we are better off with electronic money, money you can't see or touch and it is not in your own home, it is with a stranger who allows you to use it under restrictions and some other strange laws that we the general public accepted.

    I just hope we are not enslaving ourselves by allowing our money to be stored with the strangers (the bankers) who are extremely nice people by the way, um wait I don't remember I'm so into my own life that I don't know if they are good or bad people, I don't know I guess that requires a discussion by itself, but first let us ask our minds maybe we will get somewhere.

  64. this guy's an idiot. On the gld standard you actually have something REDEEMABLE backing your notes. Meaning you can take the hard earned cash you earned and go to a bank and tell them you want to exchange the cash for the gold. With the fiat system we live under the paper money is non redeemable meaning it's worthless toilet paper….

  65. and it also allows the federal Reserve to print s much money as they want and every time they do it DEVALUES our currency further which is why 1$ has lost nearly 100% of its purchasing power compared to when we were on the gold standard

  66. You always reduce gold to it's nice appearance.
    Isn't a huge part why gold was/is used as a measure for wealth its rareness?
    The amount of gold on earth is pretty limited in comparison to wood/paper for notes..

  67. Ohhhh Sall U disappointed me so much, I recommend U to read (probably again) "rothbard what has government done to our money"

  68. Gold is just another type of money. Money is defined as access to future goods and services, fiat currency and gold both do that. Gold is not wealth, wealth is the ability to provide future goods and services. Lebron James as a kid was extremely wealthy, the money in his account reflects that wealth, and that is his access to future goods and services by other wealthy individuals.

  69. Also, what people are missing is that it really is not obligated by the government, it is obligated by us, the citizens. We owe this money if Fed become insolvent. Thats what make it more wealthy than gold. We are the wealth that backs our own currency.

  70. Wow, people have this idea of money in the world being constant ingrained into their heads, which could be why they're upset at this video. Money is just a means to an end, and even with gold, it's based off trust in its value(despite it just being shiny and corrosion free, but by no means indestructible by nuclear reaction). Gold is a limited resource, but human population is increasing, human endeavours are increasing, human inventions and services are increasing. Gold is the biggest mass delusion in the history of the world and a 6000 year old bubble that will truly burst once cryptocurrencies take over.

  71. Wow! this video is like an enlightenment for me, I always wondered about why we admire gold so much and I got the answer of this question after like ages. Thanks Sal!

  72. In my country big scale gold purchase started couple of years ago done by possibly hundreds of small go!dsmith and new opened purchase shops. Could it be that some kind of large scale accumulation was happening ? I remembered that even panels with "gold purchasing" were looking the same: black letters on yellow background.

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