Jim’s Blog

E-gold, which I thought would save the world, turned out to be something of a bust, with essentially zero use in real internet commerce, but “unenumerated reports” that we are seeing the financial markets going into commodity based fractional reserve monies in a big way, many trillions of dollars.   Still, you cannot pay for your we hosting or cell phone minutes with commodity based monies.  These moneys are for big deals, and only big deals.  The revolution begins when you can send commodity based money over end to end encrypted instant messaging, and the money is good to pay for your web hosting and your prepaid cell phone minutes.

The subprime crisis represents massive unpunished malfeasance by financial intermediaries managing US dollars. This discourages people from using US dollars as money.

In 2008 January, the fed drove real dollar interest rates negative - only slightly negative, but negative interest rates suggest an intent to inflate away the dollar denominated liabilities of financial intermediaries until the real assets cover the dollar denominated liabilities. In the ensuing two months, all commodities that are readily storable and have large liquid markets, all commodities that can usefully function as a store of value, went up around twenty percent: aluminum, barley, cocoa, coffee, copper, corn, cotton, gold, lead, oats, oil, silver, tin, wheat, zinc.

This suggests that when fiat money collapses, a process likely to take place in fits and starts over a very long time rather than all at once, we will move towards a balanced basket of commodities, rather than return to the gold standard.