I recently watched this series of videos on money. Like a lot of people I knew money was not backed by gold any longer, I knew banks could lend out more than they had deposits, and I knew our fiat monetary system was given its value by law. But I didn't quite get the full picture of money as debt. The videos are well worth watching if you have the time (total running time about 47 mins)...
Part 1 http://uk.youtube.com/watch?v=cy-fD78zyvI
Part 2 http://uk.youtube.com/watch?v=hfXavRTM4Fg
Part 3 http://uk.youtube.com/watch?v=_yvRZoM-2r8
Part 4 http://uk.youtube.com/watch?v=f0p8LepIuVM
Part 5 http://uk.youtube.com/watch?v=PzXZ_Hs1g6U
The underlying logic flowing from the fact that all money is debt, is that the only way out of the present credit crunch is for interest rates to fall, for people to borrow, and for the money supply to expand; somewhat counter-intuitively to the notion that banks will keep interest rates high, become more cautious over lending, and hike savings rates to attract deposits.
This all begs the question whether the emerging online 'currencies', commodity currencies, will begin to grow significantly as people grow wary of fiat money. Online gold exchanges such as BullionVault allow customers to transact with gold reserves held in international vaults. The advent of the internet, on-line shopping, and the recent growth in individual currency trading makes the spread of such currencies more possible than ever before.
Gold has always been universally seen as a relative safe haven; a commodity which cannot easily be inflated and will hold its value. With the current and rapidly growing global uncertainty, and even at Gold's historically high price, is now the time to buy gold, not necessarily as an investment but as a currency?
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