Digging up gold and then burying it again

With reference to what I wrote in the previous posting concerning the need for a permanent depository of a valuable asset in order to back up a world digital currency, a correspondent has written to me quoting the charge that’s often made against the gold standard.

Apparently, this is something that Warren Buffet used to say:  “What’s the point of digging up gold out of the ground and then burying it again in a bank vault !”

The above usually raises a laugh but, if a valuable asset like gold is ‘buried’ in a bank vault for long periods of time, its very inactivity is actually serving an important psychological service.  It gives you the assurance that if an economic panic is in the offing and the value of your banknotes is in question, then you can always exchange them for an asset with a respectable value however the economy turns out.

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