Terry Goodkind wrote an epic fantasy series. The first book in the series is entitled Wizard’s First Rule. We recommend the book highly if you’re into that sort of thing. However, for purposes of this essay, the important part is the rule itself:
“Wizard’s First Rule: people are stupid.”
“People are stupid; given proper motivation, almost anyone will believe almost anything. Because people are stupid, they will believe a lie because they want to believe it’s true, or because they are afraid it might be true. People’s heads are full of knowledge, facts, and beliefs, and most of it is false, yet they think it all true. People are stupid; they can only rarely tell the difference between a lie and the truth, and yet they are confident they can, and so are all the easier to fool.”
Does this not aptly describe the belief that the dollar will lose its reserve status, will collapse relative to other paper currencies, and is facing imminent hyperinflation with a skyrocketing gold price?
Both motivators apply here. The gold community wants to believe it, because that means that gold will go up. To $10,000 or as that speaker at FreedomFest 2017 confidently predicted: $65,000. Everyone with a few gold Eagles in his sock drawer will be rich. And those who put a few hundred thousand bucks into gold will be Seriously Rich. A real Fat Cat! Like with Ferraris, and chauffeur-driven Rolls Royces, and everything.
Never mind that if the dollar collapses, $65,000 won’t be worth much. This will be the dollar going down, not gold going up. Never mind that in a world where everyone is impoverished to that degree, you would not dare to drive your Ferrari even if you owned one. Tune in to the chaos going on in Caracas, Venezuela for a picture of this problem.
Never mind that the other currencies are dollar-derivatives and would not survive the collapse of the currency from which they derive, if they even last that long. Never mind that the quantity theory of money, used to predict this hyperinflation, is wrong and that we have the opposite of hyperinflation now. Never mind that the other central banks are abusing their currencies worse than the Fed abuses the dollar.
