Gary North on current economic affairs and investment marketsGary North -- Specific Answers
HomeContact MeTell a FriendText SizeSearchMember Area
Gain immediate access to all of our current articles, the question-and-answer forums, dozens of free books, and article archives. Click here for details on how to join.

About This Site
Academic Gaps
Articles
Capitalism and the Bible
Clichés of Protectionism
College Finances
Debt Management
Ellen Brown: Critique
Federal Reserve Charts
Gary North's Free Books
Get Published Here!
Gold Price & My Report
Keynes Project
Price Index (U.S.A.)
Questions for Jim Wallis
Remnant Review
Social Security/Medicare
Sustained Revival
Tea Party Economist
U.S. Debt Clock
Yield Curve
Your YouTube Channel
Gary North's Miscellany
Advertising
Blogging
Budgeting for Wealth
Business Start-Up
Career Advancement
Digital Tools
Education That Works
Evernote: Free Notes
Federal Reserve Policy
Fireproof Your Job
Goal-Setting for Success
Great Default
Inheritance Strategies
Insurance
International Investing
Investment Basics
Job and Calling
Keynesian Economics
Leadership
Marketing Case Studies
Obamanomics
Precious Metals
Real Estate
Retirement
Safe Places
State of the Economy
Stocks and Bonds
Study Habits
Video Channel Profits
War With Iran
Members' Free Manuals
Our Products
Contact Me
Help
Tell a Friend
Text Size
Your Account
My 100% Guarantee
Privacy Policy
Terms of Use


This site powered by MemberGate

John Exter in 1973 Described a Pyramid of Collapsing Values. It looks Like This.


Printer-Friendly Format

December 18, 2008

In 1973, I first heard John Exter present his case for a rising gold price in a deflationary market. He was talking about falling asset prices.

He was a gold bug. Yet he believed deflation was imminent. He was wrong. I said so at the time.

Yet the pyramid has logic to it.



It places gold as the money of last resort.

Exter believed that investors in a collapsing asset market would seek safety. Safety increases as you move down the pyramid. The ultimate safe asset is gold, he argued.

We have not tested his theory. We are as close to a test today as we have ever been.

My view is that we can have falling capital markets under mass inflation. Gold plays the role as the investment asset of last resort under mass inflation.

In a panic move downward, gold does serve as the hedge of preference. But as soon as the crisis ends, gold falls back into the pattern that prevailed before the crisis.

Exter was describing a collapse. But in a collapse, who will recognize the value of a gold coin? Only a coin dealer. He will charge a hefty premium. He will pay you in dollars.

To move back to gold coins as money, the economy will first return to barter. That means social collapse. Under such circumstances, your geography will be crucial, not your supply of gold coins.

This is why I have never accepted Exter's thesis. It works for inflation. It works for deflation only in a life-threatening crisis. Why? Because to get back to gold coins as money, we must first go through a social catastrophe: the breakdown of fractional reserve banking. Such a scenario is possible, but it is unlikely. It is far more likely under severe price inflation than in severe price deflation.


Printer-Friendly Format

 Tip of the Week
Sign up for my free
Tip of the Week
Verification Characters:    Type     S  A  Y  7  3     here   


Tip of the week archives
On what this icon
means, and how it
can help you,
click here
 Q & A Forums
General Q&A Forum
Advertising and Resumés
Affiliates
American History Topics
Backyard Food Gardening
Banking and Politics
Blog Sites and Web Sites
Books Worth Reading
Bumper Sticker Slogans
Business Forum
Buying Smart
Christian Service Forum
College -- The Cheap Way
Copywriting
Education Alternatives
Food Storage
For Women Only
Fukushima
GNC Benefits
GNC Testimonials
Gold and Silver
Great Default Forum
Health and Diet
Health Insurance
Homeschooling
Investments Forum
Iran War
Job, Calling, and Career
Leadership Development
Legacy Building
Less Dependent Living
Local Political Action
Non-Retirement Forum
One Good Idea
Police State
Privacy
Public Speaking
Real Estate Forum
Remnant Review Forum
Safe Places Forum
Taxation Policy
Typographical Errors
Video Production Basics

 Archives
Reality Check
 Discussion Forum
Search Discussion


Recent Forum Posts
• Watch Junk Bonds For Early Warnings Of Fin. Crisis
• Where to start?
• investing for the beginner
• PIMCO
• Alibaba IPO
• Two Questions: 401k and Pension
• Investment advice - for a family
• Where To Safely Park A Large Amount Of Cash
• How do you invest in this system.
• Retirement Fund: Advertising budget
• Kotlikoff says SIPC insurance is a fraud
• How to Evaluate A Country's Economic Condition
• Eugene Fama's Dimension Funds
• Financial Management Sites
• Don't Touch Principle Follow Up
• Managers for Rental Property
• GN's article about "a place in the country&q
• GN's article about "a place in the country&q
• Recourse vs. Non-Recourse Loans
• Emergency Preparedness
• Nashville - Smyrna, TN Real Estate Market
• First Time Buyer Hesitations
• condominium's
• condominium's
• Modular Homes
• Another question about screening tenants
• Sell a house or rent it out
• Houston vs San Francisco
• Thanks for suggestions.
• Depreciation and cash maintenance estimates
• Moving TO the US?
• No City for Old People
• Will you die getting to your bug out location?
• teaching English overseas - some questions
• The state with the most Liberty
• Switzerland and Firearms
• On "Zip Code Searching On The Web"
• Crash Course in becoming an Expat
• Anyone tried Puerto Rico?
• Chattanooga, Tennessee
• Middle Class squeezed out of Chicago
• An Article on Chile
• 5 Amazing, Cheap Places to Live as an Expat
• Oil Field Job Security
• Moving to TriCities Area
• advice on how do I interact with my older parents?
• Do You Sincerely Want to Be Rich? Why?
• Req. For No 401(k)/Other Pensions via Relocatio
• Cashing out 401K to pay student debt?
• SS @ 62 and still working
• Desolation or Prosperity?
• I take it Retirement Armageddon is not available
• Post Retirement Career
• Social Security - when to start collecting
• 401K Risk
• Detroit Retirees Fight 83% Health Care Cut
• Lump Sum Early DROP
• Underfunded pensions
• 401k strategy
• Can I Avoid Medicare Entirely?
• Cluborlov
• National ID card vs. SSN
• Obama orders 8 million permanent green cards
• Ottawa Shooting and Seized Passport
• TSA and Traveling by Air
• 19 facts about Messed up US economy
• Orlov Article on the US-Russia Conflict
• Market crash late 2014 early 2015?
• Getting ready to publish an eBook
• airline alternative
• Function of modern libraries
• Another "Deflation is bad" article
• How to Deal with Local Tyrants
• Public Service Announcemint from Jigga Jones
• Electric Water Boiler Home Heating
• Getting kicked out by the state
• Alexa manipulating internet rankings ?
• Business Idea - Book Summaries for Sale
• Millionaires you've never heard of
• Numismatic seller wants more exposure
• Another email list question.
• Adding people to an email list.
• Business Ideas - Chinese Wife
• Business naming
• Fulfilled By Amazon (FBA) E-Commerce
• Direct-response copy
• Print on demand book
• The UPS Store Expands 3D Printing Across the U.S.
• Good Marketing Book
• Day Care in Cary