The Theory of Relativity

The theory that Albert Einstein has established has, over the course of decades, answered questions and disputes that have been active for centuries. In the field of science for example: Does the earth revolve around the sun or vice versa? According to Albert, it’s impossible to tell since all planets are theoretically in constant motion!

In economics we have a very similar scenario. What is does money revolve around? I have seen many posts on so many websites and blogs recently discussing the topic, primarily on Big Picture.

We are constantly at odds as to what constitutes as money. Gold? The US Dollar? The Euro? Corn?

“It’s all relative”

There is truly no way of developing an undistorted measure by which value can be described, especially since any resemblance of the traditional Gold Standard has been in practice.

Nevertheless, I would say that regardless of what the current outlook may be, I would say that when we are in true doubt we should use history as an example. If Gold has been a currency, worldwide, as far back as we can trace the history of money, there should thus be a solid assessment that it will provide that security in the future.

Recently even Gold has become speculative. It’s not just gold though. It’s a simple “religious” sway between those who chose to believe in the ink-on-paper-and-cotton currency they own with the power of the same government that enacted the “freedom of the press”, and those who strongly desire a tangible wealth asset that they can hold in their bare hands.

The way I see it it’s relatively simple. If you back your wealth with assets of real value – commodities – you will at least have food on the table if there is a currency meltdown.

Remember, I advocate only by Margin-of-safety.

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