This will be a rather brief blog entry. This is because: a thorough understanding of gold at the microeconomic level requires a breakthrough in economic theory since gold lies at the cusp. What I mean to say is that a more illuminating analysis lies in potential and will be presented at a later date, once the divine economy theory is expanded to encompass the realm of ethics. That is the exploration of my third book.
For the time being, gold represents a standard of purity that is trusted by everyone. Every encounter with this gold standard tests the trustworthiness of those in the mix. If a thought emerges to alter its purity, by altering the value in some manner, then the test is ultimately a test of character. It serves as an alarm. It, therefore, provides an anchor for the human conscience.
Those who have a character too weak will error and be discovered. The market process eventually finds this error because someone will lose property. These individuals with flawed character are in need of counseling. They need to develop their character so they can function in a way that protects property rights and human rights.
So what we see is this: gold allows trust and trustworthiness to flourish and it also serves as an indicator. It indicates which individuals need education and care so that they can become trustworthy. At the macro level the gold standard indicates which institutions are untrustworthy.
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