The Folly of Digital Money, the Lasting Value of Gold

Who, today, doesn’t employ a “symbolic” form of money, a credit or ATM card, several times a week (not to mention a day)? These digital transactions, though convenient, don’t actually represent the transfer of physical cash from one hand to another. Instead, and in reality, electronic digits are the only things that are getting transferred.

And not from one hand to another, but from one computer to another.

Consider this cautionary tale. A bank customer – let’s call him Dave – had accumulated 175,000 “bonus points” due to his bank credit card purchases. These European high risk merchant account qualified Dave to buy, or in bank terms exchange, points for a variety of valuable goods (kind of like a frequent flyer program). He was all set to go.

At least until a controversy involving real money arose. Dave had wanted a top-of-the line gold watch valued at 200,000 points. He needed only 25,000 additional points – via more bank credit card purchases and/or cash deposits, deposits he promptly made – and that’s when the glitch surfaced.

A deposit error involving the computer input of a single zero left Dave short of his watch. Fortunately Dave was able to produce his actual paper deposit receipt to expose the bank’s digital error. Anxious now to keep its customer happy, the bank quickly “rewarded” him with the missing 25,000 “reward points.”

All it had to do to make things right was instruct an employee to make a few keystrokes and the additional 25,000 points magically appeared on Dave’s very next statement. One second he was short of the 25.000 digits he had rightfully earned, the next they were in his account.

All owing to a few keystrokes.

Not long later, the bank “devalued” its point system, 10-to-1. What used to take 200,000 reward points now took just 20,000. Again, this complicated devaluation process quickly and quietly took place through the magic of some keystrokes. Could our swooning greenback be devalued just as fast one day?

The point here? Instead of good old-fashioned gold-backed dollars or gold coins deposited in a bank, person to person, our new digital money is added, subtracted and transferred by some anonymous someone tapping a few keys on a keyboard. And by a digital network doing its thing. If a computer said you had $2.00 – or $200,000 – in your account, depending on the keystrokes made, that’s what you had. After all, the bank’s official computer said it was so.

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