The events last week in Iran (or perhaps in Teheran) are the best example that during a liquidity run gold can easily emerge as the most liquid asset. It was like this during the great depression, in 1968, in 1971 and again in 1980. This is not a question of "superiority" but rather of liquidity, which is determined purely by emergent forces.

Keynes himself was very aware of this dynamic and dedicated the last years of his life finding mechanisms to counter the problem. The result was the Bancor (which also addressed other issues) that unfortunately never came to be.

Today many so called Keynesians choose to ignore this problem. But ignoring it won't send it away, ask your regular Iranian.

luis_de_sousa@mastodon.social