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Comment by mywittyname | Hacker News Reader

“I don’t know if it will be two days or two weeks or two months. But we have $10 million in gold and silver in denominations small enough … for payroll,”

How exactly will this work? Is USD still the unit of account for your salary, or does their employment contract state, "$X or X oz. gold at company's discretion."?

How do they expect to pay taxes? Is this even legal?

I don't see how this actually solves any perceived problems with the banking industry. Even if the banks go down for a period of time, you can still cut people/businesses a check. That's certainly easier for everyone involved than handing out gold doubloons on payday.

" in 2008 we came perilously close to banks not knowing who could accept counterparty risk,"

This goes to show how deft the Federal Reserve is. Lots of bad shit could have went down in 2008, but didn't.

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Is USD still the unit of account for your salary, or does their employment contract state, "$X or X oz. gold at company's discretion."?

I think the idea here is that if the banking system has collapsed, employees might eagerly accept gold in place of cheques, no matter what their contract says.

The irrational bit of that whole argument to me is that they are effectively trying to keep 'the lights on' when their customers can no longer use overstock anyway. After all, if the banking system collapses your inability to use 'overstock.com' is going to be the least of your problems.

Recently Greece went through something like this on a much smaller scale (and with daily limits rather than a total collapse but it got quite close). Paying with gold was never even considered, people switched to cash in stead. It's not as if you're going to buy a bread or fill up your basket at the supermarket and expect to pay with gold, people will not be able to ascertain its value on the spot at the register.

Having $10M in cash in various currencies to hedge against the collapse of one currency or banking system would already be quite an act of paranoia, having it in gold is taking that to a completely different level. That's end-of-times level stuff, it means there is no more trust in any currency at all. Merchants in Greece would have been happy to take your cash if you had it.

Right, I have no idea why it makes sense for an online retailer of non-essential goods to be making that particular hedge.

There might be an argument for nuclear power stations and similar critical infrastructure companies to have such a stockpile, although even there (a) the military would probably step in, and (b) it's likely that Bouillon would be a more useful thing to stockpile than Bullion.

I think they have the Bouillon angle covered:

"Byrne said the company maintains a 30-day supply of food, and has a distribution system to pay and feed employees in case the banking and payments systems collapse."

My point was more that food or other useful commodities might be a more useful form of currency than gold in the complete-societal-breakdown scenario.

Food is definitely more valuable than gold when society collapses to the point where people can't get food anymore.

Although the food is artificially scarce in that case, it shows that people value what's necessary for survival above trinkets when they're required to do so. Gold having value presupposes some amount of social cohesion.

>Merchants in Greece would have been happy to take your cash if you had it.

That worked in Greece because they used the Euro, which meant that the currency was solvent based on its association with countries that had better credit than Greece itself.

If the US had a Greek-style loss of credibility, the dollar would surely take a massive hit, as its value lies solely on our credibility. Since we don't have a Germany to point to as the currency's savior, it's very possible that American vendors wouldn't accept cash (USD) and would prefer something that has value independent of governmental decree (precious metals).

> The irrational bit of that whole argument to me is that they are effectively trying to keep 'the lights on' when their customers can no longer use overstock anyway.

Actually, it makes some sense (ignoring any irrationality in the fear itself): if its a fairly short-term problem that seems recoverable, you preserve your staff relations, and are ahead of competitors who either collapsed or wound down and now have to wind back up.

If its a longer-term problem, you have a hoard of valuables, a body of workers you can pay with those valuables, and you can pivot to a new business model. The initial set of workers may not be ideal for whatever that new model is ("warlords of Utah"?), but, again, you start out ahead of those that haven't prepared, and have some cushion to manage a transition.

In the kind of societal collapse this might be useful for, taxes are likely to be owned to roving warlords, not the IRS.

not entirely sure of the distinction ;)

The IRS answers to people a majority of your neighbors elected and could remove at any point if they cared to do so.

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