News & Analysis
A Gold Standard Is Good?
Return of the Gold Standard Imminent ... The gold standard will precipitate a massive deflation. The ensuing chaos will help usher in their coveted New World Order and World Currency. What has been in the cards for decades is now fully on the agenda: the return of the Gold Standard. Gold as currency is a weapon. It is a wealth transfer to those holding Gold, which is not the 99%, and will precipitate a massive deflation. The ensuing chaos will help usher in their coveted New World Order and World Currency. – Anthony Migchels / HenryMakow.com
Dominant Social Theme: Gold is a barbaric metal.
Free-Market Analysis: Energetic social-credit entrepreneur Anthony Migchels is back with a spirited criticism of a "gold standard." His article appears – as have others by him – on Henry Makow's website and is focused on a few main points that have in part been made by other critics of a gold standard.
We are grateful to Mr. Migchels – and to neo-Greenbacker Ellen Brown – for continuing to advance a larger monetary debate over fiat versus money metals, even though we think to some degree it aids those who want even bigger government than we already have.
We won't however conflate Migchel's arguments with Brown's as he has disavowed some of them and has in certain instances seemingly agreed with arguments we've made about central banking and government bureaucracy. Nonetheless, we think we disagree with certain points in this article. Some more:
Numerous stories pertaining to Gold as currency have appeared recently. Last week alone, it was reported that India will pay Iran in gold for their oil imports. In another development, China, Japan, Russia, France and a number of Arab states will pay each other with a basket of currencies, including Gold.
Yet another story was about World Bank President Robert Zoellick, who has been promoting a Gold Standard for years, 'admitting' the demise of the dollar reflects 'a changing balance of power' in the world. Even Newt Gingrich has jumped aboard the gold train.
These stories are framed as resistance against the dollar hegemony and of course that is only a part of the story ... But the decline of the dollar is only part of the story. The dollar is only the current vehicle the Money Power uses to rule international finance. It doesn't care for the vehicle itself, as long as it has a suitable successor and that will be Gold.
And in the US itself there also is a strong drive towards Gold as currency. The onslaught by Austrian Economics in the Alternative Media comes to mind. And Ron Paul of course. He openly calls for Gold as currency. In this respect, he clearly is the ultimate internationalist candidate. This contrasts sharply with his patriotic 'constitutionalism'.
Some of this is good! Some of this, we've have pointed out in various articles ourselves. We think, possibly, that Money Power is deliberately breaking down the "old" economic order in order to create some sort of one-world currency. We think gold may be part of it – and we're surely not in favor of this sort of "directed history" when it comes to monetary schemes.
But we also believe that money, historically, has proven out to be gold and silver; though as hard-money economist Murray Rothbard pointed out, money has ALSO been virtually anything that people have decided it is.
However, Rothbard, from what we can tell, was mostly talking about commodity money – shells, salt, copper discs, etc., that are injected into economies via MARKET FORCES. The problem comes when certain monetary theorists want to use monopoly power (often of the state) to produce pure-paper money.
Once the state (or its adjuncts) decides to assume the power to "print" money, the marketplace monitor that works so well for private money is disassembled. Those who work (for the state, especially) do not know how much money is "enough" money – nor can they.
Migchels also states that libertarian-Republican presidential candidate and Congressman Ron Paul "lies" about the Constitution "saying the constitution says we should have Gold as currency ... but other units are allowed."
In fact, the US mints were clearly set up to stamp metals into coins and the intent of the founders regarding money metals seems fairly clear. In an educational article entitled "What Is a Dollar," well-known libertarian writer Edward Vieira, Jr. writes:
History shows that the real "dollar" is a coin containing 371.25 grains (troy) of fine silver.
a. The "dollar" in the Constitution. Both Article I, Section 9, Clause 1 of the Constitution and the Seventh Amendment use the noun "dollar." The Constitution does not define the "dollar," though, because in the late 1700s everyone knew that the word meant the silver Spanish milled dollar.
b. Adoption of the "dollar" as the "Money-Unit" prior to ratification of the Constitution. The Founding Fathers did not need explicitly to adopt the "dollar" as the national unit of money or to define the "dollar" in the Constitution, because the Continental Congress had already done so.
Migchels doesn't seem to fully define the difference between a state and a private gold or gold-and-silver standard. One standard is imposed by force and the other is not. What is the harm in having a standard that is voluntarily imposed and utilized?
The idea apparently is that even with a voluntary gold or gold and silver standard, the elites would continue to control the world's money system because they own most of the metal extant.
We're not sure this accurate to begin with, but even it is we're not sure it makes much difference. In a free money system, it would be difficult to control a money marketplace. If one wanted to try to manipulate markets, one would have to issue out money metals – or hoard them – at which point the price would go up ... or down.
The Anglosphere power elite, from what we can tell, is almost entirely allergic to using its own funds for purposes of realizing a New World Order. We find it highly doubtful that such a group would pour money into the marketplace to devalue gold or silver – especially since those holding most of the money metals would be the most affected.
If the elite tried to hoard metals, people likely would simply dig up more of it, devaluing what was already above-ground. In a free market, money manipulations are very difficult, if not impossible, especially over a long period of time.
Migchels makes the point that a Gold Standard would be "an unmitigated disaster" that would lead to excruciating deflation. But what is wrong with deflation? Murray Rothbard was fond of pointing out that in a full-gold-standard environment, goods and services would become more affordable as technology brought down their provision.
The point, apparently, according to Mr. Migchels, is that "Deflation is a horror for debtors, who see their debts and the interest they pay over them grow worse in real terms." But in a deflationary environment, those who held commodity money would see their assets appreciate, even if their debt did as well.
Mr. Migchels quotes the "Protocols" as saying: 'You are aware that the gold standard has been the ruin of the States which adopted it, for it has not been able to satisfy the demands for money, the more so that we have removed gold from circulation as far as possible."
The trouble with this quote is that it is difficult to establish definitively where the Protocols came from or whose views they represented. (We've actually written about this in the past.) But even assuming that the Protocols speak for "all Jews" – or even a Jewish "ruling class," the statement is seemingly vague. It makes no distinction between a free-market standard and a state-mandated one.
Mr. Migchels writes that, "Far from a 'solution', the coming Gold Standard is the logical next step in the Money Power plan of destabilization and order out of chaos. We will have a long and painful depression. Although it is not certain that Gold will completely replace paper, it is obvious that we will know scarce money and contraction for years to come."
This is only certain if the powers-that-be are able to mandate a state-run gold standard. State power is always to be feared, especially in the context of a new monetary system. But we would argue, on the other hand, that no one has to fear money that is created within the context of the market itself.
For some reason, part of the alternative media is consumed with fear when it comes to money metals. We think the real agenda may be that even critics of the current system that reside on the alternative media cannot entirely give up their yen to control society via the levers of state authoritarianism.
They want to have it both ways, in other words – criticizing the current system but making state power available for their various nostrums. Within this context, it is important to remember that every law and regulation is a price fix transferring wealth from those who earned it to those who did not and have little idea what to do with it.
Let the market itself decide on money. Don't fear money metals! Gold and silver have been the historical money of choice for thousands of years. A free-market gold and silver standard has apparently proven especially utile in the past.
Conclusion: If money competes – as we hope it will – we would be surprised if gold and silver don't eventually win out. Hopefully, one day, we'll be in a position to see if this is true ...
l 
|
You must be a site member to submit suggested edits or post feedback. In addition to submitting edit suggestions and posting feedback, your Free Membership to The Daily Bell gives you access to our Member Zone where you will discover a plethora of other member benefits. Want to learn more? click here |
|||||
|
|
||||
 |
Posted by memehunter on 02/04/12 06:20 AM
To clarify: Bischoff will probably say that "Real Bills" are not the same thing as physical gold, even though they are redeemable in gold, and that I'm wrong to say that this combines both functions in one currency. I admit that this was perhaps a wrong characterization of Bischoff's position.
But I don't see how Real Bills will solve the interest problem, as Mr. Migchels mentioned.
Also, even if Real Bills, being redeemable, might force bankers and governments into being more financially disciplined, Bischoff himself mentioned the following in his interview with the DB:
"The failure of close supervision frequently resulted in violations of provisions in the state bank charter, which involved the circulation of currency not "backed" by either the value of Real Bills or physical gold. The failure of providing supervision over state chartered banks constitutes a neglect of duty on the part of the states to insure compliance with constitutional requirements."
"By their very nature, bankers do not like to see idle currency sit in bank vaults. Commercial banks are by charter required to withdraw from circulation excess currency to the value of Real Bills. This necessitates that "idle" currency be held in the vaults of the bank until the volume of Real Bills acquired increases again. The problems in commercial banking can invariably be traced back to the use of "idle" currency for "investment purposes", mostly by speculating in real estate. "Borrowing short" and "lending long" is a recipe for disaster. Most bank runs and the eventual failure of banks were caused by indulging in such practice. Strong supervision by the State over commercial bank operations is essential to prevent rogue bankers from creating havoc."
So this makes me wonder whether Real Bills are truly a viable solution...
|
Posted by memehunter on 02/04/12 05:46 AM
I agree with Bischoff that gold has a unique status because of its durability, fungibility, and the highest stock-to-flow ratio of all commodities.
But, while I agree that gold is probably the best money with respect to the store-of-value function, I think that gold is not ideal as a means of exchange.
I agree with you that the volume of the means of exchange should never be a hindrance to commerce and trading. In other words, scarcity should not be a characteristic of an ideal means of exchange. I believe Lietaer has said similar things.
The problem is when people want to combine both functions (means of exchange and store of value) in one currency. Although the DB and Bischoff have quite different views, they both seem to favor such a system.
This is known as "FOFOA's dilemma" (for aficionados of his blog):
FOFOA's dilemma: When a single medium is used as both store of value and medium of exchange it leads to a conflict between debtors and savers. FOFOA's dilemma holds true for both gold and fiat, the solution being Freegold, which incidentally also resolves Triffin's dilemma.
A definition of Triffin's dilemma (from Wikipedia):
Click to view link
|
Posted by Anthony Migchels on 02/04/12 05:40 AM
"How do you maintain a private cartel when you have a redeemable gold standard? "
You're not thinking straight flying_pig.
The private cartel will control the paper which is redeemable. The paper will be credit bills. These debts will have to be repaid to the cartel.
They will never lose an ounce to redemption, because all will have to be paid back. With interest, of course.
|
Posted by Anthony Migchels on 02/04/12 05:35 AM
corruption and bribery are the system here too flying_pig.
|
Posted by Anthony Migchels on 02/04/12 05:13 AM
Ingo, I've read your bio here on the Daily Bell.
I noticed you have georgist perspective on land reform.
I have a feeling that you are looking for ways to allow the coming generations their rightful part of their heritage.
I think I understand your proposals, it took me some time, because I mistakenly assumed they were the Daily Bell's, but both your proposal and the goals of your ideas seem different in the sense that you seem to be looking for ways to optimally organize the Commonwealth, and not one sidedly looking for 'individual liberty'.
I just don't see how your proposal will seriously dent the wealth transfer through interest: your Gold backed Real Bills will be interest bearing.
Also, I have grave difficulty with your notion that Rothschild has no stake in the Gold Market. I do notice that you have your reasons to believe that, but I don't fully grasp them.
It is clear that if Rothschild has 150.000 Tonnes of Gold in his vaults, besides the known 150.000 of which nobody knows where they are, they would be able to first flood, and then withhold specie from the market. They have done this for centuries, there can be little doubt about that.
So your proposals neither diminish cost for capital for Government and the populace, nor does it lead to stable volume.
It should ring a bell that people like Morgan and all the other bankers, including Greenspan are so hung up about Gold. they can control it and enslave us through interest.
I'm just a little exasperated that this is really so difficult to see.
|
Posted by Anthony Migchels on 02/04/12 05:03 AM
"Gold is Money, and nothing else." J. P. Morgan"
That's an interesting quote: I know of many important bankers who have said similar things.
The problem that i have with your line of reasoning is that you are putting your theory before practice: you negate WIR, but the users of WIR don't: they explain they use WIR to finance the construction of buildings. Interest free, which gives them a major advantage to firms fully dependent on expensive bankloans. They report more turnover, because of the additional liquidity WIR provides, clearly proving the quantity of money is important.
Mind you, the much scoffed Protocols have this to say about the quantity of money:
P20: 'The present issue of money in general does not correspond with the requirements per head, and cannot therefore satisfy all the needs of the workers'
They also state: And continuing, P20: 'The issue of money ought to correspond with the growth of population and thereby children also must absolutely reckoned as consumers of currency from the day of their birth. The revision of issue is material question for the whole world.'
And: P20: 'Economic crises have been produced by us from the goyim by no other means than the withdrawal of money from circulation'.
Clearly they agree that the volume is crucial.
Just because Keynes agrees, it does not mean it is not so.
|
Posted by Anthony Migchels on 02/04/12 04:44 AM
Well, there is absolutely no problem: the Gelre is traded on an on line market place, very similar to bitcoin. At the moment we don't have the software yet and there is no demand from the market for it.
But it would be very simple to allow the Gelre to be traded for Gold.
In the case of a Euro going down to hyperinflation, we could simply say: 1 gelre = x grains of silver. The only reason we use Euro as Unit of Account it because it is the dominant one and its easiest for the users of the Gelre.
|
Posted by Anthony Migchels on 02/04/12 04:40 AM
The question remains the same Ingo:
If I want to buy a house and I go to a bank providing credit based on Real Bills based on gold, how much would they charge me per year?
|
Posted by Anthony Migchels on 02/04/12 04:05 AM
where do you feel 'the greater good' would be screwing with your interests if there would be interest free credit?
|
Posted by Anthony Migchels on 02/04/12 04:04 AM
I'd be interested to know about flying_pig's asset position.
 |
Posted by Bischoff on 02/04/12 03:58 AM
@ the Hunter
"Well, if they control a large part of the gold reserves, it's easy to see how that could be construed as an advantage, no?"
No. If Gold was currency, the answer might be, yes. If Gold was an industrial commodity, the answer might be, yes. However, Gold is neither a regular currency, nor an industrial commodity. Gold is merely the one commodity in the world with the greatest liquidity, bar none. This makes Gold "Money". Since "Money" has no "price", it follows that Gold has no "price". Therefore, a Gold Market cannot exist.
The people who perpetrated the irredeemable USD/FRN are happy to have you think a Gold market exists, but it is really a market which discovers the value of the irredeemable USD/FRN. The "swings" in the "gold market" are the value fluctuation of the USD (Saudi world oil prices quoted in USD)among other manipulations. Read up on this @ Click to view link under GATA and Bill Murphy.
The Rothschilds know what Money is. They would never be fooled by a "Gold Market". I doubt that they would even think of controlling the production of gold. It gives them no advantage. The daily "Gold fix" at LME has nothing to do with controlling the "price" of Gold.
"According to some analysts, the "true" value of physical gold, if we take into account the fact that most circulating gold is in fact "paper gold", is probably in the tens of thousands."
You are entirely correct. The number of naked contracts trading on the TSE, NYMEX or the LME is large. Try placing an order for a future contract on Gold and stipulate delivery. You likely won't be able to do it.
If ever wholesale delivery is demanded from the Exchanges, they will take advantage of the clause in their trading contracts which allows them to settle their gold delivery obligations with USD/FRN by declaring a "force majeure".
Do you think the Rothschilds are dumb enough to ever put themselves into such situation... ???
"I don't know why you insist so much on a officially redeemable currency. As long as people can convert their "irredeemable currency" (be it USD, Euros, Gelre, Chiemgauer, tally sticks, or what have you) into real goods (including physical gold), I don't understand why it is such a big issue."
It is a big issue. While you can use the irredeemable currency to purchase all manner of goods and service, these things are not Money. You can acquire gold with your irredeemable USD/FRN currency, but only because it still has value as the world reserve currency needed by countries to pay their oil bills.
The real reason for the redemption feature of paper currency is that it assigns to it the standard of value represented by gold. Remember, redeemable currency created under the RBD requires that Real Bills be discounted for Gold.
"On the contrary, officially redeemable currencies are an incitement to more "fractional gold" scams and will lead to a proliferation of "paper gold", ... ."
You are failing to understand the "redeemable" currency created against Real Bills. This currency has nothing whatsoever to do with "fractional reserve lending". Real Bills are clearing instruments which can circulate on their own, but they are not uniform and therefore cumbersome to circulate as currency. Banks under charter can create uniform bank notes against the value of Real Bills in their possession, and circulate them as currency instead, as long as the bank promises to redeem those bank notes for gold. Therefore, redeemable paper currency is in essence a clearing instrument, like Real Bills themselves are clearing instruments.
While comsumer item production can be financed with 90-day Real Bills, the production of durable goods or the acquisition of investments requires payment with Gold. To use some of the earnings in bank notes for purchases of durable goods or Gold Bonds to earn interest, the bank note currency must be redeemable in Gold. Gold Bonds are an investment made by the saver on which he earns interest. They have absolutely nothing to do with fractional reserve lending.
Banks which create redeenmable currency under the RBD are by charter required to have a certain amount of Gold on hand to meet redemption requirements. If a bank runs out of gold to meet redemption demand, it can rediscount the Real Bills against which it created the redeemable currency, and thus come up with the necessary gold to meet redemption demand.
"And yes, there is a big difference between any kind of "paper gold" and physical gold; the former is merely a promise to pay you in physical gold, with all the attendant risks, while the latter is real physical gold in your hands. I think that this should be clear to DB readers."
What the DB readers must understand is that the redeemable paper currency created under the RBD is not "paper gold", it is in fact as good as "gold". To make sense of this statement, one has to understand the Real Bills Doctrine. There is an interview in the DB archive in which I explain the Real Bills Doctrine.
Again, I have to go back to the important distinction between a "means of exchange", which should ideally be interest-free and have no or little intrinsic value, so that there is no incentive to hoard it (its value resides indeed in the fact that it is an accepted means of exchange within a community - it doesn't need to be "redeemable" as long as people can buy real goods with it), and a "store of value" (for which gold is a ideal vehicle).
Means of exchange can be anything. It can be a good or a note. It can have positive value (physical good) or negative value (debt obligation). Money, meaning Gold, when used as currency only has positive value. The USD/FRN created by monetizing federal debt carries only negative value. Both currencies are a means of exchange. If the time span between earning negative value USD/FRN and using them to purchase goods and services is rather short, the negative value currency is perfectly fine to use.
However, USD/FRN are not suitable for savings. That's why we have Social Security. There are no Gold Bonds available in which to invest. The USD/FRN must be constantly invested to try to beat inflation. A redeemable currency created under the RBD is non-inflationary.
There is no "interest" involved in creating redeemable currency. There is only discount involved. Real Bills are not "credit instruments" which require payment of interest. They are "clearing instruments" which are as good as gold, and which can be negotiated and discounted without recourse the minute they are drawn and accepted (signed by the drawee).
Reading your statement, I lament the utter disconcern of the education establishment to inform Americans about the Real Bills Doctrine and the monetary system which built this country. Ever since we abondoned the RBD monetary system in 1935, this country has steadily lost ground.
"As for your last point, I'd rather be a "complete idiot" and keep my excess earnings in real physical gold, than in "Gold Bonds" or any other kind of "paper gold", especially over long periods."
You have good cause to do so with a Congress full of crooked politicians running a central bank in cooperation with a "dependent" banking system which in turn funnels campaign contributions for the reelection of those same crooked politicians.
However, there was a time in this country when the business community constituted a "Real Bills Market" in which banks could discount Real Bills The ethics in dealing in this market was beyond reproach (out of necessity). At that time, nobody ever preferred to hold physical gold over holding bank notes redeemable for gold.
It woud behoove federal politicians to allow the return to a redeemable currency to circulate parallel to the irredeemable USD/FRN by returning to the original provisions of the FRA of 1913, before the irredeemable USD/FRN loses all its value.
|
Posted by flying_pig on 02/04/12 02:02 AM
You spend all day at work, and come home to read some whiny ass comment about the how the rich people are ripping off the darling poor, implying that you are somehow living off of other people. Yeah, right. I think a "bugger off" is well deserved every now and then by certain commenters.
I don't want to minimize other people's problems, but I have problems in my own life. And I will never allow crazy people to screw me over (yet again, and ever more) for "the greater good". The greater good has caused enough harm already. That myth of the greater good must be killed dead once and for all. I'd be happy to see this greater good argument bugger off as well.
|
Posted by memehunter on 02/04/12 01:13 AM
Bischoff, I'd like to address a few points from your comment:
"The Rothschilds have no advantage in the "Gold Market"."
Well, if they control a large part of the gold reserves, it's easy to see how that could be construed as an advantage, no?
"For example: One (1) Ounce of Gold = $1,700 USD is really a quote which must be read as: One (1) USD = 1/1,700 of an ounce of Gold.
The value of the irredeemable USD is provided today by the Saudi's exclusive quote of oil in USDs. If you check the "price" of world crude, you will find it to be synchronys with the "price" of gold quoted in USD. The conclusion is clear. Gold is the standard, not the USD."
I agree with your general point here, but I think you fail to take into account that most of the "gold" included in this calculation is in fact "paper gold", such as gold certificates, unallocated gold accounts, physical gold leased many times over, etc... There is no way that there is enough physical gold for every holder of USD (or Euros) to convert all of their fiat currencies savings into physical gold at the current price of 1700 USD. According to some analysts, the "true" value of physical gold, if we take into account the fact that most circulating gold is in fact "paper gold", is probably in the tens of thousands.
"Since gold needs to be invested, a redeemable currency is as acceptable as investment in "Gold Bonds" as is the Gold itself. It is the value standard of gold that matters, not the physical metal."
I don't know why you insist so much on a officially redeemable currency. As long as people can convert their "irredeemable currency" (be it USD, Euros, Gelre, Chiemgauer, tally sticks, or what have you) into real goods (including physical gold), I don't understand why it is such a big issue.
On the contrary, officially redeemable currencies are an incitement to more "fractional gold" scams and will lead to a proliferation of "paper gold", and I'm afraid your "Gold Bonds" will eventually fall into that category (i.e., a lot more "Gold Bonds" will be printed than there is actual physical gold to cover them). And yes, there is a big difference between any kind of "paper gold" and physical gold; the former is merely a promise to pay you in physical gold, with all the attendant risks, while the latter is real physical gold in your hands. I think that this should be clear to DB readers.
"Sure, under your definition of Money, the currency which you call "Money" is perfectly fine for use to satisfy immediate consumption. However, it is no good for savings at all."
Again, I have to go back to the important distinction between a "means of exchange", which should ideally be interest-free and have no or little intrinsic value, so that there is no incentive to hoard it (its value resides indeed in the fact that it is an accepted means of exchange within a community - it doesn't need to be "redeemable" as long as people can buy real goods with it), and a "store of value" (for which gold is a ideal vehicle).
As for your last point, I'd rather be a "complete idiot" and keep my excess earnings in real physical gold, than in "Gold Bonds" or any other kind of "paper gold", especially over long periods.
|
Posted by memehunter on 02/04/12 12:31 AM
"Who's living off who? Do you dispute that there are poor people who are living off the rich?"
This is true, but let's put things in perspective: trillions are transferred yearly from the 80% poorest segment of the population to the 10% richest segment, simply due to interest charges. Don't you think that this is a far more pressing social issue and ethical problem?
Besides, I don't see how telling feedbackers who address this issue to "bugger off" is a constructive way to address this problem.
 |
Posted by dave jr on 02/03/12 10:59 PM
The 'foundation' sounds like the FOMC operating in reverse. If there were no national currency backing up the gelre, what would be used to buy it back, say its conversion rate into goods were under pressure. What mechanism controls the demurrage rate? How fast one can run to a store, any store?
|
Posted by flying_pig on 02/03/12 10:54 PM
Besides, when you are making loans to corrupt govts and despots, even if you don't charge interest, you can still enslave them. You wouldn't really expect old Kim (God rest his soul) to have been a good steward of wealth, would you? And what about those loony tunes governments in Asia (e.g. India) where corruption and bribery are "the system" ?
|
Posted by flying_pig on 02/03/12 10:09 PM
"give you an interest loan, feed off you and impoverish you for generations"
Can you explain why it is impossible to loan out Social Credit (or whatever interest-free thingamajig you prefer - too many options in this thread to keep track of) at interest, and achieve a similar result using Social Credit?
Apparently, the govt that issues Social Credit is somehow going to be pure Goodness, and will never fund the activities of the Evil IMF. Amirite?
|
Posted by flying_pig on 02/03/12 07:56 PM
Who's living off who? Do you dispute that there are poor people who are living off the rich?
Please bugger off.
|
Posted by Bischoff on 02/03/12 06:53 PM
"This is suggesting that Gold will be with the 'average saver'. And that is just total nonsense."
This statement makes sense only by understanding your mindset. It seems impossible for you to fathom that a redeemable currency is really a clearing instrument with which workers and suppliers are paid, and which they can use to claim goods and services to sustain themselves and allow further production. For some of this redeemable curency they can claim Gold to use as a "store of value". Bread and milk bought today for use in old age doesn't really work, does it? There are always Gold miners offering Gold. These miners trade some of the Gold they mine for food and drink to sustain themselves.
"Nobody knows how much Gold there is, as the Rothschilds own all the mines and we are depending on their reports of production. They have owned all the mines for centuries."
Only someone who believes the the "Quantity Theory of Money" and does not acknowledge that Gold is a standard and store of value, and not important as a currency, could possibly worry about the Rothschilds and what they own or don't own. Gold is not just a commodity whose quantity figures matter. It is Money. The fact that Gold is Money has nothing to do with the quantity of the commodity of Gold itself.
Silver on the other hand has been the "Ersatz Currency" to gold as currency. Silver today is mostly an industrial commodity. The production and inventory figures are very important to making trading decisions for silver contracts. It is in silver where little transparancy exists as to production and inventory, particularly when it comes to China. Sharp traders will talk up the value of silver, and then sell short to take advantage of the uninitiated. This cannot be done with Gold. Only by trading illegal "naked" contracts can you gain a upper hand in the "Gold Market". Too many of those "naked contracts" are traded. When push comes to shove, the Exchanges will activate their "force majeure" clause to get out of the bind. Asks the Hunt Brothers how that works.
"But we can be quite sure they have decisive stake in the Gold Market."
The Rothschilds have no advantage in the "Gold Market". None. As matter of fact, they would never be involved in the Gold Market. They would likely be taken to the cleaners, if they traded large amount of gold. The whole idea of a "Gold Market" is silly to begin with. There never existed a "Gold Market" in the history of the world until September 1, 1971. Any quote of the value of an ounce of Gold in USD is simply the converse. It is a quote of the value USD in a fractional quantity of an ounce of gold.
For example: One (1) Ounce of Gold = $1,700 USD is really a quote which must be read as: One (1) USD = 1/1,700 of an ounce of Gold.
The value of the irredeemable USD is provided today by the Saudi's exclusive quote of oil in USDs. If you check the "price" of world crude, you will find it to be synchronys with the "price" of gold quoted in USD. The conclusion is clear. Gold is the standard, not the USD.
"So it is not the average saver that will set interest rates. It's the Gold Monopolist of ages that will have privilege."
Only a mind which perceives that a monetary system depends on "credit", "debt" and "control freaks" fails to understand that Gold serves a function other than "Currency". As a matter of fact, Gold as "currency" is passe. Having gold sit in vaults is the height of stupidity, but it is necessary, as long as the acceptance of "legal tender" paper currencies is enforced throughout the world. However, irredeemable currency has a life cycle. The life cycle of the irredeemable USD/FRN is nearing its end. What comes then is a redeemable currency. It's inevitable. That's when gold savings pay off.
It makes no sense to hoard gold under a redeemable currency regime. Gold sitting in a vault does not earn interest. Gold is savings. It must be loaned out. The productive creative power of nature gives a basis to the rate of interest. The willingness of savers to depart with their gold for interest earnings does the rest. If workers earn redeemable currecny, then every worker is able to redeem his earning to into gold to use as savings.
Since gold needs to be invested, a redeemable currency is as acceptable as investment in "Gold Bonds" as is the Gold itself. It is the value standard of gold that matters, not the physical metal. So, how do the Rothschild's have any advantage by hoarding all the Gold. Can you please tell me that... ???
"In fact, it is well known that a Rothschild sets the daily price for Gold at the LBMA. Every day."
There is a AM and PM "price fix" for gold at the LME, but that is a "producer fix". There is also a producer fix for Aluminum and a bunch of other metals. This has nothing to do with the fact that Gold is Money. The Quantity Theory of Money has no application here.
"The idea that we need gold to save is wrong. Saving is not needed in a modern economy. Because Mutual Credit facilities require zero capitalization."
Wrong. Savings are required for capital investments. Capital evaluation cannot be had without a currency redeemable in Gold. Mutual Credit facilities are bogus.
"All the cash necessary will always be available, because with real assets as collateral all the credit will be there when needed at close to zero cost."
Again, you seem to be infatuated with the "barter economy". Believe me, it is a throwback to the "money economy". Of course, what we have now throughout the world is nothing but "planned economies", made possible by central bank currencies. To hold up the "barter economy" as a solution to the shortcomings of the "planned economy" and central banking, is silly.
"So for 'saving', the use of wealth for consumption at a later stage, we need not hoard cash, we should collect assets: pay off our house (which can be remortgaged when we need cash for new investments), invest in our own business, education etc."
Sure, under your definition of Money, the currency which you call "Money" is perfectly fine for use to satisfy immediate consumption. However, it is no good for savings at all. Mortgage and remortgage houses... ??? You mean the "land" underneath the houses... ??? With that you get into a whole new kettle of fish, which is better left alone.
"Even buy some Gold for all I care! Just don't hoard the means of exchange!"
Gold as savings is ideal for security in old age. Gold Bonds pay off after 20 or 30 years in Gold, and not in an irredeemable, inflated paper currency. Nobody in their right mind, earning a redeemable currency, would turn their earnings into gold to merely put it under the mattress. As long as Gold Bonds are available, a hoarder of Gold better have a good reason to keep gold under the mattress. Otherwise, he is a complete idiot.
 |
Posted by Summer on 02/03/12 05:56 PM
From memehunter's earlier response:
"DB: "You continue to believe (suddenly) that interest is the issue. We'll stick with the idea that someone who has the franchise to "print money from nothing" has the bigger stick. Interest is a secondary problem at most and we would suspect is being raised to distract people from the larger issue, which is that a small group of people can print - and spend into existence - as much money as they want, when they want and where they want."
M: Right. A "secondary problem". Do you realize that if money was "printed from nothing" by the government, we would get rid of the entire national debt? Yes, we would still have inflation, so it is not an optimal solution, and not my favorite solution. But, the point is, in the current situation, we have BOTH interest-carrying debt and inflation.
Also, money is created as debt in the current system, so it has to be borrowed into existence, not spent. Important nuance, and one that is apparently overlooked here by the DB.
Finally, I have to point out that a gold-backed currency also allows a bank to print a large amount of "paper gold". Once the biggest "private gold-backed currencies in a free market" have formed a cartel (which will almost surely happen given enough time), quasi-limitless quantities of paper gold can be printed, since there is no serious opposition (or alternative) to Money Power."
|
|
