EDITORIAL
You Know It’s Time for Sound Money When “Helicopter Money” Is All They Have Left
By Stefan Gleason - May 17, 2016

Ahead of the Federal Reserve’s meeting … an old metaphor — helicopter money — is gaining new traction as world leaders try to improve global economic growth, which the IMF recently described as “fragile.” – CNNMoney

People may wonder why sound money advocates have become so militant about the hazards of allowing governments to issue unbacked fiat currencies. However, when the Federal Reserve and other central bankers so frequently discuss dropping money from helicopters, you know monetary policy has run amok.

The case for money backed by gold and/or silver is founded on the premise that real wealth is created by productive activity in the real economy. When governments and central banks take on the role of printing money at will, expanding credit, slashing interest rates to zero (or even negative), and bailing out giant financial corporations, they’re penalizing capital, punishing savers, and robbing purchasing power away from workers and transferring it to the financial elite.

The Federal Reserve is hoping dropping money from helicopters will encourage Americans to spend money and kick start the economy. According to CNNMoney, “consumer spending makes up the majority of U.S. economic activity so more spending would boost the country’s growth prospects, which are currently very dim.”

But real growth in the U.S. economy has been hampered for decades, and this problem accelerated when the U.S. abandoned the gold standard in 1971.

The Foundation for the Advancement of Monetary Education (FAME) points out that the country’s trade deficit started going negative when the dollar was no longer tied to gold. Manufacturing was pushed offshore. The break from gold backing also enabled government deficit spending and a skyrocketing national debt.

Interestingly enough, Mario Draghi, President of the European Central Bank (ECB), commented that, “the ECB has no such plans [to implement helicopter money] and that it hasn’t been discussed. He argues that helicopter money is fraught with challenges.” But no mention of the “challenges” caused by a fiat money system?

Under a gold standard, it would be difficult for bureaucrats to make spending commitments that are unsustainable. Under the current system where central banks can create new money with a few strokes of a computer keyboard, politicians know when they dole out lavish entitlements and spending programs which future generations of taxpayers cannot cover, the Federal Reserve is there to bail them out with more money printing.

Of course, the result is more inflation in the real economy, and the purchasing power is continuously whittled away. Rather than overtly defaulting on entitlements programs and government creditors, the default is stealthy in nature. The default doesn’t come in the form of missed payments, it’s a default on the value of our currency.

Former Fed chairman, Alan Greenspan, agrees with CNNMoney’s assessment that the U.S.’s economic health looks particularly grim these days. In an interview with Bloomberg, he admitted, “Productivity is dead in the water… [Entitlement spending] will grow wholly independent of what the ability to fund is… Nobody wants to touch it. And that is gradually crowding out capital investment, and that’s crowding out productivity, and it’s crowding out standards of living.”

He should know. In 1983, he directed the National Commission on Social Security Reform. He was responsible for shoring up Social Security by convincing Congress to increase taxes and changing the retirement age. However, Greenspan must have known that his plan was ultimately unsustainable – the fundamental problem with our monetary system was never addressed. A reform of that nature would have been considered politically unacceptable.

Greenspan seems to have come to his senses, recognizing the realities of our weak economy, unsustainable debt, and unwise monetary policy. But he spent most of his career directly enabling the problem. His easy money policies helped create huge bubbles and mal-investment, and today’s central bankers have merely doubled down on Greenspan’s approach. Shame on him.

Meanwhile, the Congressional Budget Office admits that the country’s deficit shows no signs of decreasing. The deficit is projected to be $544 billion this year and over $1.4 trillion by the year 2026. Those deficits will add to the $19+ trillion national debt the politicians have already piled up.

The Federal Reserve is usually wrong in its economic forecasts, and the Fed’s only monetary tool anymore seems to be helicopter money. But bailouts and monetary stimulus are THE problem. And the solution is a new monetary system based on sound money principles and gold and silver.

 


 

Stefan Gleason is President of the Sound Money Defense League, a national grassroots lobbying organization working to restore gold & silver to their historical role as America’s constitutional money. He also leads Money Metals Exchange, a national precious metals dealer with over 50,000 customers. Gleason has frequently appeared on national television networks such as CNN, FoxNews, & CNBC, & his writings have appeared in hundreds of publications such as the Wall Street Journal, TheStreet.com, Seeking Alpha, Detroit News, Washington Times, & National Review.

Posted in EDITORIAL
  • Praetor

    Sound money! Its seems we only had one President, who understood ‘sound money’, and there have been 34 presidents since, who have not, and the 37th President totally sold the country out to the central bankers. So, 184 years later, the U.S. is reaping the whirlwind of centralized banking of the ‘Fiat Empire’. That Empire will go down in flames, and it will be up to the people to pick-up the pieces, and decide, do we want another Empire such as this!!!!

    • olde reb

      In reality, it was FDR that sold out the nation. RMN only shafted
      foreign nations.

      • Praetor

        My opinion, they all sold out. Nixon was just the guy to insure a fiat empire of monopoly money!!!

        • olde reb

          Nixon was certainly indebted to Wall Street. Rocky gave him an over-paid job and a platform to run for political office. Nelson got the pay-off.

          Do you think all of the gold in Fort Knox had been moved to FRBNY before 1972 ?

  • olde reb

    Sound money is anathema to the PTB.

    As it is, the FRBNY receives a Treasury security for which they credit a
    government account with a similar amount of book entry money. The
    Fed puts up no consideration in this process. Congress/Treasury
    spends the book entry money.

    FRBNY sells the security among the $9 trillion annual auctioned securities
    to roll over the national debt. The money from the deficit security sale is transferred to the (hidden) owners of the BOG by accounts exclusively controlled
    by the FRBNY. Ref. 31 CFR 375.3.

    The embezzled funds, which legally belong to the government, at the
    current rate of deficit spending, amounts to $6 billion daily. Ref.
    http://www.scribd.com/doc/48194264/rip-off-by-the-Federal-Reserve-revised

    Relatively, the Mafia is penny-ante poker.

  • Fred762

    Control of countries by banker-control of their money was common by 1850: The 5 Rothschild brothers by then owned Europe: the banks of England, France, Italy Austria-Hungary and of Germany were owned by them. The world banking powers were really pi$$ed at Lincoln bks he didn’t come hat in hand to borrow money to finance the Civil War. ..and bks he agreed to allow Russia to aid in in his efforts. It took 50 years for the bankers to get control of both countries..1913 we got the “fed” and 1919 Russia got invaded and taken by banker-financed “communists” The US dollar had been stable for 100 years b4 1913..[1/20th OZ of gold, or 1 oz silver = $1]
    Since 1913 the dollar has been inflated by the bankers/pols, to the point that it now = 1/1300th oz of gold.

    • olde reb

      Benjamin Ginsberg has written of the assistance bankers offered European
      rulers centuries ago in his FATAL EMBRACE: “financiers” AND
      THE STATE and the abusive acts by indigenous people who objected to
      the financial chaos that resulted.

      One interesting episode was the London bankers who induced King John to
      invade Normandy. The revolt by the Barons who would have had to
      finance and staff the war led to the Magna Carta. Ben berates the
      Barons for leaving John with nothing more than a crown.

  • alohajim

    What’s keeping this together is mass brainwashing and propaganda on an unprecedented scale. Think about how virtually all wealth in currencies is nothing more than entry’s on a banks computer. Except for the paper form of currencies (which is only a very small percentage of the total existing and the’re even trying to eliminate that), all currencies differ from Bitcoin in only one way – they are entries in a banks computer instead of yours. Yes the creation of Bitcoin differs from the creation of fiat currencies but the product is exactly the same, a computer entry. Think about when money is transferred between banks nothing at all changes hands, one bank may add digits to an account and another may subtract digits. What could be more ephemeral?
    The money masters, PTB, banksters, whatever you choose to call them, have managed to get the entire world population of seven billion people into their wealth transfer scheme by their control of governments to ‘enforce’ it. Money must be a measure of human labor and therefore must be tangible and have value. Today ‘money’ is an electronic digit in a bank’s computer and, curiously enough, only banks have the sole right to create this ‘money’ from absolutely nothing. And if you borrow some of this money and don’t repay all of it back with ‘interest’ the bank will take your real asset. All supported by our ‘laws’ and government force. Only governments can endlessly borrow, never pay back a penny of principle, and extract the wealth of the citizens to pay banks their pound of flesh, ‘interest’. Thank you banking families for creating a veritable shitshow of suffering, slavery, and human misery. The moral decay, extreme dumbing down, the promotion of endless distractions and addictions, and constantly dividing the people are not a result of our immoral monetary system – they are absolutely essential to keep it going.
    Interesting to ponder what kind of world we would have today and the mindset of the average human being if banking families had never succeeded in replacing honest money with debt based fiat currencies.

  • Pilgrim

    As a motorcycle rider of many years, I can tell you that “kickstarting” only brings the piston over top-dead-center one time. If the fuel/air mixture isn’t perfect, it won’t start, and the unburnt fuel left in the cylinder makes the chance of a second successful “kickstart” less likely. Each subsequent unsuccessful kick is increasingly less likely to result in a running motor.

    Motors with factory tolerances and settings are more likely to start than an old poorly maintained motor.

    The parallel to the economy is striking. An economy with Austrian tolerances and settings will start and run at optimum levels. Allowing Keynesian decay to occur, particularly after filling the tank with Marxist fuel, often results in an economy that sputters and dies. With sloppy tolerances, incorrect settings and poorly formulated fuel, there’s not much chance of getting it re-started once it dies no matter how much kickstarting is tried.

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