El-Erian: Damning Gold With a Half-Hearted Nod
By Staff News & Analysis - September 29, 2014

Falling Out of Love With Gold … Gold has let down its loyal investors during the past year, declining by about 8 percent. It has failed to benefit, as one might expect, from a series of geopolitical crises and concerns that stocks are overvalued. It has even failed to keep up with government bonds, usually the other recipient of flight-to-quality trades. Moreover, it has responded weakly to the excitement in India – its biggest physical retail market – over the prospects for economic reforms under newly elected Prime Minister Narendra Modi. – Bloomberg

Dominant Social Theme: Gold is unloved but has its uses …

Free-Market Analysis: Mohamed A. El-Erian was basically number two at the bond giant PIMCO until he decided he wasn't going to wait for Bill Gross to retire. Too bad for him … as Gross quit the other day.

El-Erian, meanwhile, is writing over at Bloomberg, among other gigs, and this excerpt is from one of his latest columns. It is typical of El-Erian in the sense that it purveys mainstream wisdom while weakly acknowledging that there is something else.

This is El-Erian's strength, actually. Many financial journos are so steeped in Keynesian propaganda that their rhetoric is entirely predictable. El-Erian occasionally allows a bit of light to shine in.

Here's more:

Yesterday again highlighted gold's malaise. In a lousy day for stocks, with every sector losing ground and major indexes falling as much as 2 percent, gold prices essentially went nowhere even as the bond market managed a decent rally.

I can think of three major reasons for gold's disappointing performance. First, it usually does badly when the dollar appreciates. The greenback has gained during the past year as foreign-exchange traders have started to take account of less accommodating U.S. monetary policy, including the widening contrast with Europe and Japan.

Second, gold has been hurt by a general slump in commodity markets as global economic growth has fallen short of expectations in both developed and developing nations.

Third, it has found few investors willing to buy on the dip, either directly or through commodity funds. None of this is likely to change anytime soon absent a bigger conflict in Ukraine or the Middle East. As such, gold is likely to continue to disappoint its devotees.

Yet investors shouldn't forget that gold has its place and that a well-diversified portfolio should have gold holdings equal to 3 percent to 8 percent of total assets. The biggest risk facing investors today is a large and sustained fall in assets whose prices have been artificially supported by central banks – particularly bonds and equities.

This last paragraph distinguishes El-Erian from just-plain-lousy commentators, as he accepts the common wisdom regarding gold but doesn't get carried away with gold-hatred.

Let's examine the three points that El-Erian makes.

The first is perhaps the strongest. In modern times, gold has often moved contrary to the dollar, as he suggests, though this does not hold true during a golden bull super cycle. For nearly a decade at the beginning of the 2000s, the dollar moved down against gold, no matter its appreciation versus other currencies.

El-Erian doesn't mention this sort of appreciation, nor does he mention the 1970s appreciation, as he would have to grapple with the cycle itself, which raises uncomfortable questions about the 2000s. One might end up addressing an uncomfortable question – why physical gold accrued against the dollar even though paper gold and junior miners didn't.

Second, he mentions that gold has been hurt by slumping commodity prices and lower-than-predicted growth in developing markets. What he is referring to here is the idea that monetary velocity and industrial demand helps raise prices across the board and often expands precious metals' valuation against the dollar.

However, while this is true, gold's price against the dollar is not dependent by any means on economic animal spirits. There have been plenty of times in the past quarter-century when economies worldwide have expanded significantly without having an appreciable impact on gold.

Third, and this is perhaps his most interesting point, he maintains that gold is not being purchased "on the dip." Later in the article he observes that Indian demand remains subdued.

These observations run curiously counter to what we can perceive of gold demand based on various reports – including vast gold smuggling in India, furious demand in China for physical gold and, most recently, articles about wealthy investors purchasing expensive "Italian-style" gold bars.

There is a great deal of controversy over state-sanctioned gold manipulation; while nothing has been publicly (formally) established, there are various ways that the price of gold CAN be manipulated if one has access to enough funds and is sophisticated about the market process.

The most puzzling part of El-Arien's commentary has to do with investors not buying on dips. But if he is basing this observation on price-action alone, there are lots of reasons why the market doesn't seem to be reacting in a way that confirms pent-up demand.

But as we mentioned above, the demand DOES seem to exist – in China and India gray markets and among the wealthy who are escalating gold-bar purchases.

Such articles as these – despite El-Erian's mild apostasy – are less and less reflective of what's really taking place in the larger trading scene.

This is after all a time when it is admitted that central banks are directly purchasing securities; a time when money production is being justified in the trillions without any legislative involvement; a time when gold itself is in such short supply that the Germans must wait years for the US to return what has been "stored" for "safe-keeping."

El-Erian in this article does make a half-hearted argument for buying and holding gold but he surely doesn't begin to scratch the surface of what is really going on in precious metals markets – or the larger financial marketplace.

In the 21st century following the great crisis of 2008, the system itself has vastly eroded. Central banks have pumped some US$50 trillion into the larger marketplace reportedly while derivatives may have reached the US$1,000 trillion mark or more.

There will be a reckoning once this last great surge in equity markets subsides, whenever it does. Until then mainstream viewpoints – the meme of the market-as-usual – will persist.

After Thoughts

At that point, the Keynesian rhetoric that passes for financial journalism in the 21st century will be exposed. Unfortunately, the exposure will be ruinously painful, and for most people, significant comprehension will come too late.

You don’t have to play by the rules of the corrupt politicians, manipulative media, and brainwashed peers.

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Posted in Gold & Silver, STAFF NEWS & ANALYSIS
  • Bruce C

    The real problem is that even the most superficially knowledgeable person knows or can sense that a high gold price is an important and ominous bell weather for all things monetary and economic.

    Therefore, the financial engineers have to keep the gold price down to avoid panic.

    Erian’s admission that central banks have “artificially supported” bonds and equities is a tacit admission that the gold price has been artificially suppressed (along with interest rates) as part of its financial repression scheme (ZIRP).

    Erian also has his interests to protect, so he doesn’t want people dumping bonds because of the “biggest risk facing investors today” – “a large and sustained fall in … bonds and equities.”

  • 3 to 8% of your portfolio in Gold will do little to forestall a major, derivative driven financial collapse, and nothing at all if it is in the form of the GLD ETF or other similar products. Only physical metal outside of the banking system and entirely outside of the digital domain will be a hedge against what is inevitably headed our way. It is truly the blind leading the blind in the world today and at some point all the lemmings will go over the cliff together. Spain, Portugal, and Italy (lets include France) can borrow vast sums of money at truly laughable (because they are so low) rates, complacency rules and risk has been eliminated from everyone’s thinking. Of course that is just fine since a default will never be allowed to occur (it will be called something else).

  • Danny B

    Erian can be compared to Jim Rickards when Jim endorses the SDR. In Jim’s position, he has to talk the party lines even if his heart isn’t in it. Rather than El Erian, it’s a better idea to listen to Andrew Maguire.

    China is buying a (declared) 1,000 tons per quarter.

    The BOE has a new program to sell gold. This tells you that they have a serious liquidity problem.
    Russia has a billion barrel oil discovery in the Jura sea. With that in their back pocket, they can take their entire foreign currency reserves and buy gold.

    • criticus

      How does one know where Rickards’ heart lies? Hasn’t it been fairly well established he is a controlled opposition figure working for the intelligence agencies? His mission appears to be that of guiding us toward acceptance of a global SDR/bancor currency that just might be backed in some way by gold. As for Andrew Magure, it is suspicious that he is disallowing Bill Cohan from publishing his revelations regarding silver manipulation unless published in a mainstream journal. Zerohedge apparently wasn’t acceptable to Maguire so the story remains under wraps. Something doesn’t smell right.

      • Bruce C

        I don’t trust Rickards. He seems to be just a perennial talking head and salesman for his books. He can basically say anything and not be disputed because there is often no way to prove some of what he says one way or the other, and/or it will be too late to matter when the truth becomes apparent.

    • robertsgt40

      Sadly, Maguire will not consent to having his report about manipulation of PM be published. I think someone got to him.

      • Danny B

        Wiki; “Maguire and his wife were allegedly injured in a hit-and-run accident a day after he was identified as the source of the allegations.” I haven’t seen the bruises myself.

        • robertsgt40

          He did blow the whistle on JPM silver manipulation. Along the way, I think a lotta pressure was applied, like “we know where all your family and friends live”, maybe. Hard to say.

  • Guy Christopher

    I agree with most of Daily Bell’s dissection of El-smartest-guy-in-the-room-Erian’s comments on gold. But I don’t find El-Erian’s comments friendly at all to the gold story. El-Erian says gold has found few investors willing to buy on the dip, either directly or through commodity funds, among his other silly observations. He overlooks central banks and private buyers who are depleting somebody’s vaults somewhere, and overlooking dwindling bullion shops’ inventories. He overlooks a fellow reportedly walking into an Arizona bullion shop looking for $40 million in gold. Mention to Russia, Iran, China, Dubai, Ukraine and Turkey, just for openers. that no one wants gold.

    Kudos to Daily Bell for underlining the sleepwalking German government’s stolen/missing gold, and for reminding us of the uncounted trillions in paper money currently being printed without a public vote, but a GONG! for this: “There is a great deal of controversy over state-sanctioned gold
    manipulation; while nothing has been publicly (formally) established.”

    Really? Talk to GATA at which has a stack 12 feet high of solid evidence painstakingly collected over the past 15 years, on the record, proving beyond question State-Sponsored gold-market price suppression, that would take you a half-year to read. That evidence has been purposely overlooked, mocked or outright buried by every business publication on the planet in one of the greatest acts of journalistic cowardice known to history. I know Daily Bell supports GATA, (they’ve fussed at me for doubting them) so DB’s observation on the existing, never-challenged evidence on this point escapes me. As for the price suppression being “controversial,” I believe a topic has to be widely discussed and recognized as an issue before it can be termed “controversial,” which it is sadly, not. To DB: My thanks for this forum. I am a fan of DB, believe it or not.

    • Formally.

      Recognized by Congress. Pursued by regulators. Investigated by FBI. Indicted by the Justice Dept.


      • Guy Christopher

        I just heard William Cohen’s interview with Dave Janda. He reminds us the Bernie Madoff saga was also not ‘formally’ established,” while constant complaints were reaching the SEC, and ignored by the SEC, for a decade before Madoff’s final exposure. The word ‘formally’ as used in the article above seems to be taking on the definition of “a state-sanctioned idea which is state-sanctioned for discussion leading to a state-sanctioned disposition.” I’ll buy that definition, because it certainly applies to decades of state-sanctioned and state-engineered suppression of gold’s true value. And it applies to the state-sanctioned suppression of the issue from public view (with full media cooperation & complicity).

        • We’ve conducted extensive on-the-record interviews with GATA. But GATA too has never received a formal industry endorsement of its work. It’s never generated an extensive formal regulatory review of its research. It’s never provided a briefing to law enforcement officials that we know of, or participated in judicial examination as an expert witness, etc.

          The formal mechanism of national justice has not fully been brought to bear on US and international gold manipulation. That’s just a fact. There have been at best a few halfhearted swipes …

          • Hugo

            Hi DB

            You state ”The formal mechanism of national justice” It is also international justice that is as best ”halfhearted swipes”.I wonder why that is (smile) To me what our (real) elites learned is that our current idea of (reserve currency) money does not work in the long run and want to remove some MAD (Mutually Assured Destruction) so to say. Besides the fate a few of their power hungry ancestors and rest of family met after long times of turmoil (both war and financial).

            I hope and think mr Sinclar and FOFOA (among others) are right, central banks and physical gold borses are transforming the money and currency worlds big time. The ECB is valuing their gold at market prices and they sure are not alone doing this, pic via JS mineset . Oh boy do them ”mark to market” CB’s have and incentive to make gold really expensive and thus save their balance sheet. For legacy reasons (defauling internatlly and externally on gold, not dollars) the $ reserve currency is in troube but since reserve currency. supported. Less and less so though…

            If I read the tea leaves well there will a spit between currency and physical wealth. Focal point gold since CBs are aiming for that. It is derected history for sure. Iam sure they know how to use the ”first they ignore u, then they laugh at you, then they fight you and then you win”. Still valuing and ouince of gold for $42 something on the FED books, silly USA and friends (smile)

            We have cycle studies that go back hundereds of years. Iam still looking into the theme that the Roman Empire elites created the Byzantine empire that lasted around 800 years. Amazing stuff and so hard to asses the truth but Iam sure happy to read about alternative history.

            Too long a story but the Byzantine empire is way interesting from a money and powersharing persprective in current times. Sometimes I think that this empire will go to a next one in a contolled way.
            Probably globally run.

          • Scott W

            “Roman Empire elites created the Byzantine empire”
            This sounds fascinating, where can we read more about this.

            “I am sure happy to read about alternative history”
            You might also be interested in, which describes the fictional time period known as the Dark Ages, starring the fictional character known as Charlemagne. Heribert Illig searched Europe for archaeological evidence of Charlemagne’s legacy and found absolutely nothing but empty fields and cathedrals that are more suited to a later dating.

            Another alternative history of a different period is provided by Immanuel Velikovsky, reconciling Egyptian and Jewish history by showing that the events of the Egyptian Middle Ages fit better when moved to either an earlier or later period. Velikovsky was viciously attacked by the media because his theories made so much sense and disrupted the mainstream apple cart of “established science / history”.
            Furthermore, Michael Steinbacher has melded the catastrophes described in Velikovsky’s books with concepts from the Electric Universe, to come up with an alternative geology theory that makes a whole lot more sense than what the mainstream geologists will tell you. His work can be found at The geology found throughout the world can best be explained with catastrophic origins rather than with the painstaking gradualism theory that often contradicts itself and makes extensive use of ad hoc explanations.

          • Hugo

            Hi Scott W,

            ”This sounds fascinating, where can we read more about this.”
            Boy, depends on what you want to know, it spans centuries of time (smile) Byzantine was basically a pull back position. What is crucial is to understand though is in the centuries it took for Rome to fall. The Emipire was allowed to fail since could not be maintained. West and East Roman empire were split. The East Roman empire was ”rebranded”. Byzantine Empire and went back to hard currency, rule of law and so on that once made the Roman empire great. They lasted 800 years. The Romans 1000, reserve currency empires since 1450ish… around 100 years on average.

            Anyway, if you want little disputed views on that empire and how it worked, wikipedia is a good start to get the general idea.

            On the electrical universem it makes sense to me to a a degree just so hard for me to know since no a sientist, at best Iam a beginner there . Iam quite a bit more sure that the new (?) human civilisation started not with the Romans nor Egyprians but earlier in time.

          • Scott W

            Thanks for this insight Hugo! This explains a lot. The Roman Empire didn’t actually fall, it just moved its headquarters to Constantinople and downsized the extent of the empire. Elsewhere, I read that Venice was part of the Byzantine Empire. According to Webster Tarpley, in Against Oligarchy, the Anglo-American oligarchies originated in Venice. The Venetians used the crusades to overthrow Constantinople. I’m guessing that the oligarchs shifted their headquarters from Constantinople to Venice. If so, then the Anglo-American oligarchs, that we despise so much, are directly descended from the Roman oligarchs. No wonder they’re so arrogant — they’ve been controlling the world for a few thousand years.

            This empire was likely renamed to the “Byzantine Empire” to provide the illusion that the Roman Empire was completely wiped out, when in fact it had merely shifted its centre of operations from Rome to Constantinople to Venice to London to Washington. I don’t think they’re done shifting yet.

          • Hugo

            My pleasure Scott W and agreed, they are not done shifting and maybe will never be done shifting since so profitable…

          • Hugo

            I made, what I think, was a nice post but the posting system ”eaten my reply” If the DB (elves) can repost it, please do so. Next time I will save my reply (smile)

          • All your posts are up.

          • Hugo

            I now see, thanx, usually my posts show instantly but the one did not show after around 15 min. Good to see my efford was not lost and turned into digital noice (smile)

          • Guy Christopher

            Beyond the half-hearted swipes including GATA testimony at the federal CFTC in 2010, and beyond half-hearted but expensive and time-consuming swipes under testimony by sworn oath in GATA’s federal court lawsuits, and beyond thousands of half-hearted letters sent to congressional reps by GATA supporters over the past 15 years, and beyond half-hearted public presentations at international forums attended by hundreds of half-hearted attendees from around the world year after year, and beyond extensive direct communications with Chinese, Russian and South African government representatives half-heartedly but vitally interested in learning all about US government illegal diddling of gold and silver markets, and beyond The House of Half-Hearted Representatives voting overwhelmingly to audit the Federal Reserve to force the people’s government to account for America’s gold and America’s true debt load, and beyond all those events I can’t remember right now and may not have even heard of, you may be right. And that, DB, as you put it, are just the facts. Here’s one more fact. The free market has been brought to bear successfully quite a few times on US and international gold manipulation over the decades. And that is exactly where GATA, as I understand GATA, is positioned.

            If free peoples wait on the formal mechanism of national justice to receive justice, then there will never be justice earned nor justice deserved. My thanks again to you for this forum.

  • Sam

    Daily Bell… “There is a great deal of controversy over state-sanctioned gold manipulation; while nothing has been publicly (formally) established.”


    The argument presented here is very middle of the road and of no practical value.

    As Paul Craig Roberts pointed out the other day…. “The Federal Reserve and its bullion bank agents (JP Morgan, Scotia and HSBC) have been using naked short-selling to drive down the price of gold since September 2011. The latest containment effort began in mid-July of this year, after gold had moved higher in price from the beginning of June and was threatening to take out key technical levels, which would have triggered a flood of buying from hedge funds.

    The Fed and its agents rig the gold price in the New York Comex futures (paper gold) market. The bullion banks have the ability to print an unlimited supply of gold contracts which are sold in large volumes at times when Comex activity is light.

    Generally, on the other side of the trade the buyers of contracts are large hedge funds and other speculators, who use the contracts to speculate on the direction of the gold price. The hedge funds and speculators have no interest in acquiring physical gold and settle their bets in cash, which makes it possible for the bullion banks to sell claims to gold that they cannot back with physical metal.

    Contracts sold without underlying gold to back them are called “uncovered contracts” or “naked shorts.” It is illegal to engage in naked shorting in the stock and bond markets, but it is permitted in the gold futures market.”

    • Formally, as in “announced,” sanctioned and prosecuted. Formally.

    • jackw97224

      Yeah, it is like me selling a car for future delivery and when the “Day of Reckoning” arrives, I simply vanish or I give you back your fiat paper currency after having earned a tidy 3-5% using your money to invest in a TIPS or whatever (Doesn’t make any difference the inflation rate as I am using your money).

  • Bruce C

    What’s telling is that the whole subject of gold manipulation is so
    emotionally charged. “Everybody” knows that just about everything is
    manipulated to varying degrees and at different times – not just
    interest rates – and yet nobody seems to care. But mention PM
    manipulation and everyone strains to dis-believe it. That shows that
    gold (at least) is not just another commodity, and that its price
    signals are universally understood and important, hence the effort to keep it
    controlled. The gold market is probably the most secretive and opaque one
    there is.

    Ex-Fed Chairman Paul Volker once said (I’m paraphrasing) ‘My only regret is that we lost control of the gold price.’

  • jackw97224

    “Reasons” for the fall in the price of gold seem to be confused with “correlations.” There is a difference between “reasons” and “correlations” and El-Erian attempts to conflate the words rather than distinguish the differences! A drop in the Stock Market does not cause gold to fall in price it is just that the two are correlated. A slump in commodities does not cause a slump in the price of gold but the two are correlated. And few investors refusing to buy on the “dip” does not cause the price of gold to fall; they are just correlated. Whatever the root causes of gold’s fall in price, the declines are not caused by correlations with other events, well, IMHO.

  • Professorlocknload

    Not so sure if gold’s temporary loss of luster might not be the result of too many other choices of exotic venues at which to throw ever increasing quantities of low cost fiat liquidity. Really, aren’t Twitter and Alibaba more fun to talk about at the coffee klatch than barbarically stodgy minerals?

    The “meme” as referred to here is, the CB’s will simply print, print, print and the turkeys will continue to soar with the eagles, so it’s risk on until the “bell” rings. Simple enough as long as a black swan doesn’t join them in flight.

    In my view, gold is suppressed here by universal confidence in the “meme” ie; lack of fear.

    That and maybe, to a lesser extent, in times of sabre rattling, governments selling to acquire foreign reserves.

    Until it’s realized that not much more than fleeting confidence is all that is holding this illusion together, one can either join the dance or keep their seat until the music stops. I don’t know, then maybe auction it off to the highest bidder?

    Not ignoring, that if Au is good enough for CB’s it’s good enough for the Proles.

    As an aside, in the end, considering the reasons for holding gold, manipulation won’t be proven effective in any significant manner, other than of paper prices. The street will set the price of the real thing.

    • davidnrobyn

      “Really, aren’t Twitter and Alibaba more fun to talk about at the coffee klatch than barbarically stodgy minerals?”
      Actually, no. I probably have a gearhead’s view of the universe, but talking about gold and silver gives me insight into the topic of money itself and how it works, and that’s fascinating (to me–probably incredibly boring to some others :-))

      • davidnrobyn

        Allow me to run on a bit longer…I remember my “Aha” moment a number of years ago. It was when I suddenly realized that the sizes of the dime, quarter, and half dollar were not arbitrary–they were PROPORTIONAL. My jaw dropped open, and I said something like, Ohhh… It was a paradigm shift as I instantly lost most of my previous, misplaced faith in our government when I realized what a cynical, devious, manipulative charade the “sandwich”, base-metal counterfeit coins were. And to think that the same Gov reserves the exclusive right to call its subway tokens “coins”! Hahaha.

  • davidnrobyn

    The tone of El-Erian’s argument gives the impression that the purpose of buying gold is in order to be able to sell it back for more of the fiat it was bought with. This may be true in the minds of many price-chasing “investors”, but it contradicts the true value of purchasing gold–to get OUT of fiat currency and into a real asset. Of course, we wouldn’t expect El-Erian to mention this, but given his surname, he must be aware of it.

    • Bruce C

      No one should expect a publicized representative and salesman for a product (bonds) and framework (the staus quo) to understand – or certainly promote – something different.

      • davidnrobyn


    • Guy Christopher

      El-Erian won’t say it, but there’s a long list of very wealthy folks who will say, and who are just as influential as, or more so than, El-Erian: Paulson, Einhorn, William Kaye, Grant Williams, Kyle Bass, Jim Rickards, David Stockman, Greenspan (in his early years and even recently), even Buffet’s father, who was a champion of gold, and Kissinger, according to records recently unearthed. The list goes on. And we don’t know the names of all the three billion Easterners, from newly minted millionaires to dirt scratching peasants who are furiously stocking up on metal while shedding American fiat. What a laugh they must be having.

      • Not laughing much in the past 5 years. In fact, considering price and storage charges and the selling discount, those gold hoarders have taken a real bath since the recession. I hope you are not one of them.

  • It is curious that gold, the purpose of which supposedly is to provide financial stability, does not seem to fulfill that purpose.

    Inflations, recessions and depressions all have occurred during various gold standards. And during times of crisis, when one supposedly would want to lean on gold for its “stabilizing” effects, that is when gold is abandoned by all nations as being unstable.

    So, the question remains, “Aside from the fact that gold historically has been in demand by many people (as have other commodities), what evidence exists that gold either should back, or take the place of, today’s “accounting” money?

    How is gold more useful as money than what erroneously is termed “fiat” money? (“Erroneously,” because every form of money, from corn to coconuts) exists because of the fiat of its issuer or governor.)

    • Earl of Isadore

      It is curious that fiat (coupons spoken into existence by a small group of individuals in a room somewhere ), the purpose of which supposedly is to provide financial stability, does not seem to fulfill that purpose.

      Inflations, recessions and depressions all have occurred during various fiat economies. And during times of crisis, when one supposedly would want to lean on fiat for its “stabilizing” effects, that is when physical gold is purchased by individuals, as every fiat scheme in history has eventually collapsed yet gold is still valued as a store and medium of exchange.

      So, the question remains, “Given the fact that gold historically has been in demand by many people for use as money, what evidence exists that fiat should completely replace it?

      How is fiat more stable as money than what erroneously is termed the “barbarous relic”? “Erroneously”, unless the central banks that currently expend a great deal of resources acquiring, storing and interacting in the marketplace on behalf of the metal are barbarous institutions.

      • The “small group of individuals somewhere” are the founders of America, who created the dollar, for it is the dollar, not gold, that always has been our sovereign currency.

        It is true, that because every form of money actually is a form of debt, that there have been periods when gold was the official collateral for our (debt) money.

        So what you really are campaigning for in not gold as money, but rather, gold as collateral — and not just collateral, but the limit for money creation.

        But if gold is to be collateral or a limit, that must be decided by — yes, you guessed it — “a small group of individuals, somewhere.” That small group must decide how much gold a dollar is worth, and what sort of gold standard we will have — both of which have been changed by small groups of individuals, many times..

        Running a nation always devolves to that “small group of individuals.”{

        • Earl of Isadore

          That small group of individuals out of survival instinct must always have their ears to the ground and wetted fingers in the air. These days it seems they are sensing some new conditions. Thank you Rodger for your oppositional comments that bring DB truths into sharper focus. If you didn’t exist DB would have had to create you.

          • Every day he gets more ridiculous. Maybe it’s good not to ban him for the entertainment value.

            For instance, the initial US dollar was modeled on the Spanish SILVER dollar.

            From Wikipedia:

            “The United States Mint was created by Congress following the passing of the Coinage Act of 1792. It was primarily tasked with producing and circulating coinage. The first Mint building was in Philadelphia, the then-capital of the United States. The Mint was originally placed within the Department of State. Until the Coinage Act of 1873 when it became part of the Department of the Treasury (in 1981 it was placed under the auspices of the Treasurer of the United States). The Mint had the authority to convert any precious metals into standard coinage for anyone’s account with no seigniorage charge beyond refining costs.”

          • Yes, the Mint was created by what Earl calls “a small group of individuals.” So, what is your point, and specifically, what did I write that is “more ridiculous” (he asked, knowing the answer would be a sarcastic non-answer, containing no facts)?

          • The mint was open to anyone who wanted to coin metal. It was the opposite of the kind of authoritarian monopolies that you find so attractive.

          • Guy Christopher

            Thank you, Daily Bell.

          • Anyone can coin metal, today. You can issue DB coins any time you wish, and make them out of anything you wish. No law against that.

            You even can stamp them with any value you wish. Stamp them “1,000 Bells” for instance. You even can stamp them $1,000, so long as they do not impersonate United States coins.

            Will people accept your $1,000 Bells” coins as money? It depends on your full faith and credit. As money (aka “debt”), their value is based on the full faith and credit of the issuer.

            But sorry, since your full faith and credit is limited, people probably won’t accept your coins as money.

            If your coins happen to be made from a precious metal, like gold, silver, platinum, palladium or uranium, people will accept them for their metal content or for their antique value, but not for their money value.

            I assume you do know the difference between money and something of value, right?

          • Scott W

            The retailer Canadian Tire has been issuing its own currency for decades. On payment with cash, they give a 1 – 2 % rebate using their own currency. This currency is redeemable in any Canadian Tire store. This currency is not limited to redemption in Canadian Tire; many charities also accept Canadian Tire money. If the Daily Bell had a retail outlet that accepted “Bells”, then “Bells” would readily become a valid currency.

          • Exactly.

            And that currency has value because of the full faith and credit of the issuer. If the issuer’s full faith and credit disappears, the currency becomes worthless.

            Like all forms of money, that currency is a debt of the issuer.

            Thanks Scott.

          • The US dollar enjoys whatever “faith and credit” it has partially because it is built on coercion: The Saud family has declared they will only accept dollars for oil, thus forcing nations to hold dollars throughout the world. This hasn’t impelled US officials to act responsibly however and the dollar continue to lose value at a rapid clip. Far better to use money that is accepted by marketplace competition than money that is imposed by force. You prefer the latter, we prefer the former.

          • You are correct. The demand for the dollar is based on coercion.

            In fact, all money is based on coercion. That is why they call it “fiat.” Look up the word “fiat” and you’ll see: “an authoritative or arbitrary order.”

            Every Monetarily Sovereign nation issues its money by arbitrary order. In contrast gold and silver and platinum et al are not money. Their demand is not based on fiat, just like the demand for corn, crude oil and baseball cards.

            You now have put your finger on one difference between money and a commodity.

            As for “lose value at a rapid clip,” I assume you are talking about gold for the past 5 years??

          • All money is based on coercion. A nonsensical statement. You just finished saying that fiat money has credibility because of the creditworthiness of the issue. Either “all money” is based on coercion or its not. Also, the dollar has lost between 95 and 99 percent of its value over the years. You have three responses left today. That’s what you get for twisting the truth.

          • The dollar has demand because of the full faith and credit of the U.S. government. This is far more than mere “creditworthiness” as it also includes some coercion. Here are some of what full faith and credit includes:

            A. –The government will accept only U.S. currency in payment of debts to the government
            B. –It unfailingly will pay all it’s dollar debts with U.S. dollars and will not default
            C. –It will force all your domestic creditors to accept U.S. dollars, if you offer them, to satisfy your debt.
            D. –It will not require domestic creditors to accept any other money
            E. –It will take action to protect the value of the dollar.
            F. –It will maintain a market for U.S. currency
            G. –It will continue to use U.S. currency and will not change to another currency.
            H. –All forms of U.S. currency will be reciprocal, that is five $1 bills always will equal one $5 bill and vice versa.

            For example, you will not be allowed to pay your taxes in euros. That is coercion. But the demand for dollars is based on all of the above. Get the difference?


            I hope you realize that usually I write just one comment for each post. Every other comment is in response to people who tell me I’m wrong, most often without providing any facts. You should tell your readers that, “You’re wrong;” “You’re ludicrous”; “You’re embarrassing yourself” et al, are not really discussion points, and they add nothing to your blog.

            Just a suggestion.

          • The dollar is called “petrodollar” for a reason. What you call full faith and credit is actually coercion based on seemingly threatening the Saudis and maintaining military resources well above and beyond those of the rest of the world. You have two responses left today. Good luck.

          • All money — not just the U.S. dollar — is based on the full faith and credit I listed for you.

            And the dollar was based on full faith and credit since it was created, long before oil was an issue. So please don’t try to connect demand for the dollar and Saudi Arabia.

            Oil is traded in dollars, because the U.S. is the world’s largest economy. For a similar reason, all airline pilots, from every nation, speak English.

            America is at the center of world commerce. Some day in the future, if America no longer is at the center of world commerce, demand for the dollar still will be based on full faith and credit, as will every other currency.

          • Incredible. Prior to the petrodollar, the US dollar was based nominally on gold. Nixon abrogated the gold basis. You are now at a point of denying basic economic history.

          • Young lady, please. It’s not incredible. It’s exactly as I have been telling you:

            All money is a form of debt. Debt requires collateral. By fiat, the U.S. government decided that X number of grains of gold would equal Y number of dollars.

            At the start, gold and full faith and credit were together the collateral for the dollar. But the equation regarding gold has changed many times, always by government fiat. Today, by government fiat, gold no longer is collateral for the dollar.

            What has not changed is the full faith and credit backing the U.S. dollar. That has remained consistent through the years.

            Full faith and credit consist of at least the 8 parts I told you previously.

          • Your suppositions about gender are as suspect as your monetary analysis.

          • 🙂

          • Earl of Isadore

            RMM, why do you feel the need to have the last word? Your opinions are not considered authoritative by participants here, and like the rest of us, you are a guest in the DB “living room”. Your sarcastic and mocking posts in response to challenges are really truly bad manners. Your base premises are untried and unproven. Nevertheless, no one is asking that you be banned, but you should really do a better job of minding your Ps & Qs; that would first and foremost have you self-limiting the number of your posts even when other commentors say you’re wrong.

          • Perhaps if the participants were less influenced by authority, and more influenced by facts, they would be more receptive to new ideas. That is why we all are here, isn’t it? Why else would anyone read a blog? To learn what they already believe?

            Really, why do you bother to read these comments if you already know and agree with everything. Rather than telling me I’m not polite, why not present facts that disprove my statements — or better yet, open your mind to the possibility some of them may be correct.

            When someone tells me that half the planet thinks gold is money, and these people are getting rich while users of dollars are getting poor — what shall I say about something so devoid of fact?

            And when DB tells me demand for the dollar is not based on the U.S. government’s full faith and credit, but rather has demand because we have coerced Saudi Arabia — come on!

            And when people repeatedly confuse “store of wealth” with “money,” would you rather I agreed?

            And when there seems to be no understanding about the differences between Monetary Sovereignty, a fundamental aspect of economics, and monetary non-sovereignty, should this be ignored for courtesy purposes?

            By the way, exactly which “base premises” are “untried and untrue”? That is what we should discuss; not my “P’s and Q’s”

          • Earl of Isadore

            You’re doing it again

          • Exactly which DB truths are you referring to, and in what specific way were my comments in error?

        • Guy Christopher

          Mr. Mitchell, your posts throughout this commentary are so untrue and so ludicrous on so many counts I don’t know where to start. So I’ll just address one, which I see only reinforces one reply by Daily Bell to your posts. Not only was the dollar modeled on the Spanish silver dollar, it became known as the “dollar” because of the German silver coin widely circulated throughout the colonies prior to The Revolutionary War– the Thaler, which happened to be about the same size as the first US Silver Dollar. All foreign gold and silver (and copper) coinage in circulation throughout the world prior to this nation’s founding was used as currency on these shores for 100 years after the American Revolution. The young US government was so slow in minting it’s own gold and silver currency in necessary volumes for commerce that foreign gold and silver remained legal tender by law until the 1850’s, and was still used as everyday currency throughout much of the rest of the 1800’s. Gold is gold and silver is silver, no matter what nation stamps it’s logo on it. It was, and it is.

          Since I have a moment, I will add one other thought spurred by your comments somewhere in these pages: Since three billion people on this planet see gold and silver, and not paper fiat, as true money and true stores of wealth, and since those three billion people are becoming more wealthy and more influential minute by minute while those of us Westerners trade our wealth to them for the cheap crap they sell to us, making us less influential, and since the number of nations, busy at work rejecting our printed dollars as wealth, is growing by the carload everyday, it should darn well matter to you and to everyone else that they see gold and silver as money and as stores of wealth and not paper fiat printed up this morning. What they believe is important to them and they could care less what you believe. And that should be really important to you.

          What is becoming very clear is that the paper dollar, with nothing backing it but ‘full faith and credit,’ is quickly losing that full faith and credit, that confidence, worldwide. It may not be clear to you, but it is clear to everyone else. And the reason it is losing that confidence is because it is being replicated, on rag paper and digitally, by the trillions and trillions of units with no end in sight. And it should matter to you that once that confidence is gone, it ain’t coming back, and neither is the influence it has purchased for the past 70 years since Bretton Woods. And it should matter to you that history, not my opinion, but historical fact, has recorded the US defaulting on its currency, defaulting on it’s promise to pay, cheating the people who trusted the monetary promises of the US government, five times in past years prior to today. The paper currency the government prints now is not infallible by any historical measure. History and mathematics, not opinion, both show the US paper dollar will not survive.

          And it should matter to you that every civilization since antiquity has considered gold and silver as true stores of wealth above all other forms of payment. And it should matter very much to you that the US government is so out of ideas, and so terror stricken with it’s own growing impotence on the world stage, and so unbelievably corrupt, that it has to illegally and immorally suppress the paper dollar values of gold and silver to a ridiculous extent merely to prop up the mirage and the lie that the dollar retains any value at all, just as it spreads its lies about inflation numbers, unemployment numbers, national debt numbers and every other phony number coming out of DC. It should matter to you the US Government has chosen to ignore history and mathematics in order to enforce an illusion that puts you and everyone you care about in peril of impoverishment.

          The dollar bill you favor so much says right on its face that it is debt. That’s what the word ‘note’ in ‘Federal Reserve Note’ means — debt. That’s the definition of ‘note.’ Not wealth, but debt. And, sir, nowhere is debt the equal to wealth, except perhaps for those who choose to believe only what they are told to believe by a dishonest, lying government with its back to the wall. There are powerful forces at work to replace the USA as the world’s rule-maker, and at some point, we in the US will not be in any position to make the rules for those folks, because we are handing them our wealth, and our influence, without a shot fired. And at that point, your favored paper dollars will be worthless, or at best more worthless than they are even today, while those who put their faith in thousands of years of recorded monetary history will have at least a shot at financial survival. Make fun if you must with your distorted commentary, but you will not be the last man standing.

          • Unfortunately, you don’t seem to understand the difference between something of value, vs. money.

            Agreed, that many people view gold as a store of wealth, though that hasn’t worked out too well in the past five years. So called “paper” has done better.

            To my knowledge, no nation views gold as money, nor ever has. Money is something very specific, not just something that has value.

            U.S. gold coins no longer are money. When they were money, their value was not based on the value of gold, but rather on the value stamped on them. The same is true of silver coins.

            They were coins, that happened to be made from gold or silver. As money, their value would have been the same, even if they had been made of lead — or paper.

            Every form of money in history also has been, and remains, debt. There can be no money that is not also debt. All money is based on the full faith and credit owed by the issuer. To learn why, see:

            As for gold, it’s just a metal that people like to own. It’s no more money than is platinum, silver, copper, palladium, uranium, real estate or crude oil. To be money, there must be full faith and credit by an issuer. Gold is not backed by any issuer’s full faith and credit.

            Perhaps DB can explain to you the differences between money and something of value.

            ” . . . the lie that the dollar retains any value at all . . . “

            If you don’t think the dollar “has any value at all,” please send me yours. I happen to think it has lots of value.

          • davidnrobyn

            “Mr. Mitchell, your posts throughout this commentary are so untrue and so
            ludicrous on so many counts I don’t know where to start.”

            –Welcome to the wild, wacky, weird world of RMM, Guy! And rots o’ ruck getting him to see your argument. But I enjoy reading your commentary, both here and elsewhere.

          • Guy Christopher

            Thanks, davidnrobyn. I appreciate your note. I’ve learned my lesson.

          • I can understand that you don’t know where to start.

      • Guy Christopher

        If money was meant to provide financial stability, then more and more
        printed money would certainly amount to greater and greater financial
        stability, which is the exact opposite of what is happening to global
        economies today. Money, meaning fiat, gold, silver, fur pelts or otherwise, is not intended to provide financial stability. Money, in various forms, developed over the centuries as an acceptable medium of exchange by those who chose to use it as such.

        Possession of wealth, in the form of savings, provides financial security. The lack of savings is financial instability. There is not, nor has there ever been, a requirement or definition that a
        medium of exchange should insure any person’s, or any nation’s, financial stability. It is the saving or the squandering of that medium of exchange that determines financial stability or instability, not the medium itself.

    • Bruce C

      You’re describing the circular reasoning that prevails.

      The only reason “gold backed” monetary systems have become unstable is when the currency is corrupted (either by printing too much representative notes and coins, or by diluting the precious metal content of the actual money.) But since that is not always obvious at the time, gold itself is blamed to discredit it.

      An objectively backed currency is an inherently restrictive one because it limits the borrowing capacity of governments to fund otherwise unaffordable projects (wars, redistribution programs, new agencies, etc.)

      But an objectively backed monetary system still can only work if the issuers of the currency maintain its integrity as defined by law. It’s much easier to borrow “money” than earn it, which is why politicians love to be free from “the tryanny of gold.”

  • The whole conversation about gold going up and down in “price” is ludicrous. Gold is money, and money doesn’t have a price.
    The quotes for gold are in terms of irredeemable paper currencies, but people seem to forget that such quote doesn’t “price” gold. It prices the irredeemable currencies in terms of money.

    Gold is a commodity alright, but it not a “trading” commodity. It is the ONLY commodity which has a constant marginal utility. The definition of MONEY is: “A commodity with constant or nearly constant marginal utility”.

    To look at gold as an industrial commodity such as silver, zinc or copper is folly. Gold is kept and acquired for its use as money. Gold measures value. Currencies that a on a gold standard measure value based on the value of a specific amount of gold.
    The problem is that in today’s world there no longer exists a currency based on the gold standard. When only irredeemable, “legal tender” currencies are allowed to circulate, gold disappears from usage and flees to storage vaults. Beginning in August of 1971, it is the first time in world history that there did not exist a redeemable currency somewhere in the world.

    Irredeemable currencies are negative value currencies created by monetizing debt. Gold will not reappear from storage vaults and circulate until positive value currency is resurrected.

    The second easiest people to fleece are those who “invest” in gold. Gold is not an investment vehicle. Gold is a SAVINGS vehicle, savings until the negative value currency regimes crash and burn.

    Of course, the easiest people to fleece are still the people who “invest” in silver, considering it to be money. Silver is an industrial commodity which one trades. It is not a vehicle for savings.

    All the talk about gold being responsive to this and that makes little sense to me, except it get the “investors” excited. Trading gold with all the naked contracts floating around is the height of folly.

    • snowiegeorgie

      Concise and well said. In fact, could not be said better.

      “Constant marginal utility” is a concept foreign to those who deprecate gold. It’s good that you mentioned that.

      The other point you made that I want to emphasize was in this statement : “Gold is kept and acquired for its use as money. Gold measures value. . . . .”

      GOLD IS KEPT ! Meaning that those who analyze gold’s “fundamentals” against annual production “deficits” miss the point. Almost all gold mined since the beginning of civilization is in some “savings” vehicle, somewhere. Whereas all copper, steel and aluminum ( the current year’s production ) is consumed annually.

      Flow vs. Stock distinguishes gold from the consumed commodities like copper, and the perishable commodities such as O.J., Wheat or Pork Bellies.

      Most people will not take the time to understand gold’s unique properties when flow versus stock is analyzed. ANNUAL PRODUCTION HAS ALMOST NO IMPACT ON THE “available” supply of gold. All of it is available at some “reserve” price. All of it ! As you say, “Gold is a savings vehicle” and “Gold is kept”-

      Great writing, thanks for posting it. I doubt you will convince the doubters who see gold as “just another commodity” instead of its being a commodity with “constant marginal utility” .


      • SnowieGeorge,

        I appreciate your reply. You are absolutely correct to bring up Flow vs. Stock, because judging from an annual production quantity standpoint, gold is the most prolific commodity, bar none. Annual production of gold has held steady around 3,000 tons per year for decades.

        The above ground stock of gold amounts to 80 years worth of annual production. Compare that to Platinum for which there exists an above ground stock of two years of annual production and that of copper which amounts to 4 month of production.

        Furthermore, it is important to point out that there is a subset of “stock”, which I call “inventory”. In the case of gold it consists of the small percentage of gold kept as jewelry. The flow of “inventory” to “stock” is short. Jewelry is simply melted into specie or bullion without additional cost causing stock to increase. In comparison, copper inventory which consists mainly of copper scrap, requires considerable expenditure to turn it into copper stock. This means that the price for copper has to rise, before copper stock can be increased by refining copper inventory.

        I point all this out to highlight another reason why gold is such a superior metal to serve as a vehicle for savings, not to mention the ideal standard that gold presents as a standard for the measurement of value.

        Regarding convincing the public about the efficacy of holding gold, I am glad that Anthony Wile through the Daily Bell offers me a forum to express my opinion. Let me say that, it is gratifying and heartwarming to find out that someone else is looking at the subject of GOLD in the same vein as I do. Thank you again for your reply.

        Ingo Bischoff

        • Bruce C

          Bischoff: “In the case of gold it consists of the small percentage of gold kept as jewelry.”

          According to Wikipedia almost 55% of refined, above ground gold is in jewelry.

          • Wikipedia: “Jewelry consistently accounts for over two-thirds of annual gold demand. India is the largest consumer in volume terms, accounting for 27% of demand in 2009, followed by China and the USA”.

            Wikipedia is way off base on its figures….!!!!

            However, even if the figures were right, it only buttresses my point. What is my point…???

            My point is that because the “inventory” of gold jewelry can almost without additional cost be converted into gold bullion “stock”, gold jewelry is in essence gold “stock”. (See the discourse between myself and snowiegeorgie in this thread)

            It is true that the population in India is strong on holding gold jewelry as a form of savings rather than holding gold in specie or bullion form. This is a cultural phenomenon. (Dowry in India is also mostly in gold jewelry)

            The reason why the above statement which I lifted from Wikipedia is totally “off base” is the fact that there is no such thing as an annual demand for gold. Gold has a constant marginal utility, because gold is money. That gold is fashioned into jewelry does not take away from the fact that gold as a commodity is the standard of measure of value.

            If “legal tender” currencies did not exist, talk about annual gold demand would be downright ludicrous. Gold mining industry publications talk about demand for gold as jewelry for their own good reasons. However, they know very well what I have stated about “annual production” and “annual demand”, namely that one has nothing to do with the other.

      • Burticus

        It CAN be said better. You will find out very soon that silver is not just “an industrial commodity.”

        In fact, I am voting with my own wallet (emptying it of paper) that silver has also been a monetary metal throughout history and, as such, will be a secure store of wealth, a hedge against gubbermint and a better medium of exchange than gold for other essential commodities.

        Steel and lead are also industrial commodities, but I’m not stockpiling them for their industrial uses either.

        • Guy Christopher

          Silver has actually been used as money longer than has gold. The word for money in some 17 languages is the same as the word for silver. In some Chinese dialects, the word for ‘bank’ means ‘silver okay.’ Silver kills bacteria, and has been used for centuries for medicinal and health purposes, and the number of uses in health and hospitals today is increasing. It has the best electric conductivity of any known metal and the best reflective properties of any known surfacing. The solar industry is nothing without silver. So it’s valuable in many respects, other than as as medium of exchange, It’s valuable as a store of wealth, has been for centuries and will be for centuries.

          • In mining, the amount of silver was most often found along with an amount of gold in a 1:15 ratio.

            Due to its physical characteristics, it was easier to use gold as currency for purchases in the “large”, while silver being more prolific was better suited as currency for purchases in the “small”.

            Due to the fixed ratio of value existing between gold and silver in the past, both metals served equally well as “money” (standard of measure of value) for accounting purposes. It was the British and the Chinese as well, as some European powers who preferred silver currency to gold. In the U.S., the Congress set a fixed ratio of 1:15 in the Coinage Act of 1792.

            The U.S. Dollar was set in terms of silver to match the weight and fineness of silver in a Spanish Silver (Pillar) Dollar, the most widely circulated coin in the North American colonies in the late 1700s. It was upon the urging by Treasury Secretary Alexander Hamilton that the Congress established a fixed standard between silver and gold.

            This led to huge political strive, particularly after the finds of pure silver in the Nevada Comstock Lode. Finally, the Congress passed the Gold Act in 1900. With that act, the United States moved to a gold standard, making both gold and silver the legal-tender coinage of the United States, and guaranteed the dollar as convertible to 1.5 g (23.22 grains) of gold.

            For American citizens, Gold as currency was banned in 1933. Silver as currency was abolished in 1965.
            Gold, in a revival of any type of redeemable currency system will never be a circulating currency again. (Which it hasn’t been since the Middle Ages, anyway).

            Silver today is a highly desirable industrial commodity no longer suited to function as a standard for the measure of value. Under a redeemable currency regime using the gold standard, the price of silver is quoted in terms of gold or redeemable currency. If you acquire silver with irredeemable paper currency in the hope that it will provide for you a stable vehicle for your savings, you might be disappointed. But, do not let me dissuade you from putting your savings into silver……..

            I will however be grateful, if you could let me know how it worked out.


    Did the Fed Steal Ukraine’s Gold? Sep 29, 2014

    In this edition of “Questions For Corbett” James answers questions on the U.S. constitution, the 9/11 insurance cases, censorship in the media, the DTCC conspiracy, bitcoin, global warming, the drug war, whether or not the Federal Reserve stole Ukraine’s gold reserves and much more.

    • Guy Christopher

      Ukraine is listed as a very recent buyer of gold. If true, I wonder where they intend to store it?

      • MOLON LABE

        Under ground and out of view like an old Nuclear Silo would be my guess.

  • Gold (and Silver) is a fascinating story with many more chapters to be written. If – as I believe – we are experiencing simultaneous inflation and deflation, and if – as I also believe – the needle is now swinging towards deflation (as indicated by the pathetic velocity of money, the dollar rally, and the price declines in many commodities including the PMs), then there may be further losses ahead for Gold priced in dollars. Ingo is correct – gold is for savings and pricing it in any fiat currency is absurd. However those who purchased Gold at $1900 for savings are now sitting on huge paper losses with no surety of when these declines will end. Gresham’s Law will eventually prevail – when the fiat empire implodes Gold will go into hiding and not be available for any bid other than barter for another hard asset, food, water, etc. In the meantime the story is still being written and none of us is truly capable of timing the future course of events even if we may see clearly where things are headed. Thanks to the Bell and the many commentators in this thread. GF


      We have been here economically in the late-1970’s to the early 1980’s which this was the term used and explained in this video.

      Stagflation Explained

      How a supply shock can cause prices to rise and the economy to stagnate

      • Well there certainly are similarities. The differences now are that all markets are for the moment, under the iron-fisted control of those in the shadows, and of course, everything is much bigger this time, huger. We are in uncharted waters – and no-one, even those who presume to be in control – really knows how all of this will play out. With the problem-reaction-solution technique used by our Lords and Masters, maybe it doesn’t matter.

        • MOLON LABE

          Actually, history is littered with examples of what is to come for U.S.. This will be one the most important sign’s and one of the signals to pay attention for.

          How Economies Collapse: Systemic Friction and Debt Are Self-Liquidating August 5, 2014 by Charles Hugh Smith

          Paying for unproductive friction with borrowed money has generated the illusion that free to me is actually free–it isn’t. We all understand how friction slows our progress: flatten the tires on a bicycle and it becomes much harder to maintain speed. If a brake pad is rubbing against one wheel, it gets even harder.

  • Earl of Isadore

    The website of the Council on Foreign Relations has just published an article by Alan Greenspan called “Golden Rule, Why Beijing Is Buying”.

    Here’s a snippet: “Today, the acceptance of fiat money — currency not backed by an asset of intrinsic value — rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of gold.”