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Antal Fekete On Why The Gold Standard Must Be Rehabilitated
Courtesy of Safe Harbor, must read speech delivered by Antal Fekete ealier today.
The Deep Cause Of The Great Financial Crisis: The Peace Diktat Of Versailles
Speech delivered at the Munich Economic Talks, October 6, 2010
Ladies and Gentlemen,
According to a recent news item, not widely circulated, after more than 90
years of slavery, on October 3, 2010, Germany made the final payment for its
World War I debt. This event is highly symbolic. It gives me great pleasure
to be one of the first to congratulate you, literally hours after the German
people were finally freed from debt slavery.
I have been a student of money and credit for over fifty years. I could summarize
the result of my studies as follows: Most, if not all, the great events
in the history of mankind since the advent of money, have a causal explanation.
The causes are to be found in the use or abuse of money and credit -- provided
that we penetrate historiography sufficiently deeply.
My talk is meant to be dispassionate, well-grounded in economic thought, and
certainly free from nationalistic overtones.
This evening I would like to illustrate my thesis through the following example:
The Great Depression of the 1930's, in particular, the unprecedented world-wide
unemployment was caused by the decision of the victorious Entente powers
to return to the gold standard after World War I, BUT without allowing
the clearing house of the gold standard, the international bill market, to
make a comeback.
This decision was made in secret. It has never been made public. But there
can be no doubt about the fact that in 1920 everybody, even Keynes himself,
admitted the desirability of an expeditious return to the gold standard. Had
there been no decision to ban it, bill trading would have started spontaneously.
What this decision was meant to accomplish was to block multilateral world
trade by brute force. It was to be replaced by bilateral trade or, to call
a spade a spade, by a barter system. Why did the victorious Entente powers
make such a foolish decision that was going to hurt their own producers and
consumers, and hinder reconstruction? They did it because they wanted to punish
Germany over and above the provisions of the Versailles peace treaty. They
wanted to maintain the wartime blockade under a different name. They wanted
to monitor, and control if need be, the move of goods in and out of Germany.
In peacetime the only way to accomplish this was to replace multilateral with
bilateral trade; to block the financing of world trade with short-term commercial
bills, also known as real bills. To put it differently, the Entente powers
phased out self-liquidating credit and replaced it with artificial bank credit,
the creation of which they could control through their central banks.
World trade prior to 1914 was multilateral. By this I mean that imports were
paid for by issuing, endorsing, and accepting bills of exchange payable in
gold at maturity no more than 91 days after shipping the underlying merchandise.
With three good signatures: that of the exporter, that of the importer, and
that of a recognized acceptor the bill of exchange went through a most remarkable
metamorphosis. It became money. Ephemeral, to be sure, but money nevertheless.
The exporter could use it to pay for his imports by passing it on, after
endorsing it, to the exporter in a third country. This exporter could likewise
use it to pay for his own imports, and so on and so forth. Only in the light
of this fact can one explain the unprecedented expansion of world trade during
the 100-year period between 1815, marking the end of the Napoleonic War and
1914, marking the outbreak of World War I. Such a record level of world trade
would not have been possible without the clearing house for the gold standard,
the bill market. Geographically, this clearing house was located in the City
of London. It was the great London trading houses and banks on which bills
of exchange, covering merchandise shipped from country A to country B,
were drawn. It was the great acceptance houses in London that accepted them.
Once so endorsed and accepted, these bills started to circulate on their own
wings and under their own power, as only monetary gold could circulate: without
friction.
It was this great clearing house of the gold standard in London that was blocked,
nay, sabotaged, by the decision of the Entente powers at Versailles in their
vindictive moment of victory. They never examined the broader economic implications
of their move, beyond the obvious effect of putting the foreign trade of Germany
on a leash. They utterly failed to see the wider consequences of their folly.
To show just how short-sighted the decision to block the circulation of real
bills was, consider the argument of the German economist Heinrich Rittershausen
(1898-1984) that he presented in his monograph entitled Unemployment and
Capital Formation, published in 1930, but obviously written before the
Great Depression has become a reality. Rittershausen predicted that, hard on
the heels of the collapse of the gold standard, a horrendous wave of world-wide
unemployment would prostrate the world economy.
Under multilateral world trade financed by real bills there was something
we may, in want of a better term, call the Wage Fund -- out of which
the wages of laborers producing merchandise demanded most urgently by consumers
could be paid. Please remember that these goods during their gestation period
of up to 91 days could not be sold to the ultimate consumer. He was the only
one to pay for his purchase by handing over the gold coin. Neither the producers
of semi-finished goods that go into the merchandise, nor the wholesale and
retail merchants would ever pay gold: they would issue or endorse bills. It
could take 91 days (or 13 weeks, or 3 months, or a quarter) before the real
bill matured into the gold coin with which wages could be paid. But laborers
have to be fed, clad, shod, and sheltered in the meantime. They cannot wait
for 3 months till the merchandise will have been sold to the ultimate gold-paying
consumer. Wages have to be paid weekly, not quarterly.
Thus, then, the Wage Fund is absolutely necessary for the maintenance of world
trade and full employment on a scale it has reached prior to 1913. Such a Wage
Fund could only exist by virtue of the bill market. So much of the 'float'
of real bills in the world was earmarked for paying wages; the remainder was
earmarked to pay for supplies. The system worked extremely well: 'structural'
unemployment was unheard-of before World War I.
This Wage Fund was unwittingly destroyed by the victorious Entente powers
at the moment they decided to block the financing of world trade through real
bills circulation as it existed before 1914. The result was that world trade
never really recovered. In fact it took the better part of the twentieth century
for the volume of world trade to reach its 1913 peak level again. In the meantime
it was touch-and-go. Bilateral trade, barter, or direct payment of gold and
gold exchange replaced self-liquidating credit, as the credit represented by
real bills was called.
The destruction of the Wage Fund was not immediately noticed. The great inflation
due to World War I imparted sufficient stimulus for a full decade to cover
up the complete absence of a reliable fund out of which wages could be paid.
In due course, however, the surplus money was siphoned off by an extraordinary
explosion of speculative activity in financial bills, real estate, and in the
shares of joint-stock companies. Real bills were conspicuous only by their
absence.
When money became scarce after the bubbles burst one after another: the bubble
in US Treasury bonds in 1920, the Florida real estate bubble in 1925, and the
stock market bubble in 1929, the absence of the Wage Fund, destroyed a decade
earlier, immediately became obvious. There was no money to pay the wage earner.
Workers were laid off. They had to be put on the dole. An unprecedented wave
of unemployment, like a tsunami, engulfed the world. Dictatorships could escape
the curse of unemployment by destroying civil liberties: Lenin's under the
banner of international socialism, Hitler's under the banner of national socialism.
The only economist in the world who saw what was coming was Rittershausen.
But he was treated by the international community of economists with the same
contempt as the German delegation was at the Versailles peace conference. A
new economic gospel was promulgated by the prophet John Maynard Keynes who
made a complete volte face. He was a most vocal opponent of Britain's
return to the gold standard in 1925. Not because he realized that Britain's
'newly-born-again' gold standard was not viable as it grievously lacked a vital
part: the clearing house. Keynes opposed the gold standard on doctrinaire grounds.
According to him the gold standard was obsolete, contractionist, an obstruction
to progress. The new dispensation called for flexible foreign exchange rates
that could be easily manipulated in the service of a hidden political agenda.
Keynes was the enfant terrible of economic science. He was a perfect
antithesis of Rittershausen. He was a master of demagoguery. He made economics
stand on its head. For thousands of years the problem of economics was the
scarcity of savings as well as over-consumption, especially during princely
wars. Keynes invented over-saving and its twin brother, under-consumption.
These notions are as obnoxious as they are preposterous. Yet the world, desperate
for getting out of the depression, bought them. This was just what Keynes has
been waiting for. He was hell bent on manipulating the whole world through
clever verbiage, but which utterly lacked any substance.
Rittershausen, on the other hand, had no ulterior motivation. He just wanted
to find the truth. And, indeed, he found it by pointing to the destruction
of the wage fund in the wake of blocking the circulation of real bills. It
is a great tragedy that Rittershausen was born in Germany rather than Britain,
and Keynes was born in Britain rather than Germany. If it had been the other
way around, then Keynes would have been totally ignored, as was his desert,
and Rittershausen would have been elevated to international fame, as was his.
He would have been made the object of world-acclamation and admiration.
History may not be repeating, but it certainly is strongly echoing itself.
The Great Financial Crisis of 2008 is such an echo of the Great Depression
of 1930. Or could it be that the Great Depression of 1930 was the harbinger
of something far worse: the Great Financial Crisis of 2008 and its aftermath,
still to be visited upon the world?
The last remnants of the gold standard were abolished in 1971 when the Republican
president Richard Nixon defaulted on the international gold obligations of
the US -- almost 40 years after the Democratic president Franklin D. Roosevelt
defaulted on its domestic gold obligations. It triggered the fast-breeder of
money, originally envisaged by Keynes, later dressed up academically and made
palatable politically by Milton Friedman. At first, the going was great under
the catch-word: "you have never had it so good". But then, just as during the "roaring
20's", speculators grabbed the money spun out by the fast breeders and ran
with it. Once again, bubbles were blown and started bursting one after another.
Now the world is confronted with the worst prospects for unemployment ever.
At any rate, far worse than the one Rittershausen had predicted in 1930. We
can, using his methodology, predict Great Depression II in the making. The
world still is lacking a Wage Fund. A vastly expanded army of unemployed people
will have to be fed, clad, shod and sheltered. The money to do it is not there.
Once again, governments will have to create it out of nothing to pay the dole.
The obvious way out of this corner is the resuscitation of the Wage Fund through
allowing the spontaneous circulation of real bills that were last used in 1914.
Lest anyone suggest that this feat could be accomplished under the regime of
irredeemable currency, beware: real bills can only work if they mature into
gold. It is unthinkable that they could mature into irredeemable paper
currency. A real bill is an IOU promising to pay gold, and it offers a return
to boot. An irredeemable banknote is an "IOU nothing" and it offers nothing
-- an inferior instrument at best, a fraud at worst. A real bill, to be meaningful,
must mature into a superior financial instrument. Otherwise it refuses to circulate.
Therefore the rehabilitation of real bills assumes the simultaneous rehabilitation
of the gold standard. The two go together as hand and glove.
The way to return to the gold standard is for the US government to open the
US Mint to gold -- as ordained by the American Constitution that has been violated
by power-hungry presidents such F. D. Roosevelt and his successors, every one
of whom swore to uphold it, only to turn around and trample on it.
It would be an extraordinary act of statesmanship if a new president reinstated
the monetary provisions of the American Constitution.
There is no other way to prevent the collapse of the debt tower, or to
fend off the tsunami of unemployment and the global breakdown of law and
order.
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Hey Tyler check this one out....
http://www.infowars.com/bernanke-tells-the-truth-the-united-states-is-on-the-brink-of-financial-disaster/
Which FEMA camp are you close to? I wanna know who I'm gonna be bunking with!
Double.. oops
"It would be an extraordinary act of statesmanship if a new president reinstated the monetary provisions of the American Constitution."
Wouldn't the same thing happen as before when we were on the Gold Standard?
i.e. cheese eating surrender monkeys (et al) demanding to actually be PAID with gold thereby rendering the national cupboard bare? Isn't that what happened? Vietnam...war costs spiraling (isn't that always the path to fiat), the spending constraints of gold backing? France back then, getting nervous about debasement, saying, "Hey les salopes americains, please to give l'argent maintenant beetches"
Not if gold is valued at $50,000/oz
And, you would get to keep what you have Physical now?.
At that valuation?.If you agree, I want some of what your smokin.
If you made a killing in the market, you would get paid accordingly to the dime, if they wanted your Gold......you MAY get a bullet if you refused, or another fiat POS bill.
We cannot trust the Gov we have, period.
Also, and for a turn in, you get $50.00 per ounce?.As stated on every legal tender 1oz U.S. Gold piece, except the $20's?.
Uh, NO.
All major currencies would ideally be on the gold standard, to prevent this. This works out the same as having one world currency.
yeah, but all the major powers were on "The Gold Standard" before and one by one, (again usually due to war/social program costs, the first WW in particular) dropped off, only to end up pegging to someone else's gold....
Being on a Gold standard is like being on a perpetual "diet" for countries.
who amongst us...?
It is ideal, but is it realistic?
realism is in the eye of the beholder.
He can peddle that shit somewhere else.
Secession.Period..............
Screw you, and your clowns.........come to Texas we'll meet ya at the Big Red,but your gonna have to get thru Oklahomas boys first.
No small feat...........Hehhehehehehehe
WE can take care of ourselves, cause it's a dead ass cinch you fkrs are not, will not, and are doing your damned best job to peddle YOUR plans on what WE are going to have to put up with because of YOUR policies, and idiocy.
god bless antal fekete!!!!!!!!
and for added measure, read his article on why currency devaluation is the most fucktarded imbecilic voodoo bullshit to fall out of the witch doctor's medicine cabinet.
http://www.professorfekete.com/articles/AEFPositionPaper7TheDonkeyInTheChinaShop.pdf
fuck the fed, fuck friedman, fuck keynes.
"There is no other way to prevent the collapse of the debt tower, or to fend off the tsunami of unemployment and the global breakdown of law and order."
but other than that, all is well.
carry on, carry on.
Frankly, I'm getting a little tired of all this gold standard talk.
No shit we should return to it. Never should have been able to go off of it. However, how many different 5000-word essays need to be written? I get it, OK. No need to justify your PHd with rehashed, obvious theses.
The essays will continue until enough people realize that faith and credit aren't suitable for backing a currency...or the dollar fails. Any bets on which comes first?
But guns and mass ignorance seems to be working ok as backing for the USA dollar, no?
Being a member of the choir, you have heard it all before, but there are always new ears to learn the good news. I found the real bill history relating to the great depression quite interesting.
So, move on, Turd. Not like there isn't something else to read on ZH!
When Johnny Bravo comes back as a goldbug, our job is done.
Fool, our job is done when we extirpate the parasitic money changers choking and manipulating humanity into mayhem.
http://www.youtube.com/watch?v=USGSOViaulc&feature=related
1350 Gold
23 Silver
At one point to people begin to sell their equities as the metals begin to predict a U.S. debt default or a downgrade is near?
Sølv Kvinners!!!!!!!
http://www.golddealer.com/pictures/big/agwo.jpg
Wow. Hi from Munich. Dr. Fekete did not even speak yet (a friend of mine just went there) and the speech is already on ZH.
Welcome to the oracle that is ZH.
And a gold standard won't do anything if we don't also arrest the criminals.
Btw, some clown put in a request in my name for a password change (2nd time so far), just because I think Israel-firsters have wrecked this country as well as European nations. Or maybe it's because I point out that convicted felon, George Soro's real name was George Schwartz?
Anyway, I'll keep coming back!
Gold would do much to arrest the actions of our national criminals. That is why I seriously doubt our present system of government would ever willingly return to it. Once we have free market justice and free market security services and no monopoly government we may have a shot at getting restitution for the past crimes as well as the freedom to choose gold or silver in our transactions which I think would quickly become the norm again.
Although......if any one country had the balls to go on a gold standard the price would immediately climb to $50K +.
Try $8,250.
http://zmarter.com/finances-opinions/who-is-john-galt.html
Maybe you have no friends? Just a thought.
Nice little Rocky. Now you can collect some table scraps from Soros inc.
WTF moron:
http://www.youtube.com/watch?v=USGSOViaulc&feature=related
I've been to over a dozen countries and in each and every one of them the joos take over key industries in the economy with the help of their filthy brethren.
Think Khodorkovsky, Abramovich etc etc
fuck them
awh come'on Turd, the only way to get a PHd is be a master at writing essays and shit.
Although I agree with what he has said, I am tired of hearing it every second day.
All your PHD's are belong to us, make your essay bitchez!
Cheap
A Ph.D. is something a 20 something earns. It might be hoped that that same person would understand that he/she was sold a bill of goods in that same miseducation and go beyond that. Paramita in Buddhist terms is "to go beyond."
Every single concept and "truth" is a riddle and you can "go beyond."
Please do.
I would like to provide a different perspective.
The Constitution is a legal device for paying a debt. That debt was incurred by the Founding Fathers (FFs) in the Rev. War in the 1770's. The Constitution was their way of having a pool of people (in perpetuity) pay for the debt that they took on. All the language of "We The People" refers to the FFs, "preserve the blessings of liberty for ourselves and our posterity" refers to the FFs.
There has never been an instant in US history in which the "rights" of the Consitution have ever applied to the common citizen. This is because the Constitution and its protection from debt collectors (foreign investors collecting on the Rev. War debt to this day) own all the assets of the entities included in the Constitution to which all citizens are an unknowing party.
This is because it is in the interest of the elite (Constitution signers and their posterity), not to have told you and to keep living off your labor.
This general historic backdrop is why when folks start talking about the Constitution and "our rights" and "how things will work under this new plan" I am goaded into fits of laughter.
There is a corporate slave entity called US. There is not and never was a free state under some fictional skittle-shitting Unicorn document that gave you all unalienable rights like having any power.
Just like Morpheus sez: "You are a slave."
God bless people who do not want to understand.
"The place that you are right now God circled on a map for you." -- Hafiz
Michael Tsarion ( http://tinyurl.com/dfztye ) When is this going to sink in? That's what I want to know.
Yes. I am reluctantly coming to the conclusion that the Constitution is impractical and unworkable-- even if it was followed to the letter, which it is not. We would be better off under something more like the original Articles of Confederation.
A sales receipt from Walmart will work, but not in the hands of crooks.
Awesome LeB.
Hard truth to swallow for most.
ORI
Right Everyone leave the USA right now your being foreclosed,what do you mean where,s our paperwork,we don,t need any of that shit,on yer bike now and don,t give us any trouble now ...
this is bullshit. too amny paragraphs. nothing said. the gold standared did not work out so well for Churchill, did it.
Thanks for your specific arguments as they pertain to the article. I always look forward to your penetrating analysis of the topic at hand.
I didn't understant the analysis at all.
I'm not sure how to respond. Perhaps I left off the last word:
</sarc>
In a fractional reserve fiat monetary regime, once the point of debt-saturation has been reached, debt can no longer be extinguished by issuing more debt.
Having already passed that point, we have de facto begun the process of returning to the Gold Standard.
That is what the Gold price is now telling us.
It can be but the Currency will be worthless - Welcome to USA 2010.
Any currency will work as long as it has a legitimate claim on the gold that backs it.
Your conclusion is too exclusionary.
The gold standard is a fucking myth. All of the worlds gold can be placed in three Olympic sized swimming pools. Are we going to back the world's fiat currencies with that miniscule amount?
I'm all for gold as a means of wealth storage. As a means of exchange, quite frankly, is is unusable. Fiat currencies work. Lincoln's greenbacks worked. Rome's coinage worked.What doesn't work- is allowing private banks to MANIPULATE the QUANTITY of money as a means of currency. It's the quantity manipulation that screws us. It is quantity manipulation that causes booms and busts.
When people clamor for the gold standard, what they are really trying to do, is control the quantity of money against a standard. I get it.
I thought this Cato Institute paper by Lawrence White was pretty good (it addresses your "There isn’t enough gold" concern among others):
http://www.cato.org/pub_display.php?pub_id=9181
(see links on page to read paper in either HTML or PDF)
"All of the worlds gold can be placed in three Olympic sized swimming pools. Are we going to back the world's fiat currencies with that miniscule amount?"
First, the amount of gold is plenty. Rothbard addresses this more eliquently than I can. Check out his books on mises.org.
Second, Fiat curriencies are not backed by gold.
The amount of gold does not matter that much. We don't need to carry it with us. Just store it (de)centrally and pay digitally. Like http://goldmoney.com does
Lincoln greenbacks worked at giving huge power to the national government it was never supposed to have. It gave it the power to steal. Do not steal is a pretty good rule. When a state can't even obey this basic rule you can immediately question who was the "state" a servant to at that point? Did it serve the "people" or did it serve those who get to control or use the fiat first?
Correct. Gold Standard is completely passe.
The quantity of gold is completely irrelevant if it floats.
What does not work is using the medium of transaction as the store of wealth.
Under a Freegold system, it is up to everyone individually when they want to settle up and cash out into physical gold. The govt's incentive not to go crazy printing will be to keep people from cashing out.
Feteke seriously believes they "forgot" to reintroduce real bills post WWI?
"Feteke seriously believes they "forgot" to reintroduce real bills post WWI?"
Huh. Where do you see that in what he said? He explicitly states that the Allied Powers deliberately scrapped Real Bills after WW1 to cripple the Germans.
Expanding on that, I would agree with what Fekete says about the Allied Powers, as far as it goes. My guess is, that was the rationalization that the real people who run the world (the bankers) gave to the politicians why they should trash Real Bills. The real reason, of course, was to consolidate the credit system inside the banks, and to begin the process of looting the entire world.
Good point; upon rereading I don't. I do see this:
The Entente Powers would have it appear to be oversight rather than malice. Feteke did not claim this. My bad.
69
I'd hide my face if I were you. Your "not enough gold" comment demonstrates a lack of understanding of finance and the proper structuring of a monetary system.
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=14147
"The way to return to the gold standard is for the US government to open the US Mint to gold -- as ordained by the American Constitution..."
In what world do you believe this matters any longer?
The train is off the rails, nobody knows it... or cares more importantly, and the powers that be aren't exactly looking for actual solutions that benefit "consumers" of government product; whatever will be will be. Relax, and wait for the off the rails train, skidding out of control, to hit something. There's nothing else to do, actually. Solutions won't matter till then, unfortunately.
You are more than right. At this point the argument is similar to how many angels can dance on the head of a pin.
May I suggest Ishmael By Daniel Quinn and also another of his works "TH
he Story of B", while you watch the landscape roll by.
Very en-lightening...
ORI
http://aadivaahan.wordpress.com
SO! With the planets population approaching seven billion and a vigorous global trade system in place, WHAT IS the appropriate price of gold in 'The New Gold Standard'? Anyone?
Exactly, Robert.
It is insanity. Fiat currency can work. People must understand that issuing currency is always a MONOPOLY. Taking that MONOPOLY out of the hands of private bankers is the first step. Limiting the QUANTITY so that bankers can never again pull this shit is the answer. You'd think after a few thousand years, we dumb shits would figure this out. Alas, we are slow learners.
Fiat is the power to steal. I would never consent to it. Once any entity has that, you can expect that entity to attract those who live by fraud or force and they will seek monopoly control of law, monopoly "legal" force and many other tyrannies to follow like compulsory attended state run schools, control of media and information, etc. It is impossible to trust that power with any one entity. If you do that you throw away your "power of the purse". Can you stop and figure out what you give up by consenting to fiat? Did you bother to read the links provided for your benefit?
"issuing currency is always a monopoly"
Not if the US mint is open to gold as the Professor suggests. In that case, issuing currency is a free market phenomenon.
Yes, I was too general: issuing a Non-redeemable currency is always done by government (monopoly) compulsion otherwise it would not stand. Technically isn't gold/silver coin considered "species" and not currency? But yes any paper that promised to pay coin is a form of "currency". And any paper that fails to redeem for coin subjects the issuer to potential fraud charges. I would not want my counter party note issuer to have monopoly adjudication or enforcement power as I doubt my ability to obtain proper adjudication and remedy would be enforceable at all times.
WRONG.
"Taking that MONOPOLY out of the hands of private bankers is the first step."
And put it in WHOSE hands, exactly? Politicians? The whole "rationale" for a fiat money system managed by Central Banks was to get money creation OUT of the hands of politicians!!
The beauty of a gold standard (or other commodity standard) is that the money supply is managed by the free market, and not by any group of men.
This of course has its own risks associated with it, but at least money would be freed from the tyranny of men.
In a "gold standard" there is no 'price' of gold. It is the others that become priced in terms of gold (weight, purity). The problem arises when fiat symbology and ownership symbols are struck into the coinage by the political arm of nation States.
Are you sure?
http://www.the-privateer.com/gold2.html
i think he meant , in a 'real' gold standard.
Price??? Idiot.
The MARKET fixes the ratio of oz of gold to buckets of coal to bushels of wheat to sides of beef and even to pussies.
Bills circulate backed by real production.
What this causes is a destruction of the ability of bankers to MAKE money (acquire a SHARE of REAL PRODUCTION) via their monopoly on the issuance of money as DEBT.
You understand the primary difference between RBD and central banking, don't you? In one, the bills self-create and self-liquidate as a function of the production cycle. In the other, bankers LEND at INTEREST to one party who pays another. In the end, THOSE debts extinguish when the banker gets HIS SHARE of whatever real production that INTEREST denominates.
Bank monopoly on MONEY creates free shit for bankers. I say, let them issue their own scrip against their own assets at interest, see who fucking wants it. Under RBD, people always had the option to PRODUCE or to borrow. Banks held real assets that they lent out and that too circulated as money.
The panics came because of repeated malfeasance by BANKERS, and the domination of this profession by one particular set of cousins is the reason the clan has been repeatedly run out of entire countries throughout history. Bankers have been cheaters since day one, when they figured out they could con people with fractional reserve.
Fractional reserve lets bankers EARN INTEREST on capital they DO NOT EVEN POSSESS. This is why banking is inequitable and a societal EVIL. Bankers and banking should be banned as contrary to public policy. Let banking become lend your REAL capital, fine. But every single financial panic, bubble, collapse, all of it, is traceable directly to the feet of bankers who committed fraud.
I like you.
I'm only a #uckin sock puppet, but I like your thinking.
Trav,
This same analogy is playing out now, in the home mortgage debacle.
Banks, getting paid for a loan on collateral they do not even own.
And are clueless who does. And are foreclosing without a LEGAL right to do so.LOL
Find the Title Fkstick, and I MAY make a payment.
Seriously, you have to be a crazy SOB, to try and make this shit up!.
+1 YES! The bankers got caught trying to pass more paper than the coins they had to redeem with. Bankers hate it when that happens! No wonder they wanted a "new and improved" (from their perspective) system not subject to "bubbles and runs on the bank". -- Not subject, as in "perfect" crime, immune from punishment and restitution. That can only work when you got a good deal going with your monopoly "legal" force mafia.
+1.4 Quadrillion Derivative FRNs
Aside from payment clearing and a secure facility to warehouse wealth, bankers do not contribute to society. They are leaches and parasites extracting labor and capital from other productive participants in the real economy.
Prof Fekete and this and his other presentations of truth are as good as it gets. The LORD Bless Antal Fekete!
I wonder if there is an event or two, soon to occur, that will be earthshaking enough to make real bills a reality. An event to open the eyes and motivate the public to demand honest money. It has happened before. Andrew Jackson will inspire many. We could use 30 or 40 years of monetary morality before the scum bring back fiat.
Whatever our other differences, we must cooperate on achieving honest money.
I wonder if there is an event or two, soon to occur, that will be earthshaking enough to make real bills a reality.
Yes, it is known as "universal global default". Either through debasement or outright failure to pay.
And it is already well underway.
24K,
Well, if it happens, prepare to get screwed,because you have common sense.And if they revalue Gold for this purpose, you will lose it for a dime on the dollar.
Agree with something wicke... it is not was is money it is WHO CONTROLS the money.
The only safe answer is that NOBODY should control the money. In other words what ever consenting parties choose for effectuating an exchange remains within their power to so decide. It is part of their basic power to enter into voluntary exchanges. Fiat eventually always becomes sneaky way to destroy that freedom through debasement, which is deception and theft.
Fartmen pleading on the radio - telling peeps dont buy gold up here - its due for 100 $ back up!
I don't care if it's backed by the number of letter "E's" Tyler types in a day. Something Wicke... is right. sovereign money is the only way. The lie falls in the "need to keep the money policy out of politics" we need the money to be closer to the people's control and not be debt-based with interest attached. Also what about a free market of currencies? Isn't it more resiliant for us to have local currencies in place?
See "The Secret of Oz" http://www.youtube.com/watch?v=D22TlYA8F2E
When you finally understand that you, and every other individual is "sovereign" then you might begin to see clearly that you ought to keep everything out of the hands of "politics" by only obtaining governmental type services from free market providers. Elections are a poor attempt at imposing the kinds of restrictions to power that would more effectively be provided by voluntarily purchasing your "governmental" type services (such as security and dispute adjudication) from non-monopoly competing service providers. Once you understand who is sovereign then you immediately see that YOU decide for yourself what to use as money. You will probably discover that something like gold or silver works good for you then because most of your fellow "sovereigns" will be able to agree to this.
re. Secret of Oz:
The backing of a currency, or not, by debt or gold or dried bananas, is irrelevant, except perhaps as a ruse. Currency is nothing more than a concept used for transacting. This is its only function. It requires no "backing". It should not be expected to act as a store of wealth. This is something it cannot be. This is something it should not try to be, or pretend to be, either.
We already have something which has been used most successfully as a store of wealth for millennia. We simply need to free it from the constraints of the current flawed system. This is gold. When allowed to freely float it will provide all the checks and balances currency requires.
The perfect con.
http://thecivillibertarian.blogspot.com/
Wish in one hand.
Shit in the other.
Tell me which one fills up first.
With a gold standard the Central banksters become irrelevant and that will not happen again in our lifetime.
Next.......
Latest Roota:
I just wanted to reach out to all you Road to Roota Subscribers to make sure you understand what is happening and why. The world might seem a little crazy right now to those who have not spent some time on our Road but remember that it is all being done on purpose. The battles are raging behind the scenes BUT hopefully you understand it all. The who, the how, the why...everything.
Here's a few thoughts today:
1) Gold and silver are breaking out of a decades long manipulation...but they are NOT free yet. The computer programs are still running the show and ANYTHING can happen so just sit back and watch. Keep a close eye on silver as the SECRET is out. We may see triple digit (or more) silver before the end of the year!
2) The Mortgage Fraud has gone mainstream BUT the implications have not. The destruction of the entire mortgage market is upon us and it is the largest pillar holding up the financial complex. The Good Guys knew this all along and were holding off on pulling the plug until now. Watch as entire industries start to implode taking the banks, mutual funds, corporations with them. Ashes to ashes...EVERYTHING will go.
3) The DOW is climbing to new highs because it is the BAROMETER for how most people judge how the economy is doing. The market riggers will pump the DOW for as long as they can. I expect one day we may wake up to find the markets have STOPPED trading all together.
4) Congress is being purged of the Bad Guys so expect some shockers come November 2nd. I am not talking party lines or Tea Party vs. Democrats but individuals within the US Congress that are controlled by the Bad Guys. After November we may see the END of BOTH the major parties and a return to a country who selects the BEST people for the job of upholding our Constitution.
5) QE2 (Quantitative Easing #2) may be timed for the Fed meeting on November 2nd. This all plays a part in my Time Line as we should have a new Congress ready to try and tackle the Bad Guys once again. The Good Guys at the Fed will time this QE2 program to ensure the US Dollar self-destructs. I'll call it FALLING ON THE SWORD and taking the blame for the "problem" with fiat money thus ending the the Federal Reserve System for good. I know that it's still very hard for most of you to get your heads around the US Fed having any connection to the Good Guys. Guess time will tell.
6) All the terrorist threats and warnings are very scary as the rats are trapped and still capable of causing the worst damage you can imagine. I don't know how this will all go down but now is a good time to stay close to home and take care of your loved ones. If there is anything to be scared about it is if "THEY" try to take us all down with them.
Does it all make sense? Can you see it all happening before your very eyes?
If not rummage through the Letter Archives here:
http://www.roadtoroota.com/public/department36.cfm
All the answers are there...
May the Road you choose be the Right Road.
Bix
Good luck with the election part. You seem to believe in an institution that "legalizes" theft (taxation) and then expect to be able to reap good fruit from such an evil foundation. Can any two people entirely agree who the "good" and "bad" folks are? This never works long term as the nature of the monopoly power naturally attracts the type of people who crave such monopoly power! Political power is always the tool of those who wield the power at a particular moment. For some insights about the weakness of constitutional systems and any political system please read
"The Myth of the Rule of Law" at:
http://faculty.msb.edu/hasnasj/GTWebSite/MythWeb.htm
And I hope you will then see the contradiction inherent in your strategy. Free market governmental service provision is a better choice that more effectively attracts good service providers to provide you the service you voluntarily choose to purchase and at the same time provides the best checks against the empowerment of predators. It worked for over 1000 years in Ireland to cite one example.
Our "lawmakers" in Congress can fix that with the stroke of a pen. It won't be pretty nor neat, but they can. And, rest assured, they'll do it to the advantage of the banks in the objective of "strengthening their balance sheets".
Thank you for your thoughtful comment.
Are most of you STUPID?
Fekete is not calling for a return to the fuckin gold standard, he is calling for a return to Real Bills Doctrine.
the VAST MAJORITY of what was "money" prior to 1914 was in the form of REAL BILLS, which were PRODUCTION backed.
Only some of the eventual liquidation of them was via gold because that was what the end consumer had saved!
Real Bills can be extinguished by any real asset; it does not have to be gold. You could extinguish a bill via another bill, so long as BOTH eventually mature and BOTH are backed by some real thing. Gold was merely a convenience.
The allies after WW1 did not want Germany repaying out of production; they wanted to lend Germany money to repay, creating the compound interest debt trap. The allies had the Rothschild Bank eager to get another host State.
The idiots who claim that the 65' cube of gold could not "run world commerce" are fools who do not understand RBD. A FAR smaller cube ran it less than 100 years ago, and the energy supply wave that coal and oil brought had begun 60+ years prior to the advent of global central banking on debtmoney.
Look, the Fed Act was a TAKEOVER. Yet here we have people who BLEAT about the criminality of the Fed and yet defend the institutions of debtmoney and central banking. Banks are supposed to be in the business of discounting and clearing, and lending their OWN capital for productive return.
One more time. It isn't happening. Shit in one hand, wish in the other and get back to me. The Central banksters partnered with the political elites to see to that. This is a non-starter.
Next......
oh it will.
Maybe not in our lifetime, but the collapse of debtmoney is inevitable. Always has happened.
Read the history books; sometimes these collapses take decades. We're in the middle of what our greatgrandchildren will spend a paragraph reading about.
The elites don't mean shit and they don't amount to shit. They cannot control anything forever. The books are rife with sets of elites that got replaced by other elites, entire banking clans led off to concentration camps and whatnot.
They cannot legislate VALUE nor can they adequately corral the whimsy of confidence. The oil production curve will shit all over them and all of their elite efforts.
The collapse is unavoidable, agreed.
What does not work is using the medium of transaction as the store of wealth.
Under a Freegold system, it is up to everyone individually when they want to settle up and cash out into physical gold. The govt's incentive not to go crazy printing will be to keep people from cashing out.
Bingo. This is exactly why Freegold will spontaneously emerge.
But it will all be in the history books of the future.
Why do you choose to live in a box? If you agree you would like to see such a change, what's wrong with you living the change in your immediate experience with people you can trust to live by a similar code of ethics? Learn to exchange value for value independent of the criminal syndicate. Decide in advance how to settle any disputes that may arise that don't involve criminal government and then live that change.
Love ya, Trav, but you are the one who is bashing his head against the wall with the Real Bills Doctrine meme. When you look around and everyone else seems crazy... maybe it's not them? Get another hammer.
"Fekete is not calling for a return to the fuckin gold standard, he is calling for a return to Real Bills Doctrine."
This isn't true. Fekete explicitly says that Real Bills cannot exist without gold. Real Bills can only be extinguished by actual gold.
Real Bills can circulate as currency amongst producers in the supply chain, but consumers MUST use gold for the Real Bills system to work.
http://ftalphaville.ft.com/blog/2010/10/06/361946/peta-23-from-essex-%E2...
Sure there's no 'bubble' yet ?
Tyler - HORRIBLE headline.
Fekete is NOT calling for any kind of "gold standard" where any and all money is backed by gold. He is, as I have, calling for a return to Real Bills Doctrine, where paper is backed by real things, of which gold is merely ONE out of a constellation of real assets. Real Bills circulate as money, but they can be backed by oil or coal or the services of a doctor, or even by pussies. There's no limit on what can back a Real Bill; anything productive qualifies, services OR goods. Gold is merely ONE real thing out of zillions.
I didnt hear of Real Bills until I read Fekete a few months back. Debt money is so profitable that it has been all thats talked about since WWI ended Real Bills in 1914. The money masters made sure it was ridiculed.
When the wizards hit the public with a 2 X 4 once again, some Real Men and Real Women will take some Real Action and make Real Bills happen. Then the Wizards will have some Real Brown involuntarily in their shorts. 21st century Andrew Jackson vs banksster CEO? Nolo Contendere!
http://www.safehaven.com/article/3426/detractors-of-adam-smiths-real-bil...
http://www.lewrockwell.com/blumen/blumen13.html
http://www.thedailybell.com/374/Antal-Fekete-Real-Bills-Doctrine.html
Disagree with you a little here. Fekete says that gold is REQUIRED to extinguish a Real Bill. Consumers must make purchases with gold.
Maybe you can say that this isn't technically a gold standard, but it all depends on how you define a gold standard. Let's put it this way-- the global economy of 1815-1914 is commonly referred to as a "gold standard" system. Using that as an historical reference (rightly or wrongly), you then might be justified in labeling what Fekete is trying to promote as "a return to the gold standard."
A real bill is settled in goods... or gold. Either one will stop the bill.
A gold standard provides a commonly and widely accepted method to cease the chain of debt. One can end up with widgets, which may or may not be accepted in return for payment of a debt. Or, one can end up with gold which accepted by anyone in the settlement of an obligation.
The hypocrisy is unbearable. All those who have ridden the coat tails of a debt based, paper explosion, now talk with glee about it's demise.
You are probably right. I've lived in what will probably be considered the golden age of the United States. And now I could not care less whether it crashes and burns. You have a good point and I'll concede. Call it schadenfreude or anything else. I'm simply tired of paying for the Ponzi, regardless of whether or not I have profited from it either in my standard of living or my accumulation of wealth (neither of which is extraordinary).
Forgive me for being thick-headed, but what's the basic strategy of getting back on the gold standard if this country declared bankruptcy in 1933 and all of our assets are controlled by our creditors?
Ooh, I'd like to read more about that event. Got a link?
Well, here's an "unofficiated" discussion of it: http://www.nolanchart.com/article2971.html
Although if you're like me, you want to see it at the source i.e. Congressional record. At least one of the supporting provisions concerning gold and silver holding by the public was repealed in the early 1980s. Looking into it.
That is interesting. Thanks. It'll take more than one guy's opinion for it to go mainstream, however.
I don't think mainstream would have any interest in that. If they did, you know the motive is to realllly freak out the sheep for game-over-over-time.
Gold is making a comeback and fiat is retreating.
Jim Rickards says gold needs to get past $5000 to function as backing for gold again, based on debt vs amount of gold held by the US, as the reseerve currency.
Questions remain about actual gold held by US Government, and debt being issued. Inflation and debasement of USD is required for gold to get to levels suggested by Rickards which is a drop of dollar by 75%.
Gird your loins.
You have a much larger problem than that, since 2/3rds of all USD fiat is outside the CONUS.
Plus, nearly ALL $100.00 bills(old style) are now counterfeit.
Maybe we could have a dual system, Gold/Bills based inside CONUS, and keep the Banksters happy,make them deal with fiat outside the USA.
LOL
Think they would go for that?.That way they just get to screw each other.
"Plus, nearly ALL $100.00 bills(old style) are now counterfeit."
doszap
you've posted some good stuff in the past, but this is bs.
In the last few years there's been countless times when a store clerk
has held up and scrutinized a $100 bill I offered. Never once has one
been flagged counterfeit. Doubt if I'm so luckly or such.
Nevertheless, I wouldn't be suprised in the gov didn't shortly start mandating all old $100 bills be submitted (2 to 1) for the new $100 bills.... 'cause you know, them damn "terriorists" are counterfeiting.
Antal,
Thank you for this and all of your many generous articles on the subject of monetary policy history. As a student of the history of monetary policy, I am at best a pleb, and I wonder if you would comment on what Carroll Quigley is missing when he explains, in "Tragedy and Hope" p73, why the gold standard could not be effectively reinstalled after 1914, since all of the following condition, which existed for the 100 years prior to 1914, are necessary for the gold standard to function in the manner it did during this most succesful period:
http://www.scribd.com/doc/4047296/Carroll-Quigley-Tragedy-and-Hope-A-His...
(1)all the countries concerned must be on the full gold standard; (2) there must be freedom
These conditions, which made the international financial and commercial systemfrom public or private interference with the domestic economy of any country; that is,
prices must be free to rise and fall in accordance with the supply and demand for both
goods and money; (3) there must also be free flow of international trade so that both
goods and money can go without hindrance to those areas where each is most valuable;
(4) the international financial economy must be organized about one center with
numerous subordinate centers, so that it would be possible to cancel out international
claims against one another in some clearinghouse and thus reduce the flow of gold to a
minimum; (5) the flow of goods and funds in international matters should be controlled
by economic factors and not be subject to political, psychological, or ideological
influences.
function so beautifully before 1914, had begun to change by 1890.
Don't think Antal Fekete reads ZH. You might try www.professorfekete.com
I think what Carroll Quigley is missing is not that "the gold standard could not be effectively reinstalled after 1914" but that the gold standard was arbitrarily abrogated by governments around the world due to the fact that they were bankrupt, unable to repay their loans in gold as prescribed on the bond.
'Suspending' redeemability was the easy way out.
I don't see a need to have a currency standard dictated by government at all.
Money is far to important to be placed in the hands of bureaucrats.
We should eliminate the legal tender laws and remove all taxes on gold and sliver.
The market will take care of the rest.
That's a nice clear view you have there, Mike.
Real Bills mature into gold after (at most) 90 days (the typical length of an inventory replenishment cycle), acc to Prof. Fekete. Real bills have to be allowed to mature into gold, for the same reason transactions media must have a tangible (difficult-to-produce) backing like gold: tangible backing prevents excessive issue of bills or exchange media (checks, paper currency, whatever is the principal exchange media). The threat of redemption (by recipients and/or competitors) helps to prevent excessive issue of claims against the underlying gold backing.
Real Bills are the answer also to economizing on the use of the gold stock insofar as they allow goods trades to take place without a corresponding trade of gold. But for Real Bills to circulate they have to mature into (be redeemable into) gold. So such a system requires a way to remonetize gold; that is, to get lots of gold coin back into circulation. This is most easily accomplished by opening the mint to free coinage of gold (i.e., “free” as in unlimited and as in costless to the gold providers). In its Mint capacity, the government simply acts as referee, attesting to the weight and fineness of the gold coins it strikes. In this capacity it is also operating just as it does when it establishes uniform weights and measures (and it’s no coincidence that these 2 ideas appear together in the same paragraph of the US Constitution).
As a side note, think for a moment of all the resources (CPU cycles, brain power, salaries, office space, etc.) wasted by people who trade the four trillion a day currency casino, not to mention all the wealth expropriated by the present currency regime via inflation. Imagine what would happen if these bright people and valuable resources obtained productive employment elsewhere.
What the people want as money is really what we have always wanted, and what we will ultimately get. Simply put, we want stable, trustworthy media through which to conduct exchanges and store wealth (i.e., store purchasing power for future exchanges). We’ll eventually get what we want if only because debt-money has a built-in self-destruct mechanism. And if, after that debt-money self-destruction, gold does not spontaneously re-emerge as money it will be because man has destroyed himself along with his debt-money monster.
+1
Will self-destruct in 10, 9, 8, 7...
here are some links to Dr Fekete. educate yourself
http://www.gold-eagle.com/research/feketendx.html
www.professorfekete.com