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The Golden Gift - A Modern Day Solution to An Archaic Unsound Global Monetary System
Today, there is not a single government in the world that
has provided an adequate or sustainable solution to our global monetary crisis.
The most prominent criticism from Keynesian apologists regarding our monetary
crisis is that there is no better system than the one we are using and that
supporters of Austrian economics always complain but offer no solutions. This
simply is not true. Rather, our global leaders refuse to hear or consider the
solutions we present.
Today, citizens desire real change, not change disguised as
maintenance of the status quo that politicians and bankers offer to us. Today,
we are unfortunately afflicted with a state of learned helplessness. In crisis,
we turn to our governments and bankers to help us out, a very foolish response
since it is bankers and governments that have created this crisis. How can we
expect real change from the perpetrators of this crisis? Any real positive
change that has benefited citizens has always been sparked not by the State,
but by individuals. Today, the results of our dependence on bankers and
governments to produce change will result in certain failure and more
restrictions on our freedom.
To this end, I present to you a book called The Golden Gift
that I hope will spark discussions, raise awareness, educate, and raise heated
debates. Inside The Golden Gift is an idea that I believe can ensure that the
current global economic catastrophe of massive unemployment and currency
devaluation that plagues nations in the Americas, Asia and Europe will be unlikely
to ever repeat itself in the future. Not only is this idea a relatively simple
idea to implement but it would also impact humanity in a massively positive
manner, from helping to alleviate poverty, to restoring peace between warring
nations, to destroying the conditions that give rise to terrorism. It is a
simple idea yet one that would have profoundly positive humanitarian
implications in an indirect manner as well as a direct manner. And most
importantly, it is an idea that could be implemented despite the strong
opposition it would assuredly receive from Western governments and
bankers. While far from a perfect
solution, I hope that my idea will spark a discussion that will eventually
create an implementable solution if the one I have presented currently contains
too many flaws.
To promote understanding of the concepts I present in The
Golden Gift, I have also produced the video series below entitled “The Golden
Gift” that you will find on this page. I strongly believe that one must have,
at a minimum, a basic understanding of the artificial framework in which we
live where those in power constantly sell propaganda to us as truth, if we are
ever to break free of their mental and psychological constraints. I believe
that we must explore the reasons why society holds so many widespread beliefs
to be true that are not, and why we often hold beliefs so tightly for no other
reason than the fact that someone, somewhere, at some point in our lives,
ordered us to believe it. If we can understand this, then perhaps we can awaken
from our century long slumber. And at least that is a start. Though the video
series is six parts, I have only posted the first three parts below. If you are
interested in watching all six parts, merely search for “the golden gift” on
youtube or visit the “smartknowledgeu” youtube channel to find the remaining
three parts.
I have only posted a few paragraphs from my book below. For a limited time only, the
entire book is freely available on my website at this link,
http://www.smartknowledgeu.com/thegoldengift.com. Since the topics I address
in my videos are topics in which most people hold very adamant opinions that
are almost always based upon emotions and not fact, I expect many people to
vehemently disagree with some of the points I make in my videos. That's fine because that's what makes us diverse as a people. We all have opinions. Consequently, in order
to foster a much more constructive forum and dialogue here at ZeroHedge, I
would like to suggest that people read my book and then return here to focus
the majority of comments regarding the ideas within my book and not my video! Furthermore, as I noted above, the topics I address in the video are designed only to promote understanding of the topics I discuss in my book "The Golden Gift" but are completely DIFFERENT than the topics I discuss in the book.
Brief Excerpts from “The Golden Gift”
In order to make this book as accessible as possible, I
decided to limit its length from a standard 60-80,000 words to less than 15,000
words. So without further ado, let’s begin our journey of discovery in
understanding the roots of this crisis and how we can fight back against the
grave injustices being perpetrated by bankers through the global financial and
monetary system today.
The root of every chord of economic discontent in every
country in the world today has a common denominator - an unsound monetary
system. The numerator may differ from country to country but the denominator is
always the same. An unsound
monetary system robs your wealth daily. This maxim holds true whether you live
in Nairobi, Montreal, Berlin, Mexico City, Amsterdam, New York, or Tokyo. An
unsound monetary system perpetuates poverty, terrorism, and wars. An unsound
monetary system creates ever-increasing gaps in income between the rich and the
poor, enabling the top 1% of the world’s richest families to unfairly
manipulate financial & capital markets to create a bigger division in
material wealth and income between themselves and everyone else. An unsound
monetary system grants the families that control Central Banks absolute control
over not only currency valuations, but also real estate valuations, stock
market valuations and commodity valuations. An unsound monetary system grants
the families that control Central Banks the unjust power to set artificial
interest rates that would not exist in free markets, and consequently, the
unjust power to deflate and inflate all asset valuations at will. This is
precisely why the patriarch of the richest banking cartel in the world, Mayer
Amschel Rothschild, stated, “Give me control of a nation’s money and I care not
who makes the laws.” This is precisely why the JP Morgans, the Rothschilds, the
Rockefellers, et al ensured that today, all citizens utilize an unsound
monetary system.
In an unsound monetary regime, the families that rule
Central Banks, perhaps no more than a dozen families worldwide, have
established a system that enables them to manipulate all capital markets to the
downside as well as to the upside for their maximum benefit only and to the
detriment of all people. The poor and middle class and even the majority of the
rich have no access to these mechanisms that allow Central Bankers to create
risk-free wealth for themselves year after year. Thus, today, it is no mystery
why huge income disparities between the top 1% of wealthiest citizens and the
bottom 99% of citizens in every country have formed and continue to widen at an
alarming rate.
I decided to write this book because as of the date I have
released this book, no Central Bank or government in the world has presented a
single solution that addresses the collapsing global fiat currency system and
the burgeoning sovereign wealth crises in a sustainable and viable manner. All
Central Banks and governments seem only intent on covering up the massive
problems in our current monetary system and delaying financial collapse rather
than presenting the truth and working towards a viable solution that addresses
our current formidable problems. Without implementing a sound monetary system,
bankers will retain the power to continue manipulating our monetary system to
continually cause cycles of crises in the future. Thus, a sound monetary system
is a paramount and NECESSARY first step towards the prevention of massive
financial crises in the future. There can be no financial “reform” without the
implementation of a sound monetary system and any government that presents a
financial “reform” in the absence of establishing a sound monetary system
cannot be trusted.
The First 3 Videos of the 6-Part Video Series "The Golden Gift". In this 6-part series, I explore how the elites have used academics, politics, art, music and religion to create an empire of illusion that they have used to dumb down society and discourage people from critically thinking and realizing the truth about how the world really operates.
The Golden Gift, Part One - A Modern Solution to an Unsound Monetary System
The Golden Gift, Part Two - The Lies of Academia & History
The Golden Gift, Part Three - The Fake World of Art, Music & Politics
»
- advertisements -
I completely disagree with those who support some continuation of fractional reserve banking. As long as the banking industry enjoys such an advantage over all other industries, ie: the creation of check book money, then the economy will inevitably morph back to the central bank model and monopolies will be maintained.
For the playing field to be truly fair then ANY individual or enterprise with cash holdings should be allowed to use those holdings as a reserve, thus somewhat neutralizing the privileged position of banks. The problem is that allowing literally anyone to create check book money, or credit, the economy would soon be awash with so much currency that it would all become worthless very quickly.
In addition, allowing anyone to create credit in the form of loan principal balances produces a net drain on all economic activity in order to pay the interest on the loans. It forces perpetual economic growth which is clearly a fantasy. It misallocates capital and puts untenable pressure on society at large forcing instability into the framework of the system.
Put simply, there is no way to reconcile the fraudulent nature of fractional reserve banking, even when it is commonly understood and priced according to realistic risks.
very solid points iconoclast63. your concerns were my exact concerns as well as far as how a "fractional reserve" system based on PMs could maintain integrity. this is why I maintained in my book that the system on Project Sound Money should not be a "fractional reserve" system backed by PMs. I'm still digesting the comments above about a possible fractional reserve PM system as I always try to maintain an open mind to all ideas to weigh the merits v. negatives, even if I at first, initially disagree, with them. thx everyone for commenting.
the dots are being connected because of the internet. the information age has ushered in more efficient communication among the masses who have a degree of discretionary time to become enlightened. I am an example of this type of individual.
Aarskever, you mentioned the 999 Russian Gold that rusts. True, it is very important to know the source of one's gold. however, gold is not nearly as counterfeitable as our greenbacks. Counterfeiting will always be a problem, but is an obstacle that can continue to be overcome through improved technology. For example, cottage industries could evolve strictly around 'testing kits' as it relates to precious metals.
ZackLo, your ideas are genuine, in my opinion. If folks wish to have their gold lent out (placed at risk) for the benefit of profit, then they should accept that risk personally or in association with whomever they have hired to research their investment prospects.
If folks wish to place their gold someplace to keep it safe, then they can hire a safety deposit box for a fee and keep it guarded from bankrobbers.
Fractional reserve lending alone creates an incentive to lend recklessly with the hopes that the majority of 'investments' give a return that exceeds the 'mal-investments' that do not repay the loan. As we have learned time and again, this is a slippery slope that ultimately ends in tears.
The current system never punishes excessive risk-taking, nor does it reward saving. The moral-hazards abound create the lunacies of today.
I think as a critique, I generally liked the book until the end where you proposed that Sound Money Homeland. I think I would remove that part from the meat of the book and make it an appendix or post script. Then I would flesh out the rest of the book with some hits on Weimar, Argentina, and other horror stories. Overall pretty good. I just didn't like that ending becasue it seemed like an invitation to join a cult or something.
@quinvarius, I'm definitely NOT advocating a Sound Money Homeland Security. I think that would be dangerous so you're right, perhaps I need to rewrite that portion of the book if that is how you interpreted it. I was merely implying that TPTB will not like the truth being exposed so readily so I believed that the citizens of the island would no doubt need some type of security. But the security would be to protect the islanders from outside attacks, definitely NOT to monitor its citizens or to act as some type of "gestapo"!
Gold is not money it is an investment. Which of you would trade gold for oil or gold for food?
Oil is more like money than gold until it - also - becomes too valuable to trade.
Money in a sound business environment has negative value as commerce/business expands and more money is lent into existence by business itself. The negative value of money represents 'inflation'.
When money gains value it does so at the expense of business.
'Sound money' is another easy answer to a problem that defies solution. There is no such thing as a sound economy nor sound money.
Your avatar is what, a dinosaur? That would be appropriate.
I got lost in your logic somwhere around the 2nd sentence
Gibberish.
I'll agree. It wasn't even worth a good ole junking.
SKU:
I just read The Golden Gift and wish to compliment you on your depth of knowledge, the correctness of it, and your attempt to create a way out of the monetary concentration camp we are all forced to live in.One thing that is vitally important to understand, however, is that in a sound money system, 100% (metal) reserve is not required, as fractional reserve banks can exist in accordance with supply and demand. For example, let's say I have $1 million worth. Maybe I "bank" some of them -- say, $100,000 -- under my house. With $900,000 to place elsewhere, I decide to put $150,000 in a 100% reserve bank (paying a storage fee instead of receiving interest), and put three tranches of $250,000 in other banks that have, respectively, a 90% reserve requirement, a 75% reserve requirement, and a 50% reserve requirement, each paying deposit interest reflective of the risk of a run on the bank. Furthermore, I chose these banks based on their policy of allowing audits from independently accredited auditors without prior notice.
In this way, fractional reserve can do what 100% reserve banks cannot -- i.e., lend at interest in accordance with their reserve requirements -- and thus help supply investment capital to the economy, and only the economy (no independent "financial sector," in other words). There would obviously be vastly less credit available, but this would be a good thing for obvious reasons. As such, it would put a vastly greater premium on equity investing, the point being that (1) fiat paper would be vastly reduced, and (2) there would be no central bank and thus no FDIC equivalent, meaning that bank runs would be an ever-present threat, thereby prompting fractional reserve banks to restrain themselves accordingly.
Moreover, regardless of whether fractional reserve banks existed, the high-reserve/low-risk environment would not only keep inflation to a minimum; the premium on savings that would be a core feature in such an economy would favor production over consumption, placing a premium on productivity, such that wages would tend to rise as prices trended downward. Which is to say that price stability would generally give way to price "deflation," precisely as we see in the electronics industry today. And as the purchasing power of money generally grew, wealth would grow as well.
Lastly, allow me to direct your attention footnote 152 here -- http://libertarianpapers.org/articles/2009/lp-1-32.pdf:
The reestablishment of money, however, will be in technologically advanced form, such that real assets will be exchanged instantaneously and with complete financial privacy: “In the future, trade will be executed by instantaneous and simultaneous debiting and crediting to and from liquid wealth accounts, held by both banking and nonbanking institutions. Electronic digital payments technology will enable property rights claims on real assets, such as stock and bond funds, or gold, to be utilized as the medium of exchange for virtually all transactions. In sum, when businesses or individuals wish to purchase a good or service, they will provide—directly or indirectly—an electronic instruction to their bank or other financial intermediary. The instruction will state that an amount equal to the nominal value ofthe purchase should be transferred immediately to the account of the seller of the good or service [and]...send ‘money’ from one point to another point on the globe extraordinarily fast and anonymously.” — www.cipe.org/publications/ ert/e32/e32_2.pdf Thus, on your would-be "Golden Isle," electronic debit cards of this sort would allow for the seamless, completely private exchange of goods and services. Lastly, as to the matter of taxes, there should be no need for them, period. Rather, your islanders would operate under the kind of genuine "social contract" found in footnote 116, thus precluding the need for a state that by definition requires taxation. Yes, there would be fees for services, but the free market would provide them, including a privately competing court system and privately competing security providers (see Section 12).
@glaucus, thanks for your comments. I had yet to fully grasp how a metal-based fractional reserve system could work and you've provided a basis for me to explore how it might operate. as I stated in my book, I know my "solution" is far from perfect but I wanted to put it out there to spark discussions such as the one you have started. thanks again for your thoughtful comments.
That's exactly how banking investing works in a 100% reserve system. People who require safety (for some part of their money) put money into depository banks, who hold it safe for a fee. Another part of their money, is put into banks who will pool multiple deposits, and invest them, at risk, thus paying interest to the depositor. Different banks/institutions carry different risk profiles, etc, much like investment companies and vehicles do today.
Money only earns interest when it is put at risk, something I think people fail to realize when they put money in the bank today.
So safety deposit boxes plus securitization.
I think it's good that you at least recognize the inevitability of fractional-reserve lending under gold-based banking under the Medici and thereafter.
That said, how do you deal with what I call the "Misesian Dilemma":
Mises posits that under a pure sound money system, the basis for lending is "time preference". Okay, so for all savers across a system, we can find an average or aggregate "time preference". Now, what do we do when - as a product of chance, if nothing else - that aggregage/average "time preference" collapses towards zero - that is, there is a general demand for liquidity. Per Diamond-Dybvig, we understand that changes in liquidity prefence are inherently unstable and always tend to become competitive rather than orderly.
Your thesis seems to be that an honest, transparent bank somehow cannot become the victim of competitive liquidity preference, and yet both the Nash Equillibrium and historical experience would tend to belie this.
How do you solve it?
Demand in liquidity? Liquidity in what?
Liquidity in 100% reserve deposits? Why would there be, unless the reserves were suspect? There were bank runs in the 30s, because depositors learned something, didn't they? They learned deposits were not in fact 100% there, and there was vastly inadequate auditing in place (perhaps due to introduction of the Federal Reserve) to safely determine which institutions were at risk and which were sound.
Liquidity in fractional reserve deposits (ie investments)? Well, ok, but you have the exact same risk today. With the same consequences. The assets are liquidated, depositors paid back the proceeds, and the owner goes bankrupt. Then either the interest paid fairly represented the actual risk the depositors took, or the risks were misstated and depositors taken for a ride. Gosh, that's never happened in the last 100 years. Ya places yer chips, ya takes yer chances.
This is the basis of my whole question. The author of the original comment talks about fractional-reserve, gold-based banking, with high reserve ratios. That type of banking has a very long history, filled with bank runs.
The Diamond-Dybvig model suggests that bank runs are the logical and inevitable consequence of changes in liquidity preference that become competitive and self-reinforcing. Throughout history, bank runs have proven to be extremely destructive to the economy, as they suddenly force businesses to change their financing expectations and wipe out huge amounts of savings when they force sudden liquidation and panic prices. The author of the original comment seems to suggest some reason that this might not happen in his model, but I don't know what it is.
There are those who suggest that having lots of bank runs isn't necessarily a bad thing. But bank runs certainly create a lot of what seems to me to be unecessary volatility that supresses economic growth. As for full-reserve banking, that's fine as long as the economy doesn't become liquidity-constrained - as it was for most of history prior to the invention of fractional-reserve banking (which began with the practice of overdraft privileges in the 1300's)
480 a minute or three later...
@fredquimby, thx for your assistance. it is much appreciated!
I just tweeted it....471 downloads before I did....
@spotgoldprice $1297.9 FREE Golden Gift download http://www.smartknowledgeu.com/pdf/monetarycrisis.pdf #gold#silver
I think your project sound money homeland would be hit by a US cruise missile shortly after being blamed for a terrorist act against Ft Knox during which all the gold was "stolen".
I like to compare paper money to biological stress reaction for increasing performance.
If an animal is being attacked, it produces stress hormones increasing overall strength and speed over normal possible level. It damages body, but if one survive it was warth of it. Stress must be then immediatelly reduced and consumed energy must be regenerated by resting. Keeping stress hormones to high to long is deadly.
Paper money was also used in times of emergency, to keep system survive. But some clever bankers just wanted to run the system all the time under stress. So our system is like junky, fully poisoned by paper-money stress hormone and damaged substantially.
In middle term, ill body of our world will simply die, making stress-hormones useless and disdained in the future - but only if future citizens know the past. That's why knowing the past is so important and dangerous. That's why Internet must be shout down to keep control.
We must not allow just to reset the system.
fiat currency is dishonest money
there is no way to have an honest economy or society when it is founded on a dishonest monetary system
the only way to have honest money is to allow people to CONVERT their paper (or digital) currency into something tangible - 5000 years of human history has shown that gold and silver are the 'something tangible' that will be most readily accepted by the majority of humans
be very clear on the concept of 'CONVERTIBLE' versus 'BACKED BY' - a currency backed by tangible goods is still fiat unless the people can convert the currency into the tangible good - the Euro is a modern-day example of a fiat currency which is supposedly backed by 15% gold - the gold backing was just a marketing ploy to help uninformed humans accept the imposition of a new fiat currency
inflation comes in like a hurricane...in waves. throw in a massive decade rise in commodities across the board and you don't need "the big 12%" to have an impact, "just an initial breeze." next thing you know "you're in the grinder." the health premiums are already soaring WITH the government plan!!!
Looks like you did a lot of research and thinking. I will read it.
If you really want this to go viral, you need to add linked-in, facebook and twitter capabilites (et al). With the average person having 200+ friends, and moure users than the US population, you only need very few to like this before it snowballs. I'm just sayin is all. Same goes for you Zero Hedge. I know you have security concerns, but there must be a way to protect your users data.
@fracturedspace, thx so much for the suggestions. very solid ones indeed. we will add our twitter account to the book online and consider adding facebook as well. as of now, we don't have a facebook account, but maybe we'll add one for the sake of extending the reach of our book. but point well taken!
I really like the way that you think....
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This sums it up: One cannot have a sound economy without sound money....
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Knowing that this is true....then one would question why fractional "false" money was initiated....
Perhaps the purpose was to ignite an economy in a relatively shorter period of time...versus that of a "real money" type approach....
ie People need to have a big economy fast....although not very prudent in the long term....thus the real defining moments of fiat's inevitable flaws....
ie ....the majority of a population having some form of possibly participating versus no shot at all.....knowing that the end result will be "up in flames' ...just not today....but years down the road....
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Another issue...would be hoarding....When money is a "thing" such as gold...land...etc...then it could be hoarded...ie the estancias and aristocracies time periods....peasants having no economic shot....
However...it has become clear that government capture or facism is actually "law hoarding"....
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The next move is probably going to be digital currency....as it is more efficient....If something is more efficient....it will probably happen...if available....ie possibly deters crime....taxes could be more efficient...transparent....
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So perhaps ie a form of digital currency...valued by being indexed to things that could be hoarded and scarce....will be the next possibility....and one step forward....
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Again....I really like the way that you think....
I think and act in a very similar way....
The comments that you made particularly regarding education and professors I am in complete agreement with....Education should be just that....and not delivered by some arrogant/biased individual....the delivery of education must be changed...ie internet based systems....
One could denote vast improvement in the securities markets by segmenting the banks as servicers of the PUBLIC marketplace.....not gamers of the PUBLIC marketplace....
The securities market needs to be totally revamped for the INTERNET Age....
Perhaps we are hearing your ideas, but we simply recognize them as so much pablum and don't wish to replace inflation with bank runs.
good stuff
Bank runs are good.....how about regulate their books 100% reserves, risk allocated savings accounts for lending, fuck the middle man bankers why do they walk away with the full yeilds on they're money they lend...Depositors need to learn to take risks there is no free lunch in this world...don't want to take risks save it...well under a pure gold standard that would be viable...under the system we have now no way. bank runs are a balance sheet check you have 100% reserve banking you have no bank runs...I want every form of credit marked to gold market and we will see it sooner than most paper chasers want!
Not to be unkind, but it seems to me that a far more convincing explanation of what's going on (and why the search for compound growth indeed is very harmful to most of the people in this world, excepting (perhaps) the top 5%, is offered by David Harvey here in a lecture called "Crises of capitalism" (http://www.youtube.com/watch?v=26o22Y33h9s ); a more thorough treatment can be found in (esp. the first chapter) of his book The Enigma of Capital (see review here http://www.independent.co.uk/arts-entertainment/books/reviews/the-enigma...)..
Harvey suggests that crises are occurring specifically at times when (and to the extent that) capital can no longer be invested in ways that guarantee roughly 3% YoY growth, at which time this money starts being invested in (unsafe) property and asset bubbles, which then pop some time later, generally resulting in a redistribution 'up', as the elites generally manage to make money while the bubbles are being inflated, and exit before it goes pop. Right now, more than 1 trillion dollars (of profits from last year) has to be reinvested in some way every year, and this has become harder and harder, as most of the 'easy' investments that result in profits for next year have already been made, especially in the west, where production processes etc. cannot really be made more efficient anymore. Because of that, more and more money is being invested in 'growth markets' (China, mostly) that can still offer those kinds of returns on investment capital, but everything being invested there results in more jobs being lost in the 'capitalized' world, which then results in lower aggregate demand (leading to the credit bubble as a way to keep consumption up). As such, until the Chinese start consuming more of the goods they produce, and that way cause inflation to occur in their own country, leading to a decrease of their competitiveness, the rest of the world will be in dire straits.
Not to be unkind, but it seems to me that your comment lacks a definition of money.
Or put more bluntly, do you think interest rates would remain at 0.x % with a constant money supply and skyrocketing debts?
You saw the tree and missed the forest.
we don't perceive your reply to be unkind at all. to the contrary, we welcome all viewpoints that add to the discussion and yours certainly does, so thank you. however, we don't believe that Harvey's views are different than ours (from the description you have included above). we attempt to prescribe the roots of the problem; he prescribes the results of the problem, and in that sense, we believe our views are aligned. we say that an unsound monetary system leads to the enforcement of unsound monetary policies that lead to artifical price distortions in all capital markets that banks sell to the public as "growth" but in reality, are never sustainable. therefore we label such growth as "illusory" for it is not based upon any organic growth sustained by fundamentally sound economic principles. institute sound money, and we believe that the problems Harvey alludes, especially the massive price distortions that exist in all capital markets, will disappear.
That's interesting, because David Harvey (whom i met when he was at Johns Hopkins) is as straight-up, traditional and unreconstructed a Marxist as you will find anywhere in academia.
It's my view that people are very naive about Mises and all this "Austrian School" stuff that's gotten popular on the Internet because they don't know their Marx. If they did, they'd know that Mises and Marx base their theories on exactly the same idea. In fact, Mises's entire thesis is nothing but a re-working of Karl Marx for the right, rather than the left.
When the capitalist credit system fails, both Misesians and Marxists start to sound very credible indeed. This is because both theories deny the reality or sustainability of any real credit system. But I guess this is too academic an insight for most follks. Ah well.
Gold to $1700
if you are going to quote us, please be so kind as to include our whole quote, which was "however, we don't believe that Harvey's views are different than ours (from the description you have included above)". This implied that we weren't familiar with David Harvey and his thinking and that we made this statement solely based upon the brief paragraphs to which we responded. So in order for us to really to assess the differences in our thinking and that of Harvey's we would obviously have to read more of his essays and thoughts in much more detail.
if you are going to quote us, please be so kind as to include our whole quote, which was "however, we don't believe that Harvey's views are different than ours (from the description you have included above)". This implied that we weren't familiar with David Harvey and his thinking and that we made this statement solely based upon the brief paragraphs to which we responded. So in order for us to really to assess the differences in our thinking and that of Harvey's we would obviously have to read more of his essays and thoughts in much more detail.
But the point is that the unsoundness of the monetary system (as I understand it, inflation) is built into it, and is there exactly to encourage growth..
You have to pick some accounting unit, and I'm not really convinced that it matters whether this unit is wholly fiduciary or just partly so, given the fluctuations of the gold and silver prices over time (sure, you can argue that this is due to depreciation of fiduciary currencies, but that's not entirely true, as the gold price seems to mostly correlate with the expectation of future devaluation of said currencies; moreover, gold can also be faked (see the 999 russian gold coins that rust).
The deeper point, it seems to me, is that the value of those fiduciary currencies is lost once productivity goes, so that there is less investment, and consequently a lower chance on returns on invested capital in that currency. (it is another question how much this means for internal production/consumption) That is, uncompetitive countries create less demand for their products and currency, and therefore their currency devalues. It is primarily in these times that it becomes somewhat advantageous to own gold, or other commodities, as it is fairly likely that these will remain valuable in the eyes of consumers/buyers living in other countries.) However, the motor behind a currency's value is demand, and thus production (or investment, as happened in the UK, where the pound has become overvalued due to the fin services industry, but it seems to me that this is not really sustainable.). This seems to me to mean that, ultimately labor, or its multiple 'productivity' (of any good or service that can be sold abroad) is what seems to me to determine currency value. Any commodity holding value is, if anything, impractical, given the sheer amount of people living on this planet who would have to make use of it, coupled with the fact that it is exceedingly unlikely that a government will not infringe upon your rights to own such commodities in times of crisis anyway.
Anyway, to return to the point: as soon as you have production, you have owners (investors) and laborers, who together add value to products. The profits made are then divided up between them, with the caveat that consumption can only grow by increasing wages (or borrowing, but we've seen where that leads), so that it quickly becomes counterproductive to skew this divider too heavily towards the investor. This because the investor needs to be able to reinvest his money in some way that will result in him making the same at least-3% returns next year, and this reinvesting becomes harder the more money you have to reinvest. Most of this money is reinvested in the means of production (either through expansion or optimalization). However, this becomes harder once an economy matures, and at this point you either see malinvestment (bubbles) or a jump into a new market (East Asia since the 1950s).. This results in a lowering of the production costs, but (since the investors are greedy) they both don't lower the prices ("transportation costs" or whatever) and don't create particularly affluent new consumers in the places where they build their sweat shops. All of this decreases sustainable demand, and at the same time forces the capitalists to search for even more reinvestment opportunities. And this is what becomes unsustainable. Consumption of produced goods is the constant, which will keep happening due to wear & tear, because people want 'improved' stuff, or due to theft and destruction etc., but once you unhinge that balance between production and consumption, by extracting too many of the profits (by people who save a lot and reinvest a lot; mind you, this is done both by the Warren Buffets and by the pension funds, who also seek high yields), stuff starts to unravel.
The question, therefore, (imo) is not so much how we can find any kind of 'real' currency, but rather how we can balance growth and innovation with enough stability to guarantee that the "common" people (that is, the laborers who make everything work by supplying the products that are to be sold tomorrow) can also, at the very least, lead somewhat predictable lives in which they can know that they will have enough saved up to have a decent retirement.
Anyway, I can't really do justice to Harvey's perspective using just 4-5 paragraphs, but I really do recommend his book (or at least the lecture he gave about it at the LSE which can also be found on youtube, albeit recorded by a terrible camera man). Also, I'll have a look at your book over the weekend sometime :)
No. That's just the excuse.