Guest Post: The Return Of Precious Metals And Sound Money

Tyler Durden's picture

Submitted by Giordano Bruno of Neithercorp Press

The Return Of Precious Metals And Sound Money

Well, those devious gold bugs and sound money advocates are at it
again! They had the audacity to produce economic analysis that
consistently outshines and embarrasses mainstream Keynesian pundits.
They had the nerve to expose the seedy underpinnings of the private
Federal Reserve. They even had the gall to bring the long established
short manipulations of metals markets by global banks like JP Morgan and
HSBC into the light of day, where anyone whose head was not buried in
the dark recesses of their own colon could see and say “My god! There
really is an organized cabal against gold and silver!” But if you
thought all that was outrageous, these people, who promote the insane
notion that our currency should actually be backed by tangible wealth
and should be under the control of the voting public instead of some
unaccountable parasitic corporate central bank, have now brought state
legislators into the mix! The return to sound money has begun…

Thirteen states currently have proposed measures which would
reinstitute the long suppressed need for a precious metals standard.
Utah is the furthest ahead in this battle, its House just recently
passing a bill which would make gold and silver officially recognized as
legal tender within its borders. All that remains is a signature from
Utah’s governor:

Colorado, Georgia, Montana, Missouri, Indiana, Iowa, New Hampshire,
Oklahoma, South Carolina, Tennessee, Vermont and Washington all have
similar bills to that of Utah in different stages of development. Why,
after decades of treating gold and silver standards like a cocktail
party joke, have the states suddenly turned friendly towards the idea of
commodities as currency? It makes perfect sense when you examine what
is happening all around us in the world today…

Necessity Is The Mother Of Prevention

The states are broke. Not just broke, but destitute. If California
had a loan shark, its knee caps would have felt the splintery sting of a
Louisville Slugger years ago. Illinois would have turned to
prostitution (and maybe still will). All the clawing of eyes and
gnashing of teeth that went on in Wisconsin this past month over the
rather tame cuts to labor union wage bargaining power is nothing
compared to what many states have to look forward to when they decide to
confiscate employee pensions and cut major funding to basic services
like fire, and police. Some state governments know what is coming, and
they are wisely moving to cushion the fall.

Legislators recognize that if municipal bond investment continues on
its current downward spiral, there will be widespread defaults. These
city and state bankruptcies will almost assuredly be met with offers
from the Federal Reserve of a new bailout; QE3…..or QE20 (does it really
matter anymore?). This bailout would not be “substantial”, it would be
gargantuan! What do you get when states bring in increasingly
diminished revenues while constituents demand more and more money for
welfare and public services because of inflation and the subsequent rise
in poverty? You get a space-time-debt singularity so volatile it
stretches the very fabric of your local economy until it tears wide
open, unleashing a gravity well of capital destruction similar to a
double-ended tornado that snatches your money and hurls it into the
upper stratosphere never to be seen again. The point is, you get yet
another Fanny and Freddy; a self perpetuating never ending bailout
free-for-all that fizzles only when the dollar has been thoroughly
cremated, which shouldn’t be long from now.

Intelligent and fiscally conservative local representatives have seen
the obvious danger to the stability of the dollar in this equation, and
are moving to PREVENT total collapse of their states, rather than wait
until after the fact to initiate solutions. Sound money legislation and
the creation of localized markets and barter networks give states the
ability to function beyond the lifespan of the dollar and to ensure the
continuing personal prosperity of residents. Honestly, why should the
states allow their destinies to be bound forever to the longevity of the
ailing Greenback? If there is anything good to come out of our present
predicament, it is that Americans, from average citizens to elected
officials, are beginning to understand the reality of coming collapse
and are preempting it with measures designed to insulate their
communities from the inevitable firestorm.

Eventually, as this movement escalates, certain states will come out
ahead of the pack, gaining a kind of “safe haven” status, and attracting
liberty minded people from around the country to the protective shelter
of their borders.

The Stagflationary Stranglehold

Stagflation is truly the worst of both possible worlds. A
combination of deflation in employment, wages, and traditionally high
value assets like real estate similar to the Great Depression, combined
with skyrocketing prices in base goods and extreme currency devaluation
common to Weimar-style hyperinflation. I can’t think of anything in the
field of economics more terrifying than this outcome. Unfortunately,
the U.S. is well on its way down the stagflationary path.

As many are probably already aware, the Federal Reserve has become
the largest holder of U.S. Treasury debt in the world, beating out even
China. Most analysts with any sense would agree that our central bank
generating trillions in future tax debt to temporarily stave off the
effects of present national debt is the perfect recipe for dollar
destruction. The problem is that this process of devaluation strikes
the economy from the bottom up, not the top down. Cities and states
will suffer first from inflationary pressures as well as municipal
liabilities because they do not have the capacity to fund their
operations through constant fiat printing. The Federal Government, on
the other hand, has the ability to create dollars unhindered to prop up
its functions. Therefore, as the Fed prints, it weakens state revenues
by destroying consumer buying power (and sales tax support) and
triggering price explosions, while at the same time maintaining
Washington D.C.’s administrative position and funding capability.
Ultimately, unless Congress finds a way to freeze the constant expansion
of the national debt ceiling, the Federal Government will be the last
entity damaged by the overflow of currency they set into motion.
Perhaps that has been the plan all along…

For those whose knowledge of the economy is limited to 30 second
sound bites from MSNBC, the idea of currency overflow and dollar
derailment sounds outlandish. What is a little old-school Keynesian
liquidity to the mighty American economy, right? $700 billion here,
$800 billion there, and presto, jobs fall from the sky and suburbanites
return to their iPod humvee heaven! I sob a little inside when I hear
people still using these mainstream bailout stats as if they mean

The truth is, it is nearly impossible to get an accurate calculation
of the exact amount of dollars created and dumped into our financial
system by the Fed without a full audit. We hear the same TARP numbers
repeated ad nauseam and begin to believe we have a sense of what is
happening. However, if you were ignoring TARP back in July of 2009, and
instead focused on the little know SIGTARP commission’s statistics on
the overall cost of bailouts INCLUDING those debt obligations the
government had established but were yet to pay, you would have
discovered that instead of a few hundred billion stretched out over
years, the U.S. is actually in the red for nearly $24 trillion:

This was two years ago. Not surprisingly, the far more in-depth
SIGTARP numbers on Fed quantitative easing and government costs have
been removed from subsequent reports. Apparently, they were not buried
well enough, and someone felt it would be better to pretend they never
existed instead. Some investment corporations are still keeping tabs,
though, like bond fund giant PIMCO, which has seen fit to dump the
entirety of its U.S. Treasury holdings in preparation for dollar

Yes, Bill Gross is a globalist insider, but beyond that, PIMCO’s
actions are incredibly prudent. It is quite possible we have not only
met the 2009 SIGTARP cost projections, but surpassed them in light of
the Federal Reserve’s new position as the global grand poobah of
T-bonds, as well as Timothy Geithner’s absurd insistence that being
required to go through Congress to raise the debt ceiling is like

Naturally, frustrated little Timmy would prefer if there was no debt
ceiling at all, and the government was given free reign to spend money
that doesn’t really exist, for Treasuries and toxic derivatives that
don’t exist, to support a recovery that doesn’t exist. I don’t know,
these globalist bureaucratic types are so friendly and knowledgeable and
they wear such nice suits. I’m sure they mean well. That said, the
only way the states can avoid any unpleasant consequences in the event
that globalists don’t “mean well” is to allow alternative markets and
currencies to take root, helping them to mature and slowly replace the
feudal establishment system. Only when states prepare to decouple from
the disintegrating mainstream economy will they become safe from the
shockwaves of collapse.

The Shorts Are Ripe For Squeezing

JP Morgan’s fraudulent naked short positions designed to artificially
hold down silver markets have been publicly exposed and well documented
for years by this site among many others. Their issuance of paper
ETF’s representing gold and silver they don’t actually have has also
been fully uncovered. Global bankers have been manipulating precious
metals markets down for decades. This is undeniable. Why would they do
this? To prevent exactly what is happening in Utah and a dozen other
states today; the rebirth of gold and silver as a competing currency
alternative to the fiat dollar.

As long as PM’s were seen as poor market performers or relics of a
bygone era, no state would ever consider them as a viable substitute for
the thoroughly controlled Greenback. Globalization operates on the
principles of centralization, and the purpose of centralization is to
take options away from the citizenry until they have no other choice but
to use your system. Gold and silver represent a powerful option that
cannot be duplicated out of thin air to infinity, and cannot be easily
dominated by a central bank. COMEX manipulation is an inherent
extension of the centralization process. But, as communities and states
begin the acceptance of metals based trade and the issuance of gold and
silver currency, you will see the manipulations by big banks begin to

Already, JP Morgan is beginning to take gold as collateral for
certain investment transactions, which means, first, that JP Morgan is
now treating gold not as a commodity, but as a kind of currency, and
second, that JP Morgan is in the process of shoring up its physical
metals position to prevent a “squeeze” on their naked shorts (massive
fraudulent bets that silver or gold will fall, often causing regular
investors to believe there is far more physical metal on the market than
there actually is):

It is highly unlikely, though, that the international banking cartels
will be able to generate enough excess gold and silver stock to meet
the rising demand for physical delivery, considering they have issued
far more paper securities for gold and silver than they could possibly
acquire. As physical metals go into wider use, especially through state
legislation, and spot prices keep increasing despite manipulation,
global banks with large short positions will be crushed by the ever
increasing need to cover their fake bets. This is sometimes called a
“short squeeze”, which results in history making spikes in spot price
over a very compressed period of time.

Signs of a possible short squeeze include shortages of blanks at the U.S. mint due to high demand:

Or, the decoupling of silver or gold from dollar activity, which
signals that metals are being treated as a competing currency. Silver
and gold movements outside of the dollar are now a common weekly
occurrence, and some metals suppliers, like Pan American Silver, are
shifting away from the dollar entirely and trading their supply in other

International demand for gold and silver also puts heavy pressure on
shorts. For instance, gold demand in India was up 66% in 2010:

Gold demand in China was up 70% in 2010:

Couple this kind of demand with consistently falling production
output, and you have the ingredients for a precious metals price
eruption. Gold production in major producing country South Africa was
down 6.4% in 2010, and down 17.4% in Peru:

The sooner regular Americans and state governments invest in precious
metals, the greater their head start will be when chaos unfolds in ETF
markets. There is no doubt that global banks will respond to this event
by refusing to meet physical delivery demands on paper securities they
have already issued, and millions of ETF investors are left with nothing
but worthless stock documents. States with mining operations inside
their borders will be in a prime position to become real suppliers, to
facilitate ample revenue, and to help rebuild the American economy from
the ground up, but only if they prepare now. Otherwise, the banks will
take the stage again, undisputed and ready to offer more “solutions” to
the problems that they themselves created in an incessant cycle of
deceit; the longest running con game in history.

Catastrophe Demands Concrete Solutions

Things are getting real ugly out there. The tension in the air is
dense and sweaty. Everyone feels it, but not enough people proactively
discuss it. The economy has already imploded, and is now reinflated
with volatile hydrogen like fiat, just waiting for the right spark to
bring the whole zeppelin crashing down in flames. Japan’s situation is a
prime example of the incredible sensitivity now present in the so
called global economy. One earthquake has sent world markets reeling,
and the Nikkei index into free fall, losing over 10% in one day.
Imagine the results of a massive earthquake in the U.S., or a nuclear
event like that which is unfolding north of Tokyo. What about an
escalation of Middle East political trauma or American involvement in
another war? Circumstances which could have been absorbed and dealt
with by the U.S. three years ago are now amplified by our financial

After dozens of months filled with lost jobs, lost infrastructure,
and lost buying power, even the shock of $100 plus oil is like a sledge
hammer to the solar plexus today when it was a only a moderate nuisance
back in 2008. We cannot continue on our present path, or we WILL suffer
unthinkable cultural digression and social defeat. A declaration of
independence from the faulty structure is in order, and this begins with
individuals as well as states acting to become more self sufficient.
Sound money legislation is an important foundation of such development,
and private trade in commodities will reinforce state action. The
problem must be confronted on the personal level, the local level, and
the state level. This means alternative economies based on stable trade
and tangible currencies have to become a priority for your community
and for legislators equally. Neither one should wait around for the
other to make this happen. I think if anything is quite clear, it is
that there is no more time to guess and second guess the need for
financial flexibility and self-reliance for the states. It is time to
act. The decisive will survive and thrive, the apathetic will take
repeated blunt force fiscal trauma to their collective groins until they
learn their lesson. This is simply the way of things…

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snowball777's picture

How would sound money bring anything but massive deflation in the face of the black swan clusterflock at this point?

Junk away...but answer the question.

Seasmoke's picture

so continue going 150 MPH as you approach the cliff is better than hitting the brakes because you may flip over

flacon's picture

How would sound money bring anything but massive deflation


Deflation in terms of what currency (money)? Fiat dollars? Yes. Gold/silver? No. 

We have already experienced hyperinflation - all that is left is deflation (and the central bank will counteract this with money printing because if it doesn't the currency is destroyed, and if it does the currency is destroyed), and if you look at Zimbabwe you can actuall eat gold.

Massive deflation means nobody has any fiat money - which means they will revert to sound money. Massive printing to stave off this central bank "worst nightmare" scenario will lead to the value of the fiat money decreasing to virtually zero which means the citizens will revert to sound money. Bernanke is cluserflocked. He is in a loose-loose situation.






snowball777's picture

I think we all agree that continuing along this trajectory will lead to hyperinflation or at the very least uberstagflation. Asset deflation will be necessary, but the difference is in how fast/hard it hits us...sound money is the steepest and most painful approach we could possibly take and there are other alternatives (e.g. end QE and take our lumps while retaining the Fed, replace the Fed with a US Central Bank that isn't a private corp with zero accountability, etc).


Careless Whisper's picture

Is whistleblower Andrew Maguire a FRAUD? This guy says maybe, because no one knows Andrew Maguire. Do you?



Fred Hayek's picture

Max Keiser linked to that video on his site . . . right next to recounting having had dinner with Maguire.  The guy in the video doesn't know what he's talking about.

Careless Whisper's picture

okay, so max had dinner with someone who said he was andrew maguire. is there any other information on mister maguire? anything? well?

NidStyles's picture

How much has Max Keiser made off the whole ordeal? I don't know the guy, so why should I trust him?

Al Gorerhythm's picture

Whom do you trust? Who can you trust? Financially, what do you place your trust in?

robobbob's picture

Is El Presidente Barack Hussien Obama a FRAUD? This guy says maybe, because no one knows Barack Obama. Do you?

Donald Trump asks why is Obama's history so strange and why does anyone asking questions get smeared?

You're right, we should demand to see Maguire's birth certificate, college transcripts and passport.  Ohh, wait.....

Creed's picture

sound money


you use the phrase


what part of the word "sound" do you not understand?


you Ticker Forum devotees have been mostly proven wrong since the 9/2007 Bin Laden thread

yet you guys believe you have something to offer the rest of us with condemnation of soundness

pull my other finger

snowball777's picture

I could just as easily use the inflammatory phrase, "inflexible currency".

Creed's picture

yes, inflexible to manipulation by your banker overlords


I see that as a good thing

snowball777's picture

You've missed the point about credit being created with or without a think bankers didn't rule over people in the 19th century too?

naughtius maximus's picture

Banks create money as bank credit. The banks in the 19th century even issued their own paper money. But the difference was you didn't have to accept it for debts public and or private.

CH1's picture

Which would work MUCH better with modern tools, like digital transfer. 

And think about the incentives: They'd have to convince you that their money was your best choice. Quite a refreshing concept!

Al Gorerhythm's picture

DO you mean, inflexibly honest? Excuse the tautology.

snowball777's picture

Nothing to do with honesty or a lack thereof, simply the ability to expand the money supply when it is necessary.

NidStyles's picture

Why would it ever be necessary.

snowball777's picture

Gee, I properly scale to a growing economy (even if only from extra laborers being born, if not increased productivity)?

Please explain how your static money supply would work in practice. I need a good laugh.

Al Gorerhythm's picture

Don't hold onto your belief system without thoroughly investigating other ideas. To blithely dismiss other ideas with snide asides, leaves you mired in a static and statist equilibrium. If you are happy with that, groovy.

snowball777's picture

I'm attempting to investigate, but it's difficult to see past the handwaving and sophistry.

jeff montanye's picture

as you know, you bring up a critical point.  yes deflation was endured during the nineteenth century but it wasn't enjoyed, particularly by the working class.  garfield and mckinley weren't assassinated by the cia and william jennings bryan wasn't kidding, nor were his listeners, when he said mankind was not to be crucified on a cross of gold.  maybe not right this second, but year in and year out, the bankers love the gold standard and those who pay interest hate it. (note: gold bug and creditor)


MrSteve's picture

Many great physicists have used handwaving solutions to show proof of physical world results. Only a textbook economist / statist / banker-troll would evangelize for continued fiat abuse.

Non-textbook economist like S.J. Homer in History of Interet Rates know that loans were made against gold and silver and even baskets of wheat. Loans of silver were repaid in wheat, no Federal Reserve required.

CH1's picture

The true test of ideas is to compare them directly to reality.

forexskin's picture

 arrogant frak...


increased productivity + static money supply = increased purchasing power, but statists hate that, because its much more difficult to propogate debt feudalism where purchasing power of earned wealth is growing.


learn something before your yap erupts again

snowball777's picture

sounds just lovely for actual workers.


jeff montanye's picture

and how desperately sad is it that the elite classes of the world, and not entirely by themselves, have so debased the currency of government (metaphorically even more than literally) that when the poor really need help (and by poor i mean the bottom 60%) in the first deflationary depression since ww2, not only are the treasuries bare, having been sacked in the fat years, but trust in government and its capability is so deservedly thin that this great invention (for it truly has been) is nearly incapable of being part of the solution rather than part of the problem.

forexskin's picture

better for you statists (troll)



snowball777's picture

Awww, someone learned a new name (moron)


Al Gorerhythm's picture

With gold, you don't have to expand the money supply. Gold is a measure of all wealth. If wealth increases, therein goes gold. That scenario is anathema to inflationists.

snowball777's picture

"therein goes gold"

A great system, if wealth is only to be accumulated in a small number of hands and there's no need for velocity of money. It is also anathema to progress and meritocracy.

Al Gorerhythm's picture

"It is also anathema to progress and meritocracy."

America's greatest advances were when there was true capital based endeavor, which was of course when gold and silver were the currency of the day. Assets grow cheaper and cheaper when the stability of gold, in flow terms, measures increased productivity. Velocity of gold grows and merit is rewarded by being met with increased profits from sales volume.

That's a big statement you made there which needs a bit more expansion from you to be absorbed as a game changer. You can't change a persons mindset with unsupported statements like that. My chasing of the (we all were sold) dream was set on its head when I retired. I found that the nominal amount of my savings couldn't purchase their implied promise of value when advised to save them. This outcome is the common denominator of all paper currencies, even when considering the included interest through compounding hocus pocus.

The scam of paper savings is the implied promise of a greater numbers of credits, gathered through the magic of compounding interest, which will supposedly make you richer when you retire or when your savings plan matures. The lie is cemented in schools, where they teach that an increase of money through interest earned is an increase of value in that account. The reality is; the increase in supply has an inversely  proportional loss in value. All commodities and financial products are the same. Supply and demand. Extrapolate that out to the low flow of gold to the hugh flow of products and gold rises in value or products get cheaper to purchase in gold. Gold therefore can be divided into smaller and smaller units to pay for goods. There lies the velocity of money in gold.

snowball777's picture

I'm not sure what you consider the great advances of the 19th century, but they are almost exclusively related to the industrial revolution, not some monetary policy genie. We would have seen those advances even if we were still trading puka shells for barter.

I'm familiar with the Taylor rule, but you're basically upset that you can't continue to earn without working, right? Somehow, everyone younger than you is beholden to slave away so that you can enjoy a retirement funded by interest income? Where's the meritocracy in this?

I was born after the gold window closed, so I've basically been running on an increasingly steep nominal hill since the time I entered the workforce. I harbor no illusions about a retirement or what I'm owed by a savings plan or any kind of government 'entitlements'.

The problem with your 'flow of gold' theory is that labor as well as the fruits of same are devalued in terms of gold, which is great for people who have gold, but a world of shit for anyone who doesn't. It's the same steep hill, only the ratio is adjusted by the numerator in the one case and the denominator in the other.


DosZap's picture


I just have one MAJOR issue with this article.

And it's huge.

" But, as communities and states begin the acceptance of metals based trade and the issuance of gold and silver currency, you will see the manipulations by big banks begin to unravel."


Ok, say they went/want to go that way, WHERE do they get Physical to back it up, or any other currency thry were to design, IF it was legal?.

They cannot..............without the 2 majors going to multiples of 25-45,their is no metal available for backing anyone's NEW money.

What am I missing?.How do these states make themselves better off, or solvent,or pay their bills?.

CH1's picture

The only problem is the 'legal' issue: Armed men forbidding it. Consider:

Almost ANY commodity can be monetized. Store it, insure it, issue digital recipts against it, and trade them.

MrSteve's picture

There are church records from the Middle Ages showing loans in silver and wheat, one repaying another.

Mark McGoldrick's picture

The big mistake by most people (including so-called libertarians) is they equate money to wealth. Allow me to quote from For the Common Good, by Herman Daly and John Cobb:

  • The First step to a proper understanding of money is to return to the fact that money is not wealth; it is no longer even a commodity (like gold and silver). It is a token. A token of what? We are tempted to say a token of wealth, but that is not correct because the value of wealth at any time is much greater than the value of the total stock of money - i.e. there are many more coats in the cloakroom than claim tokens.  Money is a token of indebtedness - a debt.  Money is a form of community or national debt owned by the individual and owed by the community, exchangeable on demand into wealth by voluntary transference to another individual who is willing to part with the wealth in exchange for the money.  The value of the total stock of money is not determined by the stock of wealth in existence (or by the flow of new production), but in a curious way by wealth that individuals think exists but really does not exist - what Frederick Soddy called virtual wealth.   Page 420 
People need to realize that wealth (and the preservation of wealth) is not a god-given right, nor will it just manifest itself if you labor for 40 years.  If you are expecting to increase or maintain your wealth in the form of increasing paper supply that represents debt, you deserve to loose it.  I would think that all the anarcho-capitalist, survival-of-the-fittest, purist libertarians would embrace this harsh reality because it provides yet another filter to weed out the weak in society. Being actively involved in one's wealth preservation surely would create a smarter more financially vigilant society, rather than a society that labors 10 hours a day and then willingly, blindly and ignorantly hands the fruits of their labor to others (Wall Street) to invest/manipulate and slowly skim down to zero.  Creating wealth requires more than just labor; it requires due diligence, something that everyone ignores.  Where do you store the fruits of your labor? Keeping it in tokens of debt is stupid.  Do you put it in gold at $1400?  Silver at $35?  APPL?  Oil? Cotton? Real estate in Dubai?  Farms in Peru?  Chemical companies, train companies and soft drink companies like Buffet?  Your choice.  Choose wisely, and stop accusing others of robbing you - that's not the hallmark of libertarianism. That's whiney. It has the stench of someone who is loosing in the darwinistic society that they so emphatically endorse - perhaps someone should create an ETF for irony.   In short, attempting to tether money/debt to gold is stupid.  Allow the paper tokens that represent debt to flame out (that's a good thing!), and learn to diligently move your wealth to other assets. The plutocrats have been doing this forever - now it's your turn.  Or just go watch TV, and believe in wealth-entitlement.   


snowball777's picture

How is 'wealth preservation' anything but a manifestation of the illusion that you can 'take it with you'?

Entropy reigns.

Mark McGoldrick's picture

It's all an illusion, but some illusions are more prosperous than others. 

Do you want to know the biggest potential scam of all time? 

The plutocrats take America off the gold standard. Money (otherwise known as public debt) is wantonly printed into the tens of trillions to serve the plutocrats and their sphere of friends. Aggregate public debt is racked up into the hundreds of trillions. Everyone panics and starts buying gold.  Then, rather than all the debt going up in smoke, the plutocrats take the US dollar back to the gold-standard (as libertarians want), so that all the debt - its interest and dividends - get anchored into the "world's currency" and continue to get paid to the plutocrats forever and ever.  Hilarious!  

Tethering the US dollar to gold at this stage in the scam, keeps our debts alive forever.  Or it will crash gold to zero.  And THAT is the great irony of the libertarian drive to bring the gold-standard to the US dollar. It would keep the fucking game going forever. 

Here's some advice:  do NOT advocate putting the US dollar on the gold-standard, when the US dollar represents hundreds of trillions in debt.  



tmosley's picture

You really are a silvery tongued whore aren't you?

What kind of idiot thinks that a gold standard does ANYTHING to prevent default?  All a gold standard does is prevent government overspending.  Anyone that tries to tell you anything else is a whore for the system.

Mark McGoldrick's picture

silvery tongued whore?

I don't know why I even bother with libertarians, anymore.  It's pointless.  All discussions that question your policies are immediately driven into the ditch with insults.  You guys are like fanatical organized religions, allowing no room for debate, and if someone dares to question the validity or credibility of your ideologies, you immediately start throwing knives.  Absolutism doesn't get you very far.

All a gold standard does is prevent government overspending...


Really?  That's all it does?  It would have no consequences to the debt attached to that same currency?  What sort of magical, one-dimensional fantasyland is that?

Public debt will suddenly be collateralized with gold, rather than paper.  And that has no consequences regarding default?


Good luck, everyone....


Creed's picture

And that has no consequences regarding default?


straw man build your air castles elsewhere

debt will be repudiated as it always has, same as it ever was

false assumption- melding gold standard with current consequences of fiat regime

Mark McGoldrick's picture

The economic growth of our country cannot keep pace with the growth of compounding interest on our debt, especially when that debt is serviced with more debt with more compounding interest - all of this within a sphere of finite energy.  

I get it.  I know what the end looks like.  We all do.  

However, collateralizing our debt with gold will keep the music playing longer, and those that hold our debt (the plutocrats), in power for longer. 

The debt needs to flame out.  It shouldn't be collateralized with the "world's currency" so the game can continue until gold is driven to zero.   

A gold standard on a new currency is a different story, one which has infinite other problems that are for another discussion. 


BigJim's picture

I don't mind ignorance. Monetary theory is a big subject, and takes a while to get your head around. But you are achingly clueless on this subject, and arrogant to boot.

Your quote from Daly and Cobb about money being debt, and conflating this with sound money, is just embarrassingly stupid. Yes, money is debt now, because it is created via fractional reserve banking - the more debt there is, the more money there is.

What we call 'money' now is actually currency which everyone is forced to use as money because the government demands tax paid in it. In the case of the US dollar, it is backed by a commodity (oil now - you need US dollars to buy oil - whereas, up until 1971, gold) If it weren't for these (government imposed) reasons, FRNs would drop in value to nothing overnight.

But with sound money, money isn't debt, or a 'token', but a form of barter, where the money is a form of wealth in itself - which is why people are happy to trade other forms of wealth for it. Gold and silver have always taken labour to find/mine/purify, and thus, like every other form of wealth, cannot be instantly conjured - unlike fiat currencies. The fact that money doesn't represent all of extant wealth is a red herring; and there will never be a shortage of money, because people can always barter with a different metal or material. The same is not true of currencies, the amount of which is determined by central planners.

Gold can never be 'driven to zero' no matter how much currency is floated off its back. Your ignorance is breathtaking. Go read some Rothbard, you awful human being.

Mark McGoldrick's picture

Go read some Rothbard, you awful human being....

Once again, another typical libertarian defending his echo chamber with his predictably poisoned tongue.

What is so fucking special about gold?  You guys act like its magical, impervious to devaluation. Your worship of it is as spooky and loony as the cans of ham buried in your backyard.

In reality, it's just another token.   Just because it has a deep historical precedent does not mean its feasible today with economies of our current scale, our interconnectedness and our rate of population growth worldwide.  How do you anchor gold to a quadrillion dollars worth of derivatives in dozens of currencies without totally fucking up the scale of everyday commerce, and/or pushing the world into the dark ages?  For hundreds of years, business contracts were sealed with handshakes and ink-dipped feathers - do you think we could revert to that just because it was done for hundreds of years, too?  History is not a mandate.  Try walking into the 21st century. The world is different, now; our debts are beyond the event horizon.  

If our government announces tomorrow that a few hundred trillion in US debt (currency, public debt, unfunded liabilities) will be sliced and diced into gold reserves, our plutocrats - and you can bet your fucking ass - would begin the slow dilution of gold to zero by continually adjusting the scale of how much money/debt one ounce of gold represents; it doesn't matter if its mined or printed, the plutocrats can dilute any token they want.  

..........and the world would find the next token to worship.  

Edmund Dantes's picture

You sir, speak with a "forked" tongue..... You understand nothing and suffer from an involuted logic. Gold IS in fact "magical" and therefore has never, in 5,000 years, been devalued at the whim of the ancient enemy ( try as hard as he may). WEALTH, must above all, be  DURABLE. Can you suggest anything else that has served as well for centuries?... " The world is differnent now"????? dangerous words, the game and the enemy are the same, gold IS the TRUTH and the solution.

Mark McGoldrick's picture

No, Sir....  the world is vastly different, especially over the past 30 years.

How would you anchor gold to the $4T in FX transactions each day? They didn't have that issue in the 1800s.  How do you scale gold into the quadrillion derivatives market in multiple currencies? We barely had that issue 15 years ago.  How the fuck could you do anything, ANYTHING involving modern, multi-trillion, international commerce on a gold-standard?  The world is massively different, and the models you're relying on are as archaic as your mentality.    

That is the difference between libertarians and everyone else: everyone evolved, except you guys. You guys live in the past, and you think a financial infrastructure from 200 years ago is appropriate for the unthinkably complex economies of today. Just yesterday at ZH here, someone responded to one of my posts by saying we need to return to the Articles of Confederation, because that's when America experienced a lot of growth.  *LOL*

The world is different today, and your 5000 year old paradigms won't work.

Evolve and adapt, or die.  


piceridu's picture

Your whole logic is based on false religion. I don't profess to know what will become of "money", but what I do know is that all of the things you mention above (derivatives, FX swaps, etc.) are completely based on a phony fractional ponzi economy. When this current system implodes, and I'm sure it will, the toxic derivative market, insurance markets and the whole giant counterfeit financial market created to fleece the common man will get flushed along with FRN toilet paper.