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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:

http://www.foxnews.com/politics/2011/03/04/utah-house-passes-recognizing-gold-silver-legal-tender/

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
something.

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:

http://www.sigtarp.gov/reports/congress/2009/July2009_Quarterly_Report_to_Congress.pdf

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
fallout:

http://www.reuters.com/article/2011/03/09/us-pimco-debt-idUSTRE7285M020110309

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
“torture”:

http://imarketnews.com/node/26571

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
unravel.

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):

http://online.wsj.com/article/SB10001424052748704422204576130192457252596.html

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:

http://www.zerohedge.com/article/silver-touches-3490-us-mint-runs-out-bullion-blanks-halts-american-eagle-silver-coin-product

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
currencies:

http://www.bloomberg.com/news/2011-02-16/pan-american-silver-shifts-assets-to-canadian-dollars-update1-.html

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

http://www.indianexpress.com/news/gold-demand-in-india-rises-66-pct-in-2010-wgc/751398/

Gold demand in China was up 70% in 2010:

http://www.marketoracle.co.uk/Article26463.html

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:

http://www.cnbc.com/id/42070666

http://www.foxbusiness.com/markets/2011/03/03/perus-january-gold-silver-zinc-output-falls-copper/#

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
frailty.

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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Sun, 03/20/2011 - 10:03 | Link to Comment snowball777
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.

Sun, 03/20/2011 - 10:07 | Link to Comment Seasmoke
Seasmoke's picture

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

Sun, 03/20/2011 - 11:04 | Link to Comment flacon
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.

 

 

GOLD FOR BREAD - ZIMBABWE STYLE

http://www.youtube.com/watch?v=7ubJp6rmUYM

 

Read FOFOA.


Sun, 03/20/2011 - 11:18 | Link to Comment snowball777
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).

 

Sun, 03/20/2011 - 11:38 | Link to Comment Careless Whisper
Careless Whisper's picture

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

http://www.youtube.com/watch?v=JlsBgZ_F5yQ

 

 

Sun, 03/20/2011 - 13:05 | Link to Comment Fred Hayek
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.

Sun, 03/20/2011 - 14:07 | Link to Comment Careless Whisper
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?

Sun, 03/20/2011 - 18:43 | Link to Comment NidStyles
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?

Sun, 03/20/2011 - 20:19 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

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

Sun, 03/20/2011 - 14:47 | Link to Comment robobbob
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?

http://www.youtube.com/watch?v=i9ADssjVfK4

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

Sun, 03/20/2011 - 13:09 | Link to Comment Creed
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

Sun, 03/20/2011 - 13:59 | Link to Comment snowball777
snowball777's picture

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

Sun, 03/20/2011 - 14:40 | Link to Comment Creed
Creed's picture

yes, inflexible to manipulation by your banker overlords

 

I see that as a good thing

Sun, 03/20/2011 - 16:22 | Link to Comment snowball777
snowball777's picture

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

Sun, 03/20/2011 - 19:21 | Link to Comment naughtius maximus
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.

Mon, 03/21/2011 - 04:43 | Link to Comment CH1
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!

Sun, 03/20/2011 - 14:53 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

DO you mean, inflexibly honest? Excuse the tautology.

Sun, 03/20/2011 - 16:22 | Link to Comment snowball777
snowball777's picture

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

Sun, 03/20/2011 - 18:44 | Link to Comment NidStyles
NidStyles's picture

Why would it ever be necessary.

Sun, 03/20/2011 - 20:11 | Link to Comment snowball777
snowball777's picture

Gee, I dunno...to 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.

Sun, 03/20/2011 - 20:29 | Link to Comment Al Gorerhythm
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.

Sun, 03/20/2011 - 20:54 | Link to Comment snowball777
snowball777's picture

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

Sun, 03/20/2011 - 23:09 | Link to Comment jeff montanye
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)

 

Mon, 03/21/2011 - 11:09 | Link to Comment MrSteve
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.

Mon, 03/21/2011 - 11:11 | Link to Comment MrSteve
MrSteve's picture

doubled post

Mon, 03/21/2011 - 04:44 | Link to Comment CH1
CH1's picture

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

Sun, 03/20/2011 - 21:24 | Link to Comment forexskin
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

Sun, 03/20/2011 - 22:49 | Link to Comment snowball777
snowball777's picture

sounds just lovely for actual workers.

/sarc

Sun, 03/20/2011 - 23:22 | Link to Comment jeff montanye
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.

Mon, 03/21/2011 - 00:13 | Link to Comment forexskin
forexskin's picture

better for you statists (troll)

 

/ignore

Mon, 03/21/2011 - 10:37 | Link to Comment snowball777
snowball777's picture

Awww, someone learned a new name (moron)

/backatcha

Sun, 03/20/2011 - 20:32 | Link to Comment Al Gorerhythm
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.

Sun, 03/20/2011 - 20:57 | Link to Comment snowball777
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.

Sun, 03/20/2011 - 23:42 | Link to Comment Al Gorerhythm
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.

Mon, 03/21/2011 - 10:55 | Link to Comment snowball777
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.

 

Sun, 03/20/2011 - 19:31 | Link to Comment DosZap
DosZap's picture

FLACON,

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?.

Mon, 03/21/2011 - 04:46 | Link to Comment CH1
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.

Mon, 03/21/2011 - 11:17 | Link to Comment MrSteve
MrSteve's picture

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

Sun, 03/20/2011 - 11:20 | Link to Comment Mark McGoldrick
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.   

 

Sun, 03/20/2011 - 11:29 | Link to Comment snowball777
snowball777's picture

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

Entropy reigns.

Sun, 03/20/2011 - 12:10 | Link to Comment Mark McGoldrick
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.  

 

 

Sun, 03/20/2011 - 12:23 | Link to Comment tmosley
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.

Sun, 03/20/2011 - 13:09 | Link to Comment Mark McGoldrick
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...

*LOL*

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?

*LOL*

Good luck, everyone....

 

Sun, 03/20/2011 - 13:21 | Link to Comment Creed
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

Sun, 03/20/2011 - 13:38 | Link to Comment Mark McGoldrick
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. 

 

Sun, 03/20/2011 - 15:15 | Link to Comment BigJim
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.

Sun, 03/20/2011 - 16:35 | Link to Comment Mark McGoldrick
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.  


Sun, 03/20/2011 - 17:18 | Link to Comment Edmund Dantes
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.

Sun, 03/20/2011 - 18:13 | Link to Comment Mark McGoldrick
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.  

 

Sun, 03/20/2011 - 18:45 | Link to Comment piceridu
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.

Sun, 03/20/2011 - 19:02 | Link to Comment BigJim
BigJim's picture

Jesus. You are so heart-achingly stupid. How would you anchor gold to the $4T in FX transactions each day? They didn't have that issue in the 1800s. No, of course, because they couldn't have that issue with FX in the 1800s, hambrain, because gold was money.

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.

Idiot, currencies were anchored to gold via the Bretton Woods agreement until 1971. Was that 200 years ago? What, are you claiming to be posting from the late 22nd century, in some vain attempt to lend your arguments perspective?

Please stop. You are just... embarrassing. The internet is forever - your stupidities will resound through the ages, yea, even unto the late 22nd century. Even your contemporaries will be laughing at you.

Mon, 03/21/2011 - 11:35 | Link to Comment MrSteve
MrSteve's picture

McGoldrick's logical flaw is equating gold to a token, a fiat issue such as what has been issued for a bus ride. Were he to understand gold is money, a genuine basket of tradable commodities, he wouldn't be making his core mistake.

The anti-gold speeches of W.J. Bryant were political speeches favoring a higher valuation of silver in the silver-gold ratio. This was favored by the silver-producing states in the US West. They wanted a higher price in gold for their silver output. Read Baum's The Wizard of Oz, all about the yellow-brick road, or America's streets paved with gold.

Sun, 03/20/2011 - 20:05 | Link to Comment Edmund Dantes
Edmund Dantes's picture

So it's different this time? ( some of the most dangerous words ever spoken). I never said that we should go to a gold "standard" . I said gold is MONEY.. big difference, especially if you choose to stay with fiat, in fact this gives gold an advantage as the ultimate ALTERNATIVE currency and the one  upon which all fiat must be measured, as no matter what the fiat system, it will always end in hyperinflation. I'll stick with my "old Paradigm" thank You. You should go hang out with Roubini and other brainwashed morons from the London School. BTW, the world is not massivley different, human nature has not changed, what has changed is the level of greed  of the international financiers and their continuing raping  and stealing of the world's wealth via fiat.

Mon, 03/21/2011 - 03:59 | Link to Comment KevinB
KevinB's picture

How would you anchor gold to the $4T in FX transactions each day?

Er, how much of those $4T in daily FX transactions represent actual trade, and how much represents speculation? Since, according to the WTO, annual world trade is on the order of $15 trillion, it seems to me that, for 361 days of the year, all FX transactions are merely leveraged bets in a big casino. Why should I care what happens to them? You continue to throw up these ridiculous "problems" as if they are real, rather than realizing they are only more manifestations of the big casino. If all the Indian casinos and Vegas disappeared overnight, how much would the US really lose? A pittance. We'd shrug, and move on. Same thing with FX pits.

Sun, 03/20/2011 - 17:46 | Link to Comment PhD
PhD's picture

 

And according to the constitution, diluting the money is a crime punishable by what?

Your advice seems to consist of bending over and just take it.

You really enjoy having the plutocrats dick rammed up your ass don’t you?

 

Sun, 03/20/2011 - 18:04 | Link to Comment Mark McGoldrick
Mark McGoldrick's picture

Again, another libertarian living in the past - in this case, by 46 years. 

Check out the Coinage Act of 1965.

 

Sun, 03/20/2011 - 18:17 | Link to Comment PhD
PhD's picture

And your point being what?

 

They should have been brought to the gallows and hung until dead for what they did. But you just dong get it. You got your tit and enjoy sucking it. Fucking parasite.

 

 

Mon, 03/21/2011 - 04:49 | Link to Comment CH1
CH1's picture

I think a libertarian stole this guy's girlfriend when they were 15.

Sun, 03/20/2011 - 18:02 | Link to Comment chumbawamba
chumbawamba's picture

Ok, I'm going to have to call both of you out, but you first, because you really are a douchebag.

What is so fucking special about gold?

Well, it's shiny.  And yellow.  In fact, it's the only shiny yellow metal there is.  All others are either red (like copper), or blue (like cobalt), or white (liker silver).  That's pretty special.

It's rare.  In all of recorded history, we've only been able to dig up 166,000 tonnes of it.  That's less than the yearly iron output of Tunisia.  That's pretty special.

It's dense.  One of the densest of the elements.  A little bit goes a long way.  It also stores relatively compactly.  That's pretty special.

It's basically inert.  It does not react with the enviroment or atmosphere.  It stays consistently the same over extended durations of time.  It will never spoil or expire.  That's special.

It is divisible and fungible.  No matter how many times you divide it, you will always have two equal parts of gold.  That's special.

It has magical powers.  I know you don't believe this, but it does.  I'm sure you'll agree that's special.

If gold wasn't gold, something else would be.  It just so happens that out of all the elements in our reality, gold happened to fit all the criteria necessary to be money in a manner that perfectly complemented the development of the human race.  It was an accident, pure and simple, but it is what it is.

How do you anchor gold to a quadrillion in debt?  Well, first of all, you declare jubilee and dismiss the debt, because it's untenable, unreasonable, and insane, and if we're going to recover, we first need to return to sanity.   And most of it is based on paper fraud anyway, so there really is no there there.  But even if you wanted to keep it, you simply value a unit of gold proportionate to the outstanding debt.  Tada!  I'm a genius, no?  In the California Gold Rush days, a form of money was literally a pinch of gold dust.

Your error in thinking is the belief that our money and economy can be controlled indefinitely by an exclusive group of elites.  This is a fallacy, and the proof is playing itself out currently.

Now, turning my attentions briefly to BigJim, I want to provide you with a different idea of money, even if it is silver or gold.  Money itself (in any form) is debt, because what you are giving the person to whom you are trading the money is a promise of future payment in a form that the seller can actually use, since it is unlikely they will be able to put the gold or silver (or whatever) itself into use directly.  When we had a pure barter system, you would exchange need for need: my eggs for your milk; my cheese for your tomatoes; etc.  With money, buyer is paying seller with a promise of future goods, that promise being in the form of a precious commodity (see discussion of "special" above) that someone down the trade chain will accept in exchange for their goods, and so on.

So it's no different whether the money is silver or pieces of paper issued by the Federal Reserve.  There only needs to be faith that the form of money accepted will have value when it comes time to exchange that debt for real goods.  Which is the reason you want to be dumping your FRN for gold and silver now, because when the faith in the future exchange value of the currency wanes--and it is--you get hyperinflation.

I wish I could say I came to understand this concept on my own but I really owe my comprehension to folks like FO-FO-A, Antal Fekete, Jim Sinclair, etc.

I am Chumbawamba.

Sun, 03/20/2011 - 18:22 | Link to Comment Mark McGoldrick
Mark McGoldrick's picture

Don't think you can post your racist "nigger" shit, day after day after day on multiple threads, and expect to have a reasonable discourse with me.

You're a racist pig to the core, regardless of your post above and I have no desire to discuss anything with you. 

Fuck off, and don't forget to take your white, cone-shaped hat with you. 

 

 

Sun, 03/20/2011 - 18:34 | Link to Comment BigJim
BigJim's picture

Awwww, did the nasty man use the 'N' word? Does that prove he can't possibly know something that you don't, or be able to point out where you're going wrong on a subject unrelated to race?

You're a top-level academic, aren't you? The only place I find such articulate stupidity is in the more rarified planes of academe.

Sun, 03/20/2011 - 18:52 | Link to Comment chumbawamba
chumbawamba's picture

One more thing: have you ever taken out a loan?  A mortgage?  A bank account?  What did you do to consumate the process?  Did you sign your name on line in black or blue ink?

Wow, and they let you walk away with a car or a house by just signing your name to a piece of paper with a modern ballpoint pen?  Those people in olden days who used a chicken feather to sign their agreements were surely backwards heathens compared to us enlightened modern folk!

I am Chumbawamba.

Sun, 03/20/2011 - 19:21 | Link to Comment BigJim
BigJim's picture

Thanks for the commentary on the "money is debt" subject.

I agree that with precious metals, the exchange is different to barter, but I don't think the fact that the money recieved will be used for exchange in the future rather than being consumed (or directly used) automatically confers the attributes of 'debt' onto money.

Consider some examples: in a time before metal money, I live in an era of barter. I swap a horse for 1000 eggs, knowing that I will need to offload the majority of the eggs in further exchanges before they lose their value. It may be that I will be unable to find anyone who wants eggs in that period, in which case I will have lost a lot of wealth that the horse represented. Does this make eggs a form of debt? No, just not a very good form of money.

Now let's say I swap my horse for 10 gold pieces in a market, with the intention of buying a cow and 10 geese for the same price, from two people in the next stall who have the livestock and have just quoted me. I ascertain the gold coins are real gold, hand over my horse, take the gold coins, and buy my cow and geese. Where is the 'risk' of devaluation that is what FOFOA and others are claiming make money a form of debt?

Whenever exchanging anything for something else, there is a risk that what you have exchanged is not worth (or going to be worth) what you exchanged it for, when you come to either use it or exchange it again. I don't see that that makes it debt. It just means metals make a particularly fine form of money, with gold being the best.

edit - don't get me wrong, I'm a big fan of FOFOA, Jim Sinclair, et al. I just don't agree all money is debt - though in our current currency system, it is absolutely and literally true, given the nature of fractional reserve banking.

Sun, 03/20/2011 - 20:02 | Link to Comment chumbawamba
chumbawamba's picture

Thanks for your learned reply.

I should have been more precise and used "currency" instead of money to lay the concept.  One should not take my incomplete discussion as a reflection on the teaching of FOFOA, Sinclair, etc.  But let's explore this more deeply before I respond to your point about debt-money.

I think we (or at least I) need to be more precise: when I say "money" I mean a barterable commodity, such as oil, grains, or silver.  When I say "currency", I mean paper money, and gold.  Or at least, mostly gold.  Why?  Think about it in terms of utility value.  Silver works very well as money just like eggs work very good as money because they are both something useful to humans.  Eggs are food; silver can be fashioned into all sorts of useful objects (eating utensils, for one) and has many industrial uses, and lately medical uses, etc.  Both are useful commodities.  Gold, on the other hand, like Federal Reserve notes, has limited use (utility value) to an average human (generally speaking).  In fact, in a post-apocalypse situation, I would submit that FRN would be marginally more useful to someone, which could be used as kindling, whereas a piece of gold might be a good attractant for a piece of ass (choose your fire).

Now, farbeit from me to suggest that gold is useless, as I have always argued the opposite.  If it wasn't for gold, I wouldn't be typing this right now, and it wouldn't get sent off and stored on some server yahweh knows where for you to later read.  Beyond jewelry (again, marginal utility value), gold has many industrial uses, computers being the most obvious.  But there are other critical areas where only gold will do, which is why they use any gold at all.  And the reason why when they do use gold they use only enough and not an atom more is because it's fucking expensive!

My point is that for an average human, a piece of paper is as useful as a lump of shiny, dense metal.  So as currency, let's just assume (for the average human, and notwithstanding bling value) they are both relatively useless commodities, with the main difference being that gold is natural and cannot be created on demand, while paper money is the exact opposite.  Putting those issues aside, currency is a form of debt.  It is a debt because the next person to receive it is not getting anything of utility value in exchange.  It will only be wealth for them once they trade on to the next party for something of utility value.  Etc.  I think we all understand this.

At this point, I won't bore you with the discussion of why gold is a store of wealth while paper money is not as I'm sure you are schooled thoroughly in that concept.

Now, going back to the idea of money as debt: again, in the form of a currency, such as Federal Reserve Notes (any paper money) or tokens (what most people call "coins", i.e. quarters, dimes, nickels, etc.) this concept certainly applies, as we've discussed.  I believe where it also applies to commodities, such as food, industrial metals, etc. (i.e. things of utility), is where one acquires more than they intend to consume.

As you pointed out, if you trade a horse for 1,000 eggs but then can't convert the eggs into other commodities of utility value to yourself, you will have lost wealth. So it is imperative that you try to immediately trade the eggs that you do not intend to consume yourself, i.e. the commodity of limited (to you) utility.  Between the time that you acquire the excess commodity and the time you trade it or it expires, would it not by definition be a currency?

That's an actual question (not rhetorical).  I'm sure if I had more time to mull over it I could offer an answer, but I'll leave it instead as a read exercise.  The topic is fascinating to explore, but has marginal utility value ;)

I am Chumbawamba.

Sun, 03/20/2011 - 21:38 | Link to Comment forexskin
forexskin's picture

mostly agreed, but debt is a transaction that binds two parties in performance, which division is called asset / liability.

 

money on the other hand, presumably stable in value, is no one's liability. after the original transaction, neither party can demand further performance from the other. the transaction is settled by payment and requires nothing more, after which both parties can move on to transact freely with others with no transaction interfering with any other, past or future.

 

subtle but important difference.

 

thx

 

 

Sun, 03/20/2011 - 22:23 | Link to Comment chumbawamba
chumbawamba's picture

Certainly.  And cash would fulfill settlement by payment.  However, when your cash is Federal Reserve Notes, there is still liability in a counter-party ;)

But anyway, point taken.  My point had more to do with the entirely esoteric premise that an excess commodity in one's possession becomes in a way debt-money until it is transformed into something of utility value by trading it to someone else.  Until you trade it, it is no different than cash (paper currency).  Just a dumn thought.

I am Chumbawamba.

Mon, 03/21/2011 - 00:24 | Link to Comment forexskin
forexskin's picture

 

 

it just struck me that we're discussing that odd concept - savings, it can be spent, but it can be accumulated and put to other use - investment / capitalism?...

 

in the big picture, its gotten damnably strange - that savings from any view should be an unfamiliar abstraction, but yea, point to you for calling it as it is - semantics.

Sun, 03/20/2011 - 20:57 | Link to Comment New World Chaos
New World Chaos's picture

Nice try, asshole.  You are clearly losing so you respond to the most well-reasoned post on the thread thus far by calling Chumba a racist.  That would mean you automatically win the argument at Daily Kos or at any Ivy League university, but this is Zero Hedge.  Your nakedness is now clear for all to see.

Now, what makes physical gold so special?  It cannot be stolen by inflation, taxes, fractional reserve, lawyers, greedy exes, drug-planting cops, counterparty fraud, default, chain-reaction debt clusterfuck, or any other machination of our corrupt elites.  Gold isn't just a store of wealth, it is a bet on increasing kleptocracy- which is why it is doing so well.  But the real reason gold is so special is that it cannot be printed, even by the miners.  The amount of gold mined each year is less than 2% of the existing above-ground supply.  Therefore, the supply/demand curve is extremely inelastic.  Gold isn't a commodity whose supply increases with price.  Gold is MONEY.  It is the ultimate hard money, and therefore it is the money that thinking people inevitably gravitate to as a long-term store of wealth.  There is also enough gold to back all the dollars and even all the derivatives out there- at the right price.  Not like we should try, though.  We need to default on the debt and let the whole rotten financial/ government/ entitlement system burn down, and start again with only the Constitution and the currency it mandates.  Everything else, including all unconstitutional laws (i.e. 99.99% of them) must burn like "a goddamn piece of paper", as Bush would say.  Gold will preserve wealth through the collapse of our doomed system and give much greater purchasing power under the new system. 

Sun, 03/20/2011 - 22:19 | Link to Comment Mark McGoldrick
Mark McGoldrick's picture

What makes gold so special?  It cannot be stolen by......or any other machination of our corrupt elites.....

*LOL*

Oh, really?  Let's take a look at history. 

If you think a gold-backed currency is so fucking wonderful and immune from the manipulation and "machinations" of our elites, I suggest you do some research on the history of American Banking, specifically the period between the National Banking Act of 1863 to the creation of the Fed in 1913 - pay close attention to the multiple bank panics, bank failures (503 in 1893 alone) and the overly lopsided wealth held by the plutocrats of the day (infinitely worse than today). It was a really fucking wicked time of unnecessary bank panics and total wealth wipeouts for the middle class. If you're not feeling too overwhelmed, spend some time on the Depression of 1893 - it was one of the worst in history with unemployment at 18%.  All of this... under the gold standard. 

Then, when finished, read the Gilded Age by Mark Twain.  As Mark Twain characterized the age, ""What is the chief end of man?--to get rich. In what way?--dishonestly if we can; honestly if we must."

There was no middle class, whatsoever. You were either rich, or, like the vast majority, really fucking poor. In 1890, over 90% of American families earned less than $1200 per year; of this group, the average annual income was $380, well below the poverty line. 

http://www.pbs.org/wgbh/amex/carnegie/gildedage.html

That was your America during your Gilded Age of a gold-backed US dollar.  Your era of the gold standard was crap.  If it worked so well, why were there so many massive inequities in society during that period?  And, again, if it worked so well, why did the US continually have to go off the gold standard?

The answer: because an inelastic currency is too idealistic to address the realities of life - just like libertarianism, itself. Perhaps that common thread is why you're so drawn to it.  

 

 

 

Sun, 03/20/2011 - 23:48 | Link to Comment New World Chaos
New World Chaos's picture

I didn't say gold-backed, I said physical.  Gold coins as money. Harder to scam that way.  Gold also limits the power of government by limiting the tax they can collect without revolt, and it rewards those who save money by letting them keep it.  The current system was devised by parasites and sociopaths for the benefit of parasites and sociopaths, so it should be no surprise that parasites and sociopaths run rampant today.  Honest money would cut most of them off at the knees, and eventually honest people would return.  I'm not saying there won't be corrupt oligarchs as there were in the Gilded Age.  There will always be oligarchs and inequality, usually abetted by government- which is another reason for limiting government power.  What I am saying is that by giving people an easy way to opt out of the system, things would be better overall than they are now.  Especially if state governments provided basic health care, sanitation and school vouchers so that people could escape the poverty trap.  This, plus police and courts, could probably be done on less than 15% tax burden.  Essential services should be in state and local hands to improve accountability and to run social experiments with many petri dishes.  The Feds could use tariffs to fund a small, isolationist military and state department, plus a justice system dedicated to protecting civil liberties and property rights when overzealous states threaten them.  There shouldn't be much else- the Federal Beast need to be neutered.  No subsidies, no unfunded mandates, no conditional bribes, no IRS, no regulatory sausage mill, no drug war, and I would even repeal their Constitutional authority to regulate interstate commerce.

Mon, 03/21/2011 - 04:49 | Link to Comment CH1
CH1's picture

Another nym that could use an IGNORE button.

Tue, 03/22/2011 - 21:21 | Link to Comment BigJim
BigJim's picture

FAIL. Advocating sound money is not the same as wanting gold-backed currency. Man, you are bad at this.

The multiple bank panics were the result of fractional reserve banking without a central bank, just as our recent crisis was the result of fractional reserve banking with a central bank. As long as fractional reserve banking is allowed, the money supply will expand and then deflate and banks will be technically insolvent all the time, just waiting for a run when their depositors get jittery.

What's the Mark Twain quote prove in this context?

As for the lack of a middle class, and widespread poverty, what do expect from a largely per-industrial society? That had nothing to do with having a gold-backed currency - the country as a whole was poor, dimwit.

Massive inequities in society during that period? News for you bucko - differences in wealth are greater now than ever. But you can blame fractional reserve banking for that, too; any system that essentially allows the counterfeiting of money for the benefit of the financial class is going to see the financial class' wealth outstrip those who are not part of the counterfeiting ring.

Please, please, stop; you are just embarrassing.

Mon, 03/21/2011 - 00:20 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Mark, you dumbass, that post about gold and why it's special by Chumbawamba was epic.

In fact, Chumbawamba's words should be tattooed or branded onto or into your forehead, for anyone to read, who has the misfortune of listening to you torture both math and economics.

As for his use of racist words, they are just words, we live in an atmosphere free of political correctness on Zero Hedge (so as to advance the cause of encouraging the expression of the public consciousness and free and unrestrained/uncensored exchange of ideas and thought).

I am not a gold bug, but even I concede there's no question that between an infinite currency (i.e. fiat, digital or otherwise) and a finite currency (e.g. gold, which none of the chemists, alchemists or sorcerers throughout human history - not even Merlin - could replicate), the one that is finite is most definitely going to hold its value better over time, and carries with it the added bonus that it won't be able to be used to plan, let alone implement, a political and economic structure and predetermined path for all the world's citizens.

Fuck fiat. Long live real wealth. End all institutions of financial slavery. Restore meritocracy and free will to mankind.

We are children of God, diviner of the universe. We are not instruments or tools on  or in any social, political or economic battlefield or laboratory.

Mon, 03/21/2011 - 04:05 | Link to Comment KevinB
KevinB's picture

From an earlier post by Mr. McGolddick:

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

And from his post above, when challenged by Chumbawumba:

Don't think you can post your racist "nigger" shit, day after day after day on multiple threads, and expect to have a reasonable discourse with me.

You're a racist pig to the core, regardless of your post above and I have no desire to discuss anything with you.

Kettle, pot, black - anyone?

Sun, 03/20/2011 - 20:09 | Link to Comment Edmund Dantes
Edmund Dantes's picture

well said

Sun, 03/20/2011 - 18:41 | Link to Comment BigJim
BigJim's picture

Just one sophism after another with you, isn't it? As for poisoned tongues - you're the one accusing me of being 'spooky' and burying cans of ham in my backyard.

What is so fucking special about gold? Because it's the opposite of paper, dimwit. It can't be printed at will. It's used (and been used for thousands of years) for virtually nothing other than storing wealth.

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?  You've answered your own question - you can't. Just as you can't anchor 'quadrillions' of derivatives to the currently-valued USD, which is why the system is destined to implode. Virtually all modern financial engineering centers on increasing the money supply, for the gain of the increasers, to the cost of everybody else using that currency. The sooner that ends, the better it is for all but the top 1%, the financial elite.

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? Er, no. Why, do you? If not, why bring it up in the first place? What's this, argument by analogy? FAIL.

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.  God, you are stupid. You've got it precisely backwards. If they keep piling more currency onto every ounce, the price per ounce increases, not decreases. Duh!

Get it into your picocephalic brain - gold isn't a token, any more than silver, oil, houses, wheat, corn, rubber, or any other commodities are tokens. You could use any of those things as money. And here I'll answer your first question: What is so fucking special about gold? Because it serves as money better than any of the others. Learn the difference between money and currency and at least you'll have some chance of entering the discussion without looking like a complete ignoramous, and a statist shill to boot.

"More Critical Thinking", indeed.

edit: I should add here that I am not a fan of having currencies 'backed' by gold, as that means you have to have a central authority determining how many dollars per ounce an ounce of gold is 'worth'

Sun, 03/20/2011 - 19:31 | Link to Comment sgorem
sgorem's picture

How in the fuck did you know about my buried ham!!!!??

Sun, 03/20/2011 - 21:13 | Link to Comment TX-Mike
TX-Mike's picture

If buried cabbage comes out as Kimchi, wth does a buried ham come out as?

Sun, 03/20/2011 - 20:36 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Duh.

Sun, 03/20/2011 - 15:29 | Link to Comment chumbawamba
chumbawamba's picture

What does your position, the gold standard, and Libertarians have in common?  Nothing.  You're either an ignorant prick or a paid troll.  Go back to propaganda school.

I am Chumbawamba.

Sun, 03/20/2011 - 16:29 | Link to Comment Mark McGoldrick
Mark McGoldrick's picture

You're the same guy who rattles off "nigger" in every thread, right?

Libertarians: Using the lower brain stem to preach freedom and liberty to everyone - well, let's be honest, NOT everyone.   

Sun, 03/20/2011 - 18:40 | Link to Comment BigJim
BigJim's picture

Er, yeah, because every libertarian uses the word 'nigger' when referring to black people. Nice conflation.

But HERE'S a safe conflation - every statist troll will use any dirty trick in the book to win their argument... it's for the children, you see.

Sun, 03/20/2011 - 20:33 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

Lean Forward or something...

Sun, 03/20/2011 - 21:40 | Link to Comment forexskin
forexskin's picture

troll - nothing to see here people, move along

Sun, 03/20/2011 - 22:33 | Link to Comment Mark McGoldrick
Mark McGoldrick's picture

In the libertarian world:

Troll = anyone who disagrees with your echo chamber

Tue, 03/22/2011 - 21:24 | Link to Comment BigJim
BigJim's picture

Troll = anyone who starts throwing around ad hominems when his logical bluff is called.

Someone who argues in bad faith.

You get the picture. Hell, you are the picture.

Sun, 03/20/2011 - 15:40 | Link to Comment Teamtc321
Teamtc321's picture

"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. "

 

I have to totally agree that we can not pin our dollar to a gold backed standard until our nations debt. is defaulted.

Then pin a gold silver backed currency when the system is reset to zero and controlled by a system that is transparent.  

 

Sun, 03/20/2011 - 15:55 | Link to Comment collinar
collinar's picture

You expressed a useful set of thoughts. You need to go read FOFOA's blog. Reading the whole blog will take time. Concentrate on the section describing "freegold". Freegold will be a competing medium that allows savers to preserve wealth while their debt in paper currency shrivels to sustainable levels, perhaps to zero. I agree a "gold standard" like we had 50 years ago just enables the theft to continue. Freegold stops the theft cold. Let us know what you learn.

Sun, 03/20/2011 - 13:29 | Link to Comment tmosley
tmosley's picture

Yes, you should get out.  No-one here is buying your Kool-aid.

Sun, 03/20/2011 - 13:34 | Link to Comment Creed
Creed's picture

actually, SOUND MONEY allows SAVERS to prosper

 

because their money is still worth the same 30 years after they made it so they can RETIRE on it or pass it along to their HEIRS

 

instead of being DEBASED & made worthless & causing the holders thereof to engage in ever more frantic attempts to "invest it wisely" to maximise return to HOPEFULLY keep up with inflation

 

Roman Empire = fiat debasement = US

Sun, 03/20/2011 - 16:26 | Link to Comment Crisismode
Crisismode's picture

Hmmmm, did gold currency prevent the Roman Empire from overspending its way into oblivion?

 

Did gold currency prevent the Mayan Empire from overspending its way into oblivion?

 

Did gold currency prevent the Spanish Empire from overspending its way into oblivion?

 

Etc., Etc., Etc.

Sun, 03/20/2011 - 21:00 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Oh come oooooonnnnnn!

Did any one of these governments not manipulate their currencies and were not the people living in those times the whipping boys for their greed. You sir, are a whipping boy. Bend over, assume the position. Now, just lie back and think of Britain.

Sun, 03/20/2011 - 19:34 | Link to Comment DosZap
DosZap's picture

TM,

Spot On.+100

Sun, 03/20/2011 - 19:39 | Link to Comment DosZap
DosZap's picture

#

Sun, 03/20/2011 - 12:44 | Link to Comment equity_momo
equity_momo's picture

The only thing crashing to zero was your logic in this post.

Sun, 03/20/2011 - 12:44 | Link to Comment Moe Howard
Moe Howard's picture

Thank you for that breath of fresh air. You are correct, let the sheeple be sheared. The rest of us need to preserve our wealth in a more intelligent manner than FRNs and Mutal Funds. Time to stop cryin' and start buyin'.

Sun, 03/20/2011 - 13:44 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

No matter what you buy, it can be taxed to extinction. Gold and Silver can be suppressed as well, but can not be done overnight, especially with such digital fiat money expansion.

The elites are more flexible and have advance knowledge of directional changes. The masses just react. Both deflation and hyperinflation brings misery to the working class.

Aquire assets that produce useful necessities, income producing modest real estate, agri-land, Gold and silver during hyper-inflationary times and most of all have as much fun as possible no matter what. 

Learn and teach your kids basic carpentry, plumbing, hunting, fishing, first aid and other useful skills. Hug your children often, educate them and don't take your husbands or wifes for granted. Always surprise them with acts of love and affection.

Do all that, find a hobby for yourself you have arrived. You have reached self actualization. 

Guns and God are optional. 

 

Sun, 03/20/2011 - 14:45 | Link to Comment Creed
Creed's picture

nice one OK

 

Sun, 03/20/2011 - 15:19 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ $1420 (or more tomorrow?)

Nice comments and good advice Oracle.

Estamos en el Peru de visita, favor enviarme un correo cuando te convenga, no hay apuro...

Sun, 03/20/2011 - 17:30 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

Ahorita, voy

Sun, 03/20/2011 - 20:23 | Link to Comment mick_richfield
mick_richfield's picture

DCRB --

Sorry, I've been in detox for a while.

I'm glad you liked the Latin.  We need Cato now more than ever.

 

Fed delenda est.

 

Sun, 03/20/2011 - 19:42 | Link to Comment DosZap
DosZap's picture

Sounds good till the Optional part...........all things one should do daily.

When will we learn, we will never be left alone.Never?

You choose your options, I will keep all of them open.

 

 

Mon, 03/21/2011 - 00:26 | Link to Comment TruthInSunshine
TruthInSunshine's picture

It all boils down, ultimately, to whether power flows from the citizens or the government.

If power flows from the government, then they will abuse economics and markets for all sorts of reasons, and this will include suppression and distortion of availability, price and exchangeability of precious metals or any other 'thing,' to prop up fiat.

It is only when government truly works for the common man and is afraid of the common man that such machinations and manipulations will not be possible.

Sun, 03/20/2011 - 13:18 | Link to Comment Creed
Creed's picture

Mark, money buys the means of production which is wealth.

This article is a bunch of pseudo wisdom, and you're a tool for calling people tools for thinking money buys land, tools, necessities & hookers & blow (oh wait, that's redundant).

You seem to forget that plutocrats -sheesh- have all the time in the world to play investment transfer games. The rest of us work to put food on the table, educate our kids & have a little fun and have very little time to "maximise our wealth".

And maybe, just maybe, money isn't the god some of us want to worship with our time & attention.

Sun, 03/20/2011 - 13:46 | Link to Comment clymer
clymer's picture

"It has the stench of someone who is loosing in the darwinistic society that they so emphatically endorse"

1.) Loosing?

2.) Libertarians are not interested in darwinism, only fairness. It is "social darwinism" that is referred to by the self-declared super-class as justification for this abberation in modern money mechanics.

3.) you are, and will forever remain wrong.

 

 

Sun, 03/20/2011 - 16:17 | Link to Comment Imminent Crucible
Imminent Crucible's picture

"you are, and will forever remain wrong."

You never know--every once in a great while someone actually looks at the facts and changes his mind.

Usually after a terrible blind-siding.

Sun, 03/20/2011 - 15:10 | Link to Comment tictawk
tictawk's picture

I think you are correct in what you are saying here.  It would be a travesty if DEBT that was accumulated over thirty years in a fiat currency is now collateralized by gold via "hard currency" regime.  This debt should be resolved via default PRIOR to any move to a hard currency.  The default would take place in one of two ways, inflation or DEFAULT.  I think the latter is probably the best solution for the public. 

Mon, 03/21/2011 - 00:37 | Link to Comment forexskin
forexskin's picture

agreed - and stated very well

 

no resolution while gains from fraud are allowed to stand

Sun, 03/20/2011 - 19:15 | Link to Comment Lord Koos
Lord Koos's picture

Thanks for a refreshing post that goes against the familiar ZH grain.  You definitely called it on the whining.

Yeah you can't take it with you but it's nice to have a little of it around in your old age.

Sun, 03/20/2011 - 21:26 | Link to Comment lincolnsteffens
lincolnsteffens's picture

You don't really mean individuals should be responsible for their own well being throughout their lives, do you? Why, that is unacceptable. People are not capeable of making good decisions for themselves. They need government and others with titles and degrees to take care of their savings. (NOT)

Where did you get such a radical idea from? You must be mentally unsound and need to be confined until you are fit to be released into society.

Sun, 03/20/2011 - 11:23 | Link to Comment snowball777
snowball777's picture

You can change Fed policy without abandoning it entirely or end the Fed without returning to 'sound money'. From my perspective, sound money isn't 'hitting the brakes' as much as bailing from the moving car at 125MPH.

Think Panic of 1837.

Sun, 03/20/2011 - 13:47 | Link to Comment faustian bargain
faustian bargain's picture

You can do that stuff, but it would be better to end the charade. The problem with not abandoning the Fed is that it will always want to return to the main purpose of any central bank, and that is to fund government profligacy, as well as line the pockets of its owners.

Any legalized monopoly on money creation should be abolished. Currencies need to be whatever individuals want it to be, and currencies should compete on the open market. Eventually one or a few will become standard, although if they begin to falter, just like companies in a free market they will be replaced.

The danger in thinking currency should be created and managed by a central authority is that this perpetuates the theft inherent in fiat moneyprinting. Any legalized monopoly in anything (in this case, the niche created by legal tender laws) generates bubbles and distortions, and the longer this system continues, the bigger the distortions grow. Ending it now will be less painful than ending it later. Ending it 92 years ago would have been the least painful. We may be at the point where our standard of living is going to regress back that far, regardless. What I'm pretty sure of, though, is that if we keep kicking the can, our standard of living will regress even further once it all collapses.

Sun, 03/20/2011 - 14:14 | Link to Comment snowball777
snowball777's picture

I hold that monetary policy is a tool and it is the use to which it is put that makes it evil or not. People scrambling to recover their deposits during the panic of 1907 would know from whence I'm coming.

And then there's the small problem that even without anything other than specie as currency, you'll still have to deal with the problems of the cavaliers of credit. Please don't attempt to feed me any lines about the 'free market' self-regulating or bringing pressure to bear on banks', corporations', or government's ability to synthesize debt ex-nihilo.

In short, the Fed is an enabler, but not the junkie. "They" will find their fix one way or another.

http://www.youtube.com/watch?v=iFr3Xb7Ae5k

Sun, 03/20/2011 - 19:57 | Link to Comment DosZap
DosZap's picture

"They" will find their fix one way or another.

 

We have been their fix for 92 yrs.

Sun, 03/20/2011 - 20:13 | Link to Comment snowball777
snowball777's picture

I think you mean 97 years, but what was so great about the period before the Fed Reserve with respect to the relationship between bankers and non-bankers, in your eyes?

 

Sun, 03/20/2011 - 10:07 | Link to Comment Pladizow
Pladizow's picture

Would'nt deflation assume gold at its current price per oz?

What if the price per oz sky rocketed?

Sun, 03/20/2011 - 11:20 | Link to Comment snowball777
snowball777's picture

How would that help if a tiny percentage of people have said commodity in their possession?

I know I will be fine, that's why I bought my PMs, it's the macro economy and people who would be thumped by asset devaluation (think 99% of morts underwater) that keep me up at night.

 

Sun, 03/20/2011 - 20:02 | Link to Comment DosZap
DosZap's picture

snow,

Well, its not like they have not been told for 10-15yrs+, and they are going to get it either way.

Unless they hold physical.Plus how many friends and relatives will you be HELPING out of your stash?.

IF it came to that. I am sure your immediate family(Nuclear), and likely to at least parents  bros,sisters,and families.

There is no easy answer here, none. PAIN is going to come.

Ever been dead broke, I have, was not fun getting back to even,after that perseverance and hard work got me to where I am now.

Same of the Macros.

 

Sun, 03/20/2011 - 13:49 | Link to Comment Creed
Creed's picture

Tyler I vote that if tits are shown they must belong to the poster showing them and that fact must be acknowledged by said poster

 

all in favor, say Aye

Sun, 03/20/2011 - 16:20 | Link to Comment Imminent Crucible
Imminent Crucible's picture

"I".  Did you mean "poster" or "imposter"?

Sun, 03/20/2011 - 21:12 | Link to Comment New World Chaos
New World Chaos's picture

I vote that Pladizow bring back the original crotch avatar, which was endlessly fascinating.

Sun, 03/20/2011 - 21:29 | Link to Comment lincolnsteffens
lincolnsteffens's picture

Yes, end the sharade!!! You get my vote. Yeah, I know, I'm the one with a bag over my head too so who are we to talk. 

Sun, 03/20/2011 - 10:09 | Link to Comment tmosley
tmosley's picture

It stops the draining of society's capital by government money printing.  Real capital, in the hands of individuals acting in their own logical self interest is what allows us to overcome black swans.

For a more detailed explanation of this, and economics in general, read this: http://freedom-school.com/money/how-...nomy-grows.pdf

Sun, 03/20/2011 - 10:11 | Link to Comment LoneStarHog
LoneStarHog's picture

How can one answer the question when you have not adequately defined your "deflation" (i.e. Asset Deflation or Monetary Deflation)? Deflation in things one needs for existence?  Deflation in things one merely wants? Monetary Deflation due to the non-use of Real Bills? Etc...

Sun, 03/20/2011 - 11:10 | Link to Comment snowball777
snowball777's picture

I meant asset deflation.

Sun, 03/20/2011 - 16:31 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture


@SB777

You are in search of answers. My challenge to you, grasshopper, is to compose and post an essay or treatise on the benefits of a cartel owned issuer of currency, as opposed to a money token created through effort by yeomen. 

Sun, 03/20/2011 - 22:51 | Link to Comment snowball777
snowball777's picture

False dilemma as I don't support either (just for different reasons). 

And I wouldn't be able to do any better at explaining endogenous money theory than Steve Keen anyway.

Is there no credit whatsoever in your yeomens' world?

 

Mon, 03/21/2011 - 07:34 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

There's always credit. I demand settlement rather than payment.

Sun, 03/20/2011 - 11:09 | Link to Comment LudwigVon
LudwigVon's picture

Massive deflation for whom and what asset classes?

For those who hold hard currency they will see dramatically improving purchasing power.

You would understand if you held hard currency over the last decade. All citizens of the world should heed the advice provided by world history.

Sun, 03/20/2011 - 11:17 | Link to Comment gordengeko
gordengeko's picture

Precisely at what point do all of these arguements become moot?  The entire system is reliant upon debt and consumption (well throw in mindless propaganda advertising to keep the consumer consuming garbage, since the bulk of humanity is so easily manipulated into giving up freedoms for safety and giving up their soul for entertainment).  Take either of these two these things out of the equation and what formula are we left with?  

Sun, 03/20/2011 - 11:21 | Link to Comment snowball777
snowball777's picture

<pop>

http://www.youtube.com/watch?v=gvbqG8EbxW0

"...you keep buying these things, but you don't need them...but as long as you're comfortable, it feels like freedom..."

Sun, 03/20/2011 - 11:29 | Link to Comment gordengeko
gordengeko's picture

Nice, kinda sums it up quite nicely.

Sun, 03/20/2011 - 11:40 | Link to Comment mark mchugh
mark mchugh's picture

Here's the joke:  It's a deflationary world, always has been.  The optical illusion that inflation creates makes you feel like you're winning, when you're losing.  Let me give you a few examples:

  1. Houses are deflationary - they don't outperform inflation, never did.  The rise in home prices for the last 30 years was driven by ever-lower interest rates.  It is our mathematical illiteracy that makes us think otherwise. 
  2. Is your salary keeping pace with the rises in gas, food, clothing, electricity, healthcare, and education?  If it's not, then your money is deflating in tangible terms.

I'll grant you, the inflationary illusion makes people work their butts off, borrowing to stay afloat, hoping that someday the world will inflate them to prosperity, but it won't.  Hasn't worked in Japan, and they still have a positive trade balance.

Sound money makes it easier to keep score, which is the last thing TPTB want.  I'm more afraid of becoming a debt slave than "massive deflation," how about you?

Sun, 03/20/2011 - 11:56 | Link to Comment LawsofPhysics
LawsofPhysics's picture

To put this in scientific terms, it is a entropic world (second law of thermodynamics - basically, we can look forward to a cold dark future.)

Sun, 03/20/2011 - 12:04 | Link to Comment tmosley
tmosley's picture

You really don't understand entropy.  Stop pretending you are a damn physicist.  Or any type of scientist.

We are not all going to die next Tuesday.  You can misquote entropy all you like, but it isn't going to happen.

Christ, people like you would starve to death at an all-you-can-eat buffet.

Sun, 03/20/2011 - 16:11 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Tom, don't be a dick.  It really takes away from the occassional bright things you say.

 

For the most part, enthalpy is heat, and entropy is disorder.  My biotech company continues to thrive, despite the downturn, and yes I have degrees in Physics, Chemistry, and Biochemistry.  I have spent almost thirty years in Biotech while you still haven't moved out of your mother's basement.  See how constructive insults can be fucknut?

Sun, 03/20/2011 - 12:36 | Link to Comment CH1
CH1's picture

Geez, you guys are suckers for a stupid comment.

Lots of mis-directed energy on THAT one!

 

Sun, 03/20/2011 - 14:17 | Link to Comment snowball777
snowball777's picture

Ladies and gents, it is my sad duty to inform you that you have all been participating in a Charlie Sheen Bi-winning Economy.

Sun, 03/20/2011 - 12:22 | Link to Comment DavidC
DavidC's picture

And what would be wrong with deflation? Savings worth something, the retention of monetary value.

Currently inflation ISN'T creating jobs, is destroying the wealth of the middle class and asset prices (houses) are still falling. Deflation would permit the required reset of the system.

DavidC

Sun, 03/20/2011 - 16:37 | Link to Comment LawsofPhysics
LawsofPhysics's picture

I have been asking the same question for years.  The only thing that I can come up with is that the elite and the Jewish overlords in particular, do NOT want to take a haircut, EVER.  That is what you get when you let the house of Rothschild print your money and control your Army.

Sun, 03/20/2011 - 14:53 | Link to Comment Ben Fleeced
Ben Fleeced's picture

40 lbs. of coal will heat/cook/light more for longer than 40 lbs. of paper.

'nuf said!

B. Fleeced

Mon, 03/21/2011 - 00:26 | Link to Comment Boxed Merlot
Boxed Merlot's picture

Should be:
Wikipedia:
Intrinsic Value: 40 lbs. of coal will heat/cook/light more for longer than 40 lbs. of paper.

Antonym: Face Value. See also: federal reserve note

Sun, 03/20/2011 - 15:33 | Link to Comment Banjo
Banjo's picture

Very simple you inflate an ounce of gold to $14,000 or $60,000

FIX your paper currency to be convertable to gold at that price.

This retains assets at "current" prices (you may even overvalue gold a little to allow room for some paper growth)

The fixing of paper currency to hard currency PREVENTS insane on going expansion of paper money.

Politically and economically there is more that would be required in terms of allowing working people to earn a living wage globally. You can glean many angles of this age old problem in a free book called Dying of Money by Jens O Parson. Well worth a read.

 

Sun, 03/20/2011 - 16:23 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Works fine until resources become scarcse or unavailable.  Supply chain disruptions (including power and water) are already pretty common in a number of cities.  When (if ever) will economic "laws" (Bahhahahaha0) be attached to reality.  I still say we should crash the system.  The sooner we do, the sooner compensation will find its way to people who are actually worth a shit.

Sun, 03/20/2011 - 19:00 | Link to Comment collinar
collinar's picture

If we learned anything over the last 60 years, we learned that those responsible for "fixing the ratio of paper currency to gold" will cheat. Freegold (see FOFOA) allows savers to protect their wealth in gold while  paper printers inflate debts away via inflation.

Sun, 03/20/2011 - 20:17 | Link to Comment DosZap
DosZap's picture

This has been the topic here for over a year, and it would work.

Except, do you think for one second your prudence, and fiscal sainity,and ability to see the train coming,that caused you to load up on PM's will stop them from stealing your labors?.

Anyone here thinking if G & S is revalued due to Default to the levels needed.

Going back to a metals based money system to solve the issue, is going to allow them to make out like a bandit legally(because you were smart),and keep their PM's at new raised prices,I  have some swampland to sell.

Only Wall Street Bankers get rich that way...........

Sun, 03/20/2011 - 16:34 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Deleted.

Sun, 03/20/2011 - 16:30 | Link to Comment masterinchancery
masterinchancery's picture

Good point, but we are going to have massive deflation anyway, in the end, and it is far preferable to hyperinflation.  Kondratiev Winter is coming.

Sun, 03/20/2011 - 18:49 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

#1079438

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

There is NO need to expand the money supply by creating fraudulent counterfeits of value ...exactly what bankers do in fractional-reserve lending, or in the case of the Fed, NO-reserve lending.

You advocate expanding the money supply by issuing more receipts-for-gold-on-depoisit than gold actually on deposit.   That is FRAUD. It's COUNTERFEITING. 

THAT is how banks expand the money supply.  By FRAUD.  By COUNTERFEITING.

If someone wants to buy a home for $100,000 they can't pay cash for, you advocate a banker going to the back room, turning on his printing press, printing up $100,000 in fraudulent counterfeit receipts-for-gold-on-deposit, and handing it to the purchaser, which the purchaser must pay back with interest. 

THAT'S  how fractional reserve lending works, which YOU advocate.

Maybe you justify that counterfeiting noting how the banker can carry the receivable on his books as an asset.  But that's FRAUD.  The banker is carring a receivable of $100,000 in WORTHLESS receipts-for-gold-on-deposit.  

Why do I say "receipts-for-gold-on-deposit"?

Because those paper receipts have NO value, because there is NO gold on deposit to back them up.

When the home purchaser hands those worthless receipts-for-gold-on-deposit to the seller, and the seller takes them to the banker wanting to swap them for gold, the banker will have to admit he has no gold to give the seller, those recipts-for-gold-on-deposit are WORTHLESS.

Expanding the money supply via fractional reserve lending operates by FRAUD and COUNTERFEITING. 

Granted, this is a small example, but the same thing happens on a MASSIVE  scale all through the banking system.

"when it is necessary"?

WHO is in a position to know "when it is necessary"? 

WHO do you trust to know "when it is necessary"?

Bankers with printing presses? 

Sun, 03/20/2011 - 22:47 | Link to Comment TruthInSunshine
TruthInSunshine's picture

I will call the beginning of massive global economic contraction, and the advent of the next Great Depression, right here, and right now, for some of the reasons highlighted in this New York Times article (but for many other reasons, not the least of which is the affinity of central bankers for constantly meddling with & severely distorting markets):

Crises in Japan Ripple Across Global Economy By MICHAEL POWELL 13 minutes ago

Tsunamis, radioactive plumes, Middle East revolutions and a new round of the European debt crisis could derail a tenuous bounceback.

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