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Howard Buffett Said "Human Freedom Rests On Gold Redeemable Money", Called For Return To Gold Standard

Tyler Durden's picture


Sometimes the apple does fall very, very far from the tree. A must read essay by Howard Buffett, father of the "legendary" investor who initially was so very much against derivatives then promptly changed his tune, discusses fiat money and gold, and concludes that "human freedom rests on gold redeemable money." In this stunningly simple, straightforward, and flawless analysis, Buffett's father stresses the relation between money and freedom and contends that without a redeemable currency, an individual's freedom and one's access to property is dependent on goodwill of politicians. Buffett also says that paper money systems generally collapse and result in economic chaos. He goes on to observe that a gold standard would restrict government spending and give people greater power over the public purse. Lastly, back in 1948, Howard Buffett, said this the "present" is the right time to restore the gold standard. Alas, 60 years later, his advice has still been largely ignored, and as a result we have a global economy that stands on the precipice of global default with runaway budget deficits across the entire developed world. Key quotes: "Is there a connection between Human Freedom and A Gold Redeemable Money? At first glance it would seem that money belongs to the world of economics and human freedom to the political sphere. But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold, you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty. Also, when you find that Lenin declared and demonstrated that a sure way to overturn the existing social order and bring about communism was by printing press paper money, then again you are impressed with the possibility of a relationship between a gold-backed money and human freedom." His conclusion is eerily prophetic with what is happening with US society currently: "I warn you that politicians of both parties will oppose the restoration of gold, although they may outwardly seemingly favor it. Unless you are willing to surrender your children and your country to galloping inflation, war and slavery, then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money."

And of course, the Federal Reserve is at the forefront of those who will do everything in their power to prevent a return of the gold standard:

Most opponents of free coinage of gold admit that that restoration is essential, but claim the time is not propitious. Some argue that there would be a scramble for gold and our enormous gold reserves would soon be exhausted.

Actually this argument simply points up the case. If there is so little confidence in our currency that restoration of gold coin would cause our gold stocks to disappear, then we must act promptly.

The danger was recently highlighted by Mr. Allan Sproul, President of the Federal Reserve Bank of New York, who said:

"Without our support (the Federal Reserve System), under present conditions, almost any sale of government bonds, undertaken for whatever purpose, laudable or otherwise, would be likely to find an almost bottomless market on the first day support was withdrawn."

Our finances will never be brought into order until Congress is compelled to do so. Making our money redeemable in gold will create this compulsion.

Full essay below, which we are confident was never read by Howard "oracular" son.



h/t William


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Wed, 05/26/2010 - 14:20 | 374779 Jesse
Jesse's picture

If the US were to monetize its existing gold reserves (at least if they do exist, unemcumbered), gold would have to increase to roughly $36,000 per ounce.

Hm.  Uh, ok. Let's do it. lol.

Wed, 05/26/2010 - 14:21 | 374784 koaj
koaj's picture

or federal spending would have to crater about 80%



Wed, 05/26/2010 - 14:49 | 374867 Cognitive Dissonance
Cognitive Dissonance's picture

Here is the .pdf of the letter.

Wed, 05/26/2010 - 15:09 | 374944 Paystee Gangsta
Paystee Gangsta's picture

thank you CD - I am plug-in-challenged

Wed, 05/26/2010 - 14:25 | 374795 jmf
jmf's picture

Moin from Germany,

add this interview from a guy called Mark Fisher, of MBF Asset Management to the mix....

Never heard of him, but i already love him.....

Wed, 05/26/2010 - 14:32 | 374828 Wyndtunnel
Wyndtunnel's picture

I watched this live this morning.. He's awesome.  He basically sits there and tells the usual gang of idiots that it's over for the market, things won't improve until there is a reset, nothing the authorities can do will make a difference.  After every lenghty comment you can hear a pin drop as the Quick and co. spin their wheels in disbelief.  I was howling the whole time!

Wed, 05/26/2010 - 14:44 | 374854 jmf
jmf's picture

Moin again,

i think we can add him to the "ANTI SPIN DREAM TEAM" almong with Rosenberg, Hussman, Sprott and probably only 4 or 5 other guys.....

Wed, 05/26/2010 - 14:55 | 374886 Thisson
Thisson's picture

I agree with his thesis but he's not very articulate...

Wed, 05/26/2010 - 17:49 | 375575 A Nanny Moose
A Nanny Moose's picture

What do you want? Doesn't require great oratory skills to convey the math of 0-$1trillion = -$1 Trillion.

Obamabot has oratory skillz, but can't seem to convey a damn thing. He is just there to stroke us, as a distraction from the cornholing we are receiving.

Wed, 05/26/2010 - 14:55 | 374888 Common_Cents22
Common_Cents22's picture

He won't be back on CNBS very often, and if so, there will be 5 bulls to offset him.

Prechter was on fast money not long ago and they ridiculed him.  You could tell all the CNBS morons were on the defensive.  "Noooo, I don't wanna hear about reality!"

Wed, 05/26/2010 - 15:54 | 375152 Gordon_Gekko
Gordon_Gekko's picture

Well, Prechter is in a separate class of idiots by himself.

Wed, 05/26/2010 - 15:57 | 375170 Johnny Bravo
Johnny Bravo's picture

You mean like the "gold to 2000 by June" Zerohedgers?

By the way: it's almost June, and gold is still the same price as when that poll was put on this site.

Wed, 05/26/2010 - 21:38 | 376018 Burnbright
Burnbright's picture

Or like those idiots that kept saying gold was going back down to 600-800 range... oh wait.

Wed, 05/26/2010 - 23:44 | 376218 Moneygrove
Moneygrove's picture

Erin burnett told him !!!!!!!!!!!!! lol

Wed, 05/26/2010 - 15:03 | 374921 Hulk
Hulk's picture

He must have threatened to kill them after the show if they interrupted him.

never seen those 3 idiots that quiet...

Wed, 05/26/2010 - 15:24 | 374986 Cognitive Dissonance
Cognitive Dissonance's picture

The best part was right at 7 AM when he was first introduced. Joe asks him a stupid question and Mark Fisher starts to roll his eyes a bit, begins to answer and then says something along the lines of "You know, they're betting I won't last the entire 2 hours of the show."


I assume "they" are the people on the exchange that know that this guy is obviously a straight shooter and wouldn't be able to tolerate the idiots for 2 hours. About 6 times that I saw while watching the words "Goldman Sacks" were forming on his lips while talking about banks, brokers, Flash Crash etc but he always caught himself and said "the banks" or "the spec players" or whatever.

I opened my office late this morning so I could drink Mark Fisher's milkshake. :>)

Wed, 05/26/2010 - 18:37 | 375694 Problem Is
Problem Is's picture

Did you drink it up?

Wed, 05/26/2010 - 19:37 | 375812 Rick64
Rick64's picture

LOL. CD you know that has a sexual connotation.

Wed, 05/26/2010 - 23:19 | 376173 greased up deaf guy
greased up deaf guy's picture

actually, it's a "there will be blood" connotation.  daniel day lewis.  good stuff.

Wed, 05/26/2010 - 22:24 | 376077 Temporalist
Temporalist's picture

My milkshake is better than yours:

Wed, 05/26/2010 - 14:51 | 374879 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

And tungsten would have to be like, a million dollars.

Wed, 05/26/2010 - 15:29 | 375020 Johnny Bravo
Johnny Bravo's picture

This proposal shows the age of the elder Buffett.

Labor is an infinite resource.  You can't back potentially infinite production with a finite resource if there is to be growth in an economy.

Also, money is already redeemable in gold.  Goldbugs do it daily when they pay inflated bubble prices for an ounce of gold.  I can take my dollars and redeem them for gold at any time I wish as it is.  I wouldn't pay the inflated prices of the gold bubble, however...

Wed, 05/26/2010 - 16:09 | 375246 tmosley
tmosley's picture

Wow, you think there is an infinite source of labor?  I guess you must be posting this from your time machine that runs on a perpetual motion device powered by antigravity.

Labor is NOT infinite, you bleeding moron.  If labor were infinite, everything would be FREE.  

Dollars are NOT redeemable for gold.  They can be used to purchase gold on the open market FOR NOW.  Zimbabwe dollars can't buy gold (where once you could), no matter how many of them you have.  If Zimbabwe dollars received a gold backing, no matter how miniscule, then you could trade them for gold, or anything else, so long as a fixed amount of gold was held by their banks and they were freely exchangeable.

I mean Christ, MB, you've said some dumb shit in your time here, but this takes the cake.  You need to go to the emergency room and make sure you don't have an aneurism or a brain tumor pressing against the logic center of your brain.  I mean, you comments are THAT STUPID.

Wed, 05/26/2010 - 16:20 | 375295 RockyRacoon
RockyRacoon's picture

You are right, he is wrong.  On the other hand you have responded to the dreaded troll.

He gotcha.

Wed, 05/26/2010 - 16:40 | 375376 Johnny Bravo
Johnny Bravo's picture

That fuckin tard couldn't even spell his name if he had to, let alone make a valid economic argument.

I can see why you agree with him.

Wed, 05/26/2010 - 16:22 | 375306 Johnny Bravo
Johnny Bravo's picture

How is labor not infinite?  I mean seriously, what the hell is wrong with you people?

When you have children, labor increases by the amount.  Sure it's not INFINITE per se, but you can't quantify it with a FINITE RESOURCE.  The growth is larger than the amount that can be backed with a finite resource.

Who says you can't buy gold with Zimbabwe dollars?  Sure you can!  It just takes more Zimbabwe dollars to buy the gold.  It might take a billion or a trillion dollars, but I guarantee somebody will take them from gold.

Since you call me dumb and whatever garbage you spout...I made 60% in the markets last week with VXX and FAZ.  How much did you make?

Oh wait, gold was DOWN.  It was flat since December.  Now it's going lower.
Sure sounds smart to me.

Wed, 05/26/2010 - 16:50 | 375419 DaveyJones
DaveyJones's picture

labor is only infinite when stupidity shares the same quality

Wed, 05/26/2010 - 17:19 | 375518 tmosley
tmosley's picture

Labor increases when you have children, sure, but how many generations does it take to reach an infinite number of people?  By that definition, EVERYTHING is available in infinite amounts.  You can ship some of those infinite kids to Mars and have them mine for gold.  When Mars is done, move on to the moons of Jupiter, then Saturn, then Alpha Centauri.

The fact is that there is a limited amount of labor, which can be easily represented by a limited amount of gold.  

Ha!  You made money this week with FAZ, huh?  How many times did you get whacked trying to play that before?  How you doing for the decade, champ?  Me?  I'm up 700%, or thereabouts, on my first purchases.  Cost averaged, I'm up maybe 100%.

What planet are you from where gold is going lower when $30 off its all time highs?  Seriously, I would suggest you get your head checked out.  You might electrocute yourself by drooling on your keyboard as you stroke out.

Thu, 05/27/2010 - 00:09 | 376245 Bheithir
Bheithir's picture

The ONLY things infinite, are the universe and stupidity.

Thu, 05/27/2010 - 10:33 | 376771 Zerozen
Zerozen's picture

OK, to clear these two points up once and for all, because clearly you don't get it:

1) "Gold backed" means that the currency is exchangeable for gold in a FIXED RATE. For example, right before Nixon took the US off the gold standard, it was $35/ounce. 1 ounce of gold = $35. Another example is the Pound Sterling. The very name for the British currency comes from the fact at one time one unit of British currency was worth one pound of sterling silver. Get it yet? It was stability. What you're talking about is just buying gold with paper whose real value fluctuates wildly over extended periods of time.

2) Labor is not infinite. On an infinite timeline, labor is infinite. Since this is not the case and we live in a world where the laws of physics demand that we can only experience life one moment at a time, labor at any given point in time is not "infinite". It's definitely finite. What the hell are you smoking, and where can I get some?

Wed, 05/26/2010 - 16:14 | 375270 Operafaust
Operafaust's picture

"Labor is an infinite resource"

No it is not. Infinity implies complete lack of replacement cost and an exponential ability to increase supply relative to other factors of production. Labor is subject to depletion, even in the face of demographic trends that defy social engineering.

"Also, money is already redeemable in gold".

No it is not. Redeemable implies that the paper note is in fact a de facto debt instrument; the holder of the note reserves the right to receive the equivalent amount in gold. He doesn not exchange the paper currency for gold, but merely calls in his 'loan' of the metal. When a person purchases gold under the fiat system he is not exercising a right, but making a purchase wherein a genuine transfer of ownership is effected. As for your assertion that gold is an inflated bubble, kindly compare a logarhythmic scale chart comparing increases in the price of gold since 1980 as opposed to M3 money supply growth and credit growth in the same period. Also, compare the current spot price of gold to its inflation adjusted 1980 high. That should paint a clear picture as to what is and is not a bubble.


Wed, 05/26/2010 - 16:21 | 375304 RockyRacoon
RockyRacoon's picture

The troll will not respond to reason.  You have laid out a valid case for labor.

See comment above.  You've been had.  But you have provided a valuable service nonetheless.

Wed, 05/26/2010 - 16:32 | 375348 Johnny Bravo
Johnny Bravo's picture

And what would you call somebody that contributes absolutely nothing in intellectual argument, who merely calls others trolls and parrots (incorrect) logic from other morons that haven't made any money in the recent rally?

I guess it wouldn't be a "troll".  It'd be a "lemming" more or less.

Wed, 05/26/2010 - 18:09 | 375640 nuinut
nuinut's picture

In the bigger picture, Bravo, you are the lemming.

Open the curtains; it's a big world out there.

Wed, 05/26/2010 - 16:28 | 375335 Johnny Bravo
Johnny Bravo's picture

"exponential ability to increase supply relative to other factors of production"

So why is population growth modeled with an exponential function with exponent E?  population = labor.  Population growth is infinite (in theory, not in practice) and cannot be modeled by a finite resource like gold.

Because it is infinite, in theory.  Sure there are caps on population growth EVENTUALLY.  Still, we can have a lot more exponential growth before the labor pool depletes. 

As far as what's in a bubble, the same argument can be made about 1980 being in a bubble too.  Just because it's lower than 1980 doesn't mean that 1980 wasn't in a bubble either.
Retail investors pile in before the trend change and create the bubble.  This is what is happening, as is evident on zerohedge.

Why are all the major banks short if it is NOT in a bubble?  Because they always lose money trading, right?
Oh wait, my bad.  They were right 61/61 days last quarter.

I guess that people that don't know a MF thing about trading give better financial advice than Goldman Sachs practices...

You can take any amount of money you want and buy any amount of gold you can afford.  Seems redeemable to me...

Wed, 05/26/2010 - 16:43 | 375394 faustian bargain
faustian bargain's picture

'Buying' is not 'redeeming', in this context. If it were, the supply of paper dollars would be pegged to a certain amount of gold.

Wed, 05/26/2010 - 17:21 | 375525 Not For Reuse
Not For Reuse's picture

There's no point in arguing with someone who 1) thinks human population growth is infinite ; 2) doesn't understand the time value difference between "buy" and "redeem" ; 3) posts on a blog about the "amazing profits" he made on hypothetical trades ex post facto.

Wed, 05/26/2010 - 17:28 | 375549 faustian bargain
faustian bargain's picture

Meh, I know there's no point. I do it for my own entertainment. Kinda like a cat playing with a mouse.

Wed, 05/26/2010 - 21:42 | 376028 Burnbright
Burnbright's picture

It really isn't even a problem of human population not being infinite. Assuming infinite labor is assuming infinite time, not just population size. Regardless of the size of a population, infinite or not, the amount of time being used up by each individual is finite and thus costs that individual something.

People would have to live for an eternity for their labor to be infinite.

Wed, 05/26/2010 - 17:17 | 375512 nuinut
nuinut's picture

good luck eating your theory then Jonny

Wed, 05/26/2010 - 17:25 | 375539 Clampit
Clampit's picture

By your logic gold is also infinite, as it simply takes more labor to mine more gold. Unless you think we're close to seeing the peak-resource for our little planet...

Wed, 05/26/2010 - 17:45 | 375591 tmosley
tmosley's picture

At that point gold goes...down?  Apparently that is what happens, in the cancer-ridden mind of the Great Masterbator.

Wed, 05/26/2010 - 18:16 | 375655 merehuman
merehuman's picture

masturbation ridden mind of a cancer on plain truth.

Wed, 05/26/2010 - 18:47 | 375715 Thoreau
Thoreau's picture

You're right - labor is infinite; just no longer in the U.S.; which is kinda Mr. Buffet's point. The man on the street forfeited his rights by allowing Big Brother - your Dad? - to inflate his wealth to nothing. Get it, Magoo? Or is that Son of Uncle Sham?

Wed, 05/26/2010 - 18:51 | 375725 dumpster
dumpster's picture

so you have your text book  keynesian theory at your finger tips

reading the stuff whole cloth , as this is an intellectual argument ...

the world is raging , currencys are being bombed world wide


and johhny brovo settting in some cubical waitng for his next class,, sans job sans savings sans even a smallpot to pizz in,, second that thought ,you do have that


not reading the messages in the and central topic on the nature of the articles .. but making things up ,, that really have no intrinsic value .. other than a fog horn of the existing economic mess ,, world wide ,,caused by ,, you quessed it lack of controls on the absurd notions of politicians '

gold has noticed it ,, from 250 where it was pushed by the selling forward of productiion, the very able and determined group of thugs that had Johhny in the palm of their fingers ,,a believer .. and a coming rat fink for their plans. now pushing into 1200 on its way to 1500 .. now what will your story be then come christmas ,,

and how many hats will at the time been destroyed by your mouth and tooth decay , 

Wed, 05/26/2010 - 19:52 | 375839 Rick64
Rick64's picture

I guess that people that don't know a MF thing about trading give better financial advice than Goldman Sachs practices...

You should follow their advice on currency trading, they seem to be doing really well.

Wed, 05/26/2010 - 17:30 | 375550 A Nanny Moose
A Nanny Moose's picture

Surely the PoG would inflate due to screaming demand. Ultimately, I would think an ounce of gold would be worth the same against a basket of goods.

Wed, 05/26/2010 - 19:11 | 375771 DosZap
DosZap's picture

Sir Jesse,

I know you were being humorous on the let's do it.......

But,at what point do you think they allow for any redemptions, at any price over $2500.00oz?.

I don't see it......they likely would offer us the Offical rate, of $42.00, and relieve us of our burdens.

Wed, 05/26/2010 - 14:24 | 374782 greased up deaf guy
greased up deaf guy's picture

looks like the "barbarous relic" has a use after all.

Wed, 05/26/2010 - 16:35 | 375354 Johnny Bravo
Johnny Bravo's picture

Yes, because anybody with half a brain knows that the gold standard isn't compatible with modern economics.

Then again, most on this site believe that we'll be in hyperinflation, although it is not happening at all.  They know nothing about the business cycle OR economics.

It's just "goled bitchez, cause Glenn Beck and chumbawamba said so!  Gold to 50000 baby!"

LOL at goldbugs.

Wed, 05/26/2010 - 16:45 | 375401 faustian bargain
faustian bargain's picture

You mean, 'modern economics' isn't compatible with a gold standard. We all know that. That's what we're talking about.

Wed, 05/26/2010 - 17:00 | 375442 DaveyJones
DaveyJones's picture

no standard is compatible with "modern economics"

kind of like your proof that we will not be in hyperinflation because it has not occured yet

Wed, 05/26/2010 - 17:19 | 375519 nuinut
nuinut's picture

The problem here, Jonny, is that you don't seem to be compatible with reality.

Wed, 05/26/2010 - 17:23 | 375532 nuinut
nuinut's picture


The study of history is a powerful antidote to contemporary arrogance. It is humbling to discover how many of our glib assumptions, which seem to us novel and plausible, have been tested before, not once but many times and in innumerable guises; and discovered to be, at great human cost, wholly false.  --Paul Johnson


Wed, 05/26/2010 - 17:56 | 375615 A Nanny Moose
A Nanny Moose's picture

+1 filing that one away.

Thu, 05/27/2010 - 10:40 | 376788 Zerozen
Zerozen's picture

Oh yeah? And just what exactly is "modern economics" anyway? The f-ed up version of Keynesianism that we're currently seeing? Neoclassicism? The monetarist school? The Austrian school?

The only thing a gold standard (or any other precious metal standard) is incompatible with is an expansion of credit beyond the expansion in supply of the metal. At that point, fiat currency becomes necessary...which always ends in tears..."In a social democracy, all roads lead to inflation".

Wed, 05/26/2010 - 23:24 | 376181 greased up deaf guy
greased up deaf guy's picture

i thought wb once referred to gold as a barbarous relic.  if not, then my bad.  i'm too lazy to research it at the moment.

Wed, 05/26/2010 - 14:23 | 374789 imaginalis
imaginalis's picture

"But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold"

Lenin, Mussolini, Hitler and Roosevelt?

Wed, 05/26/2010 - 14:47 | 374862 PeterSchump
PeterSchump's picture

Birds of a feather.............

Wed, 05/26/2010 - 15:12 | 374956 Paystee Gangsta
Paystee Gangsta's picture

Ha!  You took the words right out of my mouth - glad somebody brought up that fucking commie Roosevelt - big ups imaginalis

Wed, 05/26/2010 - 16:00 | 375189 Gordon_Gekko
Gordon_Gekko's picture

Roosevelt - the dictator par excellence. At least people could tell that the other three were assholes. This one - well, in true American tradition he disguised himself as a wolf in sheep's clothing, as did Obozo and Warren. I think the key to be "successful" (if you call what Warren is "successful") in America (and indeed the world) today is be a HYPOCRITE of the first order.

Fri, 05/28/2010 - 19:32 | 380297 Vendetta
Vendetta's picture

bingo +1000

Wed, 05/26/2010 - 14:25 | 374796 TheGoat
TheGoat's picture

Hi O SILVER......

Wed, 05/26/2010 - 14:25 | 374799 carbonmutant
carbonmutant's picture

"Before 1933 the people themselves had an effective way to demand economy. Before 1933, whenever the people became disturbed over Federal spending, they could go to the banks, redeem their paper currency in gold, and wait for common sense to return to Washington."

Wed, 05/26/2010 - 14:41 | 374844 What_Me_Worry
What_Me_Worry's picture

Sadly, this is the exact reason why the oligarchy had to put an end to it.  Check and balances, be damned!

Wed, 05/26/2010 - 15:03 | 374923 carbonmutant
carbonmutant's picture


Wed, 05/26/2010 - 15:59 | 375173 M.B. Drapier
M.B. Drapier's picture

Well, this is the problem - one of the problems with the argument. Saying that private ownership of gold is an effective defense against tyranny because the Nazis banned it when they came to power is like saying that private ownership of guns is an effective defense against tyranny because the Nazis banned it when they came to power. In fact both of these things are said fairly frequently, which is a bit odd.

Likewise the argument that a gold standard is an effective defense against money-printing because Roosevelt took the US off the gold standard in order to print money. It's unarguable that - /goldsupplius paribus/ - for as long as it's on the gold standard a country can't inflate its currency (credit money is another matter). It does not necessarily follow that putting a country on the gold standard will force it not to inflate its currency by printing in the future.

Wed, 05/26/2010 - 16:14 | 375267 tmosley
tmosley's picture

Widespread private ownership of guns is what allowed a ragtag Continental Army to defeat the world's most powerful enemy, and it is why Hitler never invaded Switzerland (

When you have a gold standard, it becomes obvious that the currency is being debased, and people can simply price things in gold, and refuse to take the inflated paper.  It's easy.

Wed, 05/26/2010 - 16:37 | 375364 Johnny Bravo
Johnny Bravo's picture

That had nothing to do with the invasion of Switzerland.

(now I'm going to reply like you do)
God, do you have a brain tumor behind your ears, or are you just fucking retarded?

Wed, 05/26/2010 - 17:23 | 375530 tmosley
tmosley's picture

HAHAHAHAHA!  You just refute by assertion and expect to be taken seriously!?

I am seriously laughing out loud at you right now.  What a maroon!

Wed, 05/26/2010 - 19:53 | 375843 M.B. Drapier
M.B. Drapier's picture

Widespread private ownership of guns is what allowed a ragtag Continental Army to defeat the world's most powerful enemy, and it is why Hitler never invaded Switzerland

There were other important causes of both outcomes (Louis XVI, mountains, appeasement, ...). But these are indeed cases where widespread (not necessarily private in the Swiss case) gun-holding helped to achieve something politically, as opposed to a case where it completely failed to do so. Likewise, I have no doubt that there are times and places where a gold standard helped to prevent or contain inflation of the currency. But

  1. the Roosevelt example proves that starting out on the gold standard will not necessarily prevent inflation, especially when there's strong and general deflation generating enormous political pressure for monetary easing, which is what we are likely about to experience
  2. as such, the Roosevelt example is a really strange argument in favour of the gold standard

When you have a gold standard, it becomes obvious that the currency is being debased, and people can simply price things in gold, and refuse to take the inflated paper. It's easy.

Surely it's not nearly that easy. For one thing, Montagu Norman managed to hide the true amount of gold backing sterling for years. In fact he was concealing rampant deflation rather than inflation, but he could probably have done the reverse. Or look at the sovereigns who managed to gradually debase their specie currencies more or less unconcealably over long periods without any definitive run to the exits, at least in the early stages. (Heck, it seems there's good evidence that specie currency has been a gold-debasement wheeze since Day One in c.600 BC.)

Wed, 05/26/2010 - 15:03 | 374922 economicmorphine
economicmorphine's picture

You can still do this, just not at a bank.  

Wed, 05/26/2010 - 14:26 | 374801 Turd Ferguson
Turd Ferguson's picture

Mandy looks so f-ing HOT today I'm about to pee my pants.

Wed, 05/26/2010 - 16:08 | 375242 RockyRacoon
RockyRacoon's picture

She's got that bleached-blonde slutty look that guys dig.  Count me in.

Wed, 05/26/2010 - 14:27 | 374805 thesapein
thesapein's picture

Imagine that.

Liberty being linked to honest accounting principles.

It's not really a story about gold and freedom in as much as it's about honesty and freedom. The misplaced focus on gold makes sense for those who are new to this idea.

Wed, 05/26/2010 - 14:40 | 374840 faustian bargain
faustian bargain's picture

All of civilization is about honesty and freedom. And yet we still need laws. "Oh we could have a sustainable paper currency if only people were honest and freedom-loving." Also, rainbow skittles would shoot out of my ass and I would never go hungry.

The focus on gold is not misplaced. Gold/precious metals/some kind of sound solid real currency/ is the proper focus because it keeps a government (which by its nature does not tend to be honest nor freedom-loving) in check.

Wed, 05/26/2010 - 15:32 | 375032 Johnny Bravo
Johnny Bravo's picture

The dollar is already backed by resources, mostly oil.

However, the need to have dollars available for other assets and labor far eclipses the ability of gold to fill that need.

This is why you cannot use a finite resource to back potentially infinite production.

Wed, 05/26/2010 - 16:57 | 375443 faustian bargain
faustian bargain's picture

What is why? Finite vs (potentially) infinite?

First of all, it's never infinite. It may be constantly expanding (or contracting), but it's always a finite amount.

Second, who says the purchasing power of an ounce of gold is always going to be constant? Sure, it may seem impractical to have an ounce be worth a house, but that's a technical problem, not an existential one.

I'd much rather have the so-called 'inflation' or 'deflation' rates be determined by the production of the world, than by a few people sitting around a big mahogany table.

Wed, 05/26/2010 - 17:27 | 375543 nuinut
nuinut's picture

The dollar is backed by fraud, Jonny, you're just naive or stupid.

Throw a dart.

Wed, 05/26/2010 - 18:24 | 375674 merehuman
merehuman's picture


Wed, 05/26/2010 - 21:29 | 375762 Rusty Shorts
Fri, 05/28/2010 - 19:38 | 380303 Vendetta
Vendetta's picture

backed by oil under some other country's dirt.  So we kill a million folks in Iraq who did nothing to us so we can take the oil and back up our dollar.  Sweet!  I love the smell of blood drenched dollars printed out of thin air in the morning Johnny.

Wed, 05/26/2010 - 14:28 | 374806 carbonmutant
carbonmutant's picture

Raids on Treasury

"Today Congress is constantly besieged by minority groups seeking benefits from the public treasury. Often these groups. control enough votes in many Congressional districts to change the outcome of elections. And so Congressmen find it difficult to persuade themselves not to give in to pressure groups. With no bad immediate consequence it becomes expedient to accede to a spending demand. The Treasury is seemingly inexhaustible. Besides the unorganized taxpayers back home may not notice this particular expenditure -- and so it goes."

Wed, 05/26/2010 - 14:28 | 374809 Goods
Goods's picture

I doubt the "Oracle" would have gotten this filthy (paper) rich with a gold standard.

Wed, 05/26/2010 - 15:33 | 375040 Johnny Bravo
Johnny Bravo's picture

If you think he is only paper rich, tell that to his chauffeur and the pilot of his private jet.

Do you have enough gold to get those things?

His paper does the trick somehow...

Wed, 05/26/2010 - 16:19 | 375290 tmosley
tmosley's picture

The barefoot bandit stole a jet as well, that doesn't mean that he's rich.  It just makes him a looter.  WB is no different.  He just happens to be respected for his looting, because he does it in such a way that it is hard to see that he is stealing.

Seriously, you might want to get a CAT scan.  Your logic has gotten so sloppy that it can only be explained by pressure on that part of your brain.  That or you are merely a troll, and will continue to spout nonsense no matter what evidence is presented.

Gold BAD.  Paper GOOD.  Me like paper.  It feel good when me jam up me bum.

Wed, 05/26/2010 - 16:30 | 375338 Johnny Bravo
Johnny Bravo's picture

Really, you're saying that WB isn't rich and MY logic is bad?


The people here are truly fucking retarded, I guess.

Wed, 05/26/2010 - 16:59 | 375454 faustian bargain
faustian bargain's picture

Maybe you should start hanging out with smarter people.

Wed, 05/26/2010 - 17:26 | 375540 tmosley
tmosley's picture

I didn't say he wasn't rich.  I said he got rich through theft, rather than by contributing something useful to the economy.

Mafia dons are rich too.

Thu, 05/27/2010 - 03:38 | 376351 Hephasteus
Hephasteus's picture

That's the only way to get rich. Nobody can contribute much more than any other person. The only way to get rich is to aquire other people's resources. It's the very definitation of rich.

You can't get smart thinking either. You have to aquire other people's thoughts.

Wed, 05/26/2010 - 14:30 | 374820 chumbawamba
chumbawamba's picture

Gold is Freedom.

Gold does not require a backer.  Gold is backing.

Gold does not require a counter-party.

Gold is immutable.

Gold does not require a password to access.

If I have gold in my possession, I am free.  I can carry my entire personal fortune in a sack.  The government cannot control me through my money, because it and its regulations do not stand between me and my gold.  They can come after my bank accounts, they can lien my house, but as long as I can run and hide, they can never take my gold.

I am Chumbawamba.

Wed, 05/26/2010 - 14:57 | 374898 DoChenRollingBearing
DoChenRollingBearing's picture

I hope you have a heavy sack...

Don't forget to bring along your sidearm if they come for your house.

He is Chumbawamba.  And smart people ought to listen.

Wed, 05/26/2010 - 15:34 | 375048 Johnny Bravo
Johnny Bravo's picture

I have a really heavy sack, actually.  LOL

Wed, 05/26/2010 - 17:50 | 375606 tmosley
tmosley's picture

It's comments like this that make me think you have a tumor.  You didn't start acting like this until recently (or perhaps I didn't notice it).

Anyways, if your sack is heavy, it's probably because you've got VD.  Perhaps it's not a brain tumor that causes your foolish behavior, but rather undiagnosed syphilis?  Any parts of your face been falling off lately, MB?

Wed, 05/26/2010 - 23:13 | 376165 akak
akak's picture

"I have a really heavy sack, actually."

Yeah, I hear that compulsive teabagging will do that.

Wed, 05/26/2010 - 15:14 | 374963 Paystee Gangsta
Paystee Gangsta's picture

okay dude, you're Chumbawumba - we get it...

Wed, 05/26/2010 - 15:22 | 374982 dumpster
dumpster's picture

so  paystee you got it ,, lol but have you really bought gold ///

in your possession.. enough to carry you over for a time if needed

Wed, 05/26/2010 - 15:35 | 375052 Johnny Bravo
Johnny Bravo's picture

I don't see why he/she would overpay for gold in order to prepare for something that isn't going to happen.

Wed, 05/26/2010 - 14:32 | 374827 omi
omi's picture

Tyrany is pretty easily enforced on the gold standard, so be careful what you wish for. The problem is not what backs the money - it's irellevant actually. If I want to do commerce with a group of people that accept currency X, then it has value to me beacuse I can convert my goods into currency X and buy what I want. The fact that either nothing or gold or silver or mortgages (I also don't get idiots that complain that "... money is not backed by anything, FED can get away with buying mortgages" in the same sentence) is backin the currency doesn't make one iota of a difference to me as someone who wants to facilitate exchange.


What matters is how much money is borrowed. Why can't people see what a huge distraction popular meme "we must have our currency backed by gold" really is. But no one is pressing for gov''t not to borrow money and the people that keep borrowing money are still in the office and are not likely to get voted out.

Wed, 05/26/2010 - 14:36 | 374834 faustian bargain
faustian bargain's picture

Would like to see a proof of your first sentance.

Would also like to see how much money the government could actually borrow if we're on a precious metal standard. Fiat paper is ideal because there is no limit.

Wed, 05/26/2010 - 14:58 | 374901 chumbawamba
chumbawamba's picture

Exactly.  The real limitation on the physical commodity is what keeps government spending in check.  That's the key.

Make it coal or eggs or grapefruits or whatever, but it must be something that can't just be produced on a whim and spent like it was real.

The reason it is gold and not coal or eggs or grapefruits or whatever is because gold (and silver) has all the fundamental properties of money.  Nothing else does.

I am Chumbawamba.

Wed, 05/26/2010 - 15:20 | 374978 Paystee Gangsta
Paystee Gangsta's picture

agreed - I'd like to throw one more into the hat, tho - the problem with most other commodities as far as backing currency, is their relative ease of production - i.e. in colonial times, we actually used tobacco as money, but since you could literally just grow it, it lost it's value most riki tik - however, with Gold, they can't increase physical supply very quickly , so actual monetary increase is limited to the degree to which we can actually dig the stuff out of the ground, refine it, and get it into circulation

Thu, 05/27/2010 - 00:27 | 376259 DaveyJones
DaveyJones's picture

Like that old twillight zone Where they steal gold and take it into the future

Fri, 05/28/2010 - 19:44 | 380314 Vendetta
Vendetta's picture

don't forget Nixon took us totally fiat to print up money for that lovely war vietnam that did our country so much good and was so good to our soldiers that went there .... oh wait.

Wed, 05/26/2010 - 15:00 | 374912 GoldBricker
GoldBricker's picture

Yo faust,

Napoleon Bonaparte was on a gold standard, but was a dictator who decimated a generation of young frenchmen. Ditto for the various autocrati monarchs of the age (Louis 14-16 in France, tsars of Russia, etc.)

Regarding borrowing, governments were able to borrow, but they had to find lenders with gold. They had no CB to create money and lend it to them.

Wed, 05/26/2010 - 15:06 | 374931 faustian bargain
faustian bargain's picture

That doesn't really prove how a gold standard makes tyranny easier.

And I stand by the notion that a hard currency limits debt expansion.

Wed, 05/26/2010 - 15:14 | 374951 Mako
Mako's picture

"limits debt expansion."

Without debt expansion, credit system instantly collapses... then liquidation of the unfunded liabilities

"It's not the fall that kills you, it's the landing"

"Tyler Durden: Hey, you created me. I didn't create some loser alter-ego to make myself feel better. Take some responsibility"

Yep, billions of humans caused this and don't want to take responsibility, thinking there is an escape route.  Hahahaha.

Wed, 05/26/2010 - 15:28 | 375013 faustian bargain
faustian bargain's picture

You say that like it's a bad thing.

Wed, 05/26/2010 - 15:55 | 375119 Mako
Mako's picture

Oh it's not unless you are an unfunded liability.   Last time 100+ million unfunded got liquidated, this time it will be billions.  Hilter was the most efficient liquidator in world history. 

Wed, 05/26/2010 - 15:37 | 375066 Johnny Bravo
Johnny Bravo's picture

The proof is that there has been tyranny since the beginning of time against owners of gold.

Even the Chinese can own gold.  Also, their government can execute them at will with little effort.

Wed, 05/26/2010 - 17:01 | 375461 faustian bargain
faustian bargain's picture

That's no proof. That only shows that tyranny and gold can coexist.

Besides, China is not on a gold standard.

Fri, 05/28/2010 - 19:49 | 380326 Vendetta
Vendetta's picture

China is not YET on a gold standard.  However, the chinese being allowed and buying as much as they can possibly afford is the last method to transfer purchasing power from the west to the east.  The globalists already moved huge swathes of manufacturing (wealth production).

Wed, 05/26/2010 - 17:33 | 375555 nuinut
nuinut's picture

Jonny, you seem to have run out of straws to grasp at.

Maybe you could change your login name again?

Or go back to your 6am Pina Coladas in the gutter in Vegas.

Wed, 05/26/2010 - 23:16 | 376170 akak
akak's picture

I think Johnny's had one too many pina coladas already:

Wed, 05/26/2010 - 15:08 | 374941 ThreeTrees
ThreeTrees's picture

You're right, what's backing currency is irrelevant... As long as government has the power to force trade to be conducted with its fiat money as the medium of intermediate exchange.

It's not an issue of what has "value".  It's an issue of whether or not it can be printed on the whim of self-interested individuals.

Wed, 05/26/2010 - 15:24 | 374990 dumpster
dumpster's picture

 currency is irrelevant...


how about three sacks of marshmallows

Wed, 05/26/2010 - 15:38 | 375069 Johnny Bravo
Johnny Bravo's picture

How about a sack of deez?

Wed, 05/26/2010 - 18:37 | 375693 Conrad Murray
Conrad Murray's picture

"But no one is pressing for gov''t not to borrow money and the people that keep borrowing money are still in the office and are not likely to get voted out."

You gotta get out more.  Or, at the very least, watch the news once in a while.  The TEA Party people are everywhere doing just that.

Wed, 05/26/2010 - 14:32 | 374829 Goods
Goods's picture

Since we are in the mood for past quotes:

May 2nd 1934 Vancouver Sun

Abraham Lincoln, the martyred Emancipator of the slaves, was assassinated through machinations of a group representative of the internationalist bankers who feared the United States president’s national credit ambitions-and the plot was hatched in Toronto and Montreal... Lincoln was the most powerful reformer of his day. Had he lived he would have established a national currency system in the United States. There was only one group in the world at that time who could finance anything they cared to attempt without regard to cost, and who had reason to desire the death of Lincoln. They were the men opposed to his national currency program, and who had fought him throughout the whole Civil War on his policy of greenback currency. – Gerry Mcgeer


Whosoever controls the volume of money in any country is absolute master of all industry and commerce… And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate. – James Garfield


They [the central banks] know in advance when to create panics to their advantage. They also know when to stop panics. Inflation and deflation work equally well for them when they control finance.” Rep Charles Linbergh

Wed, 05/26/2010 - 15:10 | 374950 GoldBricker
GoldBricker's picture

In this vein, Sol Palha recently recommended a century-old book,  The Coming Battle by Lorraine Walter, which documents this very thesis.

Wed, 05/26/2010 - 14:34 | 374832 faustian bargain
faustian bargain's picture

Warren, Warren, Warren. You corrupt bastard. (Because obviously that's not your real father.)

Wed, 05/26/2010 - 23:14 | 376167 Temporalist
Temporalist's picture

Haha classic.

Wed, 05/26/2010 - 14:55 | 374836 Cognitive Dissonance
Cognitive Dissonance's picture

"Human Freedom Rests On Gold Redeemable Money"

With a title like that, this will never happen. They need to come up with an headline like this that is sure to work. It goads the elite, making them think they've pulled one over on the mere humans.

"Continued Human Enslavement Assured If Silly Humans Allowed To Play With Shiny Objects Such As Gold"

Reverse psychology baby.

Wed, 05/26/2010 - 14:56 | 374849 wawawiwaa
wawawiwaa's picture

Howard Buffet thought the US was over economically about 60 years ago; precisely when his son became the 3rd richest non inheritor of wealth in the world!! come on guys.... Don't let the gold ideology fool you; as if the world did not get itself into some nice little messes while being on the gold standard!. All you have to do is read a little history to know that the US economy cratered badly even while on the gold standard in the late 1800s.

The comparative advantages are absolutely massive vs the next guy (China???) 

12 carrier groups vs none!!! for starters. 

Those comparative advantages are lost in world wars that you lose; it took England 2 to lose the empire. 

I would be more concerned about China dragging the US into korea again and making it really expensive rather than the gold ideology.  



Wed, 05/26/2010 - 14:59 | 374907 Internet Tough Guy
Internet Tough Guy's picture

Your aircraft carriers were paid for by the exorbitant privilege afforded by printing the world reserve currency. That privilege is now over; how will you afford to operate your big, expensive, non-productive navy now? Perhaps you can tie them to the dock and rent the rooms to impoverished Americans; at least then they would get some benefit for the outrageous cost.

As for the hyper-wealthy, they were only able to gain at the loss of others. Fiat money is a wealth transfer process from the many to the few. If you find that exciting, you should live in Mexico, Russia, or Nigeria. They have reached the pinnacle of kleptocratic schemes.

Wed, 05/26/2010 - 16:03 | 375213 Reflexivity
Reflexivity's picture

... big, expensive, non-productive navy ...

Isn't the point of a big, expensive navy that it deters threats passively and therefore should be non-productive???

You know, victory through intimidation not through force. 

It's a high price, but effective (so far).


Wed, 05/26/2010 - 16:04 | 375223 Double down
Double down's picture

I know: Piracy

Fri, 05/28/2010 - 20:10 | 380372 Vendetta
Vendetta's picture

You are correct that the US printing of the world reserve currency is an exorbitant privilege that has been sorely abused.  And you are correct that fiat money is a wealth transfer process.  However few here find it exciting that it has been such an abused privilege.

Many Americans are disturbed by the massive costs of building such a massive war machine as it has been paid for at great personal cost of infrastructure development and a better standard of living.  However, if you haven't noticed the powerz-that-be just took the last easy-to-extract and largest oil reserves left in the world, Iraq, killing many in the process.

The war machines, carriers and what not are instruments of massive wealth destruction or total annihilation in economic terms aside from the massive human suffering that comes with its use.  When they are "productive", they are destroying wealth in massive quantities.... if they become 'productive' someone, some economy, somewhere is getting destroyed...perhaps they should stay unproductive...running quietly on their 20 year renewable supply of nuke power...don't you think?



Wed, 05/26/2010 - 15:12 | 374934 Dr. Acula
Dr. Acula's picture

"All you have to do is read a little history to know that the US economy cratered badly even while on the gold standard in the late 1800s."

Huh? We had gold money back then? I though our money was always based on counterfeiting and fractional reserve fraud.


"To fight back, Biddle [president of the Second Bank of the United States] decided to shrink the money supply and cause a recession in 1834 in order to force Jackson to accept a re-charter bill. The Bank demanded that old loans be repaid. It made no new loans."

"The comparative advantages are absolutely massive vs the next guy (China???) "

Commiting fraud is an advantage? Having wild boom and bust cycles from manipulating the money supply is an advantage? Is that really the extent of your wisdom?

Wed, 05/26/2010 - 15:46 | 375105 wawawiwaa
wawawiwaa's picture

Double reply. 

My aircraft carriers? they are not mine !! The aircraft carriers were paid for by the British when the US took over their empire post WWII and the world currency became the dollar rather than sterling or do you think the US has bases in 157 (approx) places / countries outside its borders for shits and giggles? I don't disagree they are getting a little expensive to maintain( being facetious absurdly expensive), so if you cut out offense from the defense budget the US would not have a big budget deficit assuming TSA DOE CIA Covert etc budgets. 

If you want to discuss US vs Chinese fraud I am all for it. If people are enamored by a country whose GDP per capita is 2 grand and is one bad harvest away from starvation of about 100 mln people then let it be. The entire place is commanded by 10 guys at the top of the communist party. They don't produce a single thing with proprietary intellectual capital (generalization). The place would not exist economically if the US consumer had not been so generous by opening up its markets to them.  If you think China does not manipulate the money supply you have lost your senses. First of all take a look at graph of the yuan since the NIXON visit to china in 72. All they DO is manipulate the money supply. First by devaluing their currency by about 66 pct and then by pegging it to the dollar and a more recent example is their little stimulus gambit of 500 bn dollars which roughly represented 11 pct of GDP so we can discuss manipulating as an advantage till we are blue in the face.    


Wed, 05/26/2010 - 17:38 | 375568 nuinut
nuinut's picture

And the US consumer would not exist but for the 'generosity' of the rest of the world.

Wed, 05/26/2010 - 14:44 | 374852 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Setting up for a flash crash!!!

Wed, 05/26/2010 - 14:48 | 374866 faustian bargain
faustian bargain's picture

Everyone shoud put in some 1-cent orders for Accenture and P&G... :-D

Wed, 05/26/2010 - 14:49 | 374869 Mr Lennon Hendrix
Mr Lennon Hendrix's picture


Wed, 05/26/2010 - 16:06 | 375235 Common_Cents22
Common_Cents22's picture

Didn't they cancel trades over a 60% change?  Put in your orders at 55% below current prices ;)    55% off sales aren't as good as 99% off sales but hey, not bad!

Wed, 05/26/2010 - 16:29 | 375336 omi
omi's picture

I think only 80K shares traded at 0.01, it shot right back up afterwards. You had 0 chance of getting that filled 'cause order queues are filled up just so that you won't get in ;p



Wed, 05/26/2010 - 15:02 | 374918 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

PPT stick save baby!  Man this is such a crazy assed market!

Wed, 05/26/2010 - 15:27 | 375008 Rick64
Rick64's picture

Take it down hard boys, I'm still short.

Wed, 05/26/2010 - 15:55 | 375156 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Shakedown, go ahead and give it to me

Shakedown, honey take me through the night

Shakedown, now I'm standing here can't you see

Shakedown, Its all right!

Its alright!

Wed, 05/26/2010 - 15:38 | 375067 faustian bargain
faustian bargain's picture

oof! ouch, they went down fast.

Wed, 05/26/2010 - 15:43 | 375093 faustian bargain
Wed, 05/26/2010 - 15:48 | 375113 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think Spock went for his gold in the drawers there!

Wed, 05/26/2010 - 14:55 | 374882 Mako
Mako's picture

You can exchange for gold right now. 

Sorry folks, as long as you continue to lend and borrow at a rate of compounding interest you will continue to see collapses. 

You ran out of gold to support the system long ago.

Humans will find anything to attach compounding interest to, eventually you run out... collapse... liquidation. 

Wed, 05/26/2010 - 14:57 | 374894 Cognitive Dissonance
Cognitive Dissonance's picture

You're some kind of "thinking" computer, right? Because you don't include yourself when you talk about the human race.

Wed, 05/26/2010 - 14:58 | 374904 Mako
Mako's picture

No, I am not a machine, but I did stay at a Holiday Inn last night.

No, I don't include me in with the rest of the people that believe the lie and promote the lie.

Wed, 05/26/2010 - 15:17 | 374966 Hulk
Hulk's picture

He's the Mako5 multitronic unit, built by Dr Daystrom...hope those engrams hold up.

Wed, 05/26/2010 - 15:28 | 375015 Cognitive Dissonance
Cognitive Dissonance's picture


I thought so. It sounds like there are problems with the programming.

Wed, 05/26/2010 - 15:55 | 375163 Calculated_Risk
Calculated_Risk's picture

Yeah, it's stuck in a fucking loop!!!



   echo('humans are idiots');  

   echo('compounding interest');


   echo(' wipe out of mass amounts of humans.');

   echo('all your bases belong to me!');



Wed, 05/26/2010 - 15:09 | 374945 faustian bargain
faustian bargain's picture

Not that you think it matters, but being able to buy gold with FRNs is not the same as being on a gold standard.

Do NOT follow this link or you will be banned from the site!