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Jim Grant Joins The Chorus Demanding A Return To The Gold Standard
We salute Jim Grant for joining the ever greater chorus demanding a return to the gold standard: "Let the economists gasp: The classical gold standard, the one that was in place from 1880 to 1914, is what the world needs now. In its utility, economy and elegance, there has never been a monetary system like it." And no, as Jim Rickards among others claim, a return to the gold standard would not be deflationary...if gold were to be converted to the USD at between $5,000 and $35,000/oz.
How to Make the Dollar Sound Again, by James Grant
Originally appearing in the New York Times
BY disclosing a plan to conjure $600 billion to support the sagging economy,
the Federal Reserve affirmed the interesting fact that dollars can be
conjured. In the digital age, you don’t even need a printing press.
This was on Nov. 3. A general uproar ensued, with the dollar exchange
rate weakening and the price of gold surging. And when, last Monday, the
president of the World Bank suggested, almost diffidently, that there might be a place for gold in today’s international monetary arrangements, you could hear a pin drop.
Let the economists gasp: The classical gold standard, the one that was
in place from 1880 to 1914, is what the world needs now. In its utility,
economy and elegance, there has never been a monetary system like it.
It was simplicity itself. National currencies were backed by gold. If
you didn’t like the currency you could exchange it for shiny coins
(money was “sound” if it rang when dropped on a counter). Borders were
open and money was footloose. It went where it was treated well. In
gold-standard countries, government budgets were mainly balanced.
Central banks had the single public function of exchanging gold for
paper or paper for gold. The public decided which it wanted.
“You can’t go back,” today’s central bankers are wont to protest, before
adding, “And you shouldn’t, anyway.” They seem to forget that we are
forever going back (and forth, too), because nothing about money is
really new. “Quantitative easing,” a k a money-printing, is as old as
the hills. Draftsmen of the United States Constitution,
well recalling the overproduction of the Continental paper dollar,
defined money as “coin.” “To coin money” and “regulate the value
thereof” was a Congressional power they joined in the same
constitutional phrase with that of fixing “the standard of weights and
measures.” For most of the next 200 years, the dollar was, in fact,
defined as a weight of metal. The pure paper era did not begin until
1971.
The Federal Reserve was created in 1913 — by coincidence, the final full
year of the original gold standard. (Less functional variants followed
in the 1920s and ’40s; no longer could just anybody demand gold for
paper, or paper for gold.) At the outset, the Fed was a gold standard
central bank. It could not have conjured money even if it had wanted to,
as the value of the dollar was fixed under law as one 20.67th of an
ounce of gold.
Neither was the Fed concerned with managing the national economy. Fast
forward 65 years or so, to the late 1970s, and the Fed would have been
unrecognizable to the men who voted it into existence. It was now held
responsible for ensuring full employment and stable prices alike.
Today, the Fed’s hundreds of Ph.D.’s conduct research at the frontiers of economic science. “The Two-Period Rational Inattention Model: Accelerations and Analyses” is the title of one of the treatises the monetary scholars have recently produced. “Continuous Time Extraction of a Nonstationary Signal with Illustrations in Continuous Low-pass and Band-pass Filtering”
is another. You can’t blame the learned authors for preferring the life
they lead to the careers they would have under a true-blue gold
standard. Rather than writing monographs for each other, they would be
standing behind a counter exchanging paper for gold and vice versa.
If only they gave it some thought, though, the economists — nothing if
not smart — would fairly jump at the chance for counter duty. For a
convertible currency is a sophisticated, self-contained information
system. By choosing to hold it, or instead the gold that stands behind
it, the people tell the central bank if it has issued too much money or
too little. It’s democracy in money, rather than mandarin rule.
Today, it’s the mandarins at the Federal Reserve who decide what
interest rate to impose, and what volume of currency to conjure.
The Bank of England once had an unhappy experience with this method of
operation. To fight the Napoleonic wars of the early 19th century,
Britain traded in its gold pound for a scrip, and the bank had to decide
unilaterally how many pounds to print. Lacking the information encased
in the gold standard, it printed too many. A great inflation bubbled.
Later, a parliamentary inquest
determined that no institution should again be entrusted with such
powers as the suspension of gold convertibility had dumped in the lap of
those bank directors. They had meant well enough, the parliamentarians
concluded, but even the most minute knowledge of the British economy,
“combined with the profound science in all the principles of money and
circulation,” would not enable anyone to circulate the exact amount of
money needed for “the wants of trade.”
The same is true now at the Fed. The chairman, Ben Bernanke, and his
minions have taken it upon themselves to decide that a lot more money
should circulate. According to the Consumer Price Index, which is
showing year-over-year gains of less than 1.5 percent, prices are
essentially stable.
...
To reinstitute a modern gold standard today would take time, too. The
United States would first have to call an international monetary
conference. A chastened Ben Bernanke would have to announce that, in
fact, he cannot see into the future and needs the information that the
convertibility feature of a gold dollar would impart.
That humbling chore completed, the delegates could get down to the
technical work of proposing a rate of exchange between gold and the
dollar (probably it would be even higher than the current price of gold,
the better to encourage new exploration and production).
Other countries, thunderstruck, would then have to follow suit. The
main thing, Mr. Bernanke would emphasize, would be to create a monetary
system that synchronizes national economies rather than driving them
apart.
If the classical gold standard in its every Edwardian feature could not,
after all, be teleported into the 21st century, there would be plenty
of scope for adaptation and, perhaps, improvement. Let the author of
“The Two-Period Rational Inattention Model: Accelerations and Analyses”
have a crack at it.
(read the full Op-Ed here)
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A "gold standard" does not prohibit contracts.
Therefore, any two parties who wish to voluntarily sign a contract equivalent to those "real bills" is perfectly welcome too.
Just don't make these part of any formal system, else the predators-that-be will re-define the terms to make everyone subject to their will and scams.
By the way, you are utterly wrong to claim the world economy could not exist without "real bills". That's just another fraud floated by predators to get their claws into the productive endeavors of others.
I think we should use a star based system. In the sky. Not celebrities.
No one could add more stars without others knowing. No paper stars allowed.
Of course telescopes would be made illegal.
Actually, I find "Continuous Time Extraction if a Nonstationary Signal with llustrations in Continuous Low-pass and Band-pass Filtering" to be extremely lucid and relevant:
http://www.gwu.edu/~forcpgm/ContLagFilter_4-1-10.pdf
Here are my credentials:
http://www.youtube.com/watch?v=VsyS0oHLNFA
"1 light year=6 trillion miles.
We're talking about dollars in such numbers that if they referred to distance--a real physical thing--they would have to be expressed in fucking light years".
Ben Lightyear...known colloquially as "Buzz".
First time I saw it (no Phd) in Rogoff & Reinhart "This Time is Different" was the use of E to designate the number of zeros follwing...so 6 Trillion is 6xE12, the National Debt Clock is (was) 13.7xE12...so far Hungary wins with a note issued at 1xE20 for their 100 Quintillon Pengo...but, Zimbabwe came close and the fat lady has not sung.
@ Stevm30
"Until we remove any government props to banks who overprint paper and get caught by "runs" - we will not solve the problem."
Allow me to edit: "Until we remove every government, we will not solve the problem."
_________
The state can kiss my ass.
Fortunately for you, every government is a pure fiction.
Unfortunately for all of us, plenty of thugs are willing to harm us if we do not comply with their demands (in the name of these utterly fictional fraudulant non-existent nothings).
But you are correct. The world can no longer function effectively as long as human believe these insane fictions are real - and take actions based upon the assumption they are real.
End fiat.
End fake.
End fraud.
End fiction.
End fantasy.
In other words: End the fed. End all governments. End all corporations. End all fiat, fake, fraud, fiction, fantasy of all kinds.
In other words, the solution is simply --- get real.
Benjamin Graham would probably advocate for this type of monetary system:
http://www.amazon.com/Storage-Stability-Ever-Normal-Benjamin-Classics/dp/0070247749/ref=sr_1_22?ie=UTF8&qid=1289781284&sr=8-22
Gold standard in todays overleveraged, overconnected system = martial law and end of mkts. No other way. over 50% of global economic output is international, and our supply chains are uberdependent on components from abroad. Not to mention energy inputs will skyrocket along with gold. Not gonna happen. And if we ever go to natural resource based currencies it will be energy related not gold - gold isnt water, food or heat. Gold will still be worth alot, but isn't the end all social amplitude status protector that people think it is (the ones I read here that is)
Please explain how a 'natural resource' -based currency would work.
It wouldn't be easy (but then again, look where 'easy' got us).
First we'd have to make it through the leverage bottleneck, where OECD nations all told are roughly 500% leveraged to GDP -quite simply these claims will not be paid back. For most people this won't be a big deal - their mortgage is gone and their IRA is gone - so what is really lost is future expectations. For the very wealthy, well...
If social stability and basic needs can be maintained during this transition, nothing in that 3-6 month period will really have changed in natural resource terms - only in peoples perceptions of what they own. From then/during this time on, policymakers will need to use biophysical approaches to measure our natural resources in natural resource (as opposed to dollar/euro/yen) terms. How much water, soil, natural gas, diesel does it take to get a barrel of oil, and over what time frame do the energy inputs/energy outputs play out etc. Then you link the NEW money (because the old one will have gone poof) to some index of how much energy one can crank out every year based on some sustainable (or semi-strong sustainable) natural resource flows.
I think this is highly unlikely to happen, but if folks start thinking along these lines (energy is what we have to spend - dollars are just who controls the energy for now), then other solutions/mitigations start to look a bit more feasible/reasonable.
We're headed for a world with less, and it's due to energy decline, not the Jews or Muslims or Republicans or enviros or Chinese or...
it means BS...its just smt else but no gold - the key word is ANYTHING but gold..sorry pal but if goldman already holds more of the gold in the world you draw your own conclusions where this game is going...just follow paper trading boo-yaa...
the world is more than likely going somewhere where gold isn't going to help much.
i will put my money on cramer and gartman...good luck to you!
Seems like you're the one who will need the luck...
Please read my other posts (in this thread and elsewhere) about the nature of the honest gold standard. Once you understand its nature, you see that all your worries are utterly unjustified.
In such a gold standard system, gold becomes a standard of exchange, meaning the exchange rate for every good is specified versus "grams of gold".
This does NOT mean that everyone (or anyone) must save their wealth in the form of gold. You and everyone else can save your wealth in any form you wish. Maybe you prefer silver. Maybe your neighbor prefers platinum. Nobody knows and nobody much cares either. To be sure, many people would save their wealth in the form of physical gold coins and bars, because they could usually be exchanged directly and immediately for any other good. But if you hold your wealth in silver, you only need exchange your silver for gold before you exchange the gold for <whatever goods you want>. Or you may find others willing to accept your silver directly, because they can easily see what is the value of silver (in terms of grams of gold).
None of the problems that folks suppose exist with a gold standard actually exist. They are missing the very nature of a gold standard, which must include:
#1: Nobody is forced [or prevented from] saving their wealth in the form of gold.
#2: Nobody is forced [or prevented from] exchanging any [of their] goods directly for other goods. Gold is not required, and is only referenced to compute the exchange rate for arbitrary goods.
#3: In most ways it does not matter what real, physical, valuable good is adopted as the standard. However, any real, physical good that is not durable, or is perishable, or is not easy to store, or is too large or bulky to store large quantities of values --- makes a poor standard. Why? Because one of the attributes of a perfect standard is the ability to both store and exchange wealth in a single form. And history (and careful thought) shows... that clearly nothing has more of the valuable attributes required of this kind of standard than gold.
Being "forced" is the key. So long as the government requires taxes to be paid in the specie they issue, there will be problems. Allowing competing currencies will be the first step in setting ANY form of money free.
We need to rid ourselves of fiat governments and their taxes at the same time we rid ourselves of fiat money. That should be obvious too.
I was just doing the easy part first. The other part saved later for dessert.
A day late and a (fiat) dollar short.
Jim Grant is great, but he's also a nice guy. Sometimes nice guys forget not everyone is a nice guy, and they get gobsmacked by the law of unintended consequences.
Consider the distribution of gold on this Earth today, both in terms of national above ground ownership and what is still below the ground. Theoretically the USG has the biggest stash. Germany also has a good stash relative to the size of its economy. Switzerland has more than it needs. Japan is a little short, and has almost nothing in the ground. China has precious little relative to the size of its economy and certainly relative to the size its economy wants to be or must be.
Some countries, odd little ones as well as a few large ones, have a lot still in the ground. Australia and Canada are of the latter type, Angola, South Africa and Burma of the former.
For starters, Burma would be invaded in fact, rather than the figurative invasion it has already experienced, tomorrow by China. Imagine an existing powerful military whose future existence, much less growth, depends on how much gold it can find or seize. Seize it will, especially from those who are gold rich but militarily weak. There would be a rush to invade the Third World lands who sit atop nature's bounty. China might even consider taking on the Aussies. The US would endeavor to make Canada the 51st state.
A return to the gold standard means we must accept a return to colonialism. Like it or not, that is how people will behave. This brief and novel period where a necessary resource was allowed to continue to be controlled by a weak people who did not even know what the resource was for (oil and the Arabs, while the USA was the supreme power) has already just about run its course, as many will claim reared its head in the Iraq invasion. As we pass the peak in oil production this will only worsen.
Add another vital resource to the equation, and military adventurism will only get more widespread. Those who have the current military advantage will act as soon as possible to acquire a gold advantage, while they still can. Maybe that is Darwinism in its purest form, but before we consider a return to a standard where growth itself is a function of the random distribution of an element which in and of itself has no intrinsic value, we should consider---or at least prepare ourselves---for what it will unleash.
Imagine an existing powerful military whose future existence, much less growth, depends on how much gold it can find or seize. Seize it will, especially from those who are gold rich but militarily weak.
How would that military power pay its soldiers if it had no gold? Irredeemable paper notes? "Look, guys, let's go to some shithole in east asia to slaughter some brown people and if we find a mine there of acceptable gold reserves, we'll build a mine and in a decade i swear you'll all get paid."
And what were soldiers promised since time began? To get paid, you have to win, fellas. To the victor goes the spoils. Ever heard that old quote?
Crusades of plunder. I get it. But the initial capital investment has gotten kind of high. It would take a massive army to subdue a population and massive navy to get them there. Not cheap. And I doubt the military suppliers would be too thrilled with the promise of plundered riches either.
Just saying. Getting a gaggle of knights and sustinence farming peasants to march down a hill and ransack the next town over is one thing. An armored brigade is another.
Patriotism and nationalism work pretty well. Or how about "your kids and grandkids won't eat unless we get their gold". Or, "we have the advantage today, but this new gold standard thing is going to take it away from us, so we better act fast". All simplistic, but why bother to change what works? Leaders have always found a way to get young men to die for the leaders' causes.
Patriotism and nationalism. You're correct. Those are very unfortunate violent tendencies. And they could get someone to join the military. But it doesn't keep them fighting. From my experience, sailors like to get paid and if the idea got out there that they were being paid in paper that not even a hooker would accept, it's going to be difficult to get them to do anything. I don't imagine grunts are any different, though I've never commanded soldiers.
In general, I agree. Governments will attempt everything to prevent people from realizing this. But a gold or silver standard were re-instated, this becomes a difficult lie to maintain.
Chindit was talking about China, so I suppose the conversation would go something like this;
"DO AS I SAY!!!"
"Yes master."
The problem with that argument should be obvious. The value of gold and silver in other countries is nowhere near worth the expense of invading and taking those assets.
This is one huge reason the predators-that-be create the notion of fractional reserve banking, which lets them print up 100 or more receipts for every good they hold in their vaults, which gives them the ability to pay their military to do things that are not worthwhile.
And the predators-that-be do not care whether these endeavors are overall worthwhile or not, as long as those same predators-that-be receive the plunders. They care not how much damage they do to others, including their own slaves (called "citizens"). After all, the more they empoverish their slaves, the less able their slaves are to overthrow them.
Thus, the facts you point out are therefore excellent reasons to adopt an honest gold standard.
The collapse of all fiat currencies is also gonna unleash a lot of bad things -- change the system (like yesterday!), or expect death and destruction -- Kali will dine well, it seems!
Perhaps at first glance, it would appear that countries that have lots of gold are somehow big winners when the worldwide system reverts to a gold standard. But a little more thought shows clearly this is not true, except in minor and marginal ways.
First, any human (or country) that produces ANYTHING of value can exchange their products for gold. Thus, in very short order, the most productive people end up with more gold.
Second, mining gold is a very difficult and expensive process. Today, most attempts to explore for gold, develop gold mines, then produce gold --- end in losses! Therefore, net-net, having gold deposits does NOT give anyone a significant advantage, if any advantage at all. Most productive endeavors are far more profitable than gold and silver mining!!!
Thus, slightly deeper thought about "a gold standard" shows that nobody is given a significant advantage by the gold standard, including producers of gold. To be sure, an existing highly profitable gold miner would probably be even more successful after worldwide conversion to a gold standard, but that is such an infintesimal part of the story, it matters not.
If the appropriate price of gold was not set correctly initially, the effort put into mining gold would rise or fall slightly in the short term... but only until the appropriate price naturally balanced.
Always remember, he who is very efficient at producing anything of value is the winner in a gold standard... as it should be in any honest system.
So Chindit, how is this different from oil?
For the super newbies, a trillion dollars is a stack of thousand dollar bills stacked 26 miles high.
It is not different from oil. I am not of the view that the US invaded Iraq because of our great desire to spread democracy, and as oil becomes more scarce, such adventurism will only increase. Toss another limiting factor on a nation's growth (its supply of an otherwise useless metal), and anyone who gained military advantage by means of FIF (faith in fiat) will try to gain a monetary advantage by the oldest method of wealth accumulation since time began: invasion. Gold might be the oldest store of value, but military adventurism is the oldest method of attaining a store of value greater than what one already has.
Along with a barbarous relic comes barbarism.
Wait a second. I'm not clear I understand you.
Is the barbarous relic "gold" or "invasion"?
Issue treasury gold certificates at $1 per mg of gold, $1,000 per g of gold, $31,103 per troy ounce of gold. Issue silver certificates at $50 per g of silver, $1,555 per troy ounce silver. Let the market sort out if you want to carry Federal Reserve notes, treasury certificates or metal coins in your pocket or in your mattress.
Physical gold and silver will find its way to the treasury to be converted into coin of the realm and most people will be content to carry treasury certificates instead of the easily lost/misplaced gold coins of great value. The Federal Reserve note will find its real value, approximately zero in the market as people convert to treasury certificates. Has the benefit of effectively eliminating the Fed printing worthless fiat. The treasury gold and silver certificates are freely converted between certificates and metal and back.
Previous loans, obligations, and notes made with Federal Reserve Notes are paid back with fiat notes. Future loans or obligations are specified in notes or certificates. The loans owed to China are paid back with fiat notes. They can be purchased in the market with gold or silver certificates and will approach their inherent value.
why single out/cheat china?
China is not singled out, all past obligations made in fiat FRNotes (including home mortgages and all other countries) are paid back in federal reserve notes purchased on the market. Future wages are paid in treasury certificates and the banks can readily do an exchange value to fed reserve notes similar to your purchases in Euros or other currencies. The US will operate for a period with two currencies in circulation. If I had to guess, todays value would be approximately $20 in Fed notes equal to $1 in Treasury certificates. One days pay at minimum wages would be roughly equivalent to one troy ounce of silver, $50 silver certificate.
The banks and previous lenders get paid back in the currency they lended out, Federal Reserve notes, they are not cheated. The notes were originally generated out of thin air and to thin air they will return.
The new certificate currency needs controls to be fully backed by metal in the treasury without any fractional reserve trickery.
it makes sense to me - thanks!
Close. But no more "backed by".
As long as you allow "backed by", the predators-that-be totally owns everyone playing their fraudulant games. Even without official fractional reserve banking, the predators always have and always will print more paper receipts for gold than they hold in their vaults.
We must return to a 100% honest "gold standard" system that exists only as gold coins (and bars).
This does not require you to save your wealth in gold.
You are also 100% totally free to save your wealth in silver, platinum, palladium, nickel, copper, lumber, seeds... or absolutely any other real, physical good you wish. The "standard" in "gold standard" only means that every physical good has a known exchange rate between a fixed quantity (and quality) of that good and grams of real physical gold.
Everyone would be free to save wealth in any real, physical form, and everyone would be free to directly exchange any goods [and services] for any other goods [and services] with anyone they wish, with or without reference to their gold standard values (exchange rates).
THIS is the only real gold standard. No compulsion. No requirements. No prohibitions. No fractional reserve whatsoever. 100% voluntary exchange.
This "gold standard" only a standard in the sense of a conventional standard --- like "grams" as a unit of measure of length. The metric standard does not force you to design or buy or sell with metric units. It only offers a standard (widely known) way to measure and compare... period.
OK, but we will have to encapsulate the grams and milligrams of gold and silver into plastic so the micro coins are not lost in your pocket lint. The encapsulated gold and silver then makes it child's play to counterfeit.
I'm sure a solution can be found fairly easily.
One sound but totally laughable solution is to make small denominations look like "paper money". What I mean is, the maker would bond gold leaf of the appropriate thickness and diameter between two pieces of mylar, nylon, teflon or kevlar re-inforced linen. So it would look and act like paper money, but in fact would contain real, physical gold of the appropriate quantity.
Since this would be sorta like "paper money" in form, various kinds of fancy holographic anti-tamper stamps could easily be part of each piece.
What I like the most though is the laughability factor - that the solution to paper money is a type of paper money. That's just too gross to pass up... maybe.
A correction and addition to the above:
One day pay at minimum wages would be roughly equivalent to one gram of silver or a $50 silver certificate. (The pre 1965 dime, containing 0.0715 troy ounces or 2.224 grams of silver, would be worth $111.18.)
Address to the general comments above, not any one individual:
Sure thing. Now let's see Ron Paul introduce THAT bill in Congress. Talk about tin-foil hats! He'd be shouted out of DC. I'm not saying it's a bad idea. We might just as well be talking about a bill mandating honesty in all transactions. It can't be legislated. How about some ideas that can be implemented tomorrow? Let a little committee come out with some reasonable ideas about how to get us out of this mess and see the divisions start to form. Each legislator has his own pet ox (or lobbyist) that will get a good, bloody goring.
Precisely why "Tis death to counterfeit!" Most think this is just a human law when in reality, it's a NATURAL LAW! You cannot perpetually trade REAL value for fake paper money.
And THIS is exactly what human brains have become too stupid and insane to distinguish --- reality from fiction. This is exactly what the predators-that-be have intentionally caused via public education and endless banal stupidities on mainstream media.
Today, probably less than one human per million understands that government, corporations and all organizations are fictions --- even though fundamental law aptly calls all these entities "fictitious entities".
Those who perpetuate this system understand the difference between real and fake, and spend their entire lives convincing insane humans to give them all the real stuff for the fiat, fake, fraud, fiction, fantasy pieces of fractional-reserve-debt paper and computer bits they create.
The only solution is:
--- stop accepting fictions!
--- stop sanctioning fictions!
--- stop thinking in terms of fictions!
--- in other words, in all things --- get real
I agree with a lot of things Jim Grant is saying. But the problem with the gold exchange standard arises with the solution put forward by Grant: the arbitrary assignment of the price or exchange rate of gold (bimetallism's exchange rate between gold and silver). In the final analysis it is this arbitrary assignment that dooms the attempts by government to create one. The price, even if correctly determined at the outset, will invariably be wrong at T+1 period as the relative supplies of gold/silver/oil versus the supplies of everything else changes. The key is to never pretend to know what that exchange rate should be. Let it be and the millions, billions, trillions of daily decisions made by consumers and producers will find a clearing price.
I'd go with the Max Keisar approach on this one in general: don't wait for these assholes to realize this system is broken. Buy one silver coin. Hold it in your hand. Feel it. Examine what a coin really looks like. The realization quickly hits you that this is in fact just a lump of metal, but that you are acquiring it for what it can be exchanged for. Then let the realization come in that millions of people for centuries have known the same thing you know by holding the coin.
When people are actually introduced to the coin itself, their attitudes and arguements always change on the gold and silver standard. And the only way they will ever return is if people are introduced to what real money feels like.
Once any honest human handles any real, physical 1oz gold coin, and thinks for a few moments, they realize a few things - starting with:
#1: this sucker is real.
#2: no way, no how could I ever find and convert rocks and dirt into gold for $1500 per ounce of gold.
Even gold haters cannot avoid these realizations.
I hate quoting from Wikipedia, but: "At the end of 2009, it was estimated that all the gold ever mined totaled 165,000 tonnes[1] This can be represented by a cube with an edge length of about 20.28 meters. The value of this is very limited; at $1200 per ounce, 165,000 tons of gold would have a value of only 6.6 trillion dollars."
***
Mount Everest. Forbidding, aloof, terrifying. The mountain with the biggest tits in the world.
Start again!
Anyone that advocates a gold standard never understood why we went off the old one.
I understand PRECISELY why "we" (the government) went off the original, actual, gold coin standard: it limited the ability of government to spend money they didn't have.
I also understand precisely why "we" (the government) went off the fake "gold-exchange" standard in 1971: because the government had printed more dollars than they could ever redeem in gold (as they promised they would). So they defaulted on their promise.
If we had had one you would be right. We didn't.
the Gold Standard will not happen .... All these world leaders
can't agree on one thing...
I bet they can agree on three things:
1) When to meet for dinner and drinks.
2) Where to meet for dinner and drinks.
3) Dinner and drinks will be paid for by taxes.
LOL...+ a million 1040's.
Gold standard? Nah. All we need to do is kill all the fucking lawyers and translate all of the laws on the books to The Queen's English.
god bless jim grant.
a gold standard without gold real bills is not a gold standard. but he is right about the efficacy of that earlier system. not until 1991 did world trade equal what it was in 1913. the reason is that the allied powers wanted to punish germany and in so doing brought back a mutant gold standard - one without gold based real bills - which could not support trade on the pre-war levels.
see fekete on the subject.
gold is the impartial blind helper of the invisible hand. it defies the blandishments of the plutocrats. it respects no one but who works and deals honestly. it is the safe haven of the widow and orphan and the foundation of industry and retirement - the policeman of outlaw financiers.
Oh, we will be going on the gold standard boys. That is for sure. When the shite hits the fan, boys, the only thing that will buy anything will be gold and silver.
Well, that's interesting, seeing that the previous post about the Secret of Oz had mostly to do with bimetallism. Adding silver into the mix was seen as anathema to monometallism, or the adoption of a strict gold standard. Enough money for everyone, yea!
How about a Gödel standard...
Uh, I don't ever recall Jim Rickards ever saying a gold standard would be hugely deflationary.
On the contrary, I think he said it would not be. Fractional banking would still occur.
Rickards says it is merely a question of the price of gold and it would probably be -- $5K to $11K.
But $35K? well, OK by me.
Rickards has said it would actually be helpful if the Fed started buying gold and stopped the manipulation
This would get gold to the market discovery price sooner -- and the USA has 8133 tonnes.
If dollars were partially backed by gold, and covertable, it would be more stable.
Inflation is robbery by fiat anyway.
.
Any so-called "gold standard" that includes "fractional reserve banking" practices of any kind whatsoever is no better than the current fiat, fake, fraud, fiction, fantasy scam.
The ganster banksters could simulate every aspect of the current fraud by increasing and decreasing whatever "fractional reserve ratios" they concocted. Furthermore, as long as any activity is not 100% transparent, they can and will simply jigger the system to cause wealth to flow into their paws in exchange for manipulation and zero productive work. To give one simple example to show how totally useless any so-called "gold standard" is when combined with fractional reserve practices, note that the predators-that-be could easily and immediately print up enough fractional paper notes to buy all the physical gold on earth... at which time they own 100% of all real monetary wealth, and everyone else holds only bogus pieces of paper.
The only gold standard that is a gold standard, or an honest system, is physical gold coins with zero fractional reserve aspects of any kind. This is why the constitutions says "coin money", not "print money" or "print receipts for money" or "print receipts for monetary debts" or anything of that nature.
I'd almost give this 5 stars, but its clear the bankers don't need to do anything.
A true gold standard necessarily has no central bank, and therefore no countries need to meet to agree on anything.
The market creates the currencies, the market sets the interest rates.
This Jim Grant clearly hasn't watched Bill Still's new video. The last thing we want is to go back to a gold standard.
Other countries, thunderstruck, would then have to follow suit. The main thing, Mr. Bernanke would emphasize, would be to create a monetary system that synchronizes national economies rather than driving them apart.
Regardless of what route is taken with respect to currencies and the monetary & fiscal policies derived from them the day is approaching when such a conference will need to take place. This or these events will by necessity require the full review/resolution of debt/swaps within the formal and more importantly, the shadow systems. The key being in apportioning loses and establishing a new framework. Pain, what the super macro econometeric centrists wish to avoid at any coat has cost the world financial & economic order & its solvency.
Can't run a full M&A cycle without loses. And the main loss of sovereignty today is premised upon the concept that investors cannot suffer the prospect of loss without destroying a nation. The ultimate loss of sovereign power at the hands of those that demand they be made whole regardless of their folly at believing there is such a thing as "risk free return". Or that the concept of speculation can be removed from the equation and still have a functional marketplace. What lunacy! I suppose this is what passes for "sophisticated investing" on both an national/regional governmental level and in markets themselves. Everywhere else, most especially off South Main Street its called fraud and extortion.
Think we are already slowly but steady moving
towards a goldstandard.Gold is taken more
serious as a financial asset every day.Gold's
price rise against all currency for ten years
is starting to attract more and more attention.
Rich people are increasing their gold holding to
hedge against paper.Papermoney without backing
will always drop to zero.
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