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Is A Gold Standard Possible?

Tyler Durden's picture




 

From Deutsche Bank's Daniel Brebner:

A Future Gold Standard?

A common theme in discussing the gold market is the prospect for a new gold standard in the future. That such a topic is now common says much about the change in attitudes by investors, many who would have ridiculed the mere mention of such a thing as little as five years ago. It also, perhaps, gives a hint as to the desperation of investors in their search for assets which they believe may protect their wealth over the long-term, a period which may experience more than its fair share of event risk.

If gold were to regain its crown as the primary medium of exchange it would dramatically change the way that governments manage their economies – which some would say is a good thing given the results of their management skills thus far. Nevertheless, the imposition of a gold standard would limit the ability of government to affect the supply of money in the economy. The supply of money would rest entirely with the volume of gold holdings that a country would possess and grow in line with its trade balances plus domestic gold production (depending on domestic resources and whether these resources in fact became state property – which we expect should be of consideration).

Why it can work

Many economists shudder at the notion of a gold standard; this is understandable given the school of thought to which most adhere: Keynesian or Keynesian derivative. Keynes saw flexible monetary policy as an important tool in optimising an economy. Gold ostensibly removes this flexibility – and was therefore derided as a ‘barbarous relic’ by Keynes himself. In fact we agree that during certain periods of extreme economic imbalance, such as the Great Depression, substantial monetary flexibility may be required.

Most economists see the great problem of gold as twofold: 1) there is insufficient supply and 2) there is insufficient supply growth.

The first argument is spurious. The volume of gold is not important; instead it is the value that is ascribed to this gold that is important. A zero can easily be added to a paper bill to change its value; similarly it can be added to the value of an ounce of gold. Absolute values are in fact unimportant. As we have already asserted, gold is infinitely divisible. Does it matter that a paper bill is backed by a gram or a kilogram of gold? Theoretically it shouldn’t matter in our view.

The second argument, in addition to being fallacious, shows a certain lack of humility. In order to achieve reasonable price stability within a growing economy money supply also needs to grow. The critical question is, how fast. The rate is important, grow the money supply too quickly and inflation results, too slowly and deflation is the consequence (assuming money velocity is constant in both situations).

We believe there are two key elements which are needed to approach an appropriate rate of money supply growth.

The first: population growth – as the number of users of money changes, a money supply adjustment is needed to prevent the distortions in pricing that this would create.

The second: unleveraged productivity – an estimate of the increase in per capita productivity (or value creation) that a society experiences over time – without the assistance of credit growth.

We start by using general metrics for economic activity. There are several, including GDP and trade figures. The difficulty however is stripping out the impact of significant credit growth on these figures to get the genuine, unassisted, growth for a specific economy. For example, over the past 32 years real US GDP has averaged 2.7% (CAGR). Over the same time frame the US population has grown by 1.1% on average. On this basis   average US GDP growth after a population adjustment is around 1.6%. Of this rate, what has been the debt contribution to growth? If, to keep things simple, we assume that credit has contributed roughly 0.5% per year, this leaves an average 1.1% per annum increase in value or productivity for the US. For this reason we believe that humility is a necessity – there is considerable evidence to suggest that the impressive growth rates and productivity advances experienced over the past several decades have been temporarily boosted by the assumption of unprecedented quantities of debt, on a global level. Perhaps we are not the geniuses we think ourselves to be.

On this basis our expectation would be that the US would need to grow its monetary base by only about 2.2% or so. Long-term gold supply growth trends show a CAGR of 1.6%. While this is close to the necessary 2.2% rate needed to avoid deflationary pressure, it could still be asource of concern for those looking at gold as a viable currency alternative. However this need not invalidate gold as a preferred medium of exchange for while volume growth may remain a challenge, the exact value is still determinable by government – in fact periodic valuation adjustments for gold could conceivably be an ongoing option. Thus a low growth rate in gold volumes could be offset by a small revaluation of the metal itself, thereby preventing deflationary price pressure in an economy.

The problem with the above solution for gold’s apparent excessive scarcity is that it puts government monetary policy makers back in a position whereby they can misprice money with consequential capital distortions a possibility. This is something that market purists would rather not see, but may make a transition to gold more palatable for those accustomed to the flexibility that a fiat currency affords.

Why it probably won’t

While a gold standard could work, we remain sceptical that it will be considered (barring a serious financial crisis, perhaps associated with highly volatile inflation).

In large part we blame the low probability on culture. The world economy has, over the past century, morphed into a highly integrated, government dominated system guided by conventional wisdom (group think). The self-reliant, individualism of the free market has been left behind in favour of a ‘new age’ of coddled consumerism. Culturally this represents a very powerful force in our view, one which minimises creative options/solutions to economic impasses. On this basis we are cautious of predicting such a radical solution to monetary imbalances.

 

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Wed, 09/26/2012 - 18:48 | 2833918 savagegoose
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you need an increase in  volume to account for  fractional reserve banking, as the money supply grows so does the need to back that money with gold. if the value of the money goes down  ea time interest accrues, then people will hold only gold and not loan it out.

say you invest 1kg of gold at %5 interest in a year you could expect 1050 grams back in the end of the maturity.

 

but if you only get 1kg back and an inflated dollar of %5 then you may as well not risk the gold in a fictitious interest bearing investment.

Wed, 09/26/2012 - 18:46 | 2833919 ShrNfr
ShrNfr's picture

How about an iPhone standard? That way the Fed could debase the currency with every new model?

Wed, 09/26/2012 - 18:46 | 2833920 ebworthen
ebworthen's picture

The first thing they will try is getting rid of paper and coin curency and going all digital.

You will either have to have an app on your cell phone, a credit card, or some such item - no bills or coins.

Politicians will be licking their lips over the perceived rise in taxes (all tracked by NSA facility going up in Utah) and the bankers salivating over all the fees and control they will have over everyone.

Wed, 09/26/2012 - 18:46 | 2833921 Clashfan
Clashfan's picture

Sceptical? Like for sceptic tanks? Or skeptical?

Wed, 09/26/2012 - 19:00 | 2833952 Clashfan
Clashfan's picture

Aha, is this a British spelling? Looks like a reference to sceptic tanks to us in the colonies.

Wed, 09/26/2012 - 18:51 | 2833928 steve from virginia
steve from virginia's picture

 

 

 

The answer is NO.

 

The proposals for a gold standard presume an economy just like today's humming in the background without any changes except to monetary system. This is silly. A gold standard or specie system = non-industrial economy.

 

Industrial economies are completely dependent upon credit. No credit, no industries. How can credit expand to meet the 'needs' for new businesses (funds to borrow then steal) without an increase in credit/unsecured loans?

 

If credit expands there is no point to a gold standard. An economy may as well have a 'washing machine standard'.

 

Exchangeability of paper money for petroleum is giving the world's economies fits right now.

 

Analysts who work for Deutsche Bank should know this but apparently it isn't taught in school ...

 

The volume of gold is not important; instead it is the value that is ascribed to this gold that is important. A zero can easily be added to a paper bill to change its value; similarly it can be added to the value of an ounce of gold.

 

What, then ... is the point of a gold 'standard' if there is no standard? If one zero can be added, so can dozens of them.

 

BTW, money has no value, it destroys value, this is the problem with money. Once money gains value it ceases to be money, it becomes a collectible.

Wed, 09/26/2012 - 20:14 | 2834129 Mr. Fix
Mr. Fix's picture

steve from virginia is cluless.

Wed, 09/26/2012 - 20:47 | 2834194 RockyRacoon
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Perhaps not, Mr. Fix.  He has had a boatload of explanations thrown at him in the past and he has failed (probably intentionally) to understand.  I'm convinced that his role is that of a rabble-rouser, not a serious conversationalist.  I believe they call that sort of person a troll.  If not, then your cognomen of clueless is a compliment.

Thu, 09/27/2012 - 09:50 | 2835166 steve from virginia
steve from virginia's picture

 

 

steve from virginia is cluless.

 

Ha ha! Mr. Fix is spell-less.

Wed, 09/26/2012 - 20:37 | 2834178 Rogue Trooper
Rogue Trooper's picture

Credit is supplied via REAL SAVINGS... steve you are truly a Tool :/

Wed, 09/26/2012 - 21:07 | 2834226 steve from virginia
steve from virginia's picture

 

Wrong, credit is formed by finance companies making offering unbacked ledger entry loans. 

 

New money is created by the same finance companies making unsecured loans (loans in excess of collateral).

 

I didn't make this system up, you might check out Joseph Schumpeter and Knut Wicksell.

Wed, 09/26/2012 - 21:37 | 2834283 Pure Evil
Pure Evil's picture

Credit used to be create through savings, now credit is created via Fractional Reserve Banking.

Wed, 09/26/2012 - 22:28 | 2834369 hmmtellmemore
hmmtellmemore's picture

@steve from virginia

"What, then ... is the point of a gold 'standard' if there is no standard? If one zero can be added, so can dozens of them."

You misunderstand.  He doesn't mean the zero is added by a central bank, he means its added as demand causes the price to go up.  I can see how thinking that governments can simply set a gold price would totally defeat the purpse of a gold standard, but that is not what he meant (or gold standard advocates mean).  

Thu, 09/27/2012 - 12:56 | 2835841 steve from virginia
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Sorry, he said what he said.

 

If there is to be a standard, someone/something has to enforce it. Markets demand expanding credit (they are all margin- or credit markets after all), they abhor standards. Look what takes place under your nose in the markets today, the players all want more easing, more credit ... more 'juice'.

 

The idea that there can be a standard and a non-standard at the same time is silly.

 

BTW, there is a standard already, the petroleum standard, enforced as you suggest by another market (at the gas pump): when priced in petroleum, ordinary currency has worth.

 

A price too high and people can't afford gas (or cars, houses, jobs). The price too low and the amount of petroleum on the market shrinks due to increasing production expenses. Consider these to be shark jaws, the shark has just eaten Greece and is taking a fatal chunk out of Spain, Next into the water are France, Japan and China. The US is on the tallest mast on the sinking ship.

 

A lot of what is on ZH is nonsense: our crisis is about energy and a bankrupt waste-based economy. The problem is at the end of your driveway, not in your wallet.

 

 

Fri, 09/28/2012 - 13:37 | 2839448 mkkby
mkkby's picture

"Markets demand expanding credit"

So fucking what?  My kids demand candy and ice cream... doesn't mean they should have it.

Markets can function perfectly well on actual non-fractionally reserved savings.  In fact that would eliminate all the bubbles and malinvestment that causes all the massive booms and busts.  If you don't realize that, you truely are clueless and/or a troll.  I'm betting on the latter.

Wed, 09/26/2012 - 22:32 | 2834376 SAT 800
SAT 800's picture

England was a non-industrial economy? that will be startling news to historians. the United States was a non-industrial economy in 1909? What's the matter with you? Reality is reality; your little story you made up in your head doesn't mean anything.

Thu, 09/27/2012 - 06:25 | 2834733 _underscore
_underscore's picture

Anti gold-standard types have this fixation with 'growth' - it's the one problem I don't envisage. How many times must it be said, easy/cheap growth is gone, gone with cheap oil & easily exploitable natural resources & endless fertile farmland. A (and I use the indefinite article deliberately) gold standard could well be the perfect economic descriptor/prescriptor for a post (real) growth era. Sure, we can become more efficient from now on, more bang per buck is possible - let's call it a more sensible allocation & use of finite resources.

Even if there is more residual (real, inflation adjusted - not nominal) growth to be wrung out of the socio-economic system, I'm pretty sure it won't outrun the generally accepted extraction rate of gold now - which is around 1-1.5% I believe.

Another argument is that there won't be 'money' for commercial credit etc. Why not? If gold extraction grows at the same rate as real(-istic)  GDP growth, it looks like a perfect match to me. What there won't be is 'money' available for extreme leverage, market manipulation & goverment re-election fuel. Not sure that's a bad thing though...

 

Thu, 09/27/2012 - 10:47 | 2835354 steve from virginia
steve from virginia's picture

 

Thanks for making my point.

 

Without expanding credit there is no 'business growth'.

 

In a resource constrained world, fixed monetary standards occur naturally as they reflect conditions. Right now money creation is constrained by the ongoing shortage of fuel relative to (infinite) demand. More (monetary) demand does not produce enough fuel. Excess funds are hoarded (stored) ... because it is likely they will be caught up in widespread deleveraging (and extinguished).

 

Unrestrained credit is indeed the fixation of pro-growth analysts, they really have no choice. No growth = no credit = no industrialization. Of course, without generalized growth there is the zero-sum dynamic where one person's gain becomes everyone else's loss, in the place of generalized prosperity. 'Winner take all' becomes the outcome of hard currency regimes, there cannot possibly be any other.

 

Because of the connection between fuel and money now there is an aggregation of spending power ... toward the well-positioned criminal few. What these few do not realize is spending power is not a thing but a context. If all the spending power is in one place there is nothing to spend the power on.

 

What gives 'money' utility is the willingness of the poor man to die/kill to get it, not the rich man's collection of it. Once the poor start fending for themselves there is no more money, it ceases to exist. This is the fundamental problem with gold-money systems: too few have gold, there is no money and the ordinary citizens fend for themselves. By doing so they strand the so-called 'wealthy' who may have (some) gold but not enough to retire their own massive debts.

 

When unbalanced in this way, the 'wealth' is extinguished along with special privileges that are attached to it. The wealthy man must fend with other citizens on their terms using a 'currency' created by the ciizens that the ex--wealthy man does not possess.

 

What is an economy? It is a system that allows a fortunate few to borrow massive fortunes while requiring the rest to repay the associated debts. If the rest refuse to pay, what then?

 

The reason to read Wicksell (or about him) is that the English 'hard money' system in the 19th century had almost zero gold in circulation with a large, private debt-money regime pyramided on top of it. This regime -- and liberal credit -- is how England became an industrial powerhouse, why the European copycats did the same thing.  World War I put an end to gold leverage capitalism, the Great Depression buried it.

 

Specie systems in the New World worked after a fashion because the Americas produced much of the world's mined gold and silver. Once US gold production retreated, metal-basis currency fell out of favor.

 

Another reason for abandonment is that precious metal monetary systems become one-dimensional based on arbitrage/advantage. For example, the US could not go onto a gold standard/specie system without first reneging on its massive, multi-trillion dollar debts. Otherwise, creditors would wind up with all the gold. Arbitrage undid the Bretton-Woods system of gold reserves: the French 'bought' gold at the 'official' rate (by lending to the US government), they sold gold on the (higher) open market to finance their trade. 

 

Arbitrage between nations, between banks and bank systems, between individuals and institutions and between individuals unraveled the gold system in the West during the early 1930s. 'Money' became unworkable because so much of it was frozen within the currency markets. At the same time, countries were moving away from government money toward scrip and free-banking as in the US during the 1880s and 90s. The outcome would have been a institutionalized 'depression' and an agrarian United States. It was the banks which needed the end of the gold standard not Roosevelt. His first act as president in 1933 was to bail out the banks with paper money and a deposit redemption holiday.

 

People buying gold with the idea that the US or another country is going to shift to a 'gold standard' and thereby enrich them is nonsense. Gold is a collectible like antique furniture or classic Ferraris. No country is going to go onto a 'Ferrari 512 Standard' or a 'Chippendale Breakfront Cabinet Standard'. Standards are the consequences of untoward circumstances. Standards are the effect of failures ... not successes. If failure comes ... sorry, when failure comes you won't like it.

 

 

Fri, 09/28/2012 - 13:46 | 2839481 mkkby
mkkby's picture

Wrong, stupid ass.  There is no growth because zero percent credit has wrung all the profit out of growth.  As rates decline, new competitors take the easy money and drive the profit margin out of existing businesses.

We used to call it a "hurdle rate".  If you couldn't make 20% roi, you didn't bother starting.  Now with zirp, there is no hurdle and no incentive to do anything.  You heard of the housing bubble didn't you, asshole?

Thu, 09/27/2012 - 12:39 | 2835776 Thisson
Thisson's picture

Businesses don't need access to credit if they have access to equity.

Wed, 09/26/2012 - 18:53 | 2833933 news printer
news printer's picture
Measuring the Gold Content (Fineness) of Jewellery. !!!

http://web.archive.org/web/20080818152718/http://www.utilisegold.com/jew...

Eureka

Archimedes' insight led to the solution of a problem posed by Hiero of Syracuse, on how to assess the purity of an irregular golden votive crown; he had given his goldsmith the pure gold to be used, and correctly suspected he had been cheated, by the goldsmith removing gold and adding the same weight of silver. Equipment for weighing objects already existed, and now that Archimedes could also measure volume, their ratio would give the object's density, an important indicator of purity.

http://en.wikipedia.org/wiki/Eureka_%28word%29

Mark and Remember

Wed, 09/26/2012 - 18:53 | 2833936 BrianZeroHedge
BrianZeroHedge's picture

Here's a question, how would you convert TO the gold standard? In other words, since the US current system is based on debt, the net total of everything is $0. So how do you value that in the conversion to gold?

Wed, 09/26/2012 - 22:43 | 2834391 hmmtellmemore
hmmtellmemore's picture

I believe all that is needed is way that the average person can convert US$ to physical gold directly from the issuing government.  If a gold window was available and the government told everyone "we will give you exactly 1toz of gold for exactly $2000" then that alone would effectively put the US$ on the gold standard.  Even if very few people actually used this gold window, perhaps because you have to wait in line for a long time, this would provide a means to keep the system honest.  If politicians abused the printing presses, some sharp investors would abuse the gold window to arbitrage and gain ounces, and the gold vaults would start dropping very fast.  As long as the ratio (1 toz = $2000) was made public and was followed year after year, the gold standard would be in place.

If the gold vaults started going bare, the treasury would have to buy more gold, and send the bill to Congress.  And Congress would realize that money printing has a direct expense, and they would put an end to it pretty fast.  Problems would solve themselves pretty fast. 

Wed, 09/26/2012 - 18:55 | 2833939 Crimedog
Crimedog's picture

Proponents of a gold standard more or less believe that the money supply should be tied to the labor of mining new gold and bringing it into the system.  To this, I have one question.  What if mining technology was drastically improved and the mother of all mines was found, which allowed the supply of new gold to enter the system dramatically faster than previously thought possible?  Or better yet, what if some company learned how to replicate gold, similar to what they are doing with diamonds?  How would this new "easy" gold be any different than printing money?

Wed, 09/26/2012 - 19:29 | 2834028 r00t61
r00t61's picture

I don't think we need a gold standard; I agree with Sean7k above that we need the elimination of legal tender laws.

To your questions, though:

Even if there is some "mother lode" of gold found, and its contents can be extracted at a much faster rate than previously thought, it's still not an infinite quantity.  It can't be printed.  This "additional supply" would simply force a revaluation of gold.

As for replicating gold - gold is a heavy element, and as such, was originally created by supernovas.  To attempt to compare the energies required to create gold to the pressures and heat needed to turn carbon into diamonds is a bad comparison.  They are different by orders of magnitude. 

It might be possible to create "artificial gold" in a particle accelerator.  Currently, such a process would be pointless, because the cost of the electricity needed to generate the gold is far greater than gold's current spot price of $1750/ounce.  If human civilization advances to the point where gold could be efficiently and cheaply created in a particle accelerator, then we'd probably also be able efficiently and cheaply synthesize antimatter, and frankly, if the species managed to progress that far, I wouldn't be so concerned as to what people are using as a medium of exchange.

Wed, 09/26/2012 - 19:54 | 2834080 Crimedog
Crimedog's picture

Thanks for the response.  Good points all around.

 

But to this:

Even if there is some "mother lode" of gold found, and its contents can be extracted at a much faster rate than previously thought, it's still not an infinite quantity.  It can't be printed.  This "additional supply" would simply force a revaluation of gold.

 

The point here is that this additional supply would force a revaluation of gold, and if used improperly, could result in unwanted inflation, just as printing money.  There is really no difference. 

 

Wed, 09/26/2012 - 20:24 | 2834157 formadesika3
formadesika3's picture

The point here is that this additional supply would force a revaluation of gold...

_______

That actually happened during the 16th century after the Spanish conquest when gold from the New World flooded into Europe. But it was not unlimited and the resulting inflation was nothing like what we've seen under the present system. And so what if prices aren't completely stable? Absolute price stability is a mirage; it will never be achieved in any event.

Wed, 09/26/2012 - 21:41 | 2834292 SAT 800
SAT 800's picture

Study the history in more detail; it's very interesting; you have simplified a complex dynamic to the point where it doesn;t demonstrate anything. As for price stability; that is strictly for public consumption; eg. propaganda. There has never at any time during the twentieth century any intent to create "price stability". England achieved the status of an Empire with real price stability; and real money; the US overtook them in manufacturing and production capability and became an empire; then the Fed was created and we started hearing public anouncements about "price stability"; which had previously been un-necessary to discuss. The Silver from the New World caused more price inflation than the Gold; it spread rapidly due to the Spanish King's idiot program to force the northern Germans and the Dutch back into Catholic Orthodoxy; he bankrupted Spain and spread the money around; along with a lot of dead Spanish Soldiers; People had other things to think about besides the relatively slow increase in prices. There was more throuble and financial dis-location caused by the dollar inflation in the 1970's than there was by the increase in the money supply in the 16th. and principally, the 17th. century. Because it was fast; and meaningless; somebody just printed it.

Thu, 09/27/2012 - 01:19 | 2834569 formadesika3
formadesika3's picture

It depends on what you mean by "price stability." I hate to say this, but during most of the Fed's existence (excepting the late 1970s), there actually has been "price stability" (as the Fed defines it). But this price stability involves a hidden tax... you know the rest. A leeching effect. It would be much less onerous if not for the knowledge that this tax is being collected by a tax farming system where certain private parties, i.e. the primary dealers, that is to say the tax farmers, reap massive rewards at the expense of everyone else.

Anyhow, I think we'll all have the privilege if that's the right word, of seeing this system's demise within our lifetimes. Missed but not mourned.

Thu, 09/27/2012 - 11:06 | 2835443 steve from virginia
steve from virginia's picture

 

 

England achieved the status of an Empire with real price stability; and real money;

 

What utter nonsense! The English achieved empire because they over-ran rich areas of the world and looted them. They conquered because of technical advantages over the natives -- firearms and three-masted sailing ships.

 

They had these things in turn because they (English, Portuguese, Spanish) had organic credit and 'easy money'. Ships, firearms and the factories needed to make these things are expensive, they are impossible to bootstrap. Recall that Christo Colon had to borrow from the richest monarchs in Europe, the King and Queen of Spain in order to finance his voyage to the Indies. (He also borrowed from Genoese bankers buy they couldn't lend him enough.)

 

Borrowing => fixed capital investment => conquest => returns!

 

In the case of the Spanish, their investment in ocean voyages paid off: the resulting pillage of gold and silver from the New World financed the Reformation, the Industrial Revolution, the Enlightenment, the end of the Renaissance, 300 years of religious warfare in Europe, British colonial expansion in Asia as well as North America ... and hyperinflation in Europe.

 

The American natives had used gold and silver as decorations instead of collateral for paper money!

 

One byproduct of Spanish conquistadores was the American Revolution, caused by capital manipulation by London merchants and bankers and capital flight to-and-from the colonies. Had there been stable prices there would have been no revolution (nor one in France, either).

Wed, 09/26/2012 - 20:54 | 2834205 RockyRacoon
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I believe the saying is that the quest for the perfect will cause you to discount the useful.  Don't throw out a system like the gold standard because it has variations or attributes that can cause monetary instability.  That's the nature of any economic system.   It can and will recover, which is more than can be said for the current fiat system.   Shaking out the weak participants cannot be done any other way -- well, there's war, but that's not what is at issue here.

Wed, 09/26/2012 - 22:35 | 2834379 SAT 800
SAT 800's picture

There really is no difference? Can you "discover" forty billion dollars worth of new gold every month, from now on? Are you crazy? Can't you think at all.

Thu, 09/27/2012 - 06:38 | 2834740 _underscore
_underscore's picture

It's a question of probabilities though. What's more likely - huge amounts of cheaply extractable gold being found, or another political class needing re-electing (however you define 'electing') & just opening the fiat spigot? A bit of a false dilemma in my view. You might also posit the discovery of an anti-ageing cream and its effect on world population being an over-ridingly good reason to give up any biological science now.

Wed, 09/26/2012 - 19:31 | 2834035 WAMO556
WAMO556's picture

Really???? The mother of all mines???? Like El Dorado?

What if frogs had pockets? They (the frogs) would then start carrying pistols and shoot snakes.

Just saying.

Wed, 09/26/2012 - 20:23 | 2834151 ebworthen
ebworthen's picture

"What if frogs had pockets?"

+5

The point of gold is that it is tangible and immutable, unlike fiat database money and politician bullshit.

Equivocators cannot bear immutable's; as they live on intangible fungibility as vampires live on blood.

Wed, 09/26/2012 - 20:47 | 2834195 WmMcK
WmMcK's picture

They'd still bump their butts on the ground? They'd need wings and pockets to really rule.

Wed, 09/26/2012 - 19:41 | 2834054 Catullus
Catullus's picture

It wouldn't. But so what?

Do you think that it easy to mine gold? Or that human beings haven't been trying to "replicate" it for 4000 years?

Make it seem really simple to get it out of the ground. But try it. Hopefully you'll realize what everyone else has trying -- if you're so smart, why waste your time and capital trying to get more gold when you could be making something else more efficient and command significantly more goods and services.

Wed, 09/26/2012 - 19:45 | 2834059 formadesika3
formadesika3's picture

To this, I have one question.  What if mining technology was drastically improved and the mother of all mines was found, which allowed the supply of new gold to enter the system dramatically faster than previously thought possible?

___________

We'd go to a silver standard?

Wed, 09/26/2012 - 19:52 | 2834078 formadesika3
formadesika3's picture

Actually, no standard is needed. Gold (and silver) are good. to. go. On their own. No standards required.

Wed, 09/26/2012 - 19:45 | 2834065 Big Ben
Big Ben's picture

If someone suddenly came up with a new cheap way to obtain gold, there would be inflation. But people have been putting great effort into expanding the gold supply for thousands of years now and gold is still very valuable.

Which do you feel is more likely:

1. After thousands of years someone will finally discover a cheap source of gold?

2. Heavily indebted governments will find themselves unable to borrow any more money and will start printing paper money in large quantities?

#2 has already happened many times, but #1 hasn't happened yet.

Wed, 09/26/2012 - 21:29 | 2834263 SAT 800
SAT 800's picture

You're a bit thick, mate; but you've got the basic idea. Lord Grimthorpes clock still works pretty good, doesn't it?

Wed, 09/26/2012 - 18:58 | 2833945 Clashfan
Clashfan's picture

The initial problem, as Bill Still and others note, is that FRNs are not sovereign money but are debt-based money, debt to a privately owned institution, the Fed. I hold w/Still that the first step should be eliminating the Fed and issuing sovereign fiat ala JFK and Lincoln.

Then and only then can we have the debate about whether or not to back the sovereign currency with gold or with any other commodity (or a basket of commodities).

See The Secret of Oz for a more complete explanation.

https://www.youtube.com/watch?v=kUNABaHc9iU

Wed, 09/26/2012 - 21:27 | 2834258 SAT 800
SAT 800's picture

Let's see now; what was it that happened to Pres. Lincoln and Pres. Kennedy; oh yeah; shot in the head by one-off, non-conspiracy, madmen. Yeah, yeah, that's right. well, it might be a little difficult to find the dude who wants to implement this.

Wed, 09/26/2012 - 22:16 | 2834339 palmereldritch
palmereldritch's picture

You forgot the bi-metallist proponent...the-also-unnaturally-late...President McKinley.

Wed, 09/26/2012 - 21:30 | 2834259 moonstears
moonstears's picture

I originally thought Still was outta his mind, there HAD to be gold behind these notes, for viability. I've come to realize this is NOT the case. NO GOLD STANDARD, ever! Freedom to purchase gold, FOREVER!(THINK, too...TPTB would make the trade for fiat to Au so high J6P would never save enough fiat to benefit...say min $100K or so)

Wed, 09/26/2012 - 19:04 | 2833964 ArsoN
ArsoN's picture

Younger people are significantly more comfortable with the gold standard.  As that 15-35 year old current demographic ages and hits closer to the voting age sweet spot, we might see even more mainstream popularity for the idea.  Though who knows what the world will look like 10-15 years from now...

Wed, 09/26/2012 - 20:13 | 2834127 A Middle Child ...
A Middle Child of History's picture

For a good idea of what the world will look like 10-15 years from now, a reading of "The Fourth Turning" can provide the answer. That age group you mentioned, my demographic, is the one being shit upon by the self-serving destructive policies and corrupt leadership of previous generations of indulgent "greatest generation" parents and spoiled brat "boomers". The party is over, and it is almost time to take out the trash. A time of turmoil is upon us and will only get worse as the "Gen-Xers" increasingly assert their power and begin to take over leadership roles. A return to the gold standard and it's widespread support among younger demographics is but one manifestation of the changes which are surely coming.

If I was an old geezer, I would be long on dogfood.

Wed, 09/26/2012 - 21:14 | 2834238 RockyRacoon
RockyRacoon's picture

Or... one could have been observant and prepared for the upcoming catastrophe, like me.  I won't be a burden on any of you young folks.  I can't save the others but I can save me and mine.   I am pretty sure that a majority of the other old farts here at ZH are nearly the same asset-wise.   Prepping never ends, it just takes different directions according to exigencies.

Wed, 09/26/2012 - 19:05 | 2833967 Future Jim
Wed, 09/26/2012 - 19:06 | 2833971 disabledvet
disabledvet's picture

We appear to have one by a different name actually. If the price of gold rises while the price of everything else for all intents and purposes COLLAPSES...yo, bro...THAT'S A GOLD STANDARD. The question is "has this Administration invented a new form of SLAVERY"? it ain't like anything other than people are being bought and sold...no? "by another name" of course.http://www.youtube.com/watch?v=YaKl2ec4J_w

Wed, 09/26/2012 - 19:12 | 2833973 New American Re...
New American Revolution's picture

Amazing Tyler will print this bullshit from a representative of the status quo, sucking you in, and then telling you it "Ya ain't gonna verk, Hans", but he won't print shit I send him unless he doesn't knows it's me.   But he can't deny we have put forth a lot of very good work that not only explains a situation, which often thinks parallel to the "George Washington Blog", but actually provides an answer and the means for carrying it... and by November 6th if America pleases.   We're talking about empowering 162,000,000 Americans to vote with a single voice and take over Congress.  

What does it mean?   It means Liberty.  It means debt freedom.  It means the people rule the government and not the other way around.  This is the definition of Liberty, and only by its grace will America ever go forward.   www.electanewcongress.com

Serfs Up America!

Wed, 09/26/2012 - 21:01 | 2834219 DosZap
DosZap's picture

We're talking about empowering 162,000,000 Americans to vote with a single voice and take over Congress.

 

Newsflash, won't even take that, the supreme cumhander is going to do that by Exec fiat, and start this all over like HE thinks it should be.

Congress is more and more irrevelant by the day.

It's basically an act,and the curtain is coming down on top of them and us.

The Reichstag moment happens before Nov election bro's n sista's.

That is my take on it, and sticking w/ it sorry to say.

Wed, 09/26/2012 - 19:13 | 2833984 Yardfarmer
Yardfarmer's picture

no

Wed, 09/26/2012 - 19:13 | 2833988 Ignorance is bliss
Ignorance is bliss's picture

While a gold standard could work, we remain sceptical that it will be considered (barring a serious financial crisis, perhaps associated with highly volatile inflation)

I guess we will see a return of the Gold standard

Wed, 09/26/2012 - 19:14 | 2833990 123dobryden
123dobryden's picture

what is so dangerous about falling prices anyway? why should money supply have to rise to avoid it?  if i lend someone a kilo of gold, he can return me 1 kilo after 10 years, but i will buy like 30% more because of falling prices....dont understand

Wed, 09/26/2012 - 21:18 | 2834247 SAT 800
SAT 800's picture

there;s nothing wrong with falling prices. it's a question of whose Ox is getting gored; to be Biblical about it. For you it's not a problem; for the central bankers; if you have central bankers; it's a problem.

Wed, 09/26/2012 - 19:19 | 2834000 Tango in the Blight
Tango in the Blight's picture

I love my nuggets!

Wed, 09/26/2012 - 19:20 | 2834002 DavosSherman
DavosSherman's picture

In-Fucking-evitable you fucking douche bank morons

Wed, 09/26/2012 - 19:20 | 2834003 gorillaonyourback
gorillaonyourback's picture

Is gold universally acceptable? Yes

Is it universally available and plentifull? NO

It will not make a good currency

Silver and copper works better

Remember just like the printing press, he who controls the gold or press MAKES THE RULES

Wed, 09/26/2012 - 20:07 | 2834108 GoodMorningMr.V...
GoodMorningMr.VanRumpoy...'s picture

"Silver and copper works better"

Why not all three?

That's originally how the US started. Sliver was the "Dollar" the base monetary unit.

Gold Eagles, were higher. And some copper piece was lower.

Wed, 09/26/2012 - 19:22 | 2834006 Future Jim
Future Jim's picture

What is wrong with deflation? Deflation is honest. If the money supply increases, then each dollar is worth less than it would have been. Who decides who gets to keep the difference? Increasing the money supply to maintain price stability is still a redistribution of wealth.

Wed, 09/26/2012 - 19:28 | 2834026 cougar_w
cougar_w's picture

Honesty went out the window about the same time that Pope Urban the Second announced the first Crusade into the Holy Lands.

Notice, this was also the exact time (and reason) for the creation of organized trans-national banking cartels.

We've been living a lie for so long we wouldn't recognize the truth if it materialized in the flesh on the stage with Lady Gaga to perform a kicky duet.

Wed, 09/26/2012 - 20:08 | 2834117 Count de Money
Count de Money's picture

There's nothing wrong with deflation if you have money. In fact, you would like to see more deflation so that your money buys more value.

If you owe money though, that's a different story.

Wed, 09/26/2012 - 19:26 | 2834021 honestann
honestann's picture

The gold standard must be a self-fulfilling prophesy... or it won't happen.  The predators (banksters and government) will never permit an official gold standard.  However if everyone starts saving gold instead of worthless pieces of paper (currency, stocks, bonds, etc), then we have a functional gold standard, even if not an official one.

So screw the "official one".  Just do it.  I have for many years, and believe me, I have no regrets what-so-freaking-ever.

PS:  And yes, deflation is honest and deflation is good.

Wed, 09/26/2012 - 20:22 | 2834152 delacroix
delacroix's picture

but, do I have to sew it into my clothes?

Thu, 09/27/2012 - 07:06 | 2834754 _underscore
_underscore's picture

My view about adoption also. In fact, I think it's happening in the background now with CBs & govts., and in the foreground with people like us (& some investing houses).  Many seem to think/feel it requires some huge cataclysmic type event or revolution for a transition, but I think it's more like when you grow old - it just sort of creeps up on you, despite the Grecian 2000 & botox fillers.

Wed, 09/26/2012 - 19:29 | 2834030 Tum
Tum's picture

Gold standard, or any objective standard will do. Nothing is perfect, but the point is not to allow our overlords to devalue to fund government into oblivion.

Deep Thoughts, by Ben Bernanke.

http://www.facebook.com/photo.php?fbid=419537588103105&set=a.41953758476...

Wed, 09/26/2012 - 19:30 | 2834033 cranky-old-geezer
cranky-old-geezer's picture

 

 

A gold standard using paper currency is meaningless because it assumes paper currency is money, which it isn't.

For a gold standard to work, paper currency must be defined by law as not being money, and gold must be defined by law as money.

No government in today's world will do that.  They've seen how sheeple will accept a worthless monoply-like paper currency as money, so there's no reason to go back to true money.

Wed, 09/26/2012 - 19:31 | 2834034 billsbest
billsbest's picture

Unless gold is in the hands of the people, and not just exchanged between government fortresses, a gold "standard" will never work for the people's liberty. See:

 

 

FIVE MYTHS ABOUT THE GOLD STANDARD(Part I) - Ron Paul & Cong. Larry McDonald

 

Wed, 09/26/2012 - 19:50 | 2834072 zerotohero
zerotohero's picture

China the new gold standard

Wed, 09/26/2012 - 19:50 | 2834073 logicalman
logicalman's picture

Real Money = Honest exchange of VALUE.

01000100100010100010 - Where's the value in that??

Thu, 09/27/2012 - 00:10 | 2834511 sink critically
sink critically's picture

You have my vote. Money is what everyone values intrinsically. No other medium of exchange will work. In a pinch only the two parties in each deal need to agree, no other authority will be consulted. As labor is devalued and necessities inflated people will innovate their own markets based on need.

Any medium of exchange which does not hold its value from one transaction to the next is not money.

Wed, 09/26/2012 - 19:51 | 2834075 daxtonbrown
daxtonbrown's picture

Long term we have to move to some sort of Bitcoin solution (digital money). That will require a civil war. Don't get me wrong, gold is great, but it has its problems too.

Wed, 09/26/2012 - 20:08 | 2834119 Rob Jones
Rob Jones's picture

Because transactions are broadcast to the entire network, they are inherently public. Unlike regular banking,[31] which preserves customer privacy by keeping transaction records private, loose transactional privacy is accomplished in Bitcoin by using many unique addresses for every wallet, while at the same time publishing all transactions. As an example, if Alice sends 123.45 BTC to Bob, the network creates a public record that allows anyone to see that 123.45 has been sent from one address to another. However, unless Alice or Bob make their ownership of these addresses known, it is difficult for anyone else to connect the transaction with them. However, if someone connects an address to a user at any point they could follow back a series of transactions as each participant likely knows who paid them and may disclose that information on request or under duress.[15][32]

Jeff Garzik, one of the Bitcoin developers, explained as much in an interview and concluded that "attempting major illicit transactions with bitcoin, given existing statistical analysis techniques deployed in the field by law enforcement, is pretty damned dumb."[33][34] He also said "We are working with the government[which?] to make sure indeed the long arm of the government can reach Bitcoin... the only way Bitcoins are gonna be successful is working with regulation and with the government."[35]

Oh goody! A system that allows any government (or anyone else) to track all of my transactions. I can hardly wait.

Wed, 09/26/2012 - 19:57 | 2834084 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You have until Oct 10th to get your house in order.

You have been warned.

Wed, 09/26/2012 - 21:40 | 2834290 moonstears
moonstears's picture

You'll elaborate, please, Mr Hendrix?

Wed, 09/26/2012 - 21:51 | 2834310 n8dawg84
n8dawg84's picture

I saw MsCreant mention something about '2 weeks' in an earlier thread.  If the two of you are hinting at the same thing I can only hope you're wrong, but if time is up then so be it.  Maybe I'll get lucky and Extend and Pretend will go on for just a little longer.  Either way, I personally will have done the best I can since waking up a year ago.  That is all....bitchez

Wed, 09/26/2012 - 22:23 | 2834361 palmereldritch
palmereldritch's picture

Wouldn't October 11 be catchier ?

10/11/12 : 10 + 11 = 21 + 12 = 33   ?

Wed, 09/26/2012 - 22:39 | 2834382 moonstears
moonstears's picture

You've got till December 31st, to make sure you have aspirin and V8 veggie juice, hangovers to follow by 2 Jan. Warned you too!

Wed, 09/26/2012 - 19:57 | 2834085 Catullus
Catullus's picture

What is unlikely is that gold would be used by this generation or the next in small exchanges. I'm not sure it was that common in centuries past either. You probably only saw it then in major transactions or as a store of long term savings. And from 1500 on, the concept of checkbook money probably existed to a small extent in most small villages and towns. Even in frontier America, the village store kept a credit system.

The key is that you have a stable money to clear the transaction. That way if you extend credit, you're not paid back in depreciated money.

Wed, 09/26/2012 - 20:16 | 2834099 Count de Money
Count de Money's picture

We actually had a mixed standard up until 1964. Anyone here old enough to remember silver certificates? They looked just like FRN's except that dead giveaway was that the treasury seal was blue. There was wording on it that the bearer would be paid in silver coin on demand. In actuality, these were interchangeable with FRN's at 1 to 1.

A person would pay for something with a silver certificate and get FRN's in change. Or vice versa. Nobody worried about it or even knew why there were two different bills. I didn't, but then again I was only a kid.

Prior to 1933, there were also gold certificates, but I'm not sure these were in general circulation. My impression was that these were used to settle accounts between banks. If someone knows more, feel free.

The key point here is that having a mixed fiat/PM currency standard might be the happy medium. The PM standard would impose discipline on the fiat standard which is probably why they abolished it in 1964 and inflation took off not long after. You could still expand the fiat money supply as the economy grew but would be it would limited in order to maintain the 1 to 1 exchange with the PM currency.

Wed, 09/26/2012 - 21:13 | 2834235 moonstears
moonstears's picture

You can still get a silver dollar for your federal reserve notes, it's just approx $45-$60 in Fed notes per silver dollar unit.

www.usmint.gov

Wed, 09/26/2012 - 21:19 | 2834248 moonstears
moonstears's picture

We need an electrum standard! First recorded "coin" metal 45%Au/55%Ag (Lydia/now Turkey).

Wed, 09/26/2012 - 20:03 | 2834102 GoodMorningMr.V...
GoodMorningMr.VanRumpoy...'s picture

Wow! This article came from Deutsche bank? I assumed they subscribed to Paul Krugman's views on the gold standard.

Wed, 09/26/2012 - 20:05 | 2834107 New_Meat
New_Meat's picture

"Keynes saw flexible monetary policy as an important tool in optimising an economy..."

and we are now seeing where the Keynes "Optimal Point" is.  'cuz "optimal" is with respect to a target.

don't cha' know.

- Ned

Wed, 09/26/2012 - 20:07 | 2834113 Tombstone
Tombstone's picture

You mean politicians would actually have to become honest, accountable and give up their expediant ways?  Never going to happen in this century.

Thu, 09/27/2012 - 11:04 | 2834114 OneTinSoldier66
OneTinSoldier66's picture

Gold is not a Standard.

 

If it were to be chosen in the market to be used as money, then that is simply what it would be, money. No need for Government to intervene and try and tell everyone what the value of Gold is by 'price fixing' it. And no need for the Government to try and make "a money supply adjustment" for any reason. The marketplace(people in the free market) would determine the 'exchange-value of gold' based upon it's supply vs. 'the demand for money'.

 

If the demand for Gold is high because it is in short supply in a region, then Gold is highly valued and interest rates are normally high. You have to pay a more in interest to get a loan.

 

If the demand for Gold is low in a region because most people in the region have plenty of it around, then interest rates are usually low because there's plenty of it available to loan out.

 

Bernanke is trying to do the opposite. Even though the demand for money is high right now, he's trying to keep people from keeping cash on the sidelines by coercing them into doing something else other than save it right now. He's trying to keep interest rates down to try and make it look like people have saved a lot of money and there's plenty of it to loan out. FAIL. And he's trying to devalue the dollar, rather than let it do what it would normally be doing in 'high demand for money' environment, which would be to gain in perceived value. FAIL.

 

Companies have trouble making positive earnings in a deflationary environment when figured using Keynesian inflationary economics where there has to always be 'growth'. This would not be an 'end of the world' problem if Austrian Economics were being used where the value of the 'medium of exchange' being used is figured in, using a real actual unit of account(such as gold).

 

The dollar cannot be used as a unit of account as no one can tell what it's value is going to be long-term. Gold retains it's value long-term, as long as Government is not allowed to intervene and debase and devalue it. Bankers didn't like the little people having real money available that can hold it's value over the long haul. That allows the little people to remain in a position of authority and power, like the Constitution says they are supposed to have. So, they got in bed with the Government and got the Government to take over the value of money, and thereby take power and authority over the economy. Since then, they have used the power and authority they captured from the people to skim off the top, so they do not have to work at things that actually add value to the economy and raise the living standards of everyone, they just try and make it look like they are.

 

Does the Government work for us, or do we work for the Government? -Judge Andrew Napolitano

Wed, 09/26/2012 - 20:16 | 2834135 FutureShock
FutureShock's picture

How about a Gold split, the current oz price is now 1/2 ounce. done! new Gold standard at a reasonable cost because like everything else its all smoke and mirrors. They can go down to 1/4 and 1/10 and print more for decades. A Keynsian Gold standard.

Wed, 09/26/2012 - 20:34 | 2834170 RSBriggs
RSBriggs's picture

Never mind.  It's not worth the effort....

Wed, 09/26/2012 - 20:38 | 2834180 Pejorative Requiem
Pejorative Requiem's picture

Not possible if currency goes to precious metal coins. Notes would only be good at the local level, where thier value could be verified.

Wed, 09/26/2012 - 20:21 | 2834148 Cassandra Syndrome
Cassandra Syndrome's picture

The author forgot to mention the significance of the increased velocity of gold in a gold standard system without central banks as opposed to electronic fiat restricted velocity by contracting artificiai fractional reserved credit system supported by central banks.

Wed, 09/26/2012 - 20:28 | 2834163 Pejorative Requiem
Pejorative Requiem's picture

In the worst economic scenario currencies very well could localize. Many currencies could feasibly go to the gold standard, and it would be perfectly legal even under existing law.  Global scarcity of gold wouldn't necessarily be an issue. Ownership of physical gold would definitely be advantageous. This is one of the reasons why "armageddonists" believe private ownership of gold may be outlawed.

Wed, 09/26/2012 - 20:54 | 2834206 tradewithdave
tradewithdave's picture

It's simple enough.  First you divorce the currency into two halves; a) a half to satisfy the double coincidence of wants and, b) a half to satisfy the store of wealth.  Then you take the (a) half and gradually remove the fractional reserve component to mitigate systemic risk.  Basically this is already being achieved via the proliferation of debit cards and delveraging.  Then for the (b) half you set up a high friction system with a tiny fractional reserve of gold (whatever is needed to boost confidence) as what is essential a debt-for-equity swap as spelled out in the Chicago Plan (see J-Hole memo).  To quote the memo: It would accomplish the latter by making government-issued money, which represents equity in the commonwealth rather than debt, the central liquid asset of the economy, If someone wants or needs to withdraw their "wealth half" of the money it will be tougher than rolling over a 401(k), will take 6 months and be more complex than Medicate Part B and the penalties will be coercive. 

In business we call it a roll-up.  Barosso calls it a "federation."  All you need to push it through is a new contract.  You have to replace The New Deal, but how hard will that be when either folks are offered $3,000 for a thing-a-majig for their furnace, or $150,000 in a modern mortgage jubilee as proposed by Steve Keen and supported by George Soros.  Throw in forced organ donations (ala Sunstein) and you've got a balanced budget with no systemic risk and a central planner's dream. It's a gold standard alright with a full blown Fekete Real Bill to back it up.  The only difference is that the actual percentage of gold is "right-sized" like those coffee cups at Starbucks.  Make mine a Tall.  Stay thirsty my friend.

www.tradewithdave.com

 

Wed, 09/26/2012 - 20:58 | 2834209 tradewithdave
tradewithdave's picture

re: novelty local currencies.  Sure you get those too.  Your non-fractionally reserved debit money that resolves its nostro-vostro intraday has a cute local logo on it.  Maybe it's a Greek fisherman's cap or a Berkshare.  Who cares because there's no full faith and credit and all counterparty risk is cleared in near real time. 

Thu, 09/27/2012 - 01:49 | 2834584 essence
essence's picture

TradeWithDave

You might be on to something however your explaination here (and on your blog) is clear as mud.
Please explain how one's present assets (e.g. cash,real estate,stocks,bonds, physical PMs get rolled into this two part 'divorced currency'. And what part goes where?

If current PM stackers have a big stash, is it part of the B half? How would one get physical into this B half?
Are you saying physical holders will be essentially locked out?
Furthermore, if ones wealth is in the B half, what good is that if access to it means going to Mr Government hat in hand and saying in effect "sir ... may I access some of my wealth please".

Dave, the funniest thing you ever said on your blog was once when you referred readers to a FOFOA article but warned that he could be difficult to understand.
LOL .... talk about the pot calling the kettle black.

 

Thu, 09/27/2012 - 04:32 | 2834686 tradewithdave
tradewithdave's picture

Are the words capital controls sufficiently clear? Zero velocity pm's outside of gray market. A bar is simply raised that says if you're SIFI we recognize you and your gold, otherwise you're out of luck. If this is still difficult to understand try reading the Book of Revelation or visit your local farmer's market and survey the vendors for financial stability and acceptance of competing currencies.

Thu, 09/27/2012 - 12:55 | 2835836 Thisson
Thisson's picture

Your writing is incomprehensible.  You ramble without explaining what you mean.  If you want to discuss an actual money standard, go ahead and describe it.  Don't expect us to be familiar to your obscure non-references to Soros, etc.

Thu, 09/27/2012 - 18:15 | 2836948 tradewithdave
tradewithdave's picture

To be specific, the Soros reference would be in regard to grants from his Inet foundation to Steve Keen in support of the Modern Jubilee. In regard to the reference to a divorced currency system that would be a nomenclature as assigned by Mervyn King. You can read about it if you care to do so at www.tradewithdave.com by searching for "Mervyn King" and "divorced currency". As far as the complex nature of the material, money is quite simple, but people on the other hand not so much.

www.tradewithdave.com

Thu, 09/27/2012 - 18:15 | 2836949 tradewithdave
tradewithdave's picture

To be specific, the Soros reference would be in regard to grants from his Inet foundation to Steve Keen in support of the Modern Jubilee. In regard to the reference to a divorced currency system that would be a nomenclature as assigned by Mervyn King. You can read about it if you care to do so at www.tradewithdave.com by searching for "Mervyn King" and "divorced currency". As far as the complex nature of the material, money is quite simple, but people on the other hand not so much.

www.tradewithdave.com

Wed, 09/26/2012 - 21:08 | 2834227 d2themfi
d2themfi's picture

What's up with deutsche banks sudden fascination with gold lately? Seems like I've been seeing a bunch of bullish gold articles from them-not just in terms of market price, but as currency.

Wed, 09/26/2012 - 21:09 | 2834229 SAT 800
SAT 800's picture

The statement that the money supply "needs" to grow with a growing economy is false. that's all. it's simply false. It shows, with no possible counter argument that the author is partially brainwashed; and has not studied history. The fact is the money supply does not need to grow. This is a stupid and childish concept; it is accepted because some "expert" told you so. It is false. I repeat. It is false.

Wed, 09/26/2012 - 21:17 | 2834241 abgary1
abgary1's picture

The author of this article sounds like one of the economist who did not see the crash of 08/09 coming.

Wed, 09/26/2012 - 21:20 | 2834245 “Rebellion to t...
“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

Is a gold standard possible?  Laughable.  These assholes are debasing their currencies through egregious monetization, and are now doing this at a record pace; in order to get a seat at the table of the UN/IMF Special Drawing Rights, these thieving blood suckers will drain the wealth of the entire Western world.  

If there is a revolution, anything is possible.  Until we hang and/or shoot dead quite a few of the assholes that are destroying wealth intentionally; and redistributing wealth to the banksters free of charge, we are all at their mercy.  Get your pitchforks sharpened and your oil boiling.

Wed, 09/26/2012 - 21:39 | 2834287 KickIce
KickIce's picture

Aside from the manner of execution, looks like we are on the same page.

Wed, 09/26/2012 - 21:22 | 2834251 KickIce
KickIce's picture

Sure, once they own all the gold and purchase every other asset that's not nailed down with fiat.

It's gotten to the stage where the only way out of this is to hang theSOBs and confiscate their property.

Wed, 09/26/2012 - 21:27 | 2834255 logicalman
logicalman's picture

I'd accept gold from Zimbabwe, no problem - just small pieces these days though - got to avoid the old W.

 

Wed, 09/26/2012 - 21:30 | 2834266 orangegeek
orangegeek's picture

So the country who has dug up and stored the most gold has the strongest currency, right?

 

Welcome to some American drones and stealth bombers.  This is the currency standard.

 

Gold is a pretty metal with some industrial applications.  It's largest use is jewellry.  We remain bearish.

 

http://bullandbearmash.com/chart/spot-gold-daily-september-26-2012/

Wed, 09/26/2012 - 22:54 | 2834400 SAT 800
SAT 800's picture

They say experience is the best teacher. This is nonsense; but as a teacher it's really a bitch. You're going to meet it head on.

Thu, 09/27/2012 - 01:06 | 2834553 Clowns on Acid
Clowns on Acid's picture

no response needed ...clueless....

Thu, 09/27/2012 - 11:13 | 2835459 _underscore
_underscore's picture

Yes - but holding onto it is another question entirely - always has been. I wouldn't say Saudi Arabia (the best treated M-E state) has got full value from its oil riches, nor Nigeria/DRC from their mineral resources. Up until now, in the modern era, the UK then US regimes have had the upper hand strategically/militarily. That won't always hold. In a multi-polar world, coalitions will soon be able to defy (and quite soon) any unilateral power.

Would it be so wrong though, if the most 'golded' state did call the shots? While some states may be (nominally) democratic, the collection of states aren't democratic between themselves.

Wed, 09/26/2012 - 21:30 | 2834267 Cabreado
Cabreado's picture
Is A Gold Standard Possible?

piqued my interest... then

From Deutsche Bank's Daniel Brebner

knew I'd been had. 

Dry humor is good, ZH.  Nicely done.

 

Wed, 09/26/2012 - 21:48 | 2834306 Terrorist
Terrorist's picture

Laughable crap.
Let the market set the supply of money.
Argue with that DB biotch

Wed, 09/26/2012 - 21:53 | 2834311 Atomizer
Atomizer's picture

Petrol dollar recycling will be protected at all cost. New tungsten gold bar stories will accelerate to maintain confidence in retaining Federal Reserve debt notes.

 

Many of you are unaware of the difference between a Jew vs. Zionism. That being said, the race card is now being played during Yom Kippur.

Next, I have to tread on thin ice when presenting this post. Sarcasm will ultimately prevail.

[Mystery voice] ‘If we can only get those fuckers to engage into a new proxy war, our insolvent financial problems will dissipate’.

 

Did you see this reported on your TV? Nope, you sure didn’t.

Ahmadinejad Embraces the Jews! Rejects Zionism! 

As usual, you’re just a pawn being played in a massive international chess game to leverage new power control in untapped central planner regions. 

In case you want a crash course lesson on Zionism..

http://www.jewsagainstzionism.com/zionism/history.cfm 

Oh noes… not again. LOL. We need to ask the UN to intervene because my feelings are hurt over verbal words calling me out as a Zionist..

PM: On Yom Kippur, Iran tyrant called for our demise  

 

The same parasites already passed thru the United States Zone. Raising elevated chaos levels to play the race card didn’t work. Don’t let it disrupt your country either.

Wed, 09/26/2012 - 22:13 | 2834340 Northeaster
Northeaster's picture

I'm not that old, but didn't we have TWO "gold standard" crashes already?

Wed, 09/26/2012 - 22:57 | 2834405 SAT 800
SAT 800's picture

NO. this is spin. you have been propagandized. it will take considerable reading to find out what actually happened.

Thu, 09/27/2012 - 03:40 | 2834668 AnAnonymous
AnAnonymous's picture

Expansion schemes usually suffer from that.

As 'americans' went on several theft spree, anytime they hit a limitation to theft, the expansion is stalled and well, the rest is history...

End of indian land transfer translated into GD...

Thu, 09/27/2012 - 03:51 | 2834674 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous: excrementally ill.

Wed, 09/26/2012 - 22:31 | 2834374 CuriousPasserby
CuriousPasserby's picture

When an author can't even spell skeptical, I just can't read the rest of the post. I know our current eduction system is shit, but how old are some of the Tylers?

Wed, 09/26/2012 - 22:58 | 2834407 HungrySeagull
HungrySeagull's picture

Sure it's possible.

 

Just print some new 100 dollar Silver Certificates in either Blue or Grey at the mint to make it happen.

Wed, 09/26/2012 - 23:13 | 2834432 bilejones
bilejones's picture

The reason for the hatred of the gold standard is that it removes a ( maybe the) tool for the concentration of wealth.

Wed, 09/26/2012 - 23:22 | 2834443 jimmyjames
jimmyjames's picture

imo--There wont be any set of guidelines or government agreements for a gold standard-it will come into being violently and randomly as world central banks jump into the open market bidding against each other for gold in order to save their collapsing currencies-

The first country that's forced into weighting gold to their currency- will be the kiss of death for all unbacked paper currency-

 

Wed, 09/26/2012 - 23:57 | 2834499 Audacity17
Audacity17's picture

Jim Rogers says no.

Thu, 09/27/2012 - 01:04 | 2834549 Clowns on Acid
Clowns on Acid's picture

'Course Jim rogers says no "gold standard"....when it happens , " sell". BUT before it happemws stcok up....the "statists" or what ever youmwant to call them...will need to be brought to heel. Gold goes thru ther roof until.

Timeline....who knows....but it will occur, despite what MSM tells us.

Thu, 09/27/2012 - 01:15 | 2834561 Clowns on Acid
Clowns on Acid's picture

Globalists, socialists, statists, UNITE !
Our monthly checks and velvet pensions are at risk!

Do something !
Regards,
IMF, US Fed, ECB, EC Union, Ex - Im Bank, You feckin' name it....!

Thu, 09/27/2012 - 01:50 | 2834592 Paracelsus
Paracelsus's picture

Wish you blokes wouldn't go on about how you want to roger her majesty.

Makes me think you are Granny rapers or summat....

Next you'll say you are serial sheep shaggers....

Thu, 09/27/2012 - 02:14 | 2834607 SoundMoney45
SoundMoney45's picture

"The supply of money would rest entirely with the volume of gold holdings that a country would possess and grow in line with its trade balances plus domestic gold production"

The above is incorrect.  The supply of money also includes Real Bills.  Here is a one page explaination that is worth the time to read:

http://www.thedailybell.com/1237/Real-Bills-Revisited.html

Thu, 09/27/2012 - 13:01 | 2835857 Thisson
Thisson's picture

Some believe that real bills are also inflationary.  It is a dilemna.

Thu, 09/27/2012 - 02:46 | 2834628 Peter Pan
Peter Pan's picture

The beauty of the gold standard is that you can apply it for yourself even if the government does not apply it to government finances. Just store most of your liquid wealth in gold rather than fiat and let time and societal stupidity work their magic.

By the way, Keynes called gold a barbarous relic. He did not call the gold standard a barbarous relic.

Thu, 09/27/2012 - 03:15 | 2834658 luckylongshot
luckylongshot's picture

The last gold standard was "Banksters enslave humanity version 1" and so a return to a gold standard would not solve the problem, which is that private bankers have taken the right to issue money away from the public. The way to prosperity and a fair monetary system is for the government to reclaim the right to issue money and to do so based on productivity with no interest attached to much of the money that is created. This was the approach that Abraham Lincoln took and that the Chinese are taking today. It is possible based on historical evidence that the average worker would need to work only 14 weeks a year and pay no income tax if we returned to this system. Gold is potentially useful as backing for a trading currency but is impractical for domestic currencies mainly because it is inflexible in its supply and so results in increases in productivity resulting in recessions and deflation.

Thu, 09/27/2012 - 03:34 | 2834667 AnAnonymous
AnAnonymous's picture

Same old, same old with 'americans'

A hard currency to mean something in the current situation has to be exchanged.

Adding a zero to the value of gold diminishes the capacity for gold to be exchanged.

How would people exchange picograms of grams?

As soon this issue is bypassed by connecting to gold a means of exchange that would render the exchange possible, it is over. Back to the current situation.

If gold is attached to some other means of exchange like paper notes, or anything, the same dilution of wealth effect can happen. The same credit emission schemes can happen etc

For a hard currency to make a change, it has to be exchanged physically and therefore, there is not enough gold to allow that.

Thu, 09/27/2012 - 03:49 | 2834672 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnEncephalous said:

Same old, same old with 'americans'

Same old, same old with AnAnonymous. He came so close to making a thoughtful post, but his deranged fixation on Americans wouldn't let him do so without crapping in the punch bowl.

It just goes to show that his excremental nature is eternal.

Thu, 09/27/2012 - 05:20 | 2834703 Zwelgje
Zwelgje's picture

He writes 'americans', not Americans. There is difference in that. 

Insults are not arguments btw.

Thu, 09/27/2012 - 12:33 | 2835752 akak
akak's picture

AnAnnoyingMouse is still an 'asshole' and can still 'eat shit and die'.

Thu, 09/27/2012 - 10:43 | 2835367 Ckierst1
Ckierst1's picture

That's why they make silver and copper. Also, there is no reason why they can't alloy it to dilute the fineness of the pure gold. Electrum anyone? Gold is very malleable and thus very divisible, like gold leaf. Encase it in acrylic or something else transparent (glassy - Mylar?) to make verifiable but thin gold foil money. If it's thin it hides less tungsten I've noticed

Thu, 09/27/2012 - 12:42 | 2835786 formadesika3
formadesika3's picture

If gold is attached to some other means of exchange like paper notes, or anything, the same dilution of wealth effect can happen. The same credit emission schemes can happen etc

__________________________

Not if fractional reserve lending is not a part of it.

     - an'american'

Thu, 09/27/2012 - 04:33 | 2834687 chances
chances's picture

hahahaha! keep promoting a gold standard and watch the bankers ride off into the sunset with all the gold. this is a stupid idea promted by thieves and scoundrels!

"The supply of money would rest entirely with the volume of gold holdings that a country would possess and grow in line with its trade balances plus domestic gold production"

never has and never will, even in times of a gold standard governments have still printed more money than ther is gold,m study history and see the facts.

Thu, 09/27/2012 - 06:06 | 2834699 Zwelgje
Zwelgje's picture

Systems are as good as the people who maintain them.

 

Au in itself doesn't do fuck. It is just gorgeous.

Thu, 09/27/2012 - 05:59 | 2834716 silverdragon
silverdragon's picture

When the Chinese have the 10,000 tonne of Gold the renminbi becomes the reserve currency.

However, the real question is Yamashitas gold, it changes everything. According to Seagrave the Japanese got some and the yanks got most of it. How will it be used?

Doesn't Rothschilds have a shitload as well?

How will all the undeclared gold impact the future?

Thu, 09/27/2012 - 13:03 | 2835863 Thisson
Thisson's picture

The quantity of gold in the system doesn't matter, nor does it matter if it is declared or kept secret.

Thu, 09/27/2012 - 06:18 | 2834726 redd_green
redd_green's picture

Cheaper even than tungsten is a rat turd filled gold plated bar.  Very cheap.  made in China as well.

 

Thu, 09/27/2012 - 07:51 | 2834798 Radical Marijuana
Radical Marijuana's picture

The only good thing about commodity based money is that those were closer to the laws of nature, that matter can not be made out of nothing, nor sent to nothing. That was the point of the "ring of truth" in the gold coins. However, the postmodern world is based on breakthroughs in science and technology that have changed the law of the conservation of matter in radical ways.

The special theory of relativity, and the FACT that atom bombs go BOOM, has proven that matter is a form of energy, extremely concentrated!!!

Therefore, that expands the law of the conservation of matter to become the law of the conservation of energy, and that organizes itself through general systems theory, with its own self-reflexive paradox that energy directs its own transformations.

All of the progress in science and technology necessarily impacts upon the ideas of money. What we ACTUALLY have now is a global system of fiat money electronic frauds, backed by atomic bombs. That system rapidly evolved from the previous system of paper frauds, backed by gunpowder weapons, and that system slowly evolved from metal coins, backed by swords and spears.

Day dreaming about a gold standard is similar to believing we could go back to settling disputes with sword fights, when the REAL world now has an abundance of weapons of mass destruction.

The only aspect of the gold standard in the past that was useful was the relative ring of truth in that. What we should develop is a truth standard in our money system. However, that then demands we face the deeper paradoxes that money is actually, always, and necessarily backed up by murder. That then plunges us through the infinite tunnels of deceits, elaborated during the long history of militarism, whereby those who were the best at deceits won the wars.

From a sublime point of view, all of this is quite wonderful and mysterious ... Considering the magnitude of already accomplished progress in science and technology, and the awesome ways that postmoderning science has reconverged with ancient mysticism, developing a better truth standard in money would require profound paradigm shifts in political science.

After all, consider how quantum mechanics routinely requires us to believe in mathatical realities that utterly defy common sense!!! Despite quantum mechanics being astonishingly accurate, so far, and that it supports a whole host of technologies, that we now depend upon and take for granted, the fundamental theories of quantum mechanics blow common sense away!

For instance, they blow away the distinction between the oberver and the observed. They point out that every measurement changes the measured, and that no measurer can ever keep up with those changes. Therefore, when we consider money as measurement, we necessarily run into the same paradoxical problems.

This article, asking whether we can return to a gold standard, was ridiculously silly, and grossly superficial in its notions about what the "cultural" obstacles were in the way!

WE DO HAVE A GLOBAL ELECTRONIC FIAT MONEY FRAUD, BACKED BY ATOMIC BOMBS, SYSTEM!  Any new money system should face those facts. Like I always say, and have repeated several times in some of my previous posts on Zero Hedge about this gold standard question, the supreme ideology is miltarism, and money is necessarily inside of that.

A better truth standard in our money is needed, however, that primarily depends upon the extremely paradoxical problem that we can not have a better money system unless we also have a better murder system, because the debt controls depend on the death controls. BUT, BUT, BUT, a better murder system has to deal with that problem that those who were the best at being dishonest, and lying about their death controls, were actually the ones who DID the death controlling. Therefore, a better truth standard in our money system has to go through the almost infinitely paradoxical problem of a better truth standard in our murder system!

Like I said, postmodernizing sciences end up reconverging with ancient mysticism! The FACT that atomic bombs go BOOM means that the world is infinitely more astonishing and mysterious ... and every kind of progress in basic science that I am aware of only increases that!

It is totally ridiculous nostalgia to think we can go backwards to the truth standard as exemplifed in commodity based money, like gold and silver coins once symbolized. Those always actually had swords to back them up!

If the vast majority of people were not goof balls, looking backwards, then it should appear self-evident that our money system SHOULD try to keep up with advances in our understanding of energy laws and general systems theory. However, since those actually were primarily applied through military madnesses, to become better at being dishonest and violent, in order to operate systems of organized frauds and robberies, which, of course, deliberately denied that, and tried their best to conceal the truth about what they were doing, progress in our combined money/murder system is the most acutely difficult problem that human society faces!

One might think that our money system should be based on learning more about our best ideas about energy laws and general systems theory ... HOWEVER, that runs into a head-on collision with the conclusions that arise from those ideas, themselves, namely: REALITY IS ALWAYS ORGANIZED SYSTEMS OF LIES, OPERATING ORGANIZED ROBBERIES, AND THAT THOSE BEST AT BEING DISHONEST, AND BACKING THAT UP WITH VIOLENCE, ACTUALLY CONTROL THE WORLD, BY OPERATING THE EXISTING MONEY/MURDER SYSTEMS!

Human societies always are run by the principles and methods of organized crime, because that is what militarism IS. Therefore, a better truth standard in our money would depend upon enough of a social paradigm shift towards enough people understanding that, and therefore, evolving better dynamic equilibria between the different systems of organized lies and robbery. BUT, BUT, BUT, that is then just another restatement of the paradox of asking the authorities to tell more truth, when their "authority" actually depended upon their history of being the best liars.

There is no magical escape hatch out of that infinite tunnel of decetis that I am aware of. Therefore, our money system can never become better than our murder system, and that is THE RUB!

Thu, 09/27/2012 - 08:18 | 2834863 Zwelgje
Zwelgje's picture

your posts are outstanding. thank you very much.

Thu, 09/27/2012 - 12:31 | 2835743 OneTinSoldier66
OneTinSoldier66's picture

I do not believe that money is and always based upon violence. I transact all the time voluntarily with others.

Thu, 09/27/2012 - 20:39 | 2836955 Radical Marijuana
Radical Marijuana's picture

You pay for the government to do your violence for you, to maintain the "rule of law" ... but the government then becomes the biggest robber, that robs you the most.

All of your voluntary contracts are inside involuntary contracts. You can not stop the government from forcing you, and if they were not there, then every other little group of criminals could rob you instead, and you would then be forced to organize with others for your protection ... and presto, you would have recreated the government!  BUT, then that government itself would become the biggest robber, and would be robbing you the most, and you still would not be voluntarily able to opt out of that!

The government is simply the best organized gang of criminals, which emerge out of the struggles between the different gangs of criminals. You can deliberately ignore that, and indeed the vast majority of people do!  They LIKE to believe in the biggest bullies' bullshit social stories that OUR governments are the "good guys."

However, our governments were made and maintained by the people who were the best organized criminals, able to lie, and back that up with violence the best. That is due to chronic political problems inherent in the nature of life.

The paradoxes I talk about have been well known for thousands of years. Plato pointed out the problem of who will guard the guardians. Thomas Aquinas pointed out that, without justice, then governments were robbers. ... Well, there is no justice, other than through the paradox of the enforcement of the "rule of law," by those who are the best at being dishonest. The whole idea of a democratic republic was supposed to restrain the power of government. As George Washington said, government is like fire.

The problem we are looking at is the rise and fall of civilization, on an astronomically amplified scale. The nostalgia for a gold standard is to regress under stress, and wish we could go back to a "golden age" that actually never existed.

Going forwards is extremely problematic!  The majority of people are political idiots, totally brainwashed to believe in the biggest bullies' bullshit (like almost all of the theories about economics.)

We have a runaway system of privatizing the profits, while socializing the losses. The world is being cut up into little pieces, that can not, and do not, survive on their own. But nevertheless, the current system does everything its accounting system enables to externalize the costs, or make somebody else pay, which is just more of the runaway privatization of profits, and socialization of losses.

The mainstream world view is full to the brim of false fundamental dichotomies, which are mostly backwards. One of the most classic is the split between reproduction of people, and the production of everything else. The money system runs through and through BOTH, but we have an abundance of bullshit able to apparently uncouple those. That is merely the most extreme way that we run a society based on triumphant frauds, that makes a profession of finding hypocritical ways to deliberately ignore the social facts.

The first work of the  "father of sociology" was based on demonstrated that there were regular patterns in the number of suicides. That was a classic example of the way that death controls actually work, in one of the most extreme examples. However, those kinds of scientifically observable social facts run throughout every other area that one can examine. Those facts are also subject to their own "Oedipus effect" which is the paradox of self-reference, or the effect of knowing and predicting, upon what then happens, so that knowing and predicting, by making measurements and models, can then dynamically change what was measured and modelled. in ways that change as fast as we can do that ... (Much like in quantum mechanics.)

The heart of the problems with money is that society ends up being controlled by the people who are the best at lying, and backing those lies up with violence. Therefore, there are no straight forward solutions possible. Those who run the established systems are the best organized criminals, operating astronomically sized frauds. Everything that they say, and their professionals are paid to say, was warped and twisted by that! There is a deep undercurrent of fraudulent science, due to the vicious spirals of funding of that, which is abstractly even more problematic than corrupted politicians!

Of course, most people like to pretend that it is not that bad. Inside of their little life, it may well not be. However, those people are still stuck inside of the bigger picture, where governments are the best organized gangs of criminals, and the government as a whole finally stops having checks and balances that work, and instead, the money system and political system become such runaway crazy corruption, that they destroy themselves ... after which, the survivors have to re-evolve some new dynamic equilibria of the remaining systems of organized lies, operating organized robbery, to maybe emerge out of the collapse, after the decline and fall of civilization, to build a new one ???

That has happened over and over again in history. The difference this time is that science and technology have astronomically amplified all of that, to scales that have almost nothing in common with any past civilizations. We are witnessing the madness and self-destruction of Neolithic civilization, and nobody can predict what might survive and emerge on the other side of that ...

Thu, 09/27/2012 - 08:22 | 2834871 sporb
sporb's picture

No, it is not.  Move on. 

(I know, it is more about obsessive compulsive behaviour than reason on your part, but...)

 

Thu, 09/27/2012 - 08:51 | 2834974 lostcause
lostcause's picture

 Why go to a gold standard when you can print money for free! There will be no gold standard until the whole system collapses.

Thu, 09/27/2012 - 08:57 | 2834999 Munkey
Munkey's picture

Is it just me or was every post under this article a ranting epic?

I like gold cause its shiny, now what's the article about again?

Thu, 09/27/2012 - 09:17 | 2835070 topshelfstuff
topshelfstuff's picture

 

This sentence is what matters:

 

"""The first argument is spurious. The volume of gold is not important; instead it is the value that is ascribed to this gold that is important. A zero can easily be added to a paper bill to change its value;"""

I have posted about this many times. Either we make this move or the EastBloc makes a similar move but in an opposite manner. Let me give a brief outline.

Adding 2 Decimal Places, making $1.00 Current equal to $100.00 NEW

ALL Current USD, ( all Paper Currency ) is called in. And after a given date, perhaps one week or ten days, during which Bank Transactions are Closed and Banks only used to make the Conversion of "Old" (Current) Dollars into the NEW Currency. People have to bring in any Cash and receive the New Currency. Most is held in accounts where the conversion will be made.

This is done at 100 to 1

There are 2 definite Line Items that would be part of this change, any others can be made by "Officials"

The 2 are, All Mortgage Debt and [2] All Student Loan Debt. These two would remain FIXED in the CURRENT Dollar amount, and Payable with the NEW USD.

This will put an end to this huge and damaging Overhang and a Benefit to All who hold a Mortgage not only those who experienced Foreclosure. At the same time All Banks and Mortgage Co.s would be absolved, given Immunity, to any offenses that were made. In essence this Mortgage Fiasco would be shredded, done away with, and all New Mortgages written correctly. The same with Student Loans. This gives The People some relief and gives the Country the opportunity to reboot with a new, clean slate.

There would be no real change in a person or family's expenses or standard of living.
A person who was earning $800 a week in Wages would be making $80,000 but of course that $3 loaf of bread will be $300, the $4 gallon of gas $400. BTW, these are amounts most countries, most people (globally) are used to (think about Japan & YEN for example).

The term "Millionaire", and the implication, would be replaced with Billionaire.
What actually occurs would be missed/overlooked at first. But the actual Total Effect is Not just 100 to 1...its really 100 x 100.

The US Gold stockpile...What if we had 100 of these Stockpiles

Not only is our Foreign Debt made payable at 1% of its Current Valuation (since this Debt would remain FIXED), but with Gold and any Commodity getting 2 decimal places added the US Gold stockpile becomes 100-fold of its Current Valuation

 [ Originally I had put this thought together with only the US in mind, but now given the mess in Europe they too should make the same move, This also gives us a sort of "Cover" by not doing this unilaterally.]

Either of the first 2 articles by Hugo Salianas Price explains why we have to return to a Gold/Silver Standard, and the 3rd one details how a Silver Coin should be put into circulation as an alternative choice.

 

Gold: the protector and creator of jobs
Hugo Salinas Price
04/February/2009

The gold standard:
generator and protector of jobs

Hugo Salinas Price
16/June/2010

In this article we discuss the relationship between loss of the gold standard and the present financial chaos, which is accompanied by severe "structural imbalances" between the historically dominant industrial powers and their new rivals in Asia.... more>>

http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=167

07/June/2011

Free coinage of gold and silver - then and now

Hugo Salinas Price

Some people think that one of the fundamental institutions of the 19th century should be restored; we single out Great Britain as the great leader embracing this institution.


Thu, 09/27/2012 - 10:02 | 2835227 Money 4 Nothing
Money 4 Nothing's picture

In my *opinion* no, the only way this can work is if a new SDR is ratified and we trash the current system, which isn't a difficult feat at this point.

It would have to be a whole brand new monitary system and most likely Centralized. Question would then be, who peg's the next "dollar"? Will price discovery really be realized for Gold per Troy? I would say it should be at $3,200.00 right now with supression lifted.

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