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Guest Post: Piketty's Gold?

Tyler Durden's picture




 

Originally posted at The New York Sun,

With all that has been written in respect to Thomas Piketty's new book, “Capital,” you would think that someone — Paul Krugman, say, or Jonathan Chait or David Brooks or Hendrik Hertzberg; we’re not worried about who it might be so much as someone among the liberal intelligentsia — would have remarked on an odd coincidence of timing. We’re speaking here of the timing of the rapid rise of the blasted inequality over which Professor Piketty is so upset. After all, this inequality has become the cause celebre of the season for President Obama and his entire political party. It’s the issue of the hour. Yet when it comes to the timing at which this phenomenon presented itself, nada. Omerta.

Well, feature the chart that Professor Piketty publishes showing inequality in America. This appears in the book at figure 9.8; a similar version, shown alongside here, is offered on his Web site. It’s an illuminating chart. It shows the share of national income of the top decile of the population. It started the century at a bit above 40% and edged above 45% in the Roaring Twenties. It plunged during the Great Depression and edged down in World War II, and then steadied out, until we get to the 1970s. Something happened then that caused income inequality to start soaring. The top decile's share of income went from something like 33% in 1971 to above 47% by 2010.

Hmmm. What could account for that? Could it be the last broadcast of the “Lawrence Welk Show?” Or the blast off of the Apollo 14 mission to the Moon? Or could it have something to do with the mysterious D.B. Cooper, who bailed out of the plane he hijacked, never to be seen again? A timeline of 1971 offers so many possibilities. But, say, what about the possibility that it was in the middle of 1971, in August, that America closed the gold window at which it was supposed to redeem in specie dollars presented by foreign central banks. That was the default that ended the era of the Bretton Woods monetary system.

That’s the default that opened the age of fiat money. Or the era that President Nixon supposedly summed up in with Milton Friedman’s immortal words, “We’re all Keynesians now.” This is an age that has seen a sharp change in unemployment patterns. Before this date, unemployment was, by today’s standards, low. This was a pattern that held in Europe (these columns wrote about it in “George Soros’ Two Cents”) and in America (“Yellen’s Missing Jobs”). From 1947 to 1971, unemployment in America ran at the average rate of 4.7%; since 1971 the average unemployment rate has averaged 6.4%. Could this have been a factor in the soaring income inequality that also emerged in the age of fiat money?

This is the question the liberals don’t want to discuss, even acknowledge. They are never going to get it out of their heads that the gold standard is a barbarous relic. They have spent so much of their capital ridiculing the idea of honest money that they daren’t open up the question. It doesn’t take a Ph.D. from MIT or Princeton, however, to imagine that in an age of fiat money, the top decile would have an easier time making hay than would the denizens of the other nine deciles, who aren’t trained in the art of swaps and derivatives. We don’t belittle the skills of the top decile. We tend to view them the way we view great baseball players or violinists — heroic figures. Neither do we make a totem out of economic equality; in inequality, after all, are found incentives.

In terms of public policy, though, we favor honest money. It works out better for more people. And there is a moral dimension to the question of honest money. This was a matter that was understood — and keenly felt — by the Founders of America, who almost to a man (Benjamin Franklin, a printer of paper notes, was a holdout), cringed with humiliation at the thought of fiat paper money. They’d tried it in the revolution, and it had been the one embarrassment of the struggle. They eventually gave us a Constitution that they hoped would bar us from ever making the same mistake.

There is an irony here for Monsieur Piketty. It was France who gave us Jacques Rueff, the economist who had the clearest comprehension of the importance of sound money based on gold specie. He was, among other things, an adviser of Charles De Gaulle. It was De Gaulle who in 1965, called a thousand newspapermen together and spoke of the importance of gold as the central element of an international monetary system that would put large and small, rich and poor nations on the same plane. We ran the complete text of Professor Piketty’s book “Capital” through the Sun’s own “Electrically-operated Savvy Sifter” and were unable to find, even once, the name of Rueff.

 

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Tue, 04/22/2014 - 20:14 | 4684799 logicalman
logicalman's picture

As soon as a few grabbed the exclusive right to print 'money' inequality was sure to increase.

Until 1971 there was at least some connection to reality, however small.

And here we are.

Tue, 04/22/2014 - 20:59 | 4684966 DoChenRollingBearing
DoChenRollingBearing's picture

Honest money != gold standard

FOFOA took a long look at "Honest Money" here:

http://fofoa.blogspot.nl/2011/05/return-to-honest-money.html

EDIT:

In the event of financial calamity, we're going to need the gold (each individual's own, private, non-confiscated gold) as capital to rebuild.

Tue, 04/22/2014 - 21:25 | 4685045 spine001
spine001's picture

Multigenerational Preservation of capital in the presence of inflation is a very complex task. Obviouslly the top decile is better equipped to defend their capital than the bottom 90. Henceforth, it is a valid inference to assume that inflation will preserve and increase the income divide between the top and the bottom. If somebody thinks otherwise they still need to present any reasonable case. 

Wed, 04/23/2014 - 00:00 | 4685442 Derezzed
Derezzed's picture

Dear zh readers, don't waste too much time on Piketty. He is just a fraud : a socialist keynesien, a pure ideologist who pushed for the election of the biggest failest moron president the country has ever seen, with the orwelien state that goes with it (novlang, full narrative, etc etc).

Poor us ...

Wed, 04/23/2014 - 01:32 | 4685567 SAT 800
SAT 800's picture

Maybe it's just a co-incidence.

Tue, 04/22/2014 - 20:23 | 4684825 Unknown User
Unknown User's picture

It's not the gold, it's the Fed and the fractional reserve. Besides, WTF is sound money?

Tue, 04/22/2014 - 20:23 | 4684834 ebworthen
ebworthen's picture

It's both.

Create central banking and fractional reserve systems while unhinging from tangibles.

This has allowed them to jigger and lie about everything else; currency valuation, inflation, employment, debt; everything.

Tue, 04/22/2014 - 20:29 | 4684858 Unknown User
Unknown User's picture

It's not like they let you see the gold in their volts. Fractional reserve gold is a scam. The issue is who prints money and not what it's made of.  History shows that successful monetary systems were based on twigs, copper, bronze, etc.

It is said “Let me issue and control a nation’s money and I care not who writes the laws.”  

 

Tue, 04/22/2014 - 20:39 | 4684895 ebworthen
ebworthen's picture

Right.

When you can't exchange a paper bill for tangible Silver or Gold or copper or beef or twigs you have a complete fiat paper mache dreams machine.

JFK was assassinated for trying to restore the Silver Certificate.

Nixon came along and ended the Gold standard 1972.

That was move 3 of FED and Income Tax circa 1913.

Tue, 04/22/2014 - 21:02 | 4684982 DoChenRollingBearing
DoChenRollingBearing's picture

Had Nixon not ended the exhange of gold for foreignly held dollars in 1971, we would have no (national) gold, it was disappearing very fast, led by France!

Nixon had no choice.  All of our gold would have been gone, say, by 1977.  For $35 / oz.

Tue, 04/22/2014 - 22:59 | 4685299 Vint Slugs
Vint Slugs's picture

DCRB, I respect your views expressed here but this one is off-base.  Sure Nixon had a choice.  Instead of following Friedman's crackpot advice, he could have debased the dollar against gold.  Instead of closing the gold window and defaulting on the US international contractual obligations to redeem $ in gold, he could have debased the dollar price to, say $70- or even $100/oz gold.  Since that alternative was not adopted, now a dollar debasement would probably be around $8000/oz - that's at a minimum textbook debasement based on US M2.  Based on outstanding global fiat notes the per/oz number is probably north of $12000.

Wed, 04/23/2014 - 00:10 | 4685458 DoChenRollingBearing
DoChenRollingBearing's picture

OK, yes, that would would have likely worked as well, one way or another, + 1.  He did have to do something fairly drastic though.

Wed, 04/23/2014 - 03:36 | 4685683 Rubicon
Rubicon's picture

He could have stopped printing dollars.

Tue, 04/22/2014 - 21:26 | 4685068 Dick Buttkiss
Dick Buttkiss's picture

Unknown User: "WTF is sound money?"

Sound money, UU, is whatever the people decide it is, nothing more and nothing less.

Get that through your head, and you're halfway home, the other half being what government has done to it:

http://mises.org/money.asp


Tue, 04/22/2014 - 20:21 | 4684827 ebworthen
ebworthen's picture

Yup.

They didn't create central banks and move away from sound money to benefit the citizenry.

Tue, 04/22/2014 - 20:25 | 4684840 logicalman
logicalman's picture

The rich invented money to benefit themselves at the expense of others.

Started as soon as humans stopped being nomadic hunter-gatherers.

Still works, it would appear.

Tue, 04/22/2014 - 20:31 | 4684870 ebworthen
ebworthen's picture

Well, interest based lending and fiat at the least.

Tue, 04/22/2014 - 21:16 | 4685030 logicalman
logicalman's picture

I should have put the word money in quotes.

Sloppy on my part, I was really referring to paper money/currency.

I do know the difference between real money and currency.

Tue, 04/22/2014 - 21:25 | 4685062 ebworthen
ebworthen's picture

Roger, you are correct, they love "money" and interest and non-tangibles that disconnect labor from reality.

Tue, 04/22/2014 - 20:45 | 4684914 NidStyles
NidStyles's picture

Some humans have stopped being hunter-gatherers. If you look on TV and watch the news and see the wlefare enrollment it's obvious that there are still a lot of primitives out there. 

Tue, 04/22/2014 - 21:28 | 4685057 Pickleton
Pickleton's picture

Never mind.  The huge error in your wording was addressed

Tue, 04/22/2014 - 23:02 | 4685312 Vint Slugs
Vint Slugs's picture

Lm,

"The rich invented money...."

You are so full of shit.  You have, literally, no idea about what your are talking.

Tue, 04/22/2014 - 20:24 | 4684837 Spungo
Spungo's picture

It looks like workers around the world started getting a bigger piece of the pie between the years of 1932 and 1945. It went flat for about 20 years then went back the original highs as survivors of that generation became adults.

Tue, 04/22/2014 - 20:30 | 4684860 ebworthen
ebworthen's picture

Your thought is unclear, care to extrapolate?

Tue, 04/22/2014 - 20:25 | 4684842 Dr. Engali
Dr. Engali's picture

It's not that hard to comprehend. Without gold to tie the currency to, the fed can print with reckless abandon. Those closest to the printers reap all the benefits of freshly printed currency. By the time the rest of us get trickled on our buying power has been inflated away.

Tue, 04/22/2014 - 20:32 | 4684873 Unknown User
Unknown User's picture

"The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. The financing of all public enterprise, and the conduct of the treasury will become matters of practical administration. Money will cease to be master and will then become servant of humanity." - Abraham Lincoln

Tue, 04/22/2014 - 20:40 | 4684900 Charles Nelson ...
Charles Nelson Reilly's picture

Fucking Lincoln... What a statist prick. When he wasn't slurping on William Clay's nuts & stroking off his awful Whig Party, he was out promoting the nonsense of Hamilton's central bank ideas.

Not to mention the prick is revered for getting us into a senseless war that killed over 700k people. Only in America could we worship a killer like that,

Tue, 04/22/2014 - 21:02 | 4684987 Jimmy Carter wa...
Jimmy Carter was right's picture

How'd that slavery thing work out for ya? Still paying for unpaid wages 150 years later, whys that? Maybe shoulda done the work themselves? Who woulda thought all the social problems we'd have cause of slavery 150 years later. But it was Lincoln that dirty rat? Go fuck yourself.

Tue, 04/22/2014 - 21:35 | 4685091 Charles Nelson ...
Charles Nelson Reilly's picture

Uhhhh, yet another unenlightened clueless fucking shill. Explain to me newbie, how many other countries fought civil wars over slavery? From the history I've read, none. That's right, every other country in the world had ended slavery peacefully.... Except for old Honest Abe. Yep, there had to be a retaliation after that horse was killed at Fort Sumtner.

What a fucking statist dimwit you are. The civil war was never about slavery. It was about a powerful centralized govt having control over the states and their rights. Lincoln used slavery as the last vestige to win his war.

Tue, 04/22/2014 - 22:46 | 4685270 Jimmy Carter wa...
Jimmy Carter was right's picture

What the fuck Chuck?

Newbie? Look again. Yeah johnny reb woulda ended slavery about the same time our partners in freedom Saudi Arabia did, about 1964. We're still paying for confederate salt of the earth laziness 150 years later.

Tue, 04/22/2014 - 23:16 | 4685346 Inbetween is pain
Inbetween is pain's picture

Talk about dimwits--you empty headed moron, you're probably a southerner who forgot his own history, or never learned it right in your backward school system.  Who fired the first shot of the Civil War?  Who seceded from the Union and declared War?  The Southern States, you unbelievably stupid motherfucker.  The only thing Lincoln did to provoke their anger was to get elected.  Despite what that closeted bigot O'Reilly says, Lincoln was our greatest president.

Wed, 04/23/2014 - 08:26 | 4686045 Sean7k
Sean7k's picture

The southern states had every "right" (international law at that time) to secede from the Union. Nothing in the Constitution allows for the forced taking of States. It was Lincoln that suspended Habeus Corpus, Illegally printed greenbacks and bears the responsibility of every rebel death and dismemberment. May he be sequestered in the deepest, darkest corner of hell.

Because of Lincoln, States and their citizens are now debt slaves of a federal government run amok. The tenth amendment is all but gutted. The Constitution held you were a citizen of an individual state, but the 14th amendment changed that and allowed for the slavery of all. While Lincoln did not live to see the amendments passed, thank you John Wlikes Booth, he knew what he was doing and what for. 

The South did not start the war, anymore than Spain, Germany, Vietneam, etc did. They defended themselves from an aggressor. We are all poorer for the road Lincoln set us upon. I would not be surprised to see secession again in our lifetimes, by many parts of the USA, because of the same North Eastern money establishment. 

You are a special kind of dimwit, the one who believes what he is told. Read real historical research, not the crap the government puts in schools. Start with, "A New Economic View of American History", "Bloodlines of The Illuminati" , "A History of Money and Banking in the United States". You could also go to www. state-citizen.org for additional information on legal changes and background. 

Tue, 04/22/2014 - 21:42 | 4685107 BigJim
BigJim's picture

Cuz no other country ended slavery without a massive war that killed three quarters of a million people.

Riiiight...

Tue, 04/22/2014 - 23:22 | 4685367 Inbetween is pain
Inbetween is pain's picture

The death of 700K people seems like a fair trade for the freedom of 4 million.  Particularly since half of the dead were mostly worthless, bigoted Southerners.

Wed, 04/23/2014 - 06:25 | 4685812 MeelionDollerBogus
MeelionDollerBogus's picture

Could have just split into North and South with no war and no slavery in the North and keep getting slaves to escape in the South. It's not like slavery ended in the world.

Tue, 04/22/2014 - 20:45 | 4684911 nevadan
nevadan's picture

Spoken by a man who needed to finance a war.

Tue, 04/22/2014 - 20:51 | 4684944 TheReplacement
TheReplacement's picture

Best criticism of Lincoln I've seen yet.

To the guy below, who fired the first shot?

Tue, 04/22/2014 - 21:05 | 4684999 Ness.
Ness.'s picture

  ...but it is the government’s greatest creative opportunity. 

 

They've created quite the paradise.

Tue, 04/22/2014 - 20:38 | 4684896 disabledvet
disabledvet's picture

as long as oil remains priced in dolares the Fed can print with impunity.

Until the Ukraine thingy i think a good argument could have been made that situation was in deep doo-doo. But then you the whole Syria thing (which Israel and Saudi Arabia opposed) which was then quickly followed up by Ukraine.

We've just had strikes deep into Yemen...I think you get the message as i'm really preaching to choir on this site.

The problem has become in my view and as i've said before one of a "crowding out effect" as treasuries simply become the only asset left standing here.

We cannot grow the US economy while that is still "in effect."

One solution...incredibly enough...is for the USA to return to gold. Say 1500 bucks an ounce or something.

The other is a very convoluted scheme to "go all in on Total War with Russia" which my Inner Historian says is a REALLY bad idea.

I think I might be too late on "Plan B" however.

Ironically...Plan "G" might still be effected in spite...or perhaps even because of...Plan B (or is it U?)

Tue, 04/22/2014 - 21:44 | 4685115 BigJim
BigJim's picture

1500 bucks an ounce? Try 7500.

Tue, 04/22/2014 - 20:41 | 4684904 NoDebt
NoDebt's picture

Doc, honestly, given what I'm seeing going on (and increasing with every passing year), I seriously doubt that even a hard-gold-standard could stop the amount of distortion and corruption going on.  They'd just find a new way to game that system, too.  It would probably involve lying.

 

 

Tue, 04/22/2014 - 20:54 | 4684952 TheReplacement
TheReplacement's picture

Don't forget stealing, raping, and pillaging!  Got tungsten?

Wed, 04/23/2014 - 08:38 | 4686075 Sean7k
Sean7k's picture

The Constitution was incredibly clear that we were to have a hard money regime based on the silver dollar and gold equivalents. Reading Alexander Hamilton'e arguments for a fractional reserve currency can make your blood boil. Reading Blackstone's commentary on paper money restores your faith in humanity. 

As long as you have law and the means to modify it, you will have tyranny. 

Now, the Constitution has not changed in this regard. Congress has neither the power to incorporate a central bank nor make FED notes legal tender. These powers were NEVER enumerated to Congress.Thus, these laws are null and void. A dollar will remain 374.5 grains of pure silver until an amendment is passed to change it. No Congressional, Executive nor Scotus declaration can change the fact that the Constitution is the SUPREME law in the land. Second only to We the People.

Tue, 04/22/2014 - 20:30 | 4684853 NOTaREALmerican
NOTaREALmerican's picture

Survival of the fittest, Bitchez.

The dumbasses getting eaten have no idea how it happened either.  As a society, we can't even pass predatory lending laws to keep the obvious sociopathic predators from feasting off the obvious least-smart people society, so how are we - as a society - supposed to have a moral frame-of-reference about "honest money"?   We're a nation that rewarded the predators for generations, laughed at the prey, and now that a few of the prey actually realize what's happening and happen to be intelligent enough to write a blog, we're supposed to stop the predatory society just-like-that?   Life don't work that way.

Nope, the predators are gonna feast.  Not sure exactly how it will stop, but our society won't stop it,  we don't even have the language to describe why is should be stopped.  

Tue, 04/22/2014 - 20:58 | 4684974 TheReplacement
TheReplacement's picture

It needs to stop because it is causing many people to be hurt.  Soon it may cause a war.  If we look the other way on this crime then what is to stop them from escalating to more blatant, harmful, and violent crimes?  We see wrong we must act to right it.  Otherwise it will continue and eventually come back on us.  It is purely in our own self interest that we must protect ourselves from the wolves.  Yada yada...

Wed, 04/23/2014 - 00:57 | 4685523 jaxville
jaxville's picture

Honest money is natural money. Gold is pretty rare for the average or low income person. Trade will involve a great deal of "commodities"  barter or just plain old deceit, violence and prostitution in the intial stage of a monetary collapse.

      Gold has been money for a very long time. It won't take long for the sheople to awaken to that cosmic reality.

Tue, 04/22/2014 - 20:30 | 4684859 Hughing
Hughing's picture

Hiding the decline is a way of life for our public elders

Tue, 04/22/2014 - 20:34 | 4684861 Charles Nelson ...
Charles Nelson Reilly's picture

Fucking Keynesians are the most dishonest, disgraceful & cowardly bunch to crawl out from the campus dungeons where they were bred.

I'm not really a violent person, but after a couple of drinks I could see myself knocking Krugman's teeth out. Fuckheads like him make my blood boil.

Tue, 04/22/2014 - 20:59 | 4684977 TheReplacement
TheReplacement's picture

You'd need a couple of drinks first... pansy.

Wed, 04/23/2014 - 06:19 | 4685798 MeelionDollerBogus
MeelionDollerBogus's picture

Now try talking economics to a Marxist.

Tue, 04/22/2014 - 20:30 | 4684865 Latitude25
Latitude25's picture

Here's an alternative view on German gold repatriation.

https://www.youtube.com/watch?v=PBEwXgUfbZ0

And for videos of some of the best gold analysis I've seen to date by an individual NOT selling PMs.

https://www.youtube.com/user/belangp/videos

Tue, 04/22/2014 - 20:42 | 4684887 Kaiser Sousa
Kaiser Sousa's picture

the MoneyChangers appear invincible only becuase the bulk of the citizenry remains ignorant of the power they possess to destroy and render them extinct..

it is so fucking simple..at the bottom of "Exeters Pyramid" lies "1" of the only "2" forms of real money - Gold which the MoneyChangers have hoarded and is beyond the reach of the common man...

yet, Silver which they thought they had demonitized in the crime of 1873 remains so grossly undervalued in debt coupon dollar terms, lies currently at less than $20 per oz. despite the fact it is more rare than Gold, and despite the fact that the US govt. DOESNT HAVE ANY!!!

the rule of the MoneyChangers would end over night if every thinking man, and women would turn their backs on their worthless green peices of paper and saved the fruits of their most valuable resource - their time and energy in that which they do not control and has, like Gold been money for thousands of years -  SILVER!!!!

STOP BEING SLAVES OF YOUR OWN MAKING.............

Death To The MoneyChangers.

Tue, 04/22/2014 - 20:55 | 4684962 Al Huxley
Al Huxley's picture

Re: silver ~ 1 billion oz/year produced, and 600 million used for various industrial purposes - that means the global available pool for investment is 1oz/person every 20 FUCKING YEARS!   Yet I can go down to the coin store tomorrow and pick up 1000 if I want to (and have the cash).  USGS says production will be effectively over by 2020 - where's that 600 million/year going to come from then?  I tell you, there are some GROSS distortions in the market right now - the propaganda is almost unbearable, but it has to be to hide the distortions.  If you can just buy it and forget about it, strikes me as a reasonable bit of insurance against this paper ponzi fiasco we live in.

Tue, 04/22/2014 - 21:04 | 4684990 Kaiser Sousa
Kaiser Sousa's picture

"USGS says production will be effectively over by 2020 - where's that 600 million/year going to come from then?"

answer: no where...in fact, where the fuck is it coming from now??? we will never know what lurks in the shadows but be god damn sure they fear Silver as evidenced by the way they ruthlessly and blatantly attack the phony paper price on the "we dont have any real Silver" Comex...

bro, ur dealing with sociopaths who r just trying to alter perspectives of the weak minded...the paper games aint real...THAT SHIT THATS SHINING IN YOUR HANDS IS!!!!!!!!!!!

stay focused soldier.....

 

Tue, 04/22/2014 - 23:02 | 4685308 Latitude25
Latitude25's picture

Plus peak oil has already happened and we are moving down to an inevitable collapse in production.

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

It will become too expensive to even mine gold due to energy costs.

Tue, 04/22/2014 - 23:12 | 4685331 Vint Slugs
Vint Slugs's picture

KS,

In the throes of a bear market the discredited bulls always fall back on the fundamental supply/demand imbalance.  The above ground supply 10 years ago was ~700 m/oz.  What's the above ground supply now?  How about 700 m/oz or more?  Imagine yourself, a bull at silver $50/oz in January 1980.  What would your tune have been for the next 19 years?  I'll tell you - the same as you are now singing.  Let me know when you (I'm speaking collectively) start to seriously consider the prospect that silver prices might be headed for double digit numbers.

Tue, 04/22/2014 - 21:07 | 4685004 Kaiser Sousa
Kaiser Sousa's picture

"In the past week, the Shanghai Futures Exchange suffered another large withdrawal of silver from its warehouse stocks.  Actually, this is the lowest level of silver inventories since the exchange started building its silver stocks in August, 2012. In my article, Large Decline Of Shanghai & Comex Silver Stocks, I reported that inventories at both exchanges fell significantly since the beginning of March.  According to the most recent data, the Shanghai Futures Exchange had another 41 metric tons (1.3 million oz) of silver withdrawn as well as a million oz removed from the Comex since April 10th.

"Of course, these two banks are going to hold onto their precious metals trading activity… because how would the Fed continue to manipulate the paper price of gold and silver without the aid of these fine institutions. Furthermore, ever since Deutsche Bank announced that it was exiting its participation in price-fixing of gold and silver on Jan 17th, there have been a rash of mysterious banker deaths and suicides. Something very fishy and foul is taking place at the top banking institutions.  Unfortunately all we can do is speculate, but I would imagine things are about to get a great deal more interesting as time goes by."

http://srsroccoreport.com/silver-continues-to-drain-from-the-shanghai-fu...

Tue, 04/22/2014 - 21:27 | 4685069 logicalman
logicalman's picture

You know what they say......

Diversify.

Good idea - own silver AND gold!

 

Wed, 04/23/2014 - 04:37 | 4685709 tradewithdave
tradewithdave's picture

No mention of bitcoin? How 'bout Ethereum? It's good enough for Ben Lawsky to license just not good enough to be considered money...

If you divorce the currency (as per Mervyn King) and tech is naturally deflationary and paper money is gradually displaced for safisfying the double coincidence of needs, while gold is "allowed" solely as a store of wealth but not as a means of exchange .. what seems to be the problem?
"Don't fight the Fee .. Don't fight the tape." On the other hand you could join Chris Hedge's pitchfork revolution...

Wed, 04/23/2014 - 06:10 | 4685781 MeelionDollerBogus
MeelionDollerBogus's picture

A true money can't be grid-dependent because a true money needs to operate in places where there is no grid, never will be & where it isn't even wanted.

Wed, 04/23/2014 - 08:10 | 4686014 tradewithdave
tradewithdave's picture

Tell that to Benkler.

Wed, 04/23/2014 - 23:08 | 4689162 MeelionDollerBogus
MeelionDollerBogus's picture

Sure. We'll go for a 2 week trek through a South American jungle, me with coins, him with bitcoin, and see how we can bid/trade anything we find, buy, make, etc., as leveraged with our money on the way in, out and who knows, maybe someone we meet along the way.

Then we'll see what value bitcoin has. No grid, no bitcoin usage.

Tue, 04/22/2014 - 20:54 | 4684956 Seasmoke
Seasmoke's picture

How the fuck does 8 Billion people, allow 800,000 to abuse them so badly. 

Tue, 04/22/2014 - 20:57 | 4684967 Bastiat
Bastiat's picture

Very concise, factual and powerful piece.    I thought sure this was a ZH piece because: who else publishes articles like this?  NY Sun -- never heard of them but I'll be reading them going forward.

Tue, 04/22/2014 - 20:57 | 4684968 Jimmy Carter wa...
Jimmy Carter was right's picture

Leave your Bernanke and Krugman baggage at the door and read this

http://billmoyers.com/2014/04/21/government-protection-racket-for-the-1-...

Then try Krugman, I know I know ,

http://billmoyers.com/2014/04/16/paul-krugman-why-we’re-in-a-new-gilded-age/

We are well and truly fucked

Tue, 04/22/2014 - 20:59 | 4684978 Flakmeister
Flakmeister's picture

Classic example of confusing correlation with causation....

Hitting the oil wall was the root of the coming rot...

Tue, 04/22/2014 - 21:24 | 4685055 SilverIsMoney
SilverIsMoney's picture

The Austrians were right... 80 years later still we aren't listening... how long can this go on? When do the dominos finally fall?

Tue, 04/22/2014 - 21:41 | 4685105 roadlust
roadlust's picture

Because poor people don't have enough gold???  WFT?  If the "gold standard" was the secret to income equality, there would have never been a Great Depression.   Oh.

(Hint: Piketty's book is based on years of painstaking collection of facts, not shit he pulled out of his biased ass to post on a blog.  Which is precisely why it is being taken seriously, and will probably win the Nobel, and the pearls of wisdom in this rant, not so much.)

Wed, 04/23/2014 - 06:06 | 4685774 MeelionDollerBogus
MeelionDollerBogus's picture

Incorrect. The Federal Reserve since 1913 allowed 'creation' of money which then on the gold standard permitted theft of actual money (gold) from everyone else. It became illegal for people to make their own money whereas before you could find silver & have it made into your own silver coins. Not sure about gold but since you could trade silver for gold it wouldn't matter. A central bank has only 1 job: stealing.

Tue, 04/22/2014 - 21:45 | 4685119 NoWayJose
NoWayJose's picture

I was digging through a coin collection I inherited from my brother, and I separated out coins from England - some back to Quen Victoria. As I looked up what they were made of, I was not surprised to see that many from Queen Victoria's time contained silver (this was the golden age of the British Empire). However, over the next several decades, the silver content decreased (1920) and finally disappeared (1947) - well before the US dumped silver (1964) and gold (1971). So while we see lots about the decline of the US dollar over the last 100 years, it was an eye opener for me to see the earlier and equally devastating destruction of the English currency.

Tue, 04/22/2014 - 21:57 | 4685153 Sutton
Sutton's picture

See Steve Sailer's blog for more on this. He's the best-along with ZH.

Tue, 04/22/2014 - 22:48 | 4685275 Vint Slugs
Vint Slugs's picture

I think that Dr George Reisman has effectively dealt with Piketty.  His NY Times blog posts effectively nullified Piketty's initial premise.  Please see here: http://georgereismansblog.blogspot.com/2014/04/smith-marx-and-piketty-reismans-new.html

 

Tylers, maybe you could give Reisman some space, seeing that he's a rational man in an increasingly irrational world.

Wed, 04/23/2014 - 01:56 | 4685599 Prairie Dog
Prairie Dog's picture

I got as far as the second paragraph, which is a lie, or a misconception if you want to be kind. Either way, it's not true:

 

This is the belief that the original and primary form of labor income is wages, with profits appearing only later, with the emergence of capitalists and their capitals, as an unearned, unjust deduction from wages.

 

who says capital/profits are an unearned, unjust deduction from wages? nobody.

 

Wed, 04/23/2014 - 06:04 | 4685771 MeelionDollerBogus
MeelionDollerBogus's picture

I say it is. A lot of fraud is involved. Some of it's in the backend, cooking books, some is in the front-end, adding hours and duties belonging to managers, but making the non-managers do it for non-manager pay.

Wed, 04/23/2014 - 01:18 | 4685545 BeerMe
BeerMe's picture

Fuck!  Here it is again.  Some dumbass thinking the Keynesian monster is capital.  This thing is really fucking simple.  1913 with the institution of the Fed and then finally it gets completely unhinged in 1971.  True capital can not exist with a central bank.  True capital can not exist with a meddling government.  Inequality will always exist and will always be worse with crony governments.

Wed, 04/23/2014 - 01:53 | 4685594 Prairie Dog
Prairie Dog's picture

I come to Zero Hedge to be with the smart people!

Wed, 04/23/2014 - 03:31 | 4685680 Gumbum
Gumbum's picture

I know that leaving the gold standard gets blamed for pretty much everything that is wrong in US and it was obviously a significant event. But I believe something far greater happened in the early 70s that has been the key driver of falling living standards ever since...US oil production peaked.

Wed, 04/23/2014 - 04:06 | 4685695 Gumbum
Gumbum's picture

Look at that! Perfect fit!: http://imageshack.dk/?img=301398239997.jpg

The top tier didn't get to loose anything after the peak. All hits went to the lower/middle class.

IMO much much better explanation than leaving the gold standard. Leaving the gold standard might even have been a consequence of a US peak in oil production.

Wed, 04/23/2014 - 06:42 | 4685852 falak pema
falak pema's picture

you forget that the BW revoke was followed by the "petrodollar" standard to protect greenback hegemony.

The only collateral to that deal was that the Arabs became net owners of wealth and the West net owners of petrodollar debt! 

But as Reagan said : when WS churns up paper profits, who cares about petrodollar devaluation. In fact we welcome it 'cos its those Arabs who pay more for our guns n butter with their OIL ! 

Yes, the middle class got screwed in first world.

Reagan protected his own; like Maggie.

Wed, 04/23/2014 - 08:30 | 4686055 Flakmeister
Flakmeister's picture

The alternative was to forego a major reduction in living standard... And Nixon, or anyone else for that matter,  was not going to run on that...

The US was not going to see the rest of its gold converted into oil imports, which would have taken 5-6 years...

Wed, 04/23/2014 - 06:36 | 4685838 falak pema
falak pema's picture

Yes, this shamanist war continues.

But the substance of the Piketty thrust is more about the ills of the capitalist "financialised" model and LESS about fiat vs gold exchange standard.

But the BW revoke obviously has its place in monetary and financial history of the West; a HUGE place and Rueff was right on that. 

Wed, 04/23/2014 - 08:40 | 4686078 helloway
helloway's picture

(1) How come inequality was so great during such large swathes of time when the gold standard was used globally?

(2) If fiat puts wealth in the hands of the money printers, wouldn't the same logic infer that a gold-currency system puts wealth in the hands of the gold miners? Or as tradition had it, the gold hoarders?

I think this discussion is an elaboration around a data point. The very essence of money is such that those in charge of regulating its supply will have an advantage, gold or otherwise.

Wed, 04/23/2014 - 09:37 | 4686226 Toolshed
Toolshed's picture

You are missing the point. It is the ability to summon money from thin air, as the banksters do every single day, that causes the divergence. Humans have been trying to accomplish this same feat of magic with gold throughout recorded history, with little success fortunately.

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