Currency War: 140 Years of Monetary History In Ten Minutes

Tyler Durden's picture




 

From "why did Nixon sever the link between currencies and gold?" to "is war good for the economy?" Mike Maloney's tour de force through 140 years of gold, silver, and monetary farce is indispensable as major parts of the world enter a de-dollarization phase. As Jesse noted here, after listening to this presentation, one can surely understand why the central banks both fear and covet gold. It resists their wills, but has a natural tendency to be seen as money. Money is power, after all, and greed will too often refuse to relinquish any power or claim willingly, even to its own destruction. The American abuse of financial power for political purposes is causing a bifurcation in global finance, along the expected fault lines, and it will be interesting to see how that develops. Maloney's bottom-line, we are overdue for a new monetary system.

 

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Fri, 06/13/2014 - 19:58 | 4855346 knukles
knukles's picture

This is how all currencies and Empires die.
They spend themselves into oblivion

 

Read Cicero on Rome.
Most telling.
Almost could just change people's names for the broad policies and actions are identical.

Fri, 06/13/2014 - 20:08 | 4855374 Harbanger
Harbanger's picture

The reason we have The Fed is because some progressive politicians 100 years ago, disregarded the Constitution, and saw the unlimited financial power that private bankers and their fractional reserve banking could give to the Govt.  They didn't read the fine print that said this would bankrupt the country in Debt.

http://www.usdebtclock.org/

Total Debt per citizen is now over 193K.  Maybe someone should tell those crossing the border how much they owe.

 

 

Fri, 06/13/2014 - 20:11 | 4855385 knukles
knukles's picture

Oh, they'll pay their share with the new EDT card.  Electronic Debt Transfer card.
Simple...

Press 2 to speak Engrish

Fri, 06/13/2014 - 20:26 | 4855420 Thought Processor
Thought Processor's picture

 

 

Gold was very difficult to undermine, but sure enough they found a way to do it.  

Just re-hypothicate the stuff and BAM!  Instant increase in gold.  Need more?  Just keep re-hypothicating.   

 

Didn't take long to realize that re-hypothication is just a fancy word for counterfeiting.

 

The lesson: If you don't hold it in your hands, you don't hold it at all.

 

Fri, 06/13/2014 - 20:45 | 4855459 gh0atrider
gh0atrider's picture

gh0atrider is sorry, he came from a family that liked golds.  It was very difficult coming out to parents and saying he liked bits instead.

Fri, 06/13/2014 - 23:51 | 4855850 Richard Head
Richard Head's picture

Fuck your 3rd person, ass.

Fri, 06/13/2014 - 23:53 | 4855853 gh0atrider
gh0atrider's picture

No fuck him!

Fri, 06/13/2014 - 22:09 | 4855682 Unknown User
Unknown User's picture

People lately act as if gold was not the basis of all monetary scams including fractional reserve.

Sat, 06/14/2014 - 13:41 | 4856836 shovelhead
shovelhead's picture

Kinda like saying that a knife was the basis for all crime.

Fri, 06/13/2014 - 20:10 | 4855383 FOFOA
FOFOA's picture

Friend of Another: Start with gold standard, people will find ways to turn it into trash. This is not a United States problem. This is a world problem.

The only solution is freegold.

Fri, 06/13/2014 - 23:48 | 4855844 IridiumRebel
IridiumRebel's picture

Whoever gave you the junk needs a throat punch.

Sat, 06/14/2014 - 00:56 | 4855870 DoChenRollingBearing
DoChenRollingBearing's picture

Iridium ol buddy ol pal,

He ain't the real FOFOA...

(Of course I am not either.)

EDIT:

I remember ZH publishing one of FOFOA's columns a while back ("The Shoeshine Boy", easy to Google this article on Zero Hedge itself).  

Don't let a huckster taint the reputation of a world-recognized top gold analyst.

Sat, 06/14/2014 - 10:14 | 4856403 Sean7k
Sean7k's picture

While it is quite a slog, "Pieces of Eight" is worth the read. Why? The committee minutes from 1849 reveal a seldom discussed concept: the use of gold and silver as money. 

The Congressmen were aware of an important function of money: it must be used or it will die. 

Paper money, fiat currences, etc are not new concepts, they are millenia old. Like social credit, it provides liquidity and convenience when compared to precious metals. While attempts were aways made to tie paper to something of real value (specie redemption), these same attempts were always found wanting, because the bankers controlled the politicians and businessmen.

As a people, we have to make a choice: continue to use paper money and fractional reserve banking or repudiate them through the use of precious metals or other forms of social credit and commodity monies or combinations thereof.

Social credit requires community and knowledge of those you deal with, but it provides liquidity with timed settlements via agreement. Both social credit and settlement metals are near impossible to track or tax. While they are probably insufficient for major corporate dealings, for all us little guys (and most of the population are little guys) it could be an ideal method of financial and political revolution. 

Coordinated with other forms of non-compliance and refusal to sanction the current tyrannical regimes, it could lead to a form of social organization which is much more palatable and at variance with established Elites. 

We "know" how money functions as a means to lubricate trade, now we need to exclude those whom would use it as a tool to enslave us through debt and value creation alchemy. We have the means to free ourselves, but it will require we step out from our caves and engage our neighbors in solidarity in purpose and form.

Fri, 06/13/2014 - 20:16 | 4855395 cynicalskeptic
cynicalskeptic's picture

The US has followed the same road - in fast-forward.

 

The Republic collapses and becomes Empire with any pretense of representing citizens disappearing.  Wealth is no longer produced withing Rome but comes from conquered peoples.  Yet in time that starts drying up.   The conquered peoples no longer WANT to be Rome's subjects.

Wealth becomes more and more concentrated. - some citizens sell themselves into slavery willingly.   The money is debased to worthlessness.  Citizens no longer serve in the military - that becomes a mercenary endeavor as the Empire struggles to hold onto power and influence.

Of course it all collapses - as all overstretched and overspent endeavors do.  

Sadly, Chaos and Dark Ages follow.

Sat, 06/14/2014 - 13:53 | 4856865 shovelhead
shovelhead's picture

People will re-establish trade very quickly because they must. The trick is to keep whatever they choose to be a conveyer of value out of govt /bossman control.

That is the sticky wicket.

A quart of booze is easier than a barrel of oil but gold is the best conveyer of value if it's purity can be assayed.

Sat, 06/14/2014 - 01:59 | 4855988 pcrs
pcrs's picture

Empires spend themselves oblivious because they have lost moral authority in the eyes of the governed. They are buying time. Their evil ways have been detected. Time for the cover up wars. Started by the evil dictator who 'came out of nothing'.

Sat, 06/14/2014 - 08:15 | 4856226 new game
new game's picture

the dark ages are upon us...

Sat, 06/14/2014 - 08:49 | 4856266 Eeyores Enigma
Eeyores Enigma's picture

America or the entire developed world for that matter would not have grown to what it is now if the dollar were still tied to gold.

This whole concept is just a gold bugs wet dream that one day gold will revalue to the world currency.

If that happened which is impossible it would not become a greater store of value because there is not enough of it, by several orders of magnitude, to the current role of currency. Everything would come to a screaming halt.

There will be a point in the near future where metals soar and thats when to sell out and buy all the tangible necessities you can because that means we are approaching the bottleneck.

Sat, 06/14/2014 - 10:22 | 4856415 Sean7k
Sean7k's picture

The assumption being that the modern world is preferable to the old? Why? The pollution? Non-stop wars? Revolutions? Genocides? etc. As if we could not have a better world if the Elites were incapacitated? 

Trotting out the old argument of not enough gold is laughable. That is the lesson of hyperinflation in money systems. Gold just "re-valued" to maintain a true sense of value.

Trade has never come to a screaming halt, anywhere or anytime. Paper currencies have failed continuously. You must be confused, for one is not the other. 

Sat, 06/14/2014 - 10:34 | 4856435 Flakmeister
Flakmeister's picture

So are you are going to declare by fiat what price oil exporters have to take?

The gold-oil-ratio has been fairly stable, with, if anything, gold slowly deflating against oil, esp. since 1980...

While gold is easily revalued against currencies, it is not so against other commodities...

Sat, 06/14/2014 - 10:48 | 4856460 Sean7k
Sean7k's picture

Why would I declare anything? The market is quite capable of valuing gold against oil or any other product. 

I never suggested a set value for gold, you're too smart to be so disingeious Flak. However, explain why it is not easily re-valued against other commodities. Oh wait, YOU ASSUME a State dictate. That is where the problem started in the first place, an erroneous SCOTUS argument in favor of tender status for paper money in violation of the Constitution. 

Arguing from ignorance is not your strong suit Flak...

Sat, 06/14/2014 - 11:04 | 4856478 Flakmeister
Flakmeister's picture

You clearly misunderstood what I was getting at...

There was a very good reason why Nixon reneged on BW... It was to do with the flow of oil and the stock of gold. US gold reserves would not have lasted 10 years given the explosion in imports once US production peaked in 1970...

Don't go creating strawman. Ceteris paribus, the price of all commodities is easily expressible in gold independent of any fiat MOE. These ratios well defined using historical data that overlaps the end of BW.

If gold was to be basis of international trade, then you would have to by fiat revalue it against oil. And I can assure you that oil exporters would not be very ammenable to the idea of making their oil cheaper...

 

Sat, 06/14/2014 - 11:18 | 4856503 Sean7k
Sean7k's picture

Really? It had nothing to do with tying the value of the dollar to oil instead of gold? It had nothing to do with fractional reserve banking and debt creation to transfer wealth? Bretton woods was a con job, a means to complete the destruction of gold as money and move us into paper only. 

Oil is meaningless. It is an energy source. There are other energy sources. Oil is used for a purpose. The Elites don't allow other sources of energy and will not until they are ready to control the market with the new source.

Just as fractional reserve banking is the method of value exchange they control. 

It is about control. Control. Control. 

Gold is a great liberator. Silver is a great llberator. Social credit is a great liberator, Production and the minimalization of consumption is a great liberator. Statists fear liberation.

 

Sat, 06/14/2014 - 11:33 | 4856546 Flakmeister
Flakmeister's picture

Without oil the world grinds to a halt...

Agricultural production and distribution collapses...

Gold on the other hand is easily replaceable as a MOE...

----

BTW, How many gallons of diesel does your farm use in a given year? 

Sat, 06/14/2014 - 11:40 | 4856566 Sean7k
Sean7k's picture

You seem to be ignorant of bio-dynamics in farming. I use zero gallons of diesal or gasoline to farm.

Without oil the world grinds to a halt? So the history of mankind began in the late 1800's?  No sailing ships? Horses, Bicycles, oxen pulled plows? The Amish? They stopped farming? 

Agricultural production would collapse, then reboot locally. Amazingly, people are adaptable...

Sat, 06/14/2014 - 12:06 | 4856598 Flakmeister
Flakmeister's picture

You don't have a tractor? You don't bring your produce to market? 

Yep, it will reboot, minus a few billion excess people and then we can all happily live in a subsistence level post apocolyptic agricultural society...

What do you figure? 60 years? 100 years?

Sat, 06/14/2014 - 12:39 | 4856642 Sean7k
Sean7k's picture

So the renaissance and age of reasoning were low points in human development? We are not living a subsistence level life now as debt slaves? It would be preferable to live in slavery with iphones and soylent green? 

You decry the dangers of climate change and energy depletion, then worry about the excess population created by a false age of cheap energy? The same population creating the climate change? 

 

 

Sat, 06/14/2014 - 12:52 | 4856726 Flakmeister
Flakmeister's picture

Quit creating strawmen...

I make no such claims, I only point out the conundrum of our current situation as a rhetorical device. As far as the direction taken, the choice is ours, pointing out the options is hardly taking sides. And very soon, the illusion that we even have certain choices will be revealed as such. Tipping points are usually acknowledged only in the rear view mirror. 

I, for one, abhor the idea of playing God, unfortunately, there are many that have no qualms about it...

Sat, 06/14/2014 - 13:40 | 4856830 Sean7k
Sean7k's picture

Why? You don't like competition? Having it tossed back at you? 

The choice is ours, on a personal level and that will be the limit of its' effectiveness. If every factoid you have assembled is true, it will mean nothing unless the Elites agree to implement it. If every man, woman and child declare for change, it will come to nought if the Elites tune us out.

Revolution or status quo? How enslaved to the convenience of modern society are you? Do you drive a car? Heat and cool your home? Sewer? Water treatment? Asphalt and concrete roads? Supermarkets? How close are you to being carbon neutral? How about everyone else? Globally? China? 

Personally, I think there are much greater problems than climate change. I live as close to the earth as I can and always have. It has always felt "right". I didn't need a scientific argument. When I look out on my farm, I see a vibrant, healthy environment flush with every kind of critter imaginable, above and below the ground. I drink water from the earth, food from my garden and fields and put the waste back into the same ground.

I don't need someone to tell me what to do or how to conduct my life. Unfortunately, too many people either by desire or compulsion do not live the same way. So, what will you do Flak? What kind of choices are you making? What do you go without? Instead of telling me why climate change exists, tell me what you are personally doing to combat it. How are you getting the lead out of the environment?

Sat, 06/14/2014 - 14:15 | 4856915 shovelhead
shovelhead's picture

Don't bother.

You're dealing with brain-lock. OIL GAAAAAH.

You're right. Gold flowed out because the excess of dollars to gold ratio was screwed and Degaulle knew it. They committed fraud and were caught.

Oil imports mean nothing as long as your export values exceed the cost of oil. This means far less oil for wasteful consumption and more oil to productive value add uses.

Had we maintained a gold standard we wouldn't have the blight of excess waste and mis-allocation of capital  that reserve currency status allowed us to steal from around the world.

We simply wouldn't have the money for it. For all the various inputs, A country's balance of trade is no different from your check book.

Sat, 06/14/2014 - 14:20 | 4856922 Flakmeister
Flakmeister's picture

Is a 5% chance of an anthropogenically driven mass extinction cause for action, let alone alarm? 10% 50%. Are you willing to roll the dice, or worse yet, leave it in "Gods Hands"? 

As for your farm, the people of Petra and the Mayans saw pretty much the same in their farms as well, to cite just a few...

And nobody is telling you how to live your life, only that you be willing to foot the cost of your choices. Very simple really. I am more than willing to pay whatever price society deems necessary....

Sat, 06/14/2014 - 15:21 | 4857055 Sean7k
Sean7k's picture

I don't see a single thing your committed to listed here. So, all talk and no action? Still trying the emotion driven gambit for your argument? 

You're telling me I have to go along with whatever YOUR scientists recommend. That is your argument, is it not? Your saying I cannot ignore their conclusions and thereby MUST change. That IS telling someone what to do. Your willing to pay any price? What if society chooses no price at all? That is acceptable? 

Pretty flaccid thinking...

Sat, 06/14/2014 - 19:59 | 4857571 Flakmeister
Flakmeister's picture

Sorry but I will not be martyr that you think I should be...

If the world chooses to go off a cliff, I will act in my best interests. And if the world decides to try and avoid the cliff, I will also act in my best interests. The difference being those actions are not necessarily the same nor are there required to be...

I hate to admit it, but Ayn would concur....

 

Sat, 06/14/2014 - 21:24 | 4857729 Sean7k
Sean7k's picture

So, no having the "courage of your convictions"? Is this why scientists have no integrity? :)

Ayn is not big in my world concept...

Mon, 06/16/2014 - 00:35 | 4858264 Flakmeister
Flakmeister's picture

Fuck you....

Find someone else to play word games with...

Mon, 06/16/2014 - 01:02 | 4860343 MEAN BUSINESS
MEAN BUSINESS's picture

word games and gaming the system. 7K gross revenue is the magic number to be considered a "farm business" in certain jurisdictions (ie: Ontario). Sorry Sean7K, fail, but by all means carry on with your purist idealology.

Sat, 06/14/2014 - 20:46 | 4857663 magnetosphere
magnetosphere's picture

except tractors, locomotives, and cargo ships use very small amounts of oil.  as in biofuels with small improvements might be able to sustain food production at high levels until something like phosphorus shortages force changes in farming methods.  all this assuming wasteful consumption could be curtailed, a big if.  but horses and sailboats are not good ways to move stuff around.

Sun, 06/15/2014 - 09:45 | 4858267 Flakmeister
Flakmeister's picture

What fraction of US oil use is directly related to agricultural production (including livestock)?

Try ~25-30%....

Or roughly 1/2 of all domestic oil production...

Sun, 06/15/2014 - 10:25 | 4858315 magnetosphere
magnetosphere's picture

not even close.  these studies claiming 10x embodied fossil fuels for every calorie consumed are misleading.  they include things like hot water for dish washing and fancy restaurants.  direct costs for fertilizers, tractors, locomotives, cargo ships, and refrigeration are only a few times the embodied energy of the food, and not all from oil.

in india for example, total energy consumption is 19 kwh/p/d.  compared to america, where total energy consumption is 250 kwh/p/d, the entire food chain estimated at 27 kwh/p/d, and calories consumed 3 kwh/p/d.  the indians aren't dead, and 19 kwh/p/d can conceivably be provided by renewables.

Sun, 06/15/2014 - 10:33 | 4858355 Flakmeister
Sun, 06/15/2014 - 10:51 | 4858397 magnetosphere
magnetosphere's picture

thank you for validating my point.  agriculture and transportation use 3% of total US energy.  the rest can be vastly curtailed.  see india.

Sun, 06/15/2014 - 11:36 | 4858495 Flakmeister
Flakmeister's picture

You didn't read the fine print...

Sun, 06/15/2014 - 13:01 | 4858704 magnetosphere
magnetosphere's picture

figure 7:  branding, marketing, services, packaging, processing, hot water for dishes, storing frozen beef in your freezer for 6 months.  OPTIONAL.  just like trading MBS, CDS, and carbon credits.  food needs to be grown, moved, stored for a short period, cooked, and eaten.  everything else is a luxury.  see the rest of the world.

Mon, 06/16/2014 - 01:40 | 4860292 Flakmeister
Flakmeister's picture

Quit making shit up...

Neither figure 7 deals with what you are saying...

Mon, 06/16/2014 - 15:42 | 4862402 magnetosphere
magnetosphere's picture

for my love of god i will walk you through this step by step.  Canning paper FIG 7.  now scroll up to see what is in each category, mostly unnecessary crap.  for sure gristmills are required, but what kind of other processing is NECESSARY or even desired for that matter.  now cf. table 7.4 of http://www.inference.phy.cam.ac.uk/sustainable/book/tex/sewtha.pdf to see what is in "household" category.  cooking and refrigeration should use less than 1 QBTU/yr in america.  and no, you will not be driving your suv to the grocery store, you will take public transit or ride a motorbike.  we could easily reduce the food chain to 5 QBTU/yr to match, drumroll.... the rest of the world!  the horror!

Mon, 06/16/2014 - 19:40 | 4863252 Flakmeister
Flakmeister's picture

Read the introduction of Canning, pg. 1. In particular the comments regarding the work of Pimental et al. 

We are clearly shouting past each other, moveover, Canning is concerned primarily with the changes in energy use in the food system so he is not so much interested in the more difficult absolute estimate of energy use...

Mon, 06/16/2014 - 20:51 | 4863465 magnetosphere
magnetosphere's picture

i am aware of pimentel's work.  my claim is simply that the absolutely essential fundamentals of food production like fertilizers, tractor fuel, rail/ocean freight, are not that expensive.  3rd world countries survive by focusing on these fundamentals and forgoing the luxuries we enjoy.  but to claim lots of people absolutely must starve is unfounded, though they very well may if we continue to drive our cars and planes in endless circles.

Mon, 06/16/2014 - 23:36 | 4863963 Flakmeister
Flakmeister's picture

    Yes, in current dollars food is still cheap and will stay "cheap" for a some time yet in the Western world. It is likely to be the climate that breaks about a significant failure in agriculture before a decline in oil production does.

 Re: the US, I don't see the suburbs ever getting the pop. dens. necessary to support a 3rd world style of food distribution. Already there exists food deserts where the only alternative is corn based fast food that is disproportionately hydrocarbon dependent. Better make sure the distribution network doesn't go down for long though or it will get ugly very fast...

Sat, 06/14/2014 - 18:31 | 4857418 G-R-U-N-T
G-R-U-N-T's picture

Word has it your a 'woman' is that true Flakmeister? Doesn't matter to me if you are just curious to know if the rumor is true.

Sat, 06/14/2014 - 20:09 | 4857585 Flakmeister
Flakmeister's picture

For Tall Tom it helps him focus his anger if he thinks I am a women. Something to do with being raised by a lesbian (his words, see below) and having unresolved anger issues....

But like most rumors, this one has zero credibility. sorry to disappoint you...

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