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Who Said It? "Deficit Spending Is A Scheme To Confiscate Wealth. Gold Stands In The Way Of This Insidious Process"
...by Alan Greenspan
Published in Ayn Rand’s “Objectivist” newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967.
An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.
In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.
Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.
The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.
What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term “luxury good” implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.
In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.
Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society’s divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.
A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.
When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one — so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the “easy money” country, inducing tighter credit standards and a return to competitively higher interest rates again.
A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.
But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks (“paper reserves”) could serve as legal tender to pay depositors.
When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve’s attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates. The “Fed” succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.
With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain’s abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed “a mixed gold standard”; yet it is gold that took the blame.) But the opposition to the gold standard in any form — from a growing number of welfare-state advocates — was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.
Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.
* * *
Somewhat explains his recent commentary...
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Irrational exuberance from Greeny.
This is my umpteenth time reading this and I must say I agree with all or most of it.
Greenspahn, The Sometimes ON Sometimes OFF GOLD Bug...
Exactly.
He was a director of JPM then became Chairman of the Fed as the chief central planner for the bankers who own the Fed as shareholders.
Using the fraud of gold manipulation and CPI distortion to hide monetary inflation, he oversaw the fleecing of the American people leading now to collapse.
Treason.
I know a Vietnamese family that barely escaped Vietnam when Saigon fell. They escaped by boat and the ONLY thing that the boat owners would accept was gold for payment, no dollars or any other paper currency.
I know you can't eat gold, but you can't eat paper either. Gold will protect your purchasing power, and, it could save your life.
I think Allen Greenspan wants to die in peace.
Here's a perspective on gold:
TPTB are supressing gold in order to maintain faith and confidence in the fiat dollar, we all agree.
However, by failing to allow gold to rise, they are directly destroying capital - when investors shift their equity from any other asset to gold, it reduces demand in the alternative assets - contributing to deflation. By failing to allow gold to rise commensurably, the holders of that gold are less able to service investment debt, and have less equity when selling gold to swing back into alternative asset classes
so contrary to their very intentions to create inflation, their suppression of the gold price is the CAUSE of the deflation
I havent thought that brainburp through fully, just throwing it out there
In the final minutes of the fourth quarter of his life.......Alan seeks absolution.
Will he find it?
Stay tuned for the next episode of......as the wirld burns.
I honestly hope Bix Weir is right about him and he does find it, but I will have to see it to believe it.
"In the final minutes of the fourth quarter of his life.......Alan seeks absolution."
Alan is back in a position where he can say whatever he wants, after many decades of doing what benefitted him and his banker friends. Thus, my fundamental problem with people who follow the likes of Rand. They can watch a guy like Alan do the exact opposite of what he (and Ayn) said, and still find value in the meaningless words even after decades of "objective" evidence that they are not worth the paper they are written on.
Your assuming one thing for another. Greenspan sold his soul and gave away his ideals to play the financial game of thrones. Now that he no longer plays the game he wants his soul back but he's going to discover that the loss was permanent.
Yes, exactly. I don't understand LTER's criticism. Greenspan's actions while at the Fed have no bearing on the truth or falsehood of what he wrote in this article; they in no way make them "meaningless words". If anything, what we've been seeing in the last few years is objective evidence that the article was spot on.
All we can infer from this strange episode is that either Greenspan wrote the article and changed his mind once at the Fed (and now changed it back again??); or, he still believed in what he wrote but acted otherwise, for reasons about which we can only speculate.
Yeah. Judge a man by his actions, not by his words. Words are cheap.
Incidently, this essay slides in an interesting assumption, one that is a major contributor to our present situation (collapse in progress). It may be THE most important contributor, outside of the end of cheap oil. He throws in without analysis the assumption that ursury is fine and dandy. Like it's in the natural order, or something. To me, that makes the whole essay suspect. Guess that's why I stopped reading.
Ursury represents something for nothing. Wealth has to be created by tangible labor for a system to stand. Money, essentially, represents surplus production, and the labor that went into it, if I produce wheat in excess to my needs I can exchange it for something. Where is the surplus production in interest?
Let me guess: the writer is a dual citizen?
Ohhh, what a shame. You ask a very reasonable question -- but then mess it all up with this "dual citizen" slur, which hints at an underlying sewer of loathsome beliefs, indicating that further conversation is pointless. Go ahead: junk away...
Except Ayn Rand espoused people doing everything in their power to accumulate wealth. If Greenspan was given the keys to the vault, Rand would say he is obligated to partake. According to Rand, taking money from the taxpayers, if legal, is the reward for the hard, ingenious work of getting to a position to be able to take it, legally. So, Greenspan and his sponsors should be entitled to all they can carry. According to Rand.
True-
That is the problem with Atheist Capitalists. No absolute morality in the end to define what "hard, honest, work" really is.
But she's still a saint compared to some MFing "reverends" out there.
No it's not true. Yrb-she said the exact opposite. Greenspan was a paid .gov political junkie employed by the FED-and charged to the US tax payer base . He made nothing, contributed nothing and was worth nothing, but took payment from the .gov elite parasites. THAT was exactly what she was against.
You need to go back to skool dude..
,
"No absolute morality..."? You really ought to read what she wrote one day. That's precisely what she was trying to set out: a morality based, not on brute force, not on mystical religious pronouncements, not on the wishful thinking of socialists, but on the nature of human beings; on what is required for us to survive and to flourish.
"Except Ayn Rand espoused people doing everything in their power to accumulate wealth."
And there's the evidence that you either haven't read Ayn Rand's works or that your reading comprehension is abysmally low.
@yrbmegr: You either have no idea what she said or you are a liar.
Your skepticism is appreciated however, the conundrum you seek is not that of rational self interest, rather it is Rand's support of The State. Even actors within The State will act in their own rational self interests. The problem for the rest of us is....The State has all the fucking guns, and a legal right to initiate force.
your issues are not with Rand/Objectivism, except to the extent that she/Objectivism support The State.
Granspankyourmoney would be a nobody, were it not for the guns of The State.
Not all of the guns...I hear my neighbor out shooting sometimes. Me...of course I don't have any guns. I love Big Brother.
....for all intents, and purposes, The State has all the guns, and a monopoly on the initiation of force.
Please restate your position, clearly, and concisely.
police courts and military only. too much for me already
As a teenager, I first read Harry Browne's "How I Found Freedom in an Unfree World", which argues for complete anarcho-capitalism, with competing security agencies and all. When I started reading Ayn Rand later, I thought she was, well, a bit conventional and not really that radical, due mostly to her support of a government monopoly on the initiation of force.
Her argument against total anarcho-capitalism, as I recall, was something like this: Person A accuses person B of having committed some sort of offense. A squad from A's security company goes to B's house, and is met by a squad from B's company. Now what?
I'm sure that there are various libertarian and anarcho-capitalist responses, but haven't come across any that's completely convincing yet. (Neal Stephenson's "Snow Crash" is interesting, though...)
Suppressing gold is just another price control and price controls cause shortages.
Not just gold but anything with a true value must be controlled, otherwise capitalism might erupt and we can't have any of that.
Who said, they want inflation?
They already got inflation in all the asset classes that they need.
Paper assets such as equity, stocks are all on the rise. The asset value sometimes fall only to send losses to those who cannot afford to hold on to stocks or those who panic. And such falls are related to times when they plan commodity purchases. They control all the levers and story boards.
So, something happens. or is happening you can be very sure, thats what they want.
They wil only pretend they are losing. When the day come when Bankers lose their short and pushing carts on streets, you tell me. Non-of the bankers are in Jail or in low cost apartments or will ever be. Those arrested are already out or living their dream life at home with Government security and call it house arrest.
I think Alan Greenspan is hoping to rehabilitate or soften his historical legacy. He does this by plugging gold, despite having not discussed its merits for 20+ years. He also does this by warning about the risk of turmoil/market collapse. He hopes that by doing so he'll be able to fend off much of the criticism about his bubbles and ultra-low interest rate policies should a market collapse occur.
True - You can't eat gold or paper, but termites love paper.
I've told my wife
"These here gold and silver pieces may one day get us the fuck out of Dodge when nothing else will."
Viet families escaping Siagon with gold? Did they represent .0001 percent of the population? Or less?
This warm and fuzzy anecdote about gold leaves me nonplussed.
It's also true. I know several people, refo's as kids, who can attest to it. That's why so many of the refo boats fell prey to pirates.
When the walls were built around West Berlin there were many East German guards who took Gold from those seeking escape.
Even your Armed Forces are fragmented. (Look at the Seal's response to their President?) Your empire is in decline into the dustbin of History where it rightfully belongs.
People actually shit upon the US Dollars before they spend them. They wipe their arse with them as they are worth nothing more than toilet paper.
This is currently happening.
Your New World Order is chaos. Gold will stand as your currency burns.
Remember this when these paid off hired errand boys later claim 'they didn't know it would get so bad, - it was a horrible mistake'.
They know Exactly what they are doing to us.
+100
Evil, not stupid.
Greenspam has nothing to loose (he is in the grave with half of his foot). So he can say whatever, especially what he perceive as truth.
Re read it three times to lock it in my mind.
The real question is how hard the Greenspam will work to resurrect his reputation or will he feel satisfied with the present intellectual prostitute role he now has earned?
Not sure he has time for a real book, but it would be nice.
"Gold is not necessary. I have no interest in gold. We'll build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money."
Adolf Hitler
Hard to believe they never gave that guy a Nobel Prize......I mean......they pass that crap out like it's candy.
He was not commie enough.
Sure, he was the guy in the National Socialist German Workers' Party and went on to rule the Nazi Party.
I hear people talking about gold transactions, based in dollars because we are trained by habit to bring all values relative to fiat. but gold is the secret weapon. once all these currencies run their course no one will accept dollars or any other paper for their gold. if any currency does survive, its value will be weighed relative to gold, not the other way around. and it will only survive because it became convertible to gold. I expect, however, that places like the SGE will offer digital products of customers holdings in the form of debit cards or some kind of crypto currency. these cards will keep running tallies of total gold in milligrams and automatically convert it to whatever local payment system is used. businesses and even governments will LOVE to be paid this way. it will be one of the key ways to bring VALUE back into a collapsed and whored-out economic system.
"it puts the lotion on its skin and then it puts it back again"
HELP. HELP ME.
"it puts the lotion on its skin and then it puts it back again"
how can the welfare statist's keep us in a hole in the basement if we got gold?
duh
ban the federal reserve and move to a state bank system. each state with its own bank and its own gold.
tada
fixed it
Lets go back to the tobacco standard... at least you can smoke tobacco
You can smoke silver too, but we don't recommend it.
On Nov. 8, former Assistant Secretary to the Treasury Dr. Paul Craig Roberts spoke with precious metals news source King World News to discuss recent events occurring in the gold and silver markets and in particular, with the Federal Reserve and U.S. dollar. During his 19 minute interview Dr. Roberts unequivocally stated that the Federal Reserve is using the bullion banks to short the futures market on the Comex with naked paper contracts as a hedge against the dollar collapsing because of the five year long easing programs done by the U.S. central bank.
http://www.examiner.com/article/fed-using-banks-to-short-gold-and-silver...
The Shadow Knows
It becomes so glaringly obvious what was played against the public.
Had Gold been allowed it's meteoric rise it would of become an alternative to the stock market and also flew in the face of 'deflationary pricing perception.' It could of triggered a rush and destroyed their plans for a inflated stock market via savings hunted out of hiding from negative interest rates.
It had to be stopped so they crafted this plan to subcontract the bullion banks to naked short paper contracts destroying the price of the gold futures market.
Physical right now should be trading at $3000 an ounce.
The gold 'market' in reality is probably 10% physical 90% paper and we are accepted 'gold futures' as a index of the combined two. Or even better the gold market is in reality 1% physical 99% paper.
The question I have for the zerohedge readers is how is delinkage about to occur - will it be some black swan event when the Silver dealing window shuts down world wide causing a 'aha' moment when people realize that there is no physical to be had?
TPTB pull the plug on credit and the shootin starts by gov forcing thier own people into thunderdoom.
When there is no physical "to be had", these exchanges will settle in fiat. For example if they have 1,000 shares and silver is $20 at that time, that's $20,000, the settlement might be $25,000. The traders will be happy with that! Off to the next trade, they hit a homerun on that one!
As for buying physical metal from dealers, they will most likely impose minimums. For example monster boxes, 1,000 ounce bars, or measured in fiat i.e. $100,000 minimum. If silver is $20 something an ounce at that time, the premium will be a couple of bucks over spot.
This will price Joe Prepper Stacker out of the market and only the big boys will be able to buy the real stuff.
Joe Prepper might be able to sell his existing stack on Craigslist for 50% or 100% premium, (this is what the silverbugs are anticpating, the decoupling) but it will still be a tough sell because 99% of the public couldn't give 2 hoots about coins, especially when their $29,000 median salaries can barely afford their rent/mortgage, food, utilities, insurances, car note, taxes.
Go ahead and downvote me metalbugs, I got this tidbit from a dealer. Imposing minimums is what will keep product on the shelves. The wealthier clients can take advantage, and the lower and middle class is not invited yet again.
When the metal is replenished from mining or recycling, the minimums will be reduced or lifted and a new gimmick will be played again!
When .gov imposes solutions, there are always unintended consequences. Look at India last year to see what would happen under this particular scenario.
Black market/smuggling.
There's quite a shortage already, esp if you are looking for a particular gold coin. I know b/c I've been helping my brother looking for some Perth Mint lunar coins. Can't find them, at least not from a reputable dealer. Used to be you could find any oz of any date. Not any more. Same with some of the older gold Panda's from China. My neighbor who is from Mainland says Chinese are grabbing them like crazy now esp the perth Mint coins and the Panda's.
As the article above says, the dollar is actually worth much less but the CB has been suppressin git through all sorts of contortions and distortions. When they finally lose their grip, who know how much these undervalued hard assets [namely, gold and silver] will skiyrocket.
We need to get on the feces standard, because Greenie and the fed are full of shit
Throughout history there has been a cycle that moves between having a gold standard and having fiat currency. The cycle starts with a gold standard, which quickly leads to the point where it starts to strangle the economy, which leads to fiat, which leads to corruption then a collapse and a new cycle begins based on a gold standard. What history also shows is that if fiat is issued interest free then it can continue for indefinite periods without collapsing. Europe operated for 500 years under such a system in the middle ages and it took a war to finish it and install bankster issued money in its place. What this means is that while gold is a great policeman and remains a true store of value it is possible through a public banking system that issues money linked to productivity in a disciplined manner (and interest free in most cases) to have a fiat currency that provides all the funding the economy needs without collapsing. The problem we face today is the bankster controlled fractional reserve banking system is a ponzi scheme that uses counterfeiting and fraudulent accounting to enslave the public rather than that we need to reuturn to a gold standard.
I say break that cycle. A energy backed coin one dollar per gallon of gas. Or an ounce of good weed. Its all about what you get for that dollar remaining the same.
You do relize how many states would go bankrupt, right?
That is the only solution. Bankruptcy is an explusion of the poisonous debt they hold. They should bankrupt themselves tomorrow and let it be a lesson - NEVER LEND YOUR GOVERNMENT MONEY.
In fact gangsters should beat any citizens that buy a muni or government bond. It would put an instant end to this debt to infinity BS.
You know if you go back far enough, you'll find the smithsonian money was "taken" by 3 states who later defaulted on the state bonds they issued with the i'll gotten gains. The gvt, our taxpayers of the day, eventually footed the bill plus a 6% interest payment when it was all said and done. This was at a time when the country was young and we almost got a handle on it by the 1830's, but low and behold the gvt debt grew and never stopped. Now 2 of these 3 states have produced people who have a direct relationship with todays financial problems and direct financial gains. Those states are Arkansas, Illionis, and Indiana, and they should pay more than others for their involvements in crime, and of course you are always allowed to move out of a state which might have too large a tax burden to shoulder for an ordinary citizen to bear.
It all depends how elegantly the shift to public banking is made. If the legal principle of absence of consideration were used as the grounds for declaring all debt void, the banks would all fail. They could then be nationalised and people's deposits honored with very little damage to the system. A bad day for the banksters could be a good day for the people.
Not my problem. I suggest hanging as a solution to governments declaring bankruptcy. Hang every living poll for doing it.
Wondered when this gem was going to show up.
Fiat is controlled by the statists while Gold controls the statists. Which one do you think they favor?
Im pretty sure they got a big pile of all the gold now.
Knocking down the paper price while snapping up the physical really was the only way they could gather up all the gold chips they sold away over the preceding 30 years. It was, and still is, brilliantly executed for a bunch of thieves and frauds.
We underestimate them every time we call them, or their lackeys, stupid. "They" are far from stupid.
Its easy to look good when the ref dont call no fouls on your team?
That's the brilliant part of the con. 'They' control the rules, the refs, the players, the score board and the announcers. How can they not win?
If we dont play?
To some degree or another we can withdraw and minimize, but not to play means going full hermit. The good news is simple. If enough people were to simply begin the process of withdrawing, that alone is enough to bring the house of cards down. The system is so unstable that even incremental negative growth is enough to throw a wrench into the gears.
It's a math formula.
If 1/5 the population would no longer spend debt (i.e. - spend future fiat not yet earned), the system would crash. IOW, the other 4/5 couldn't increase their debt spending by a large enough magnitude to offset the crash brought about by the 1/5 who went to an all savings and/or barter spending/consumption pattern.
That's how dependent upon and leveraged to debt the system is.
Knocking down the paper price while snapping up the physical
The Chinese and Russians are aware of it....the American public.....not so much.
Yeah but we know about the size of Kardashian's ass, so there....
Trade gold for things of value. Make deals on gold and a handshake. A they lose track. B the deals will be good every time. Whats the price of that good ol used car if I pay in gold? They have no intension in using thier gold for coins for EBT.
No need to withdraw. In fact, we should all participate, as much as possible, in exactly the way statist wish. Work for the State. Live off the State. Draw as much money from the State as possible. Encourage others to do the same.
At the same time, introduce others to the idea of true abolition.
I like Ben Stone's podcasts explaning the goals for non-violent methods of ending all human slavery.
http://badquaker.com/archives/3208
Disagree on taking welfare, but I upvoted you for mentioning Ben Stone.
You are one principled ape Ishmael
but I think Ben Stone is right, overload the system, it has imposed itself upon you involuntarily, you owe it no respect
In fact if I were American I would vote for Hillary in 2016
WADR, The State is going to steal and redistribute regardless of our agreement, or lack thereof. Accepting welfare is a peaceful means of subverting The State, while giving it exactly what wants. It is also, not the only means of peacefully resiting. Such acceptance appeals to the pragmatic, and fiscal arguments for ending the state, as follows:
-It must spend more than it makes. It is therefore bankrupt, and must debase the currency.
-Efforts to end inequity will ending in failure, as they always have. It is incumbent on the us to educate others with regard to the pragmatic arguments.
Peace.
If like 2400 tons a year of phys is going east - they must be using intermediary companies to buy it all.
In essence then the elite of the elite are positioning themselves to the seats of the new thrones of power - Russia and China.
Whaddya mean "Gold is controlled by the Statists"?
I thought it was controlled by the Unbalanced: From what I read here, there are tons of gold bugs with unbalanced boats, who keep capsizing the gold into lakes. ;-)
I really like your basket thingy from yesterday.
The error here is in thinking that money MUST be both a medium of exchange and a store of value. The future holds fiat as a medium of exchange and gold as the best store of value. This separation of functions will allow fiat to do what it always does (get over printed) while gold acting as the universal reserve and best store of value to preserve the wealth of savers.
It seems impossible to see how this might be today but the key to seeing this is in the structure of the newest currency, the Euro. By holding gold, marked to market it allows the consumer of the currency to judge the value of the Euro by varying the gold price.
If commodity markets were immune to manipulation, you'd be right I suspect.
You're using " money" and " currency" interchangably.
They are different things. That leads to confusion.
As they like it.
Currency is supposed to be a representation of money. Gold is money. It fits ALL of the definitions. Fiat is NOT money. Nor does it represent money. It is a fantasy, and we are conditioned to all be a part of the fantasy.
(paraphrasing:) "Only Gold is Money."
J P Morgan
Real money, end interest, no fractional reserve.
Let's have a level playing feild.
Taxation is theft.
Good government is an oxymoron.
Just typing what I think.
Inflation is hidden taxation.
oh that girl
Girl? That's a guy!
along with negative interest rates, gold controls and a number of other criminal toys
You are correct, but it's still a tax and therefore, theft.
Too bad he never had the chance to put hard money into practice, by being appointed to a central bank for example.
Yeah, what the hell happened to Greenspan between his time as protegé of Ayn Rand and his tenure at the Fed? Did he have a massive stroke that destroyed his ability to think rationally?
He sold out. It doesn't need to get any more complex than that.
He didn't sell out.
All he's ever done is say whatever he thinks will serve his own ends.
Circumstances change - his words change accordingly.
Bitcoin Last Price $344
I stopped reading BTC news and prices for the same reason I stopped reading Gold news and prices:
My BTC and PM assets are... "under water". Thank goodness my RE and other assets are not.
Gold.....nature's Bitcoin.....you don't even need a computer.
You just stick in your pocket......and go.
The best part.....it's completely anonymous.
Someone figured out how to copy the block chain and create paralleled transactions. Aka they found a loophole to print Bitcoin.
It supposedly was patched, but I think the damage is done.
When the treasury came out and said they fully supported Bitcoin I knew either A. NSA was using massive server farms themselves to mine it or B. CIA were the ones runing Bitcoin banks and selling AK 47's. Oddly when you see the map of Tor traffic it goes straight to Langley Virginia.
And magically $4 million dollars in Bitcoin that existed in a anonymous bank inside Tor disappeared.
Bitcoin will fail simply because it's corruptibility index is off the chart - the entire thing is fraud.
I absolutely hate what has happened here in the USA an in the world.
I may not understand all the issues surrounding the gold standard and have read that a true gold standard will not work but it seems to me it would if the dollar value assigned to gold were allowed to increase according to the increase in the currency. Just as if the USG actually has 8,000+ tons of gold then it should not be valued at $35 USD per ounce which it is currently but should be valued at the amount of dollar currency in accounts and in circulation divided by the number of ounces in 8,000+ tons. If more currency is created the dollar currency value of an ounce of gold should go up respectively. My simple logic tells me this would work. Perhaps even better would be to have the total USG PMs revalued to cover the total USD in accounts and in circulation and their dollar value would go up as more currency is created.
NO!!!
As soon as you 'assign' a value to gold, those that do the 'assign'ing will see to it that gold does not function as a wealth asset.
NEVER let the government tell you what gold it worth...NEVER!!! They will always say it is shit and the paper they make is cream.
$15 Trillion a year in GDP / 4,000,000 ounces - yep if it's value was representative of GDP cycled once a year it should be like $70,000 / ounce right now. Which would create the larget economic boom in history - that is looking for gold.
There are drawbacks to a gold standard. First be clear are we talking gold coin or a paper claim?
With a gold standard I believe paper gold ETF's would not be allowed to exist.
Its either a gold coin or its not.
Drawbacks for whom?
Everyone. If its paper its fiat because they cannot be trusted. If its coin then the people will shave the coins. Human nature.
A scale to weigh coins, and basic means of testing purity have existing for a long time.
I think it would just be impractical for very small amounts, and for transacting over great distances.
Ever notice the reeded edge of the dime, quarter, and half dollar? They date from the time when those coins were made of silver, to prevent people from shaving the coins. Your gold and silver eagles still have a reeded edge.
Pennies and nickels, on the other hand, never had a reeded edge since they were base metal and not subject to shaving.
In a gold standard, you would not have to " transact" with gold. That is what currency does.
The gold would be in the background, in your safe as a store of value, or in a trusted bank vault accounting for your currency.
Governments would keep it, and settle trade accounts with it.
But I don't ever expect to live to see this. It forces the governments and politicians to be honest , and gives the people some economic power. They will resist that at all costs.
If I was running the printing presses, I'd be scared of gold too.
Most British one-pound coins also have the reeded edge, with the inscription "Decus et Tutamen": "an ornament and a safeguard".
The excellent book "Newton and the Counterfeiter" talks about this technical innovation in some detail.
Let's not forget, that a "standard" is what got us here, monetarily speaking. One of the first acts by CONgress, was to fix the ratio of Gold to Silver.
Violence again, having produced the exact opposite of its stated intent.
The scale was inventted many years ago
Do you have any idea of the things an average jewler can do? Pleanty of ways to mess with gold coins in particular.
Plenty of ways to get caught too. Back in the day when a gang tried to steal Lincoln's dead body they needed a third hand, they found a guy, he was a nickle forger, can't recall if they got caught or escaped, but the life span of crook is shorter than a banker and during a great depression would be even harder for the crook to succeed.
I mentioned it above before seeing your comment; but if you want a great example of the lengths to which the counterfeiters would go, and those who pursued them, you'll enjoy reading "Newton and the Counterfeiter".
It was illegal to spend a shaved coin, why would you play human nature against its self?
Drugs are illegal hows that working so far?
There's a difference between 'legal' and 'lawful'
There's a difference between 'money' and 'currency'
Two things many people don't understand.
We need a system of law, not a legal system.
We need a system of real money - currency would take care of itself at that point.
Ultimately there is no difference between a gold certificate and a gold coin if the former is fully convertible into the latter.
That is a big if. Every other time it was not at the end.
We are so far removed from the system that was in place, that we don't realize, in 1910, you could take a paper $20 "note" to a bank, and exchange it for a $20 gold piece.
Up until 1964, you could exchange your $1 "silver certificate" ( we have all seen them,at one time or another) and get four quarters that were made of 90% silver.
Honest money. And real currency.
It has morphed into the toilet paper "Federal Reserve Notes" we have today. Rapidly used to buy less and less. ( inflation). Printed in quantities determined by whatever bullshit hocus Pocus fantasy bullshit paper shuffle computer keystroke media manipulation, banker controlled Facist crap they decide works at any point in time.
Whew!
Well that's how we know we still live in hell, with hope and change, maybe some of us can get to the middle.
The only difference between the government printing paper money and a member of the public printing paper money is that one group has enough hired thugs to prevent the other from competing.
Either way, both are backed by the same fat nothing.
BTW, I see you are as confident regarding your retirement as I am.
Anything on paper gets copied more than an Pamala Anderson porn video... As soon as it's supply can be increased it is frauded by human nature's interest to serve one's self before others.
It's like the internet - anything that has been digitized becomes worthless. Software included. Thus you see the migration to paired software which portions of it are locked online in a vault and the software simply does not have it's full function set without linking to a server - regaining control to the programmers and letting them control value of it.
Yes: the trendy term for this is "Software as a Service" (SAAS).
One of the few articles that I will copy and keep. Having read some of Mises, Rothbard, maybe next will read the rest of what Ayn Rand has to say.
Still stuck on whether to buy more physical at this point. The Darkside Force is strong.
Extension of reserves/credit to wage war is needed in order to obtain energy and commodities.
Not much gold left to run the vast economy on gold.
Gold is held by people to defend against confiscation by inflation, but there is no way gold will become government money again.
Wars to maintain energy and commodities coming home won't stop, hence gold is on the way of reserve/credit creation.
Without war, there is no high standard of living. It is that simple.
I am not endorsing war, I live small myself. But people have high expectations and won't oppose war.
History is impeccable. Nation A attacks Nation B to take energy, water, food, commodities by force. This will never change.
Libya, Egypt, Iraq, Sudan, Afghanistan, Ukraine, Cyprus.... did I miss any? The US has been invading and pillaging gold from every nation it enters. War is the effort, "humanitarianism" is the excuse. Gold is treasure #1, Oil objective #2.
Transparency is a bitch.
Fort Knox might be empty, but where is all the foreign gold they stole?
Operation "Screw You".....was a complete success.....just don't tell Germany.
http://www.zerohedge.com/news/2014-03-10/was-price-ukraines-liberation-handover-its-gold-fed
"... there is no way gold will become government money again."
If the people were ever to take control of the government back from the banksters, it would be possible. Unlikely, perhaps.
These things are cyclical. The gold standard may return (even if its for a short time) but it will come after a severe collapse or a final world war (a war to end all wars)
This cannot go on without one or the other (or both), the world is in too much debt.
A war to end all wars??
I thought we already had one, and it didn't work.
delete
is that a paper claim on paper? or is that velllum?
"it puts the lotion on its skin and then it puts it back again"
time to clear the air in here
As was published here last January...
http://www.globaldeflationnews.com/what-caused-a-brilliant-young-economi...
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.
In lieu of gold, lead would serve as a fine stand-in for blocking the statist's confiscation of wealth.
Alan Greenspan's 'Gold and Economic Freedom' from Ayn Rands 'Capitalism: The Unknown Ideal"You're going to fight deficit spending with an assault rifle?
what is an "assault rifle?"
I'd say it's double barreled shotgun.....why would anyone need two barrels on a gun?
2 ducks are better than 1
The people always ask me what happened to your teeth? I said the old man used to bring home a lot of wild game so we bit down on some buckshot as a kid. Matter of fact my dentist told me wit a couple more crowns, you could prolly just live off buckshot.
An 1873 Winchester painted black with a muzzle brake and a tripod.
A rifle you assault someone with, as opposed to a carbine.
Gold, get you some.
Author: A very smart dude.
http://www.safehaven.com/article/35734/the-financial-repression-authority-with-john-butler
John Butler has 18 years experience in the global financial industry, having worked for European and US investment banks in London, New York and Germany. Prior to launching the Amphora Commodities Alpha Fund he was Managing Director and Head of the Index Strategies Group at Deutsche Bank in London, where he was responsible for the development and marketing of proprietary, systematic quantitative strategies for global interest rate markets. Prior to joining DB in 2007, John was Managing Director and Head of European Interest Rate Strategy at Lehman Brothers in London, where he and his team were voted #1 in the Institutional Investor research survey. In addition to other research, he publishes the Amphora Report newsletter which appears on several major financial websites. A cum laude graduate of Occidental College in California, John holds a Masters Degree in International Finance and Economics from the Fletcher School of Law and Diplomacy, associated with Harvard and Tufts Universities.
Financial Repression
BROAD DEFINITION: "Any Policy that constrains the ability of the financial markets and investor participants in these markets to take rational actions to invest, diversify and manage the risk of their investment as they would personally prefer to do."
NARROW DEFINITION: "A specific tool kit of policies implemented by government which indirectly confiscate the wealth of the private sector and move it to a combination of the public sector and/or "too large to fail" institutions."
FINANCIAL REPRESSION IS ABOUT LIMITING INVESTMENT CHOICE
"The whole point of financial repression is to make it difficult or impossible for an investor to protect themselves"
John feels Financial Repression "is now extremely broad based (globally) and in fact you have to look very closely to find countries not actively pursuing some mix of Financial Repression policies."
A Negative Sum Game
Butler has argued in his Amphora Report that competitive currency debasement is "is not a zero sum game but rather a negative sum game because policy makers don't realize that by trying to devalue against each other, unseen they are undermining the very credibility of unbacked fiat currencies generally."
Increasing the BRICS are "becoming increasingly wary of where all this is going and as a consequence are diversifying not only their fiat currency reserves but are diversifying into gold, oil fields and real assets generally."
How Investors Protect Themselves
"The only free lunch in economics is DIVERSIFICATION. The problem is that in a world of Financial Repression, the way you diversify yourself is very different than a world where financial represion is not an issue."
"There is no way out but Currency Debasement"
John outlines in this video specifically what the "new diversification" must consist of.
He believes the Fed "will blink" as the US dollar continues to rise as a consequence "of the deflationary pressures which are spreading across the world." He sees evidence of a major trend reversal coming in 2015 and possibly before the end of 2014.
https://www.youtube.com/watch?feature=player_embedded&v=brEfmCgWIIY
we need a money system that combines bitcoin with the gold standard, then we will have multiple means by which its integrity is monitored, because evindently varients of the gold standard to date have always been corrupted when they have been controlled from one centralized body
Listen.
As of now I see no down votes against your comment. I guess many, if not all of the original gold guys who were here in the beginning are officially "GONE".
Blame it on the full court bitcoin press and Fonestar. He was an arrogant provocateur, 'you guys are too stupid to understand the brilliance of bitcoin', or whatever.
You shot yourself in the foot. With a 12 gauge.
Try transacting with it when the.electricity goes.out.