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Ron Paul On Gold & The Fed's Failed 'Utopian Dream'
Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,
Over the last 100 years the Fed has had many mandates and policy changes in its pursuit of becoming the chief central economic planner for the United States. Not only has it pursued this utopian dream of planning the US economy and financing every boondoggle conceivable in the welfare/warfare state, it has become the manipulator of the premier world reserve currency.
As Fed Chairman Ben Bernanke explained to me, the once profoundly successful world currency – gold – was no longer money. This meant that he believed, and the world has accepted, the fiat dollar as the most important currency of the world, and the US has the privilege and responsibility for managing it. He might even believe, along with his Fed colleagues, both past and present, that the fiat dollar will replace gold for millennia to come. I remain unconvinced.
At its inception the Fed got its marching orders: to become the ultimate lender of last resort to banks and business interests. And to do that it needed an “elastic” currency. The supporters of the new central bank in 1913 were well aware that commodity money did not “stretch” enough to satisfy the politician’s appetite for welfare and war spending. A printing press and computer, along with the removal of the gold standard, would eventually provide the tools for a worldwide fiat currency. We’ve been there since 1971 and the results are not good.
Many modifications of policy mandates occurred between 1913 and 1971, and the Fed continues today in a desperate effort to prevent the total unwinding and collapse of a monetary system built on sand. A storm is brewing and when it hits, it will reveal the fragility of the entire world financial system.
The Fed and its friends in the financial industry are frantically hoping their next mandate or strategy for managing the system will continue to bail them out of each new crisis.
The seeds were sown with the passage of the Federal Reserve Act in December 1913. The lender of last resort would target special beneficiaries with its ability to create unlimited credit. It was granted power to channel credit in a special way. Average citizens, struggling with a mortgage or a small business about to go under, were not the Fed’s concern. Commercial, agricultural, and industrial paper was to be bought when the Fed's friends were in trouble and the economy needed to be propped up. At its inception the Fed was given no permission to buy speculative financial debt or U.S. Treasury debt.
It didn’t take long for Congress to amend the Federal Reserve Act to allow the purchase of US debt to finance World War I and subsequently all the many wars to follow. These changes eventually led to trillions of dollars being used in the current crisis to bail out banks and mortgage companies in over their heads with derivative speculations and worthless mortgage-backed securities.
It took a while to go from a gold standard in 1913 to the unbelievable paper bailouts that occurred during the crash of 2008 and 2009.
In 1979 the dual mandate was proposed by Congress to solve the problem of high inflation and high unemployment, which defied the conventional wisdom of the Phillips curve that supported the idea that inflation could be a trade-off for decreasing unemployment. The stagflation of the 1970s was an eye-opener for all the establishment and government economists. None of them had anticipated the serious financial and banking problems in the 1970s that concluded with very high interest rates.
That’s when the Congress instructed the Fed to follow a “dual mandate” to achieve, through monetary manipulation, a policy of “stable prices” and “maximum employment.” The goal was to have Congress wave a wand and presto the problem would be solved, without the Fed giving up power to create money out of thin air that allows it to guarantee a bailout for its Wall Street friends and the financial markets when needed.
The dual mandate was really a triple mandate. The Fed was also instructed to maintain “moderate long-term interest rates.” “Moderate” was not defined. I now have personally witnessed nominal interest rates as high as 21% and rates below 1%. Real interest rates today are actually below zero.
The dual, or the triple mandate, has only compounded the problems we face today. Temporary relief was achieved in the 1980s and confidence in the dollar was restored after Volcker raised interest rates up to 21%, but structural problems remained.
Nevertheless, the stock market crashed in 1987 and the Fed needed more help. President Reagan’s Executive Order 12631 created the President’s Working Group on Financial Markets, also known as the Plunge Protection Team. This Executive Order gave more power to the Federal Reserve, Treasury, Commodity Futures Trading Commission, and the Securities and Exchange Commission to come to the rescue of Wall Street if market declines got out of hand. Though their friends on Wall Street were bailed out in the 2000 and 2008 panics, this new power obviously did not create a sound economy. Secrecy was of the utmost importance to prevent the public from seeing just how this “mandate” operated and exactly who was benefiting.
Since 2008 real economic growth has not returned. From the viewpoint of the central economic planners, wages aren’t going up fast enough, which is like saying the currency is not being debased rapidly enough. That’s the same explanation they give for prices not rising fast enough as measured by the government-rigged Consumer Price Index. In essence it seems like they believe that making the cost of living go up for average people is a solution to the economic crisis. Rather bizarre!
The obsession now is to get price inflation up to at least a 2% level per year. The assumption is that if the Fed can get prices to rise, the economy will rebound. This too is monetary policy nonsense.
If the result of a congressional mandate placed on the Fed for moderate and stable interest rates results in interest rates ranging from 0% to 21%, then believing the Fed can achieve a healthy economy by getting consumer prices to increase by 2% per year is a pie-in-the-sky dream. Money managers CAN’T do it and if they could it would achieve nothing except compounding the errors that have been driving monetary policy for a hundred years.
A mandate for 2% price inflation is not only a goal for the central planners in the United States but for most central bankers worldwide.
It’s interesting to note that the idea of a 2% inflation rate was conceived 25 years ago in New Zealand to curtail double-digit price inflation. The claim was made that since conditions improved in New Zealand after they lowered their inflation rate to 2% that there was something magical about it. And from this they assumed that anything lower than 2% must be a detriment and the inflation rate must be raised. Of course, the only tool central bankers have to achieve this rate is to print money and hope it flows in the direction of raising the particular prices that the Fed wants to raise.
One problem is that although newly created money by central banks does inflate prices, the central planners can’t control which prices will increase or when it will happen. Instead of consumer prices rising, the price inflation may go into other areas, as determined by millions of individuals making their own choices. Today we can find very high prices for stocks, bonds, educational costs, medical care and food, yet the CPI stays under 2%.
The CPI, though the Fed currently wants it to be even higher, is misreported on the low side. The Fed’s real goal is to make sure there is no opposition to the money printing press they need to run at full speed to keep the financial markets afloat. This is for the purpose of propping up in particular stock prices, debt derivatives, and bonds in order to take care of their friends on Wall Street.
This “mandate” that the Fed follows, unlike others, is of their own creation. No questions are asked by the legislators, who are always in need of monetary inflation to paper over the debt run up by welfare/warfare spending. There will be a day when the obsession with the goal of zero interest rates and 2% price inflation will be laughed at by future economic historians. It will be seen as just as silly as John Law’s inflationary scheme in the 18th century for perpetual wealth for France by creating the Mississippi bubble – which ended in disaster. After a mere two years, 1719 to 1720, of runaway inflation Law was forced to leave France in disgrace. The current scenario will not be precisely the same as with this giant bubble but the consequences will very likely be much greater than that which occurred with the bursting of the Mississippi bubble.
The fiat dollar standard is worldwide and nothing similar to this has ever existed before. The Fed and all the world central banks now endorse the monetary principles that motivated John Law in his goal of a new paradigm for French prosperity. His thesis was simple: first increase paper notes in order to increase the money supply in circulation. This he claimed would revitalize the finances of the French government and the French economy. His theory was no more complicated than that.
This is exactly what the Federal Reserve has been attempting to do for the past six years. It has created $4 trillion of new money, and used it to buy government Treasury bills and $1.7 trillion of worthless home mortgages. Real growth and a high standard of living for a large majority of Americans have not occurred, whereas the Wall Street elite have done quite well. This has resulted in aggravating the persistent class warfare that has been going on for quite some time.
The Fed has failed at following its many mandates, whether legislatively directed or spontaneously decided upon by the Fed itself – like the 2% price inflation rate. But in addition, to compound the mischief caused by distorting the much-needed market rate of interest, the Fed is much more involved than just running the printing presses. It regulates and manages the inflation tax. The Fed was the chief architect of the bailouts in 2008. It facilitates the accumulation of government debt, whether it’s to finance wars or the welfare transfer programs directed at both rich and poor. The Fed provides a backstop for the speculative derivatives dealings of the banks considered too big to fail. Together with the FDIC's insurance for bank accounts, these programs generate a huge moral hazard while the Fed obfuscates monetary and economic reality.
The Federal Reserve reports that it has over 300 PhD’s on its payroll. There are hundreds more in the Federal Reserve’s District Banks and many more associated scholars under contract at many universities. The exact cost to get all this wonderful advice is unknown. The Federal Reserve on its website assures the American public that these economists “represent an exceptional diverse range of interest in specific area of expertise.” Of course this is with the exception that gold is of no interest to them in their hundreds and thousands of papers written for the Fed.
This academic effort by subsidized learned professors ensures that our college graduates are well-indoctrinated in the ways of inflation and economic planning. As a consequence too, essentially all members of Congress have learned these same lessons.
Fed policy is a hodgepodge of monetary mismanagement and economic interference in the marketplace. Sadly, little effort is being made to seriously consider real monetary reform, which is what we need. That will only come after a major currency crisis.
I have quite frequently made the point about the error of central banks assuming that they know exactly what interest rates best serve the economy and at what rate price inflation should be. Currently the obsession with a 2% increase in the CPI per year and a zero rate of interest is rather silly.
In spite of all the mandates, flip-flopping on policy, and irrational regulatory exuberance, there’s an overwhelming fear that is shared by all central bankers, on which they dwell day and night. That is the dreaded possibility of DEFLATION.
A major problem is that of defining the terms commonly used. It’s hard to explain a policy dealing with deflation when Keynesians claim a falling average price level – something hard to measure – is deflation, when the Austrian free-market school describes deflation as a decrease in the money supply.
The hysterical fear of deflation is because deflation is equated with the 1930s Great Depression and all central banks now are doing everything conceivable to prevent that from happening again through massive monetary inflation. Though the money supply is rapidly rising and some prices like oil are falling, we are NOT experiencing deflation.
Under today’s conditions, fighting the deflation phantom only prevents the needed correction and liquidation from decades of an inflationary/mal-investment bubble economy.
It is true that even though there is lots of monetary inflation being generated, much of it is not going where the planners would like it to go. Economic growth is stagnant and lots of bubbles are being formed, like in stocks, student debt, oil drilling, and others. Our economic planners don’t realize it but they are having trouble with centrally controlling individual “human action.”
Real economic growth is being hindered by a rational and justified loss of confidence in planning business expansions. This is a consequence of the chaos caused by the Fed’s encouragement of over-taxation, excessive regulations, and diverting wealth away from domestic investments and instead using it in wealth-consuming and dangerous unnecessary wars overseas. Without the Fed monetizing debt, these excesses would not occur.
Lessons yet to be learned:
1. Increasing money and credit by the Fed is not the same as increasing wealth. It in fact does the opposite.
2. More government spending is not equivalent to increasing wealth.
3. Liquidation of debt and correction in wages, salaries, and consumer prices is not the monster that many fear.
4. Corrections, allowed to run their course, are beneficial and should not be prolonged by bailouts with massive monetary inflation.
5. The people spending their own money is far superior to the government spending it for them.
6. Propping up stock and bond prices, the current Fed goal, is not a road to economic recovery.
7. Though bailouts help the insiders and the elite 1%, they hinder the economic recovery.
8. Production and savings should be the source of capital needed for economic growth.
9. Monetary expansion can never substitute for savings but guarantees mal–investment.
10. Market rates of interest are required to provide for the economic calculation necessary for growth and reversing an economic downturn.
11. Wars provide no solution to a recession/depression. Wars only make a country poorer while war profiteers benefit.
12. Bits of paper with ink on them or computer entries are not money – gold is.
13. Higher consumer prices per se have nothing to do with a healthy economy.
14. Lower consumer prices should be expected in a healthy economy as we experienced with computers, TVs, and cell phones.
All this effort by thousands of planners in the Federal Reserve, Congress, and the bureaucracy to achieve a stable financial system and healthy economic growth has failed.
It must be the case that it has all been misdirected. And just maybe a free market and a limited government philosophy are the answers for sorting it all out without the economic planners setting interest and CPI rate increases.
A simpler solution to achieving a healthy economy would be to concentrate on providing a “SOUND DOLLAR” as the Founders of the country suggested. A gold dollar will always outperform a paper dollar in duration and economic performance while holding government growth in check. This is the only monetary system that protects liberty while enhancing the opportunity for peace and prosperity.
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Please Ron, give it a rest. We are done with words. You know, just like us, that gold is still the preferred collateral and asset by all central banks.
All the fraud, hiding in plain sight. When the supply lines break, then and only then will the rubber meet the road and then and only then will the world get the "reset" it so badly needs.
Turns out, humanity stopped evolving as soon as bad behavior started rewarding itself (and we allowed it to continue).
"A sword not used appropriately will eventually be fallen upon"
he's trying to expand the remnant, who still need messages like this, even if you dont need to hear it anymore. youve already woken up, hundreds of millions have not.
< Less than 1%
< More than 1%
Yes he is.
Sometimes I wonder what the percentage of people who actually know WTF is going on is to get a better idea of just how fucked we are. They say you only need to get 5% awakened before change is possible...
http://psychcentral.com/news/2008/02/15/herd-mentality-explained/1922.html
based off of personal interactions with those around me, id say we're at less than 5%. it's hard to tell from things that one might normally use like elections and youtube videos because we know those are controlled. i would say that i think that although we aren't at the 5% threshold of people who have "woken up" more and more are starting to realize that something is terribly wrong, but they cant identify the real problems or even start to ask the right questions because of highly successful brainwashing. that's why RP's messages like this remain so important.
Lately I have been having conversations with friends in public about these important issues and have had complete strangers come up and want to join in the conversation.
Very encouraging...
yes but people ive talked to often agree with me as i wonder IF there is ANY fixing it anymore. except a reset. as far as ur 'boiling frog' comment below, i fear that we might already be 'done'
The above commentary is the very reason Dr Paul never made it to the White House... It is the truth and makes perfect sense... A pox on the tribe...
r.p. is a direct threat to the fed as it operates-a criminal banking crime syndicate above the law.
that is what it is and will be until overthrown. overthrown is the only option and that will be violent. they are not going to go away with their tail between their legs. they will use violence to prevent abolishment. plain and simple fact of money, power and control....
like topelling the king andf all the kings horsemen.
and how can this monumental task be acomplished? that is the 100 trillion dollars of debt contol question...
Good on you Zer0head. I think displaying a willingness to dialog an unpopular topic (which is to say, it's disspiriting because it seems unsolvable) is THE step to take.
The Establishment has a great trick to quell dissent by saying: "If you don't have a complete solution then SILENCE is all that you're allowed!"
Well, duh, how do we get to a solution without discussion?!? See... status quo inertia.
So the energy to invest is not just to talk about it, but to raise the acceptance level for _wanting_ to talk about it.
I too have had public conversations and reasonably well fact-supported people with policy/political awareness joined in, and here's the important bit, they didn't spend a lot of time at the beginning trying to figure out what my views were first to make sure there "wouldn't be any contention," they just dove in, and embraced the difference of views and discussed those differences with some passion...
Encouraging indeed.
Good on you Zer0head, you're doing your bit, and that's great. Often friends and family are deer-in-the-headlights, or too afraid to discuss the unpleasantness, but once enough people show that it's something that's more important to talk about than news over in the next State/Country/City, cause it effects us all, all the time, for generations out.
at least the rp institute tried harder this time to not include all the political jibberish they added lin the last message of "his" to make him look nuts.
Sadly, much less than 1%, though many who are just starting to "get it" claim they "get it". So... depends on what you mean.
The real problem is, only 0.0001% are willing to say NO. And mean it. And live it.
Even 0.1% is sufficient, if that 0.1% is 100% totally and absolutely committed to do whatever it takes to eliminate the human predators who control and enslave everyone. But we are still many orders of magnitude away from 0.1%.
A systemic collapse would change that in 24 hours.
As long as we don't experience the boiling frog syndrome we may stand a chance...
In theory, that's correct. But there is another important part of the equation.
Namely, when people "lose it", WHO do they go after?
Do they go after the oligarchs, the human predators?
Or do they go after whoever they see who has something they want and think they can get?
Because if they go after the oligarchs, they win. Otherwise, they lose (and are little or no better than that oligarchs).
Unfortunately, I don't think you want to know the answer to this question.
Of course, only time will tell for sure, but I don't think the oligarchs are worried, or need to be worried, because at least 99.9% of those who pretty much understand what is happening, and have pro-liberty attitudes... will not take the necessary actions.
I hope I'm wrong, but I don't think I am.
Humans ain't what they used to be.
Nice guys finish last.
But they don't die from Syphilis...
A systemic collapse where a person's survival is threatened will cause most people to revert to their default setting.
Nothing of which has anything to do with freedom or private property.
chaos is ugly, ask the jews in the 40's, hiding in the woods living a complete state of fear/survival...
picture society unraveling like katrina time a million. wolves preying on each other...
Yes, which is why solutions must be worked out early enough, and acted upon early enough. Because nobody works very efficiently on productive projects when they're just trying to stay alive. /ricochet
"Or do they go after whoever they see who has something they want and think they can get?"
Yes and that is why there is no real choice other than to try to reform things rather than submit to collapse.
Unfortunately, one must assume being confronted with armed gangs of merciless 25 year olds.
When the Holocaust By All, Against All starts there will be no reversing the bloodbath.
I disagree.
I think the established powers are pretty hip to the idea of insurgence, hence the Big Brother structures of total survellance.
Force on Force is a failing proposition, cause you'd be taking a toothpick to a gunfight.
In my opinion, if you can take your "chips out of the game," and display that you can sustain a reasonably comfortable lifestyle, then this will be sufficient as a grass-roots movement.
Cause what will happen is "chips in the game" people will start to face "the decline" as wealth concentrations to elite result in less for the non-elite. The monotonic decline for their quality of life will at some point lower their standard experiece so that those "out of the game" will appear to have it better (and indeed they do), at that point the watershed has been crossed.
The way to keep people in control is to keep them one sliver above desparation, as they approach that line, any alternative becomes attractive, so instead of chaos, if they can see a slightly better alternative, they'll rush towards it.
Another reason Force on Force won't work is because it's self organizing, and the victor will be an even worse Bad Ass {tm} than what we have now, so welcome to tyranny/dictatorship... I'm just sayin'
Cheers,
Nage.
I don't think you disagree, because I've said many times in ZH messages that a direct, face-on battle against the predators-that-be is utterly hopeless. Which is why I've said many times any action would have to be hyper-asymmetric and hyper-unconventional... or it would absolutely guaranteed fail.
The reason I've said "humans are finished" so many times is... almost certainly they are vastly too disorganized and vastly too conventional to figure out they even NEED to design and fight such a hyper-asymmetric and hyper-unconventional war to have any hope.
And thus, humans are finished.
Which is why I never tried to organize anything, but moved to the extreme boonies in a remote location in the southern hemisphere and set up my self-sufficient place to live. So yeah, "take my chips out of the game" is precisely what I did, and what I advise.
However, when people ask whether it is possible to defeat the predators-that-be, I give my honest answer. Which is "yes... but only if humans do what they are not willing to do" (and most are too stupid or conventional to even imagine).
Yes, what exists now IS total dictatorship, tyranny and slavery. And this has already existed for a while now, albeit not quite as visibly.
I basically agree with your "badass" comment. Though I agree this will never happen (due to the overwhelming braindamage suffered by virtually all regular folks at this point in history), it is possible for productive people to be soooooo clear about the nature of predators and producers (prey), that those producers come to clearly understand a key point. That point being... if they intend to survive, they must become extremely schizoid beings (for a while). They must be utterly non-predatory with other producers, but become the baddest bad-asses in the universe when self-defense is called for. And always via hyper-asymmetric and hyper-unconventional techniques so the kill-ratio is well over 1000:1 (or at least well over 100:1).
NONE of that will happen, for several reasons. But I do state, as a matter of fact, that such is possible. And if the producers who are prey FULLY... and I mean FULLY... understood the nature of the predators, and the nature of the game, and what complete, overwhelming sucker-putzes they are... well, maybe they would shape up and do the right thing.
But bottom line is, we agree. Not gonna happen. Which is why I choose to evade. No comrades with sufficient clarity, brains and seriousness to make a difference... by orders of magnitude. Not even close to not even close.
Heya;
Thanks for your comments honestann.
I understand your frustration, and especially your sense of disappointment in the seemingly underwhelming capabilities of "the average man."
I share this disappointment and my experience has also been that there is usually only a very small fraction of people that have the characteristics of:
Funded, Knowledgable, and Willing (people who can self-launch towards big system-wide solutions).
My current project is to sniff-out and locate these self-launcher and plug them into a self-organizing framework to tackle big system-wide problems.
Wish me luck.
Cheers, Nage42.
I wish you luck!
Zer0head:
Re: more or less than 1%?
In the Canadian context, I have worked on that problem for several decades and continue to do so through Electoral District Associations. By those means, every single day, I continue to PROVE it is less than 1%, and overall getting worse, not better.
(Although, with a limited sample size,
it may not personally seem that bad.)
The more one knows, the worse it gets.
Ron Paul is the best that I am aware of in the American context at waking up millions of people. However, he is still a reactionary revolutionary, promoting impossible ideals as bogus "solutions."
Although I love to hold on to the irrational hope that we will see increases in the percentage of people who understand that the monetary system is based on government enforced frauds by privately controlled banks, there are no objectively good grounds to actually believe that is happening in any sufficiently worthwhile ways. Furthermore, and more importantly, guys like Ron Paul and his ilk are deliberately NOT facing the facts that money is measurement backed by murder, and therefore, the ONLY way to have a sound money system is to have a sound murder system to back that up.
I would suggest that we would need an average of 10% who understood the monetary system to make that understanding have enough momentum to drive real political change. Or, one could have 5% who understood well, and another 20% who sort of supported them, although that larger group did not understand as well. However, we are nowhere near those kinds of thresholds of public awareness.
Actually, when one endeavours to be more objective, I believe that the unavoidable conclusion is that the deeper problems of the funding of the political processes are automatically getting worse, faster, rather than in any possible ways getting better. Personally, I have been forced into a political stalemate situation, by the ways that the political games are so totally rigged.
Playing the long game of politics is like playing in a league where the team that won the previous season gets to unilaterally change the rules of the game, as well as picks the referees and pays them. Since that has been going on for season after season, the long game of politics has been almost totally rigged to become a vertical cliff, rather than a level playing field. The banksters and their buddies control their political puppets, who are voted for by enough of the masses of muppets, who were misinformed by the mass media. The oligarchical plutocracy derives their "wealth" from being able to make the public "money" supply out of nothing as debts for everyone else, which fraud is enforced by governments. Collectively, they are a group of trillionaire mass murderers, and nobody else is in their league.
There is almost NOTHING but organized crime and controlled opposition. It is practically impossible for any publicly significant opposition to organize, because whenever it starts to become significant, it ends up being subverted, to again become dead-end controlled opposition. It would take an enormous series of political miracles for enough people to understand enough, to be able to organize effectively against the ruling classes. That particularly impossible because almost all the alleged opposition now is already controlled.
The bigger problems in the background are automatically getting worse, faster, far, far beyond what most people who only pay attention to the human world of screwed up political economy appear to be fully aware of. Guys like Ron Paul base their kinds of bullshit "solutions" on magical words, like "liberty." As Ron Paul correctly wrote in the article above: "The fiat dollar standard is worldwide and nothing similar to this has ever existed before." However, his views are not remotely close to the kinds of intellectual scientific revolutions which would be theoretically necessary to cope with the emergence of globalized electronic monkey money frauds, backed by credible threats of force from apes with atomic bombs!
Not only do we live in a Bizarro Mirror World, or a Wonderland Matrix, where everything appears proportionately backward and absurd, but moreover, almost all of the bogus "solutions" proposed by the mainstream morons and reactionary revolutionaries are also actually backward and absurd too. The only genuinely better resolutions to the chronic political problems inherent in the nature of human life would require better death controls at their core, which would require radical changes in the ways that we perceived those problems, in order to change the basic paradigms of militarism.
Militarism is the self-actualizing supreme ideology of the murder system. Militarism deserves to be the supreme ideology. What exists are combined money/murder systems, because the debt controls are backed up by the death controls. That manifests as governments being the biggest form of organized crime, controlled by the best organized gangs of criminals. More genuine scientific coping with that requires developing UNITARY MECHANISMS, rather than continuing to use the old-fashioned DUALITIES of false fundamental dichotomies, and their related impossible ideals.
However, as I said, Ron Paul is about the best we actually have who is publicly significant, yet therefore, he is a typical reactionary revolutionary, who provides about 90% relatively good analysis of the problems, followed by then about 10% bullshit solutions, because his analysis never went deep enough. That is pretty well a universal feature of the kinds of controlled opposition which are the only kinds that we find are publicly significant. Meanwhile, the organized crime that dominates civilization continues to control things in ways whereby overall that civilization automatically becomes more and more criminally insane.
Hence, any realistic view of the future should expect that there will be NO good solutions. The problems will continue to automatically get worse, faster. We are headed towards the established systems of legalized lies, backed by legalized violence, through which operate the financial enforced frauds, going through some series of psychotic breakdowns, and crazy collapses into chaos. and, even then, the most probable futures are for that to continue to get worse, faster ...
The basic problem is that the social pyramid systems developed by Neolithic civilizations were always based on backing up lies with violence, which systems have been amplified to astronomical sizes by progress in physical science and technology. However, nothing like that has happened in political science, because the oldest and best developed from of social science and social engineering was warfare, whose successes were based on deceits and treacheries. That then became the foundation for economics to be systems of organized lies operating robberies, whose successes were based on enforced frauds.
A few more people are beginning to superficially recognize those social facts, because those facts were becoming worse at an exponentially accelerating rate. However, almost all of those continue to be controlled opposition, or reactionary revolutionaries, still operating within the same frame of reference as the biggest bullies' bullshit world view, due to the degree that all the dominate natural languages, as well as the dominate philosophy of science, were developed inside the context of the triumph of the biggest bullies' bullshit world view, resulting in social systems which are based on the principles and methods of organized crime, against which there are no significant opposition groups which are not also controlled to spout similar sorts of bullshit.
Ron Paul may be one of the best there is, but then, that only demonstrates how pathetic the real social situation has become. From my point of view, he is basically still another immaculate hypocrite, who continues to be able to provide some good analysis, up to a point, but then, promotes bullshit "solutions" based on old-fashioned ideas, explained using poetic magical words. Of course, that is a mirror image to what Ron Paul stated about how the Federal Reserve Board has "over 300 PhD’s on its payroll," as intellectual mercenaries, who are professional liars that manage to maintain the necessary deliberate blind spots in their perception of the basic social facts, not to mention also being similarly able to deliberately ignore the most important physical and biological facts.
Given that is my overall assessment of the political situation, I would say that 99% of the population is profoundly ignorant about how the monetary and taxation systems actually work, and they want to stay that way. That relatively recent increase to perhaps as much as 1%, that have now somewhat become aware of the basic facts regarding the fundamentally fraudulent financial accounting systems that currently control civilization, at least 99% of them are still reactionary revolutionaries, promoting the same old-fashioned false fundamental dichotomies, and related impossible ideals, as the basis for the bogus, bullshit sorts of "solutions" to those problems which they superficially analyzed in correct ways, but never went deep enough in order to their solutions to reflect that deeper level of analysis ...
Overall, our society is terminally sick and insane. There are no reasonable ways to expect that to get better. One can only hold on to irrational hopes for some series of political miracles, IF there are going to be any finite, realistic, resolutions of the problems. (And, of course, one can also hold on to transcendental hopes.) Ideally, understanding political economy should be consistent with the understanding of general energy systems. However, actually doing that enough would take a series of intellectual scientific revolutions, which would make all previous paradigm shifts in physical and biological sciences look like mere child's play by comparison.
The grand canyon chasm between progress in physical and biological sciences, WITHOUT any similar progress in political sciences, keeps on getting bigger and BIGGER. It is still INSIDE that context that guys like Ron Paul propose utterly ridiculous "solutions" based on going backward to some kind of honest money, with a sound dollar.
While it may well be a nice day dream to imagine an American democratic republic in which the monetary system continued to be based on gold and silver, whose value was set by Congress (while that was backed up by the death penalty for those who debased that money), the facts are that the international banksters were already able to apply the methods of organized crime to the political processes, in order to completely corrupt all branches of the American government, which has made the situation overall get worse, faster, and particularly at a nearly perfect exponential rate since 1971.
Moreover, the EXISTING money system is now electronic, backed by atomic bombs, and other weapons of mass destruction. I.e., MAD Money As Debt, backed by MAD Mutual Assured Destruction, all of which is ALREADY a runaway towards MADNESS without end, except through series of severe social storms, blowing through to unprecedented degrees. More importantly, the old-fashioned notions of the conservation of matter, that were present in the ring of truth of real metal money, such as backed by gold and silver, no longer makes enough sense in a world where it has been proven that matter is a form of energy.
The only theoretical standard for "money" that makes sense now would be an energy standard. However, such a standard ought to be developed in ways which are consistent with general energy systems. However, adequately doing that requires recognizing that the biggest bullies' bullshit world view dominated the history of the philosophy of science, in ways which reversed our understanding of entropy. Furthermore, doing that requires more fully understanding how and why human energy systems operated as entropic pumps of energy, wherein the path of least resistance was the path of least morality, and the components that controlled the systems were the most labile ones, which were the most dishonest and violent people.
An energy standard is the best standard for money. However, such a standard, to be self-consistent, must recognize the degree to which money must be measurement backed by murder. Of course, guys like Ron Paul do not come within light years of that kind of insight. (And, yet, like I said, he is relatively the best of the kinds of controlled opposition groups which are publicly significant at the present time.)
Although I happen to believe in my own bullshit, which is the result of spending several decades becoming educated about these matters, including a long series of political experiments and related court cases, as well as face to face discussions of these issues with tens of thousands of people from all walks of life, my current conclusions are that the existing social situation is hopeless from any reasonably objective point of view. Most of Ron Paul's analysis is correct, on the level that he presents it. However, most people do not understand even that level of truth about the social facts, and most people have been conditioned to not want to bother to know about even that level of truth about their own real social situation. Moreover, a vanishingly small percentage of population wants to understand any deeper levels of more radical truths. Instead, there is almost nothing but runaway organized crime, against which there stands almost nothing but controlled opposition.
I am sure that a bunch of comments below are going to be posted with the typical range of silly & superficial ideas about what "money" should be, which will continue to deliberately ignore what "money" IS! Furthermore, those people will continue being almost completely impervious to any more rational evidence, or logical arguments about that, since they will continue to want to believe in what they personally think "money" should be, in ways which enable them to deliberately ignore the most important physical, biological and social facts.
Like I said, it is mostly a waste of time to post comments on Zero Hedge, because there will be such a tiny, tiny, tiny minority of people that are able and willing to consider what money actually IS, who will not then continue to short-circuit that with their collapse back to their favourite bullshit religions/ideologies about what money should be. There continues to be almost no public ways to make any progress in political science! It is such a sublime paradox that such an extremely important theoretical topic has no possible way to make any practical progress.
The basic dilemma is that there is nothing which is worthwhile doing, because there is nothing that can come remotely close to changing the established systems, other than their own MAD self-destruction. Indeed, the more one learns, the worse it gets, because the more obvious it becomes that it would take a series of extremely improbable political miracles for any genuinely better sets of solutions to the chronic political problems inherent in the nature of human life to actually be developed, especially since all of the existing problems are becoming more acute, at an accelerating rate, in ways which are very likely going to overwhelm any other attempts to cope with those runaway situations.
This system is perverse with moral hazards that are woven into the social fabric over time. The answer is not save this system, the answer is to influence the next one.
This system is doomed, the next one will be better or worse,.......better or worse ?
Human action is chaos in motion, money should accomodate the chaos of human action. "Money" in it present forms are designed to tame the beast......
I completely agree, LocalBoy!
Go out and play...
Yeah I was kinda wondering what a "sound murder system" was too.
Author forgot to mention "chattel slavery" with all that commentary about energy and the like. Maybe we should have a sing song standard?
"I'll sing and you'll sell for a song!"
That's what the monkey grinder is for folks!
"Once yer done bein railroaded mister we'll buy it back from ya fer a discount!"
Now let's talk 'bout dem der bailouts again and we'll discuss the whole war profiteering later
mmmkay?
@RadicalMarijuana - so what would you say that money Really Is ?
HardAssets:
money Really Is
measurement backed by murder.
Every other definition deliberately ignores some of the facts, in order to promote some idealized view regarding what money should be.
The history of money begins with someone catching and killing animals and plants to eat, that they shared with others.
Money is now globalized electronic frauds, backed by the force of weapons of mass destruction.
The same basic factors have been developing from the beginning of human beings up until now ...
Measurement begins with the concept of SUBTRACTION.
After there is that relative subtraction, then follows ROBBERY, to take energy across the boundaries defined by that relative subtraction process.
Trade exists as some dynamic equilibria in the forces of robbery. Within that dynamic equilibria, there may be exchanges, which are symbolically expressed as monetary transactions. However, all trade exists within the overall context of possible robberies, and therefore, all money Really Is measurement backed by murder.
IF, by prodigious political miracles, America returned to a bimetallic standard of money being the measurement of gold and silver, then that would also necessarily return to the original provisions of the American coinage of the 1790s, which administered death penalties for debasing that form of money. Basing money on metal actually means that money is the measurement of that metal, backed by murder. Symbolic money only have meaning when those symbols are backed by behavior. To express that is the simplest way, which includes all of the facts, results in my definition that "money is measurement backed by murder."
The money system that exists today is due to the international bankers having been the best organized gangsters. The most important way that the current monetary system was developed was that significant politicians that could not be bribed or intimidated were assassinated. Those were the deeper reasons how and why we ended up with the monetary system that exists today, manifesting through ORGANIZED CRIME & CONTROLLED OPPOSITION.
The debt controls necessarily depend upon being backed up by the death controls. It is due to the almost total social dominance of the biggest bullies that their bullshit view of "money" prevails, which includes how reactionary revolutionaries promote impossible ideals about what money should be, that deliberately ignore and deny aspects of what money Really Is.
Human realities are always organized lies operating robberies. The people who are the most socially successful at doing that are the best available professional liars and immaculate hypocrites. Therefore, it is practically pointless to promote more radical truth about what money Really Is, since the people who benefit the most from the established systems of ENFORCED FRAUDS have the greatest interest in promoting bullshit about what money should be.
That is the profoundly problematic paradox of Neolithic styles of civilization, which are social pyramid systems based on backing up lies with violence, which have been pumped up and UP by progress in physical science and technologies, to make possible the existence of electronic communications and atomic bombs, which continue to serve to maintain systems of legalized lies, backed by legalized violence, no matter how criminally insane that becomes, due to its scale being astronomically amplified in size!
IF I could think of something better to do that posting my comments on Zero Hedge, then I would do that. However, the essential nature of the political problems are that people are proportionately successful inside of social systems based on backing up lies with violence to the degree that they deliberately ignore and deny those basic facts. That is why we have ended up with the situation where governments are the biggest form of organized crime, controlled by the best organized gangs of criminals: i.e., systems of ORGANIZED CRIME & CONTROLLED OPPOSITION.
Ron Paul is a sterling example of the golden reactionary revolutionary, promoting impossible ideals that will continue to backfire badly in the real world. He is able to use the language of magical words, which many others continue to approve of. Therefore, he can speak about "liberty" in ways which do not have to ever attempt to reconcile that with the principle of the conservation of energy. He can implicitly rely upon the principle of the conservation of matter, exemplified in gold, as the basis for a sound money which would have its ring of truth, to the degree that the conservation of matter manifested in the form of gold is an expression of the laws of nature. However, he does not have to bother whatsoever to try to understand how matter is a form of energy, nor make any other efforts to understand other general energy laws, such as in thermodynamics and information theory. The audience that approves of what Ron Paul says are the "solutions" is not interested in going through intellectual scientific revolutions in the philosophy of science, which would then apply to political science, and therefore, to the combined money/murder systems.
All in all, those are the interrelated reasons why our society is terminally sick and insane. There has been significant progress in the scientific paradigms of physics and biology, but nothing like that in political science, which are still dominated by old-fashioned ideologies and religions, that are hundreds or thousands of years old. Those who promote going back to money being backed by gold (& silver, etc.) are examples of atavistic throwbacks, who somewhat understand that the currently establish monetary system is a state religion, since its money is faith-based (while that fraud is backed by force in ways which are mostly being deliberately ignored.)
Ron Paul's notions of what money should be are to promote going backwards, to return to more old-fashioned forms of money as a state religion, while the realities of doing that tend to continue to be deliberately ignored and denied. It is completely goofy to actually have electronic money, backed by weapons of mass destruction, and then expect that it would be possible to go back to money being the measurement of gold (without resolving the issue of how to operate the murder system to back those measurements up, after the development of weapons of mass destruction.)
All in all, is is practically a waste of time for me to bother to post my comments on Zero Hedge. It is simply a bad habit that I have gotten used to during the last couple of years, which I should give up, because it has become a repeating cycle, stuck in a rut, since, after a while, one recognizes the themes reoccurring in Zero Hedge articles and comments ... which make no progress, other than to note how the established systems are becoming more and more unbalanced ...
My contributions to that discussion appear to be appreciated by a tiny minority of the people who read Zero Hedge. However, to return to the point originally made by Zer0head above, those few are a tiny minority, of a tiny minority, of a tiny minority. More radical truth about the monetary and taxation systems is a Fringe Cubed position. There is no practical political point to promote that, because the established systems are overwhelmingly ORGANIZED CRIME & CONTROLLED OPPOSITION.
The profound paradoxes continue to be that success in warfare was based on deceits, which made success in finance become based on frauds. All of the established systems operate organized lies and robberies, which are promoted by bullshit about that as much as possible. People are proportionately more socially successful by operating within the biggest bullies' bullshit world view, regarding everything, and especially regarding the monetary system. Therefore, although money Really IS measurement backed by murder, almost nobody who lives inside of that system wants to stop deliberately ignoring the facts about that!
The established systems are vicious spirals of money through the political processes, becoming bigger and BIGGER LIES, spinning more and more wildly out of control, because being able to enforce frauds never stops those frauds from being false.
But nevertheless, within those systems, those who make the most of that kind of "money" are then the most powerful people within those social and political systems. All together that means that what money Really Is has become runaway criminal insanities ...
Yes. The fraud is in plain sight.
It is the US CON-Gress and FED who must look at the Economy for the benefit of National Security, Tax Revenue, and the common good of Main Street and the future of the Middle Class. Does the USA have a Strong Future without a Strong Middle Class? No, and I think this is clear.
Can the USA be a Super Power without strong Economics, Strong Businesses, Strong Technology, and Strong Education? No, this is also clear. But what they don't tell you is being a Military Republic and a Super Power has certain features including picking the losers economically. You see they don't need that much Industry and that many working is High Technology. In fact most needs are met by unskilled labor even if they happen to have college degrees.
SO let's look at the Natural Features of a Military Republic Super Power. First of all Fascism naturally will be suggested as it is our most successful example of the Roman Empire or other empires. that is why we have the Fasces on our Mercury Dime. Fascism is the joining of National Government to large Corporations who are chosen to represent the country's Success.
- Fascism
- Foreign Policy involving Interventions, Support of Trade
- Global Trade, Regional Resources
- Protection of Sea Trade Routes
- Free Trade Agreements
- Military Hubs, Ports, Territories around the world
- Domestic & Foreign Policy change toward Spying
- Police State, DHS type Agency
- Domestic Spying, Mail, Internet, Email, Public Camera
- No Resolution for Fraud in War Department Contracts
- Support of Giant Corporations, Bail-Outs, Loan Guarantees
- NAFTA, CAFTA-DR, Decline of Small Businesses
- Unfair Competition by Large Corporations & Banks
- Media & War begin to Militarize the People, Casualties are down played
- Education in K-12 is sabotaged, 18 YO Kids uninformed about past wars, military history
- Wealth Extracted from Households, Household Debt Increases
Winners & Losers are picked in Labor Force,
- No Trade Barriers, Low Labor Compensation, Off Shoring
- New kind of Protectionism with Free Trade, Bailouts, Regulations & Legislation provide unfair advantage to Large Corporations
- Era of Small Businesses comes to an end eventually
- Fixed Markets are the Norm, Stock Markets, Commodities, even Interest Rates
- Laws & Taxes become complex, Wealth Shapes the Law
- There is an End to the State of Justice where the Wealthy are concerned
- Financial Instruments seem to have no Limits, Engineering is applied as if it adds value
I just lay this out to say that in an Empire or with a Super Power it is natural to have today's state in the USA: 1) Free Trade 2) Huge MIC Security Apparatus 3) DHS type Police State for the Father Land 4) Domestic Spying 5) Captive US CON-Gress 6) Huge Money Flow to Election Campaigns and US CON-Gress 7) Global Free Trade 8) Open Borders, Illegal Workers, Slave Labor Overseas, Off Shoring 9) No State of Justice for Wall Street Crimes & DC Bribes, even Foreign Bribes 10) Central Bank that is Crony Capitalists 11) Fascism
The Joke is that CB really isn't responsible for Jobs & Wages in the USA. Change must come from the US Congress or some Constitutional Solution unless we allow National Referendums... allow true Debate to Spread and fire up the Citizens and Children.
Plain sight?
This is fraud WITH A BLOWHORN!
Well..get busy livin or get busy dyin....
Glad to see Ron's articles are getting shorter.
Politicians & their elitist fundraisers have ALWAYS hated gold for over 5,000 years. Why? Because it cannot be manipulated and cheated. Who gives a fuck what Helicopter Ben thinks? Next country that backs their currency with gold wins.
www.traderzoo.mobi
If only there was a country that could do so. It would be handy to know the country and price ahead of time if possible.
As long as you can get there before NATO does.
"Because gold is honest money, it is disliked by dishonest men."
Indeed, medium giraffe, as the example of Libya most recently demonstrated!
actually, gold can be cheated...just ask china, with their less-than-reliable production numbers.
With a graduated cylinder, a drop of acid, and an electric resistance probe you can defeat ANY attempt to counterfeit gold.
So, no, gold cannot be cheated before a COMPETENT Essayer.
The greatest of ironies is that the technology exists NOW for the first time in history for average people to be able to economically essay PMs for themselves.
Things like graduated cylinders, and acid test kits were expensive the last time there was a hard money standard in the world. And electronic testers simply didn't exist.
Now you can have all of them for less than $1000.
There has never been less need for a MINT much less a government issuer of currency.
You could literally use elements on the periodic table as a medium of exchange in their raw form with near perfect authenticatability.
Reverting back to the gold standard would require a lot of politicians with some balls. Myself, I can't think of even one.
There are politicians with balls like Merkel and Hillary but they aren't in favour of a gold standard.
Didn't you hear? Vaginas are tougher than balls-those things can take a pounding.
Yep. Ever seen one in the trash? Lying beside the road? Over at the recycle center? They are pretty sturdy and can indeed take a pounding!
Weiners are, on the other hand, vulnerable. Bring back the Cod Piece!!
Save the Weiner!
They will for once not be in charge of that decision.
PMs will come thru the trade window.
The FED's shareholders idea of the utopian dream revolves around them living the effendi life while the sub human barbarians they rule over are eating bugs and living the nomadic lifestyle.
This is an inequitable, predatory, confiscatory system of money, and it was designed that way from the start by people who were smart enough to hide it until the results rolled in.
No way any country would revert to a gold back money system. Not when they have bitcoin,wizcoin,shizcoin,pizcoin,etc...
These nattering nabobs of negativism need to get with the program!
Fiat is like margarine which looks good and is very spreadable but stripped of its colour it is disgusting and no one would ever touch it. Likewise when people understand that fiat is not backed by intrinsic value but by sheer arrogant confidence and promoted even further by a totally corrupted pyramid scheme called fractional reserve banking, then we slowly come to realise the great theft that has been perpetrated by the masters of the banking system.
Well, maybe. But what the hell is backing bitcoin?
Is bitcoin backed by "intrinsic value"?
Is bitcoin "fiat money"?
Nope, which is why I am quite surprised so many self-proclaimed liberty-lovers also love bitcoin. I can appreciate some aspects of bitcoin, and just the fact it might give nightmares to the predators-that-be has to make one want to like bitcoin. But the reality is, bitcoin is more-or-less just "fiat without without the fed". Better perhaps, but still fundamentally flawed.
It depends on an honest unmanipulated internet.
I understand precious metals, I don't understand bit-coin.
I would venture that the vast majority of those commenting on bit-coin don't understand it either. Some say it is secure and anonymous. Do they have PhDs in Computer Science and experience with bitcoin down to the digital coding level? Do they know encryption? Or are they repeating what someone else told them, which they are completely unqualified to evaluate? If you don't have this 'nuts & bolts' detail level of knowledge (and very few do) - you don't really know what you're talking about.
Nothing new here. We know of examples of companies brought down by quant types that were doing things & taking risks that the execs didn't even understand. It all sounded impressively 'scientific' however.
Note I'm not saying bitcoin is 'bad' either. I stay away from it because I have no way of determining its merits for myself.
I have no problem saying it. Bitcoin is the banksters WET DREAM. It gives them exactly what they've been after for the better part of a century....the proverbial cashless society, where they don't even need to go to the trouble of printing physical monopoly fiat.
This doesn't even take into account the multiple times the bitcoin system has been hacked, and 'coins' have gone missing or outright stolen. Ooops! So sorry, we'll get that fixed in the next coded patch.
Yeah, well I am a scientist, engineer and long time hardware and software developer, and I don't trust the security and anonymity of bitcoin either, definitely not in the medium or long term. I haven't coded bitcoin or anything exactly like bitcoin, but I have written CRC, ECC and some encryption code before. So I understand the basic mechanisms, and I don't trust them.
As a scientist and engineer who has-worked and is-working on "rocket science" level projects, I encourage everyone NOT to think of "science" and "scientists" like some form of religion. Cuz they're not.
Religion offers the promise of "omniscience". Science does not. But too many promoters of too many points-of-view pretend you can trust "science" or "scientists" in that way.
DON'T. Scientists are human beings, and most aren't much smarter or more honest than regular off-the-shelf human beings. They are almost as easily bought-off as anyone else. For evidence, see "AGW", which is just the tip of the iceberg in modern times.
Technically bitcoin is fiat money
The source of intrinsic value is that new bitcoins must be "mined" by expending an ever increasing amount of CPU power and are not created at the whim of a bank.
Importantly, one of the most distinguishing features of gold in possession is no counterparty risk, and this cannot be duplicated by bitcoin.
Therefore, in addition to price risk, there are other risks associated with using bitcoin as a wealth storage medium.
Cryptocurrencies are complementary currencies, which are like littler parasites riding on top of bigger parasites.
Black gold is much more important.
Black gold is indeed more important than gold. Energy is extremely important, no question. Period.
However, as a medium of exchange (not an energy source), "gold gold" is excellent and "black gold" sucks.
Perhaps your only mistake is to assign too little value to a "good medium of exchange". While energy sources are indeed exceedingly important, that phenomenon we call "trade" or "exchange" or "buy" and "sell" is also extremely pervasive and valuable.
Just imagine, for instance, if you had to exchange eggs or lumber or virgins or whatever they were in the mood for, in order to get oil from Saudi Arabia. And imagine if everyone else on earth who consumes energy had that same problem.
Yes, a good, solid, honest medium of exchange is valuable too.
And I don't mean fiat, fake, fraud, fiction, fantasy, fractional-reserve debt-bits.
So you're not wrong, you're only addressing part of the issue.
PS: You might also be correct to say "more alternatives for money exist than for energy". Maybe so, but not by much. Both gold and oil have proven themselves effectively and thoroughly. Note that food and drink are crucial too, and both gold and oil suck for that.
Black gold is indeed more important than gold. Energy is extremely important, no question. Period.
You said it yourself.
Without oil, there is a much smaller supply of food and drink.
Hemp Oil? Cheap, grow every where Alternative to Black Gold?
OT: Bring on the hot wars, bitchez!
http://www.reuters.com/article/2015/01/28/us-mideast-israel-lebanon-idUS...
As long as the hooker down the street gives blow jobs in exchange for those pieces of paper called dollars, they are still worth something. The illusion is alive and well. As much as we like to bash fiat currencies, people all over the world are more than willing to accept them for tangible products. We can bitch and moan and say its all fucked up... but at the end of the day it is what it is. How long will it last? Who knows? But reading 3 identical articles every single day about the dangers of fiat money sure is getting boring...
Xq, reading the comments thus far, you're makes the most sense. I've met with the Austrian/Lew Rockwell/Ron Paul/Peter Schiff crowd and they all have been saying the same thing; dollar crash. You would think I would join this group in agreement, but they miss one simple fact in all their critique. That fact is that if the dollar were to crash, then by default, all of the currencies that make up the dollar index would have to skyrocket (the Euro/Yen/Pound/Canadian Dollar/Krona/Swiss Franc. The Yen and Euro alone make up 71.2% of the dollar and for the most part looking at their charts, they are the reason why the dollar has shot up in value since 2011. The illusion is that currencies priced in each other guarantees that currencies maintain purchasing power.
In reality, over time, gold maintains its purchasing power. Silver does too. While I sell gold and silver for a living, I have been one of the few who have been calling for lower lows in gold and silver. Why would I do this? It's because I have been dollar bullish for the most part, but also because all my indicators point to lower prices.
I critique the Austrians and talk more about these indicators in my last article:
2015 Predictions for Gold and Silver
http://buygoldandsilversafely.com/gold/2015-predictions-for-gold-and-sil...
I write about the gold and silver markets 5 days a week and I do think we get one more smack down to lower lows. This won't sell me a lot of gold and won't make me a lot of money, but that will come when we finally hit bottom. While I may get negative votes for speaking about what I see, at least give me credit for calling it like I see it, and calling it well.
And yes, eventually, all the names mentioned above will be right and claim they were right. But I can't say they haven't lost some credibility in the meantime. Personally I can't wait to be bullish on the metals again. Patience they say is a virtue.
Enough with the diversions Ron. You know that a sound dollar, although a good thing, will do nothing for this country until the real problems are addressed. Talk about how the country has been taken over by the jmafia. Talk about how 911 is an obvious false flag, how the FBI, NSA, Justices and all other avenues of possible redress have been fully compromised. Talk about how all agencies are dominated by this particular group of people.
Talk about how even your very own son aligned himself with the jmafia and is a traitor to this country.
Ron, you just put false hope in the minds of the sheep by making them believe they will be allowed to benefit in some way. You know any benefits will be sucked up by the jmafia.
You are aware, Ron, but you do not inform the sheep. Why is that?
I am going to love watching the Ki... er... Prime Minister of the United States of Israel address his Congress in February.
He wants action on the Iranian and Syrian war fronts.
We will soon get to see who wears the pants around the joint...
https://consortiumnews.com/2015/01/22/congress-seeks-netanyahus-direction/
Netanyahu In 2001: 'America Is A Thing You Can Move Very Easily'
http://www.huffingtonpost.com/2010/07/16/netanyahu-in-2001-america_n_649...
ISIS = Israeli Secret Intelligence Services
Dear Ron,
Next time, would you please share with us the truth - all of it - about 911? It would establish your cred as genuine opposition, once and for all.
Sincerely,
Lin
Why is Ron Paul supposed to know "the truth" about 911 more than anyone else?
He wasn't there and just reads the newspapers like everyone else.
If the New York Times or CNN or the 911 Commission lie to him. what is he supposed to do to get facts that the public can't otherwise get.
In case you don't realize it, Ron Paul is likely NOT an insider, so the insiders are going to keep him in the dark just as they do everyone else.
thebigunit:
There are now several dozen decent documentaries about the events on 9/11, freely available on the Internet, which one could watch, if one could afford to take several hundred hours to do so. After that, one would have a relatively well-informed opinion on the matter. There is such an abundance of publicly available information, that anyone able and willing to take enough time to shift through it can come to relatively well-informed opinions.
Although there will always remain reasonable doubt about exactly what happened, since there were never allowed any proper investigations to be conducted in a timely way, but rather, lots of evidence was summarily destroyed, rather than properly studied, that merely reinforces the basic fact that 9/11 was certainly some kind of inside job, false flag attack.
My opinion is that there is no reasonable doubt that the events on 9/11/2001 were actually done by Zionists in order to blame on Muslims. The "War on Terror" was deliberately designed to become a self-fulfilling prophesy, the way that the "War on Drugs" also was, because the basic systems are DEBT SLAVERY BACKED BY WARS BASED ON DECEITS.
9/11 was the most spectacular symbol, so far, of the ways that our public political agenda is set by the ruling classes tricking those they rule over. 9/11 was an inside job which set up the financial crisis precipitated in 2008, which were also an inside job. I do not think that anyone can understand the financial world if they do not consider the ways that the military world backs that up, because money is measurement backed by murder. However, I can appreciate why those with something to lose may not want to announce their opinions about that publicly.
My personal opinion is that Ron Paul is probably well aware of what the preponderance of probability, verging on beyond a reasonable doubt, conclusions about 9/11 indicate, but has made a political decision to not discuss that, somewhat similar to how Noam Chomsky also does not do so, etc. ... Since one's opinion about 9/11 is such a clear litmus test, I can sympathize will famous and influential people not being too pleased about showing their colours on that particular topic.
INSIDERS eventually blab
Not going to happen. It doesn't allow the shysters to pillage the goy.
Look around. There aren't going to be any goyim.
"the once profoundly successful world currency – gold – was no longer money."
When was "gold" the "once profoundly successful world currency"? And what definition of currency must you use to make this statement true? During that wonderful period, what percent of total trade had gold involved? And moving along further, where did that gold come from? And moving along further, was there enough gold during that period to support all propensity for trade? Has there been enough gold during all periods, regardless of whether gold was a profoundly useful currency or not?
Let's see how Ron's essay does in answering these crucial questions. Always in the past those answers have gone begging.
Given gold's almost infinte divisibility, exactly how can there be an insufficiency of it?
Earlier I suggested that it be redeemable by the milligram.
Given gold's almost infinte divisibility, exactly how can there be an insufficiency of it?
Kind of a funny question. An apple is theoretically close to infinitely divisible. But every time you divide it, the pieces have value directly related to their share of the whole.
If an ounce of gold is worth $2,000, 1/2 ounce is worth $1,000 isn't it?
If an ounce of gold is worth $2,000, 1/2 ounce is worth $1,000 isn't it?
Indeed. But in a situation where gold was widely used as a money, the 'worth' of an ounce would be relative to how much gold was available to trade in relation to all the goods and services people wanted to trade for it. ie - half an ounce of gold would be 'worth' more like $10,000.
That ignores the cost of bringing a new ounce into existance doesn't it? If you can grind up a computer or dig up some dirt and create a new ounce for $2,000 or less, how can you make 1/2 ounce be worth $10,000 or more? With 1000% profit, don't you fear lots of effort will be misdirected to digging dirt and grinding computers?
No. I do not fear how other people spend their time.
Do you fear that your fellow man is too stupid to bargain for prices in the market????
No. I do not fear how other people spend their time.
Do you fear that your fellow man is too stupid to bargain for prices in the market????
No. But I know a commodity backed money cannot work if the supply and demand for the commodity or the supply and demand to trade can vary widely with respect to each other. That's just more degrees of freedom that brings nothing to the party and opens new vectors for exploitation and manipulation.
"Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: 'Account overdrawn.'
speech of Francisco d'Anconia in Atlas Shrugged
http://www.dailypaul.com/133313/francisco-d-anconias-ayn-rands-money-spe...
with a mandatory FU to the destroyers Wilson, FDR, LBJ, Nixon and the central bankers among a large cast of others
I disagree with the sentence "SOUND DOLLAR as the Founders of the country suggested". It was not a suggestion.
I reckon Ron Paul selects his words on purpose. It's just that this careful communication is not meant for the ZH audience.
Why appeal to the Founders, who, for all their merits, lived in a pre-industrial economy?
The Founders understood Human Nature.
They wrote our Documents to include that part of Man's Being.
I'm sympathetic to Ron Paul's point of view. It all seems to make sense.
However, it is, arguably, mostly theoretical, (which is my gripe with people who are hysterical about "global warming"),
QUESTION: Could Ron Paul, or any of his comrades in arms, identify the most "Austrian" countries in the world today, in terms of their monetary and economic policies? Since there are apparently NO countries on the gold standard, the answer might very well be "none".
(And, NO, Austria is NOT the most "Austrian country in the world in terms of monetary and economic policies.")
when the world goes kaboom your rhetorical question will get an answer.
Nobody did. Then everybody will.
PS: until some "smart guys" decide to try the fiat thing, again.
It is always crucial in reading Ron Paul's pieces that we know what "fiat money" is because it's always the bad guy. Wikipedia says: Fiat money is currency which derives its value from government regulation or law. It goes on to say: The term derives from the Latin fiat ("let it be done", "it shall be"). It differs from commodity money and representative money. Commodity money is based on a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange, while representative money is a claim on the commodity rather than the actual good.
So, if it's not one of these three: (1) Fiat; (2) Commodity; (3) Representative, it's not money. Look at the definition or "representative money" ... a claim on the commodity rather than the actual good. So that makes (2) and (3) the same thing, right? It's either money because "that big "he" in the sky says so" or it's a commodity.
Noting there's absolutely no need for money without trade, why does this definition of money say nothing about trade. Why doesn't it allow money to actually originate with a trading promise? If money "always" satisfies a trading promise immediately after negotiation ... on the spot ... how do you assure that there is money available to allow that trade? How do you assure that money in no way inhibits a trade that has no interest in the money itself ... rather is interested in money's ability to allow simple barter over time and space?
We read on...
"A printing press and computer, along with the removal of the gold standard, would eventually provide the tools for a worldwide fiat currency. We’ve been there since 1971 and the results are not good."
We were there before 1971. By 1971 we had passed "there" by a factor of two. The rubber band had already broken. Nixon just declared it broken.
His mention of New Zealand is illuminating
In 1984 the Liberal government pushed NZ into bankruptcy.
Afterwards, the government only subsidized education, social security, and health. All other aspects of their economy was left to fend for themselves.
After a major downturn in their economy, the country had a major revival in prosperity.
That lasted until 2008 and the country only has 9 million people.
"The lender of last resort would target special beneficiaries with its ability to create unlimited credit."
If traders want to make trades ... and those trades mean making trading promises spanning time and space, why should there not always be "credit" sufficient to support that trade? Why would we ever tolerate a system that throttles trade as long as we are keeping track of the "in process trading promises" that "is" trade happening over time and space?
And let's look at this lender. What is he lending? He's lending nothing. He's just saying "I'll keep track of this in-process trade and I expect you, Mr. Trader, to return these certificates when you deliver on your trade as agreed."
So BillyBob and myself can get access to the feds window, we can get easy money with bad collateral and implied immunity from our trades ?
Your missing his point, he refers to how the fed works, not how it is supposed to work.
Do you deny cronyism within our monetary system ?
Do you deny cronyism within our monetary system ?
No I don't.
But our problem is bigger than that. If it was just a few insiders scratching each others backs we wouldn't have 4% inflation. To have that level requires total incompetence. A properly managed MOE would allow neither. This is because it would be open for all to see and because verification would be simple at all times: does cumulative INTEREST collections equal cumulative DEFAULTs all the time everywhere? Simple arithmetic known as integration.
With a properly managed MOE there is "no" anonymity when it comes to traders getting their trading promises certified (i.e. creating money). Those certificates circulate with total anonymity, but the trader originating certificates (money) must return certificates (money) when he completes his trade.
That can only be verified if the MOE manager knows who he is, what he has promised, and the certificates he has returned. With such transparency, neither cronyism nor incompetence can live. This is not an unfamiliar concept. When you buy a house and create money, your trading promise it thoroughly documented. The difference is this documentation needs to be open to the public since it involves creation of money. It's the trader's choice on whether to take a private or public route with his financing.
The certificates work as the most desired object of simple barter and are transferred with total anonymity. But the creation and subsequent recovery and destruction happen totally in the open.
It sounds like the system you are proposing would result in an MOE that is backed by an entire economy's production. Am I correct in assuming the system monetizes everything based on voluntary transactions and price discovery (rather than pegging an MOE to PMs, which doesn't scale to productive capacity efficiently if at all)?
It sounds like the system you are proposing would result in an MOE that is backed by an entire economy's production.
It's backed by INTEREST collections which always equal DEFAULTs. In theory, you can't collect INTEREST until after you experience a DEFAULT. Thus, for that period between DEFAULT recognition and INTEREST collection, INFLATION is "not" zero. The INTEREST collection could be a simpleminded process. It comes from subsequent traders certifying their trading promises from which INTEREST is collected in advance before granting certificates (money). If no traders come to create money, INFLATION will be non-zero until they do.
That said, it's not unlike insurance. You can't set premiums until you experience claims. You can't experience claims until you sell insurance. You can't sell insurance until you set premiums. It's kind of a Lloyds of London thing at first. As with the insurance, the solution is in actuarial sciences. You collect the INTEREST up front in anticipation (estimation) of DEFAULTs you will experience. If you over collect, you must under collect for a little while. If you undercollect, you must overcollect for a little while. On average, permiums equal claims. On average, interest collections equal defaults in a properly managed MOE.
In an automated continuous process with negative feedback, three components are monitored. It's called PID control: (P) adjustments made proportional to feedback; (I) adjustments made integrating feedback; (D) adjustments made according to the derivative of the feedback.
With the science advanced to its current state, such systems control responsively with precision.
The MOE is "backed by the process" that matches DEFAULTs with INTEREST collections.
The interest/default process is for resolving mal investment, correct? It would become a real-time mal-investment feedback loop.
I don't see how the interest/default process would affect price discovery delineated in the MOE's certificates.
wake the F-up journalism such as the above completely disregards where (which stratum) the fiat dollars are being blood-suckled from and to whom they go...as a point of fact, more and more, they no longer need to be bled from those willing to work (the productive), rather now, elite financial predators use crony monetary policy (their plutocratic privilege), in ever greater ways, to just extract whatever they need (from Central bankers) to sustain and grow their bloated and abusive power.
Let's not forget to dole out enough subsidies to keep the debt serfs out of the streets...hmm, critical thought may recognize that plutocratic socialism is working beyond splendidly for those directing it.
Fiat dollars should not be the dispute...it is currently the corrupt and captured nature of institutions of democracy (world wide), thus no longer giving consideration to how, to whom and to what sorts of civic virtues those public dollars are spent into existence on, to sustain, not just people but the planet which in turn sustains us.
It didn’t take long for Congress to amend the Federal Reserve Act to allow the purchase of US debt to finance World War I and subsequently all the many wars to follow.
The government is just a trader like you and me. It makes trading promises and is expected to keep them. The Fed is our Medium of Exchange (MOE) manager. That job means freely certifying trading promises and recovering those certificates with completion of the trade or with recovery of DEFAULTs through INTEREST collections. The government, however is a deadbeat trader. It never delivers on its trades ... it just rolls them over. It DEFAULTs and INTEREST must be collected to mop up those DEFAULTs. The Fed "must" make those INTEREST collections ... and it doesn't. So we have INFLATION at the average rate of 4% per year. The governing relation is INFLATION = DEFAULT - INTEREST. The Fed is just not doing it's job. We need a new Fed and we need to precisely define its job. A constitutional amendment is the place to get that done. Above all, the MOE manager is responsible for "guaranteeing" INFLATION at zero ... all the time ... everywhere!
I politely disagree. We don't need a new Fed, we just need free markets and the only thing that should be guaranteed is that the currency is tied to real money. That way, everybody truly has a shot at the American dream and are playing by rules meant for everybody, not just a select few. Local and regional banks can take care of the rest.
And "real" money ... drum roll please .... "is" ???????
1) Universally recognized
2) Easily divisible
3) Portable by humans
4) Store of value
Works for me. And how are you going to guarantee INFLATION = zero all the time everywhere to achieve 4?
How about 'money' is whatever the two people trading agree it should be?
Thats a simple medium of exchange.......it takes force to monopolize legal tender to restrict free medium of exchange.
Money, on the other hand stores value over time, where as in your exchange both could have traded consumables.
Thats a simple medium of exchange.......it takes force to monopolize legal tender to restrict free medium of exchange.
Yes, I was taking a more normative approach than describing where we are now with fiat.
Money, on the other hand stores value over time, where as in your exchange both could have traded consumables.
True, but in that case our hypothetical two parties probably wouldn't have considered the exchange for 'money' then :-)
It is hard to collect "income" taxes with competing currencies. When the producers and consumers have choices on meduim of exchange the central planners and looters are required to enter into the world of chaos. They cant compete in that world we live in.......
Do we want a producer based, ground up system or do we want consumer based top down.
Works for me. But when traders create it by making trading promises (as you do when you mortgage a house) and put it in circulation, they must return the same amount they created when their trade completes.
I'm not, no money will have absolute value, unchanged over time. I only advocate the freedom to have choices.
How can what you advocate work without monopoly power over the creation of money and credit ?
An omnipotent overlord of currency and credit balancing the defaults with interest........sounds monopolistic.
Management of an MOE is very much like management of insurance risk. Just as there can be multiple insurance companies existing at the same time, there can be multiple MOEs existing at the same time. The only ones that will be competitive enough for widespread trading use will be properly and openly managed. We have multiple MOEs today. They just have national borders around them. The more mismanagement of the MOE, the more prevalent the black market within the borders. A properly managed MOE does not require borders. Further, the exchange rates between properly managed MOEs "never" change.
Perfect, you have no issue with gold and silver circulating as money. As long as your yet to be named system can compete along with it.
How can we achieve this ? You could get a lot of support freeing the tender market.
Does your system use future human action as collateral ?
Perfect, you have no issue with gold and silver circulating as money. As long as your yet to be named system can compete along with it.
I have no issue with gold and silver circulating as objects of simple barter ... as money circulates as objects of simple barter. But money originates with a promise to complete a trade and is extinguished when the trade is delivered. It costs "nothing" to originate it, nothing to circulate it, and nothing to extinguish it. Gold and silver, however, have a significant cost of origination, have no cost of circulation, and are never extinguished ... so it's difficult to say what value they have at any point in time. And circulating gold and silver is obviously more costly than circulating promises.
As far as naming a properly managed MOE, how about "properly managed MOE" ... or more simply "money". It's about getting the definition right.
Does your system use future human action as collateral ?
Collateral:1.something pledged as security for repayment of a loan, to be forfeited in the event of a default.
Based on the definition, no. You don't secure repayment with "future human action". DEFAULT is a failure to deliver ... that is future human action abandoned. Payment then is secured by INTEREST collections which "mop up" the DEFAULT. Unreliable traders pay higher INTEREST than reliable traders ... just as wreckless high risk insurance buyers pay higher premiums than those who minimize their risks and thus minimize their claims.
There used to be a time when a common saying was "my word is my bond" ... and it was true. Come hell or high water, a person delivered on his committments. But that was when the world was small and everyone knew everyone else. Go back on your word and the word quickly got out that you were prone to go back on your word. If you're prone to go back on your word, people trade with you more reluctantly than if you're totally reliable. That's the function "monitoring defaults" and "collecting interest" performs in a large and populous world where everyone doesn't know everyone else but is nevertheless trading with everyone else. Reliable traders have a documented clean history. Unreliable traders have a documented blemished history.
That’s when the Congress instructed the Fed to follow a “dual mandate” to achieve, through monetary manipulation, a policy of “stable prices” and “maximum employment.”
The MOE manager is "not" concerned with employment. He is not concerned with prices. He is only concerned that the exchange media is in free supply and that INFLATION is guaranteed to be zero all the time everywhere. If you want to diddle employment and prices, you need to do it somewhere else. Actually, if they quit diddling the MOE they wouldn't have to attempt diddling prices and employment. They would take care of themselves.
The MOE manager is "not" concerned with employment. He is not concerned with prices. He is only concerned that the exchange media is in free supply and that INFLATION is guaranteed to be zero all the time everywhere.
And how does he do that? Are you talking about 'inflation' in terms of actual units of the supply of the MOE relative to the value of all goods & services trading at any particular time? Because unless your MOE manager succeeds at all times to keep the MOE fluctuating in exact proportion to all trades - an impossible task, requiring split second variations in the supply of the MOE, in effect huge deflations and inflations of supply - then prices are going to go up and down as demand and supply of goods and services is constantly shifting.
Exactly how would the system you are always hinting at/advocating work? I don't recall you ever giving even the sketchiest description.
And how does he do that? Are you talking about 'inflation' in terms of actual units of the supply of the MOE relative to the value of all goods & services trading at any particular time?
It is the trader who determines the value of the MOE for his trading promise. When I buy a house, the seller and I negotiate (in MOE units) what is required to make an exchange. On agreement, I go to the MOE manager, record the terms of my trading promise, and am given the certificates (i.e. create the money) that allows my trade to be carried out over time and space. I deliver those certificates to the seller. The seller is now done. My obligation to him is complete. Then, monthly, for 360 months I return the agreed upon certificates (with no interest if I'm a reliable trader ... an actuarially determined interest if not) to the MOE manager who extinguishes them. In this process I am completing my obligation to the marketplace which is actually explicitly backing my trade.
By this mechanism, the supply and demand for certificates in circulation is always in perfect balance. It's the nature of a trade. And, as always, the value of the objects being traded are in the eyes of the traders themselves. The MOE manager has no interest in "prices" whatever. The MOE has units which never change. We call ours dollars.
INFLATION is not a rate in this sense. It is the difference between cumulative DEFAULTs and cumulative INTEREST collections, that difference being required to be zero at all times everywhere through proper monitoring of DEFAULT and equal collection of INTEREST. Like insurance, the amount of INTEREST (premium) paid is equal to the amount of DEFAULT (claims) incurred. With insurance, the profit is in the investment income. With an MOE, there is "no" profit. Proper collection of INTEREST requires actuarial techniques to be fair and effective. In the end, simple arithmetic verifies that property.
Now if that's sketchy, where does it need sharper definition?
OK, thanks for the description (I didn't junk you, BTW).
Let me have a think about the ramifications of that.
OK. I don't see how your proposed regime is massively diffferent than the current situation.
In our current regime, the people conducting the trade agree the number of units of MOE are required. They go to their local 'manager of MOE' - in our regime, a commercial bank - and the bank lends the MOE. The buyer hands this MOE over to the seller and the trade is complete. The buyer now has to pay back the MOE over 360 months (or whatever).
What are the similarities between yours, and the current regime?
* The MOE in universal circulation is all lent into existence. People conducting trades without needing to borrow are still reliant on an MOE that was lent into existence to enable a trade requiring credit. Check
* The MOE that was lent into existence is destroyed when it gets paid back. Check.
* people are charged interest related to their creditworthiness... well, sorta.
As far as I can see, the only major difference between your system and what we have now appears to be that you'd have these 'managers' of MOE lend at 0% interest to people who are 'reliable' traders. But there's no perfect way of determining whether a person will default, particularly over a course of 360 months; even people with spotless histories keel over dead at the age of 40 from previously undiagnosed heart problems. So, unless someone had enormous collateral, and was borrowing for a short time period, they would have to be charged some interest. The MOE manager and the institutions backing him would need to be paid for, also; where would the MOE for this come from, if not from the people who were being lent to?
I genuinely can't see why you're so excited about your idea. The only thging that differs is that the central bank wouldn't be (supposedly) inflating reserves every year by GDP growth + 2%... partly because your scheme appears not to operate on the basis of reserves. Am I missing something? Or have you misundrstood how the current system works?
I genuinely can't see why you're so excited about your idea. The only thing that differs is that the central bank wouldn't be (supposedly) inflating reserves every year by GDP growth + 2%... partly because your scheme appears not to operate on the basis of reserves. Am I missing something? Or have you misunderstood how the current system works?
You can't dispute that a properly managed MOE requires monitoring DEFAULTs, just like properly managed insurance risk requires monitoring CLAIMS. But our system "doesn't monitor DEFAULTs". As evidence, try to show me a time series of DEFAULTs ... you can't. It doesn't mop DEFAULTs up with INTEREST collections. It doesn't treat reliable traders differently than unreliable traders other than allowing them or denying them (a binary function) to create money with their trading promises.
When you mortgage a property, you either qualify for the mortgage or you don't. Once qualifying, you pay the same prevailing interest as everyone else, regardless of your relative reliability in delivering on your trading promises. I have "never" defaulted on a trading promise. If I die, my unfulfilled trading promises can be fulfilled by selling the underlying property and returning those certificates. To the extent they don't, interest can be collected (from new traders in my actuarially determined risk class) to match the deficiency. That risk is then a mortality risk, not a trading integrity risk. Bankers seeking riskless business require "compensating balances". That's their choice ... works ... but stifles trade. What is wrong is "banks have a privilege you don't have". They can keep you from getting your trading promises certified. It is a necessary control in their ongoing "farming operation" known as the business cycle.
And look at how interest is determined in our system. I asked a close friend of mine who is a president of a bank "what should interest be?" His answer: "Whatever the market will bear". That's wrong. It should be that amount that exactly matches DEFAULTs experienced and thus preserves the integrity of the MOE in the marketplace (i.e. guarantees INFLATION = zero). And look at the qualifying point system. The more people examining your record, the fewer points you have. What's up with that?
And look how LIBOR determines interest.
Enough said?
And you are correct: "a properly managed MOE does not operate on the basis of reserves". That's a contrivance of capitalism ... the definition of which is "two years" (i.e the difference between a capitalist and a non-capitalist is two years ... insignificant in terms of an 80 year lifespan).
The obsession now is to get price inflation up to at least a 2% level per year. The assumption is that if the Fed can get prices to rise, the economy will rebound. This too is monetary policy nonsense.
Inflation is inflation of the MOE. It may or may not show up in "all" prices ... actually it never does show up in "all" prices. It can't be measured. But with a properly managed MOE it can be guaranteed to be zero. What possible justification is there for trying to make it 2%? Prices are a measure of supply and demand. Inflation is a measure of an imbalance between DEFAULTs and INTEREST collections. They're totally different things and one isn't an adjective modifying the other ... ever!
Today we can find very high prices for stocks, bonds, educational costs, medical care and food, yet the CPI stays under 2%.
Oh really? How in the world could we possibly know that when they change the way they measure it month by month?
Inflation "can't" be measured. You can only guarantee it to be zero by "mopping up" all DEFAULTs with INTEREST collections.
Defaults with interest........inflation and deflation requires debt, is that it.
defaults on debt is credits left in the economy, interest mops it up.
In your model, do prices fall with gains in efficiency ?
Correct management of any MOE has the same effect on the price of all objects (just like changing the scale on a ruler affects all subsequent measurements it yields). The only proper level of that effect is zero. If an object is produced more efficiently its supply likely increases so for the same demand, the price would go down. But proper mangement of the MOE has absolutely nothing to do with this. Improper management of the MOE is like changing the level of the water in the ocean. It raises or lowers all boats. Properly managed, it has no effect on the level of any boats. INFLATION "is" zero ... all the time ... everywhere.
Why would the supply likely increase,
So improper management effects all, equally ?
What is being "supplied" is actually "promises to complete trades". It's created by traders making trading promises and extinguished on delivery as promised.
In the mean time it circulates as the most preferred item of simple barter ... as chosen by traders themselves, not dictated by any law. The supply varies with trader's propensity to trade and with the number of traders trading. It goes up when traders are comfortable with their ability to complete their trades in longer and wider time and space domains. It goes down when traders are uncertain in those domains. It goes up with population automatically. It goes down with depopulation automatically. INTEREST collections go up automatically as DEFAULTs go up, and down automatically as DEFAULTs go down. It is never "artifically" constrained or expanded to meet some macroeconomic or social goal.
In a perfect trading environment there are no DEFAULTs, thus no INTEREST collections. In an MOE with perfect trading risk classification, responsible traders pay zero INTEREST. Deadbeat traders can't even trade because their deals can't work under the necessary INTEREST assessment.
Regardless, the MOE itself never gains nor loses value. You can put it under a mattress for 50 years and take it out and it has the same value ... not 14% or its original value as with the currently mismanaged money (to the tune of 4% annual INFLATION) we have today.
At first it appeared to be Mosler (MMT). Now I oscillate....
So your system has no government monopoly on legal tender, does not use income tax as a monetary tool.
It requires the manager of the many different MOE's to work in a glass room, full of sunlight. This glass room has an operator, your system does not require secret PHD overlords.
Would raising the rates while defaults are high be wise /
What prevents mal-investment in your system ?
So your system has no government monopoly on legal tender, does not use income tax as a monetary tool.
Correct. But it's not "my" system. It just the obvious way to properly manage any MOE.
It requires the manager of the many different MOE's to work in a glass room, full of sunlight. This glass room has an operator, your system does not require secret PHD overlords.
When it comes to the adding and subtracting, the detecting and measuring of DEFAULTs, the collection of INTEREST ... that is a robotic function. There is no subjectivity in it whatever.
However, like insurance, properly classifying risk and assessing INTEREST is best handled with actuarial tools.
All is done in full sunlight. The actuaries may be PhDs. The MOEs with the best actuaries (i.e. most fair and accurately predictive of DEFAULTs) will be the most efficient. We are likely to see an industry originate here ... like the title insurance industry did when scrutinizing real property by abstract just became an exorbitantly expensive process ... and before MERS became a destructive process. There are issues that cannot be swept under the rug, as credit cards do today. We're perfectly capable of dealing with those issues in an open fashion. But failing to do so does not collapse the system. It is just a slight inefficiency that people will diligently work to drive out.
Far and away, the largest benefit we see from a properly managed MOE is that DEFAULT never has a cascading effect. There is never a run on the bank It never affects in process trades, it only affects oncoming trades.
Would raising the rates while defaults are high be wise
Yes. Remember, the rates are raised on oncoming trading promises ... not on existing in-process trading promises ... they are left to work as originally planned. DEFAULTs signal a market problem ... probably too many traders going after the same market. INTEREST collections cause higher loads on new entrants causing their deals to be less likely to pass due diligence. It's a natural negative feedback system. Alternatively, when the market needs more traders, DEFAULTs are lower and INTEREST collections are lower, thus inviting new participants.
What prevents malinvestment in your system ?
Immediate recognition and mitigation of DEFAULTs through immediate collection of INTEREST to recover them. This does two things. It reclaims and extinguishes dead but still circulating trading promises and thus their competition with real money. Second, it imparts higher INTEREST on new trading promises thus dissuading new entrants of investment in a demonstrably difficult market.
Finally getting some decent questions. Thanks.
BTW: Still a huge issue is recognizing syndication and rollovers. Have any ideas?
How could such a system be rolled out? How would the MOE have immediate value and a relatively high volume of transactions to provide price stablility and confidence?
I like the idea.
How could such a system be rolled out?
Requires only a change of perception of what money really is ... "an in-process trading promise". The current MOE manager, the Fed, just needs a couple new directives. 1) Completely decouple the MOE from macro-economic management. 2) Tightly couple the MOE to trader's promises to complete trades.
This can be accomplished without any visible changes to the existing system (since most of what needs to be changed is currently invisible). To get a running start, we should start monitoring DEFAULTs and INTEREST collections of the existing system first. In time it will be obvious a single private collection of banks is not the proper MOE manager ... if for no other reason than a properly managed MOE has no use for banks ... or government for that matter. Remember, a level of government only exists to do those things a higher level can't do ... the individual being at the top level.
How would the MOE have immediate value and a relatively high volume of transactions to provide price stability and confidence?
It would be indistinguishable from the current system on a day to day basis. The dollar can remain in place. The mint can remain in place. All mechanisms supporting today's high volume of trade are perfectly suitable. All that needs to be changed is how money gets created (traders making trading promises instead of governments making and breaking trading promises) and how interest is assessed (equal to DEFAULTs measured instead of "what the market will bear" or "what economists think it should be"). Traders immediately begin to enjoy lower interest and are guaranteed a zero inflation marketplace.
It's really just that simple ... yet very difficult to accomplish. Why? Look what it does to banks and capitalism (it's not needed); look what is does to governments (treats them like any other trader, shunning them if they don't deliver on their trades).
It sure would be neat if we could get rid of those two bad actors and get on with it ... wouldn't it?
"newly created money by central banks does inflate prices" it does inflate prices, share prices, the money ended up mostly in speculative investments, not the general economy.
Money created must eventually be returned and expunged. Does that then deflate prices? I suggest prices don't go up when a trader makes a new trading promise ... and they don't go down when he delivers on that promise.
It’s hard to explain a policy dealing with deflation when Keynesians claim a falling average price level – something hard to measure – is deflation, when the Austrian free-market school describes deflation as a decrease in the money supply.
There it is ... spelled right out for you. Inflation and deflation are neither of the above described. They are an imbalance between DEFAULTs and the INTEREST collections necessary to mop them up by the relation: INFLATION = DEFAULT - INTEREST. Collect too much INTEREST, you have negative INFLATION. Collect not enough and you have positive INFLATION. It's just exactly that simple. And we know how to measure DEFAULTs precisely so we can make the correct INTEREST collections precisely. A robot can ... and probably should ... do it.
If you're in American Dollars and have a lot of them,you can acquire Gold at a reasonable cost right now because of the rising $USDOLLAR.If you look at the charts by Frank Holmes,you can see how expensive Gold is becoming in other countries with depreciating currencies that are falling fast against the $USDOLLAR.Canadian Gold producers are very attractive also.The Canadian Dollar is dropping like hell but the Canadian Gold producers sell in American currency.When will big money and sentiment start flowing from oil and other equity sectors into Gold Mining Shares is the big question?
http://www.stockhouse.com/opinion/independent-reports/2015/01/27/frank-h...
We have Federal Reserve Notes... not American dollars. The American dollar is a coin with 371 grains of silver.
At today's value 1 American dollar = $17.86 FRN.
A simpler solution to achieving a healthy economy would be to concentrate on providing a “SOUND DOLLAR” as the Founders of the country suggested. A gold dollar will always outperform a paper dollar in duration and economic performance while holding government growth in check. This is the only monetary system that protects liberty while enhancing the opportunity for peace and prosperity.
There it is folks ... that good ole "sound dollar". Of course the founders never suggested any such thing, but so what.
"Gold", he says "is "the only monetary system that protects liberty". Well folks, your level of liberty protection there is one ounce of gold per person on Earth. At today's production cost that's less than $2,000. So your liberty is worth less than three or four month's wages at minimum wage. No wonder we don't have liberty!
Ron Paul ... why did WTC7 fall down?
Not a fan of Article one section eight, eh. Find me the place in the constitution for a US central bank oh wise one.
I'm not a big fan of the "and regulate the value thereof and of foreign coin" part. The manager of any MOE has no concern for its value, except to the effect that it never ever changes over time and space.
But let them regulate it all they want. It's traders that really decide what it's worth (as they did when Nixon abandoned the gold standard ... traders ...France in particular ... said "I'll take the gold, thank you very much" ... bammo ... end of fake price of gold in the eyes of the U.S.Government).
Re. Central bank in the constitution: It's not there. No banks are there are they? Actually, I think management of an MOE properly belongs there (if a commerce clause properly belongs there). Regardless, an MOE can exist privately. It's a trader's choice to use it or not. And putting "legal tender for all debts public and private" on the FRN means nothing (that wasn't on the silver certificate was it?) If you think it does, and have an account with Fidelity, try to get your money out in cash ... i.e. not their check which you must take to a bank to convert to cash.
Do you know what happened to it ?
With the investigation we were given who knows what happened ?
I think it was dropped by design.....yet without a fair and public peer review who knows.
Paul took the only road viable for a serious national candidate, he advocated an open investigation. To this day a public audit and open investigation is the goal, is it not ?
Paul advocated competing currencies, reforming legal tender laws. The federal government was to be restriained by gold, not the people. Federally controlled banking cartels are not authorised in the USC.
The founders did not envision a US dollar as worlds reserve, transactional, currency backed by a standing army with bases all over the world. In fact, they designed a system that would make empire difficult.........
"Paul took the only road viable for a serious national candidate, he advocated an open investigation. To this day a public audit and open investigation is the goal, is it not ?"
When your national flag is captured you "advocate an open investigation"? When you have an obvious exposure vector in WTC7 falling down, you wait 4 years and then accept the explanation that one girder slipped and caused a perfectly symmetrical collapse at free-fall speed? And you have your department in charge of yard sticks do the investigation? (shades of the park service investigation of Vince Foster).
Sorry. Paul should have been on the floor making a 5 minute speech about it every single day. At least C-SPAN couldn't ignore him. That's how Walker and Gingrich gained so much power. It works.
I get an email from Paul every single week begging me for money so he can deliver his message. When he was in congress he could have delivered his message for free every single day ... and he didn't.
And while improper management of our MOE was probably the most important issue before the obvious 9/11 inside job, it is irrelevant after when you know you're dealing with your captors. We "must" get our flag back before we return to rearranging deck chairs in advance of the imminent reset.
After the reset we must be aware that Paul's ideas on the MOE (the ideas of the Mises Monks) are as badly misguided as Keynes' ideas. Paul and the Mises Monks are positioning us for accepting those ideas and we must understand and expose the reasons not to.
Walker and Gingrich did what was necessary to obtain personal power in the chambers of government. These two, as well as the majority of others, seek power. Paul did not compromise his oath to obtain political power so he could use it to "force" the passage of legislation (Gingrich).
He did go to the floor, as many if not more than most. Would it have been a wise use of the people of the 14th district of Texas political power to repeat the same thing over and over ?
I ask this - can you find any evidence of Paul advocating the scientific truth contained in the NIST report ? It wont be hard to find the prostitute Gingrich proclaiming its truth, and its lie.......
He ask for money as a person advocating, he spoke on the floor on behalf of the people of his district, under oath and affirmation.
The better complaint would be his stewardship of your donation.
My comment was not in support of Walker and Gingrich. It was to show that the tools existed to acomplish what Paul wanted to accomplish, and he was perfectly positioned to use them. He didn't use them effectively ... or at all! Further, it doesn't look like he was ever able to even get a partner in his efforts while in Congress. Why in the world was that?
Paul did not compromise his oath to obtain political power so he could use it to "force" the passage of legislation (Gingrich).
He didn't have to. This isn't about Paul being right and honorable ... Gingrich and Walker wrong and sleezy. It's about effective use of the system we have. Paul is more vocal now then I ever knew him to be while in congress ... begging me for money.
I ask this - can you find any evidence of Paul advocating the scientific truth contained in the NIST report ?
No. And I can't find any evidence of him advocating an audit of the NIST reports and methods used to produce it. I can find no evidence of him advocating "for" the Fed. But evidence abounds of his advocating for an audit. As I have shown, dealing with the Fed is fairly simple (in process terms); very difficult in political terms. Dealing with the criminals who have taken over our government is very simple (in process terms); very difficult when you consider the probability you will be suicided.
The better complaint would be his stewardship of your donation.
"His" being Gingrich's or Paul's? If Gingrich's, he never got a donation from me. If Paul's, my donation bought me lots of junk mail and a blizzard of emails making claims written in hyperboli and begging in more and more sophisticated ways (money bombs for instance) for money. Movement of the ball down the field? Zero. And his love for the Mises Monks should be obviously problematic if you have followed what I have written this far.
Just sayin'
Congressman Paul
as I believe you know (it has been explained to you several times including by Charles Partee, fofoa and me... (OK that last one might not count) fiat currency is not going away. We must accept it or fight windmills which I don't have time for. I'll be happy if the people have a good reliable store of value. They will when the dollar dies and gold becomes the new CB reserve. Look at the ECB balance sheet if you are uncertain where we are headed.
People saving the medium of exchange results in hugely increased value being attributed to the paper that should just pass quickly from hand to hand as it is used as a mere medium of exchange. Instead we squirrel it away like it was gold.
Just wait for the dollar to go away and gold to assume its proper function. You'll be happy. I do agree we should make the Constitution match what are actually doing.
"Money" is whatever people agree it is.
Granted, governments usually hold a gun to everyone's head to get them to accept whatever they decide to use as "money", nevertheless don't lose sight of the truth.
And that's probably the only issue I have with Ron Paul and the "Gold is money" adherents.
Gold might be the best of current alternatives to use as money (but first, before accepting that, educate yourself by studying the history of Gold Standards, reading FOFOA, and reflecting), and please, quit being so pedantically religious about it (besides, you make the silver tards feel left out).
STFU .. who the fuck do you think you are lecturig to dooshbag ? You d your feckin reserach and then come back with a theory or comment....otherwise STFU..
Fair enough..answer me this:
Can you explain the differences between the previous Gold Standards in the 1900s?
Can you explain why they failed? What factors led to their failure?
Should a currency be 100% Gold backed? 50% Gold backed, 10 % Gold backed.
Have you studied previous iterations of Gold Standards and seen how they fared.
Should a currency be pegged to Gold or should it be floating in relation to Gold?
Should a bi-metallic standard (Gold & Silver) be implemented?
Should only physical Gold be used (passed hand to hand) or should digital representations of Gold be also utilized (see the method used by the company GoldMoney as a real life example).
If we're going to do something as drastic as switch to a new Gold Standard (in whatever form), should we also address the underlying fractional reserve banking system and the concept of compound interest on loans?
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How many Gold bugs out there can give a lucid dissertation of why Gold is the best form of money and exactly how it should be implemented?
Until you can answer the above you are merely fodder for some demagog to lead you by the nose into yet another elitist, self-serving, exploitative money system.
All the above, eliminate the monopoly on legal tender and let the people use what is best for them, at the time.
This is the way I see it: Gold keeps banks and gov'ts fiscally responsible. Look at the way the governments worldwide have been destroying our currencies, we sit here at the mercy of our governments speech's as to how much money they will print out of thin air, and our entire markets have become dependent on it. These aren't free markets. Last 8 years we've seen company earnings reports come out low, while their stock price goes up, need to say more?
Gold backing means that money cannot be printed, unless you obtain more gold. Basically, nobody should have ever even heard of the word trillion, because there simply wouldn't be that much gold to back that kind of money in circulation, and obviously, cost of goods would correlate.
In a gold backed world, inflation would be mining more gold, or using the price of gold. And it wouldn't be passed around or carried in pockets, although it could be as the constitution says so, 'silver notes' or 'gold notes' could be a form of currency that could be traded at the bank for silver or gold, or like the digital cards you pointed out. It has been this way for far much more of human history than simply printing pieces of paper.
Of course, this wouldn't end wars or anything. Let's face it, humans have always killed each other, and always will. Whether it be over gold, land, oil, or power. So get your rocking chair on the porch, grab your gun, an old ceramic milk jug, bury your gold, and ride out the fiat collapse that is inevitable. https://www.youtube.com/watch?v=PXeqmBVRlIw
Every type of currency is fiat except one: labor. Gold included. Gold only has value because humans like to use it for decoration. If you focus down to the very basics a man only needs water, food security and shelter. He can supply those things easily enough with a little knowledge. This whole society thing probably formed when one man gathered enough of those four things to be able to pay another man to labor for him.
The truly rich (Rothschild/Rockefeller) know that to make real money you trade in people and not those fiat currencies loved by the Plebes.
ufos8mycow:
True enough, with two caveats:
First:
Consciousness is the value creating element, since there is no human labour without human consciousness.
Second:
The most important form of human labour is when some human beings kill other human beings.
I'm with Edison and Ford. Why not just issue US Notes instead of Fed Notes? Instead of selling bonds and paying the coupons, just issue bills backed by the "full faith and credit" of the US taxpayer and US assets. The same instrument that makes the bond good makes the note good, and we don't have to pay someone else to use our own money!! I think JFK tried this at one point................................
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Backing a currency on a basket of hard goods? I can understand the logic in that but the obsession with returning to a purely gold-standard is both historical bunk (glosses over the fact that until the Civil War the US was a bimetallic system generally and a lot of in between) and doesn't discuss some of the real problems that occurred with the various gold-standards in late 19th century/pre-WW1 early 20th century in the U.S.
It may be true that all "money" is to some degree fiat money, but some things are more suited to be money than others. The problem with paper fiat money is that the government that issues it is charged with the responsibility of keeping the people's confidence high with respect to its worth. They are like a magician on stage who can never step down and as people began to figure out his tricks, is forced to wow the crowd with ever more elaborage and subtle tricks. Sooner or later people will understand the fraud and leave the room.
The attributes of precious metals, especially gold and silver make them the supreme form of money if your intention is to control the growth of government. If you allow governments to create all the money they need then they will fight wars and expand welfare at every social level, which is what governments do. More money, more wars, more corporate, middle class and lower class welfare.
A case in point. If Lincoln had not been able to create paper money, gold would have constrained him against invading the South. We don't know what the outcome of a divided America would be except that we do know that America lost the war of 1812 which was an invasion of the north to bring Canada into the United States. It failed but that seems to have worked out well for all the parties involved.
If the Federal Reserve had not existed before WWI, we likely wouldn't have been able to get involved in it either. Nor would we today be drowning in debt to support a bloated welfare state, a perpetual state of war, a monsterous military industrial complex and world wide police force.
As quaint as a precious metal money standard may sound, it is still, almost certainly, the best answer to sound government and economy.