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Paper Money Versus The Gold Standard
Submitted by Richard Ebeling via EpicTimes.com,
We are living in a time that can only be considered monetary chaos. The U.S. Federal Reserve has manipulated key interest rates down to practically zero for the last six years, and expanded the money supply in the banking system by $4 trillion dollars over that time. And with the true mentality of the monetary central planner, the Fed Board of Governors are now planning to manipulate key interest rates in an upward direction that they deem desirable.
The European Central Bank (ECB) has instituted a conscious policy of “negative” interest rates and planned an additional monetary expansion of well over a trillion Euros over the next year. Plus, the head of the ECB has assured the public and financial markets that there is “no limit” to the amount of paper money that will be produced to push the European economies in the direct that those monetary central planners consider best.
We also should not forget that it was the Federal Reserve that earlier in the twenty-first century undertook a monetary expansion and policy of interest rate manipulation that set the stage for the severe and prolonged “great recession” that began in 2008-2009, in conjunction with a Federal government distorting subsidization of the American housing market.
The media and the policy pundits may focus on the day-to-day zigs and zags of central bank monetary and interest rate policy, but what really needs to be asked is whether or not we should continue to leave monetary and banking policy in the discretionary hands of central banks and the monetary central planners who manage them.
Central Banking as Monetary Central Planning
And make no mistake about it. Central banking is monetary central planning. The United States and, indeed, virtually the entire world operate under a regime of monetary socialism. Historically, socialism has meant an economic system in which the government owned, managed, and planned the use of the factors of production.
Modern central banking is a system in which the government, either directly or through some appointed agency such as the Federal Reserve in the United States, has monopoly ownership and control of the medium of exchange. Through this control the government and its agency has predominant influence over the value, or purchasing power, of the monetary unit, and can significantly influence a variety of market relationships. These include the rates of interest as which borrowing and lending goes on in the banking and financial sectors of the economy, and therefore the patterns of savings and investment in the market.
If there is one lesson to be learned from the history of the last one hundred years – during which the world and the United States moved off the gold standard and onto a government-managed fiat, or paper, money system – is the fundamental disaster of placing control of the money supply in the hands of governments.
Continual Government Abuse of Money
If is worth recalling that money did not originate in the laws or decrees of kings and princes. Money, as the most widely used and generally accepted medium of exchange, emerged out of the market transactions of a growing number of buyers and sellers in an expanding arena of trade.
Commodities such as gold and silver were selected over generations of market participants as the monies of free choice, due to their useful characteristics to better facilitate the exchange of goods in the market place.
For almost all of recorded history, governments have attempted to gain control of the production and manipulation of money to serve their seemingly insatiable appetite to extract more and more of the wealth produced by the ordinary members of society. Ancient rulers would clip and debase the gold and silver coins of their subjects.
More modern rulers – whether despotically self-appointed through force or democratically elected by voting majorities – have taken advantage of the monetary printing press to churn out paper money to fund their expenditures and redistributive largess in excess of the taxes they impose on the citizenry.
Today the process has become even easier through the mere click of a “mouse” on a computer screen, which in the blink of an eye can create tens of billions of dollars out of thin air.
Thus, monetary debasement and the price inflation that normally accompanies it have served as a method for imposing a “hidden taxation” on the wealth of the citizenry. As John Maynard Keynes insightfully observed in 1919 (before he became a “Keynesian”!):
“By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.”
It is the corrosive, distortive, and destructive effects from monetary manipulation by governments that led virtually all of the leading economists of the nineteenth century to endorse the “anchoring” of the monetary system in a commodity such as gold, to prevent governments from using their powers over the creation of paper monies to cover their budgetary extravagance. John Stuart Mill’s words from the middle of the nineteenth century are worth recalling:
“No doctrine in political economy rests on more obvious grounds than the mischief of a paper currency not maintained at the same value with a metallic, either by convertibility, or by some principle of limitation equivalent to it . . . All variations in the value of the circulating medium are mischievous; they disturb existing contracts and expectations, and the liability to such changes renders every pecuniary engagement of long date entirely precarious . . .
“Great as this evil would be if it [the supply of money] depended on [the] accident [of gold production], it is still greater when placed at the arbitrary disposal of an individual or a body of individuals; who may have any kind or degree of interest to be served by an artificial fluctuation in fortunes; and who have at any rate a strong interest in issuing as much [inconvertible paper money] as possible, each issue being itself a source of profit.
“Not to add, that the issuers have, and in the case of government paper, always have, a direct interest in lowering the value of the currency because it is the medium in which their own debts are computed . . . Such power, in whomsoever vested, is an intolerable evil.”
The Social Benefits of a Gold Standard
Under a gold standard, it is gold that is the actual money. Paper currency and various forms of checking and other deposit accounts that may be used in market transactions in exchange for goods and services are money substitutes, representing a fixed quantity of the gold-money on deposit with a banking or other financial institution that are redeemable on demand.
Any net increases in the quantity of currency and checking and related deposits are dependent upon increases in the quantity of gold that depositors with banking and financial institutions add to their individual accounts. And any withdrawal of gold from their accounts through redemption requires that the quantity of currency notes and checking and related accounts in circulation be reduced by the same amount. Under a gold standard, a central bank is relieved of all authority and power to arbitrarily “manage” the monetary order.
Many critics of the gold standard consider this a rigid and inflexible “rule” about how the monetary system and the quantity of money in the society is to be determined and constrained. Yet, the advocates of the gold standard have long argued that this relative inflexibility is essential to discipline governments within the confines of a “hard budget.”
A Gold Standard Can Limit Government Monetary Abuse
Without the “escape hatch” of the monetary printing press, governments either must tax the citizenry or borrow a part of the savings of the private sector to cover its expenditures. Those proposing government spending must either justify it by explaining where the tax dollars will come from and upon whom the taxes will fall; or make the case for borrowing a part of the savings of the society to cover those expenditures – but at market rates of interest that tell the truth about what it will cost to attract lenders to lend that sum to the government rather than to private sector borrowers, and therefore, at the social cost of private sector investment and future growth that will have to be foregone.
In other words, it prevents the government from “monetizing the debt” to cover all or part of its budget deficits. The borrowed sums cannot be created out of thin air through central bank monetary expansion. The government, under a gold standard, can no longer create the illusion that something can be had for nothing.
As Austrian economist, Ludwig von Mises, expressed it:
“Why have a monetary system based on gold? Because, as conditions are today and for the time that can be foreseen today, the gold standard alone makes the determination of money’s purchasing power independent of the ambitions and machinations of governments, of dictators, and political parties, and pressure groups. The gold standard alone is what the nineteenth-century freedom-loving leaders (who championed representative government, civil liberties, and prosperity for all) called ‘sound money’.”
Milton Friedman’s “Second Thoughts” About the Benefits of Paper Money
It must be admitted that even some advocates of economic freedom and limited government have been advocates of paper money. The most notable one in the second half of the twentieth century was the Nobel Prize economist, Milton Friedman. Over most of his professional career he argued that maintaining a gold standard was a waste of society’s resources.
Why squander the men, material and machinery digging gold out of the ground to then simply store it away in the vaults of banks? It is better to use those scarce resources to produce more of the ordinary goods and services that can enhance the standard and quality of people’s lives. Control the potential arbitrary recklessness of central banks, Friedman proposed, by setting up a monetary “rule” that says: Increase the paper money supply by some small annual percent, with no discretion left in the hands of the monetary managers.
But it less well known is that in the years after Friedman won the Nobel Prize in Economics in 1976, he had second thoughts about this monetary prescription. In a 1986 article on, “The Resource Costs of Irredeemable Paper Money,” he argued that when looking over the monetary mismanagement and mischief caused by governments and central banks during the twentieth century, it was “crystal clear” that the costs of mining, minting and storing gold as the basis of a monetary system would have been far less than the disruptive and destabilizing costs imposed on society due to paper money inflations and the booms and busts of the business cycle brought about by central bank manipulations of money and interest rates.
In his 1985 presidential address before the Western Economic Association on “Economists and Public Policy,” Friedman said that Public Choice theory – the use of economics to analyze the workings of the political process – had persuaded him that it would never be in the long-run self-interest of governments or central bankers to manage the monetary system according to some hypothetical “public interest.”
Those in government or holding the levers of the monetary printing press will always be susceptible to the temptations and pressures of short-run political gains that monetary expansion can fund. He admitted that it had been a “waste of time” on his part to try to get governments and central banks to follow his idea for a monetary rule.
And in another article in 1986 (co-authored with Anna Schwartz) on, “Has Government Any Role in Money?” Friedman said that while he was not ready at that time to advocate a return to the gold standard, he did conclude that “that leaving monetary and banking arrangements to the market would have produced a more satisfactory outcome than was actually achieved through government involvement.”
Monetary Mismanagement versus Markets and Gold
But it is not only the political dangers arising from government mismanagement of paper money that justifies the establishment of a gold standard. It is also and equally the fact that monetary central planning is unworkable as a means to maintain economy-wide stability, full employment, and growth.
Especially since the 1930s, many economists and policy makers influenced by Keynes and the Keynesian Revolution have believed markets are potentially unstable and susceptible to wide and prolonged fluctuations in employment and output that only can be prevented or reduced in severity through “activist” monetary and fiscal policy.
But in reality, the causation runs the in the opposite direction. It is central bank manipulations of money, credit and interest rates that have generated the instability and periodic swings in economy-wide production and employment.
The fact is financial institutions and interest rates have important work to do in the market economy. Banks and other financial intermediaries are supposed to serve as the “middlemen” who bring together those who wish to save portions of their earned income with others who desire to borrow and invest that savings in profit-oriented productive ways that generate capital formation, technological improvements, and cost-efficient production of new, better and more goods and services to satisfy consumer demands in the future.
Market-determined interest rates are meant to bring those savings and investment plans into coordination with each other, so the amount of invested capital and the time-shape of the investment horizons undertaken are consistent with the available real savings to support them to maintainable completion.
Monetary expansion by central banks creates the illusion that there is more actual investable savings in the economy than really exists. And the false interest rate signals generated in the banking system by the monetary expansion not only misinforms potential investment borrowers about the amount of real savings available for capital projects, but creates an incorrect basis for determining the present value calculations that influence the time horizons for the investments undertaken.
It is these false monetary and interest rate signals that induces the misdirection of resources, the mal-investment of capital, and the incorrect allocation of labor among employments in the economy that sets the stage for an inevitable and inescapable “correction” and readjustment that represents the recession stage of the business cycle that follows the collapse of the artificial boom.
The monetary central planners can never be more successful in determining a “optimal” quantity of money or the “right” interest rates to assure savings-investment coordination than all other socialist planners were when they tried to centrally plan agricultural production or investment output for an entire society.
All such attempts at monetary planning and management by central bankers are instances of what Friedrich A. Hayek called in his Nobel Lecture a, “pretense of knowledge,” that they can know better and do better than the outcomes generated by competitive interactions of the market participants, themselves. And as Adam Smith warned, nowhere is such regulatory power “so dangerous as in the hands of a man who had the folly and presumption enough to fancy himself fit to exercise it.”
There is no way of knowing the optimal amount of money in the economy other than allowing market participants in the competitive exchange process to decide what they want to use as money – which has historically been a commodity such as gold or silver. And there is no way of knowing what interest rates should be other than allowing the market forces of supply and demand for lending and borrowing to determine those interest rates through the process of private sector financial intermediation, without government or central bank interference or manipulation.
The Return to the Gold Standard as a Monetary Constitution
Finally, how do we return to a functioning and workable gold standard? Under the current government and central bank-controlled monetary system the simplest method might be for the monetary authority to stop creating and printing money and credit. Over a short period of time a fairly reasonable estimate could be made about the actual quantity of a nation’s currency and checking and related deposits that are in existence and in circulation. A new legal redemption ratio could be established by dividing the estimated total quantity of all forms of these money-substitutes into the quantity of gold possessed by the government and the central bank.
A country following this procedure would then, once again, be on the gold standard. Its long-run maintainability, of course, would require the government and the central bank to follow those “rules of the game” that no increase in the quantity of money-substitutes may be created and brought into circulation unless there have been net deposits of gold in people’s accounts with banking and other financial institutions.
Can we trust governments and central banks to abide by these rules of the game? The temptations to violate them will still remain strong in a political environment dominated by ideologies of wealth redistribution, special interest favoritism, and numerous “entitlement” demands.
It is why the real long-run goal of monetary reform should be the denationalization of money. That is, the separation of money from the state by ending of central banking, altogether. In its place would emerge private, competitive free banking – a truly market-based money and banking system.
But nevertheless, in the meantime, a gold standard can serve as a form of a “monetary constitution” setting formal limits and imposing restraints on those in government who would want to abuse the monetary printing press, similar to the way political constitutions, however imperfectly, are meant to limit the abuses of power-lusting monarchs and the plundering majorities in functioning democracies.
If it fails, it should not be for want of trying. And a gold standard can be one of the positive institutional reforms in the attempt and on the way to a fully free market monetary system.
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Since the Fed came into existance, the US dollar has lost about 97% of its value.
If the Fed hadn't happened, credit cards would only be found in works of fiction.
With real money, it's harder not to notice being duped.
Empires die by the debasement of their currencies.
Hedge accordingly.
empires die by the debasement of their currencies.
This is the underlying truth, regardless if the currency is backed by gold, seashells, industrial productivity, or nothing.
"Empires die by the debasement of their currencies."
Empires die through overreach. The debasement of the currencies only temporarily hides this underlying truth, by attempting to paper over it with a lie.
If the currency is a verifyable commodity then it cannot be debased. In the ancient world there was not a ready means to check if the coinage was being watered down. Now there is.
Modern States have forced their citizenry to use fiat currency for the express purpose of being able to debase the currency.
The US wages war upon the Earth in an attempt to maintain the lie that the dollar is worth anything at all. It's not. The US is incredibly bankrupt and massively overstretched. The only thing left keeping the entire rotten edifice up is the firepower of the military and the willingless of the people to sacrifice their sons. As soon as either of these is no longer in effect, or of such effect that it is no longer sufficient to bully the entire world, the US will collapse.
Putin may very well be the catalyst that destroys the US.
Sure, the bi-metal or tri-metal (including copper) was messy.
Messy, but finite and verifiable. Nothing like what we have today.
It also self regulated the trade deficit, something our economies fail to do, even with Central Banking.
My opinion is that the hard metal currencies were just outright superior.
Empires have no intention of being responsible. All they want to do is to perpetuate themselves.
To do that, they need people to do what the rulers want. To get the people to do what the rulers want, the people are bribed and commanded with their own money, taken from them in the way of taxes.
Since taxes are NEVER enough in the long run, empires (governments) continually debase their currency, even if it's gold.
That's why even a, so called, gold backed currency is no different than any other. A tightly controlled and managed fiat currecy is far better than a loosely managed gold standard (small percentage backed by gold). A tightly controlled gold standard has never existed (for long) and would never support anything more than the most basic society or economy. Money creation and lending are the foundation of a high standard of living.
The people arguing for a strict gold backed society(100% backed)? Imagine trying to get a loan? You would have to wait your turn, maybe decades, before "your" golden loan comes in. Instead if you want a house? Just keep working until you've saved up enough for your 100% (down)payment...
Yea, the fed sure is tightly managing the dollar, for the serfs.
Not true. Gold/Silver/Copper currencies existed for thousands of years. Economies did just fine.
Metals can easily be tested for purities today - any stacker knows that.
You don't want any currency "backed" by gold - you want to use the gold itself. Anything "backed" will just be another printed fiat currency.
Try debasing metals when every cash register verifies the purity of the metals being used.
Thats a pretty nifty cash register? Where can I get one?
Just breed a run of the mill cash reigster with something like this:
http://www.alibaba.com/product-detail/X-Ray-Gold-Testing-Analyzer-DX_603...
Portable x ray? To test for purity?
Trust is the opiate of fools. Trust in Central bankers, the Fed, is delusion. The Fed is selling snake oil. The sheeple buy it with hope.
Agree. You don't want to trust in anything - not even gold. Verify it. Know what it is worth. Don't trust it.
The meaning of the word "trust" could just as easlily have been:
Can't be fucked to check up on the validity of said thing/item/person, ie laziness.
– “The United States and, indeed, virtually the entire world operate under a regime of monetary socialism.”
The word socialism is once again wrongly used to avoid the more accurate noun, fascism.
Is this some prejudice unconsciously ingrained by propaganda of the Cold War era?
Socialism, in theory, it is an economic system wherein all means of production are owned by the people and controlled cooperatively by the State. The benefits of the production should be shared equally in a classless society.
Fascism, on the other hand by definition is a nationalistic single-party state controlled by a dictator or small elite who control every aspect of the society including the economy and favor a wealthy minority, the oligarchy.
OK – so much for word definitions.
But which of those words used adjectivally best describes a global monetary system which transcends nationalism to aim at world control --- monetary socialism or monetary fascism?
The author is at the right pier but he missed the boat. A 'gold standard' is nothing but a fig-leaf designed to cover banker abuse of the currency. The GLD ETF is on a 'gold standard'. Each share is supposed to be worth 1/10 of an ounce of gold. But they only have 1/249th of the gold to 'back' their claims. Let the central bankers and you will find out how many hidden ways there are to print money.
The only solution to our money problem is to go on an 'equity' standard. That means: Prohibit bankers from making loans, prohibit them from fractional-reserve games, and keep title for all deposits in the name of the depositor, not the bank.
Creature From Jekyll Island is a great book that covers this in considerable detail. Read it if you are not sure what I am talking about. Or, if that's too heavy (which it is, literally), read Thieves Emporium instead. It covers all the points well in a 'primer' sort of way as well as a wide variety of other issues we face in trying to control the Deep State.
http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/09129864..., rated 4.7
And
http://www.amazon.com/Thieves-Emporium-Max-Hernandez-ebook/dp/B00CWWWRK0, rated 4.6
The US Treasury probably wishes they could reset to a gold standard but they know their vaults have been looted.. this may be why the idea of a trillion dollar coin was kicked around. Wouldn't it be easier just to devalue dollars against gold? The US will have to collapse before the rest of the world can revert to a gold standard.
This post suffers from the usual Austrian economic viewpoint short comings.
The author writes "fundamental disaster of placing control of the money supply in the hands of governments", then he goes on to advocate Government instituting a Gold Standard.
So which is it article author; free market determined money or Gov instituted "Gold Standard"?
And what do you mean by "Gold Standard"; 100% backing? 40%? No mention of that very important detail. Nor is there any mention of what happens internationally when a country (or community of countries) have their currency being defined as a certain unit of gold.
If it is just one country for example that is pegged to gold, they might quickly find their currency highly valued among others ....bad for exporters who find their products difficult to sell internationally.
If a number of countries peg to gold, then we have essentially, fixed foreign exchange rates between countries. That has worked out about as well as a lead balloon every time in the past it was tried.
How about war time? Countries tend to dispense with the Gold Standard during times of war for the more inflation friendly paper fiat. Should that be allowed?
And no mention of Silver. How about Silver? Here, I'll answer my own question.
A bi metallic standard has inherent problems. What if the ratio of gold to silver changes as new discoveries or other developments occur? Arbitrage occurs, and that makes bi-metallic standards with fixed ratios problematic.
This whole article is sophomoric.
Where oh where are the "serious" people when it comes to addressing a workable & lasting metallic standard? Certainly not posting on ZeroHedge.
Sorry, better to have government just get out of dictating what folks are to use as money. Like Religion (at least in the U.S.). Don't pick winner & losers, don't attempt to handicap contenders via laws and regulations.
I've no problem with a country (U.S. for example) having a fiat currency or a metal/bi-metal backed currency, OR even a digital crypto currency. It could specify that taxes and other people to gov dealings be in that currency, Just as long as it's not forced down the throats of citizens and the world for non gov use. I want real competition and choices. No government mandated currency all set to keep politicians and oligarchs living a life of undeserved luxury.
The way it is now is that governments have forced people into using their provided currency. Because of that, you (me too) are just as much serfs as in the middle ages.
Let fair competition (free markets) determine what people have available for use as currency.
Likely there will be multiple. Likely I would spread my funds among several as each would have its advantages (& draw backs). Ditch the FED and let the Treasury Dept directly issue the dollar currency (no longer backed by debt issuance that is handled by the corrupt douche bags in the FED & the Primary Dealers). Sure, the U.S. gov would probably inflate the hell out of this new dollar. Wouldn't matter because I would keep the bulk of my currency elsewhere, only shifting needed amounts into dollars for government dealings. I would agree with clients/employers/business partners what currency we are to deal in. There shouldn't be "legal tender" law dictating our choices. No laws abrogating gold contracts (which happened in the 1930's with FDR). No laws unrealistically attempting capital appreciation tax between currencies (really just an alternate means to lock you into the gov's/oligarchs crony currency).
Understand? Get the picture?
It's the monopolistic laws, rules & regulations that force people into a monetary box canyon that are the problem. This didn't just come about by happenstance either, rather some rich group of assholes bought off congress. We all know that, it's just not publicly ackowledged (perhaps 90% of the media being owned by the oligarchs has something to do with that ... ya think?) And don't get me started on Healthcare because it's the same monopolistic laws bullshit that are the underlying problem
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I look at this article, the comments after it, everyone advocating THEIR choice being forced upon others. Who is the advocate for free choice?
Everyone wants to invoke government to do their bidding.
Government is just another word for force. Deadly force.
I believe the auther is confused on the topic of gold standard. Most are.
Gold standards are worthless, might just as well stay with fiat, which is what gold standards are in reality, the truth being they are not "backed" for long, if ever.
In fact, any "standard" would be equally worthless.
Bi metal, or tri metal (copper for loose change) as the actual currency provides an interesting solution. With x-ray verifiable checkups it keeps the money manipulators clean as well.
Fluctuations in rarity don't present a real problem to the money market either, as the eschange rate between all metals and all goods/services is floating, not set. That might provide some winners and losers on occasion, but let's face it - gold rushes are rare, so it's not something that truly threatens the system.
I would enjoy someone seriously critiquing the viability of using tri metals as money.
Can't see too many pitfalls myself.
It dont scale well.
It is easy to shave.
Savers screw it up.
As of right now there is no good value one could place on any metal coin.
Just who could possibly issue this coinage?
Just going to break down your critique.
It dont scale well. – pure bullion coins do, which is what would be used - dump the idea of numesmatics - just go with the bullion price.
It is easy to shave. – only if you rely on a face value. If you weigh and test purity then no problem.
Savers screw it up. – how? Withholding gold from the marketplace just drives up the value of that remaining.
As of right now there is no good value one could place on any metal coin. – please describe “good value”. If you mean face value - no need. Coins should be like rounds, stating purity and weight.
Just who could possibly issue this coinage? –any and all could potentially do so – the only thing that matters is agreed upon weights and purities.
lol
What is real money? Certainly AU/AG has a few thousand years of history but has fallen out of fashion lately. There is at least one gov agency that regulates real money, the ATF. Booze, backy and bullets. The DEA is another. I guess the vice squad is in charge of the oldest most sought after form of value ever. I have a stock of all the above minus booze, I am freaking rich!
Both choices suck and lead right back to this. I like an energy backed coin issued on actual production.
The thing Im looking for is a coin that protects the value of my/our labors. So it must scale well. It must also have a measurable value. An open market for coins of all sorts back by all maner of production. ie no force needed. Free choice means no force needed. This also allows for credit to be issued against actual inventories/surplus production. IMHO.
Sorry, any and all currencies "backed" by anything will always lead us back to where we are today, as the issuers of the currency will always lie about the level of backing to serve their purposes. Understandable really, they are human after all.
The only way out is to dump the idea of "backed" or for that matter "fiat" currencies altogether.
You need to use valueable commodities themselves as the currency - no need to "back" what is already there.
What's the best commodity to use as money, I hear you say?
Gold. Same as it always was.
A measureable amount of energy should do well. Gold as a coin is not going to work at scale. It will be clipped, shaved, dilluted and messed with every way possible. As history has shown time and again.
What is needed is a coin with a stable perchasing power. Weather its a coupon for a pint of 100 proof vodka or a killawatt hour of electicity. The actual value needs to be stable.
There are several big problems with gold as the coin. The savers doing the right thing is the one that cant be overcome.
Registers could be designed to weigh and scan the gold. Problem solved.
No need for savers to do the right thing - any gold removed from the circulating pool just increases the value of those still in it. The trick is not to take the coins at face value, but test them for weight and purity.
Energy is appalling as a currency as it can't be literally carried about - what you are talking about is an electric "standard" ie "backed" paper fraud. As I've said before, any and all "backed" currency standards are instantly misrepresented by the "redeemable note printers" ie they're fiat.
Gold and other metals have problems, yes. But the problems can be tackled.
Crypto, digital and "standards" are as worthless as fiat.
Gold is the value itself - it doesn't need backing, just a consumer base ready to test its claimed validity.
Come on people. I'll say it one last time - if you don't have the actual wealth in your hand you don't own it. So the currency actually being used has to be the thing of wealth itself. Redemption notes don't cut it. What's the best, most transportable, convertible, divisible, interchangeable commodity that holds its value over the long term?
Gold of course. Same as it always was. 5000 years used as money didn't happen by accident. Use the grey matter folks.
I tend to keep an eye on the Chinese.
The mainland Chinese have been buying gold in huge amounts compared
to 20 years ago. The Chinese have been buying up overseas real estate for
investment,citizenship and bolthole. I think they know about bubbles and what
happens when the SHTF. The question should be can you carry it,and can you defend it.
USSA is bankrupt all the rest of it is just BS. China and Russia have the pet rocks and the rest of the world will get to play with them after the USSAN implosion of its Ponzi sewer.
fed cannot be audited, per all recent fed chairmen (jews all FWIW)..congress & president, has no oversight of our money system. somebody is not doing their job.
we cannot even see the gold in ft knox??
the common problem with any money system: crime, a central money system is just too easy to become a source of criminal activity once the right people get control..today it's a lot of jews, but any sociopath will do.
It's not paper money vs gold standard.
The gold standard is what got us in this shit in the first place. A gold standard just gives governments "licence" to deceive the users of their redemption notes and print these notes exactly the same as "paper money".
Paper money vs gold standard is therefore the same as saying, "Paper money vs paper money".
What you want to discuss is:
Paper money vs Gold as a currency.
Now critique.
I`ve been following a few lines of thought but maybe someone can enlighten me on a couple of things
1) Central banks and wealthy interests seem to have most of the gold sequestered already....same dudes
how does a gold standard change anything for the elites? Silver was the standard that made manipulation tougher
2) If economies got ugly , bitcoin would be difficult to use without interenet connections and electronics , or payment terminals that are totally controlled by banking interests and rented , not to mention that at some future date it may be hackable or counterfitable.
Seems like silver makes more sense , more of it out there in the general population if things do get worse
Firstly, stop using the words "gold standard".
A gold standard is just a lie to say that your fiat is covered by gold. It isn't, won't be and never was.
Secondly, if you are using actual gold as your currency (instead of it's pathetic, often confused cousin, the gold standard), then you have robbed the bankers of their ability to print money.
Need I go on?
From my reading it was the lack of physical gold and the dishonesty of bankers that spawned fiat in the first place , no arguement here
No - it was the greed of charlatan politicians and their eagerness to sell out the entire West to the Shylocks that first spawned fiat. Same reason it's still in place.
I think if you go back far enough in history, you'll find that banksters printed paper "gold receipts" and exchanged them for physical "gold coins".
They claimed "paper is easier to carry around than gold", or some such soundbite propaganda. And they convinced a significant percentage of the population to hand over their gold coins and carry around paper "gold receipts" instead.
It wasn't long until the banksters realized they could print up unlimited paper "gold receipts", and lend them or spend them. No need to keep the required 1:1 ratio between physical "gold coins" stored in their vault and paper "gold receipts" handed out to clients.
As long as the number of people turning in paper "gold receipts" for physical "gold coins" never exhausted the physical gold coins in their vault... they could keep their fraudulent scam running.
These "gold receipts" were the first "fiat currency"... the moment they printed more paper "gold receipts" than they held in storage in their vault.
This fiat, fake, fraud, fiction, fantasy, fractional-reserve SCAM was extremely lucrative for the banksters! They could lend out many times as much fiat "gold receipts" as they had physical gold coins in their vault. And so, these dishonest banksters could realize (via this fraud) many times as much revenue and profit as they could honestly. Which made them much more successful than honest bankers or less radically dishonest banksters.
And thus, the worst scum rose to the top of the bankster world.
And thus, fiat, fake, fraud, fiction, fantasy, fractional-reserve practices first came to exist.
At least, that's how I understand this issue.
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What you say isn't wrong... it just isn't the beginning of the scam.
Agreed. My answer was to a historical specific question - as to why we weren't currently using PMs as money, and why that "fell out of vogue".