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In Advance Of A Gold Standard, A Look At Gold Stocks vs. Flows
Submitted and copyright by Keith Weiner
Stocks vs. Flows
Today, people who believe that gold is money think that one should hoard gold. They seek to take possession personally. Or when they have it stored professionally, they look for a private vault outside the banking system where they can (hopefully) trust their warehouse receipt. And why shouldn’t they avoid the banking system?
Its corruption was always inevitable. The advent of the central banks before World War I ensured it. The theft (in the US) of the gold of the people in 1933 cemented it, along with the dollar devaluation. The treaty at Bretton Woods in 1944, in which the world agreed to treat the US dollar as if it were gold nailed it in place. The default on the US government’s gold obligations in 1971 by President Nixon set it in stone. Today, we have a corrupt central bank that centrally plans money, credit, discount, and interest.
The regime of irredeemable paper money is going to collapse. Anyone who understands it should want to get out of it, and not be a creditor to insolvent banks. This is a rational personal response to an irrational system.
But it is not necessarily a vision for how the world ought to be run, or how a banking system should be designed. Today, it is necessary to hunker down, trust no one, hide one’s gold, and take no unavoidable or unnecessary risk. Today, one is concerned with one’s stocks of gold. One has what one has, one tries to get a little more while one can, and then one hopes that after “it” happens, one will have enough.
But let’s assume we had the Rule of Law once again, reasonable expectation of enforcement of contracts, and the absolute right of property. What kind of financial system would we have? Would it be the product of fear and distrust wherein gold does not move, but is hidden and buried in vaults?
Many today propose that banks must back their reserves with 100% gold. They envision a vaulting and payment processing system only. But without realizing it (or in some cases deliberately), this policy rules out credit. Perhaps it is based on this view, that detractors of the gold standard say that there is not enough gold for modern production and trade.
And they would be right! Most businesses make a small margin. They buy their inputs such as raw materials, labor, tooling and other consumables, and they sell their product for a little more. In any competitive market, margins are thin. Therefore most companies will never have the capital to buy their inputs for cash (and even for those few who could, this would be an inefficient use of capital). And then what happens when technological change allows a new business to insert itself into the supply chain? The supply of gold coins would have to expand, which is clearly not feasible. Or else a new business could not be added to the supply chain. This problem is intractable. It does not go away when the economy grows larger, technology improves, production becomes more sophisticated, or markets interconnect globally.
The point of this essay is that if we are to have a dynamic economy with production, trade, invention, innovation, global markets, and growing efficiency then there must be a financial system in which gold flows.
One gold coin can do a lot of work in the economy if it is unshackled and thereby allowed to move to where it’s needed to pay creditors and extinguish debts. Then it can move to the next and the next. In a free market, both Real Bills and bonds (and probably other credit instruments) will arise. The structure of credit, who owes whom and when each obligation is due, the amount of total credit, the terms and conditions of credit, and the business models of those who deal in credit will evolve based on the needs of the participants in the markets.
Credit will be limited only by the creativity of the entrepreneur, the inventor, the innovator, and others. That is, gold will flow and men will prosper if there is no draconian rule that bank reserves must be 100% backed by static stocks of gold, no onerous restrictions on who may deal in trade credit, and no reactionary rules against lending based on ancient hatred of “usury”.
As we begin the earnest discussion of how best to go back to a gold standard, and what that gold standard should look like, I think it is important to keep in mind that gold must be free to move.
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IF the Germans would leave the eurozone (which is not the same as leaving the EU), they would have to peg immediately their DM to the EUR or to the Dollar or both. and the Global Banking Cartel would organize immediately a run on the peg.
No, they wouldn't have to peg to any existing currency. Let the DM float.
And guess what would happen? The Euro would collapse against the DM. Absolutely fucking collapse. Ditto for USD. Absolutely fucking collapse against the DM.
Switzerland is crazy for pegging their currency to the Euro. Everybody knows it's worth far more than 1.20.
But it's not really a peg. That's the point. In reality the two currencies float against each other. It's why they have to print boatloads of Francs and buy boatloads of Euros with it. To maintain that stupid 1.20 imaginary "peg".
Germany wouldn't have to do that. Nothing says they'd have to, and who would make 'em do it? Nobody.
ok, ok, let the CHF float, let the DM float. and then?
those countries are not willing to scrap the biggest part of their industrial production and ship most of it to China just so that you can make your point versus Bernanke.
sure, your proposal would make a lot of bankers and FX traders very, very happy. The City of London is with you on this. All MegaBanks are pushing for this. Nigel Farage would love it. Hell, the whole of the UK/UK MSM would cheer. Why?
WHO CARES what a bunch of fucking bankers think?
DM's dramatic rise against EUR and USD reflects REALITY. The German economy is the ONLY economy in the EU that can be called functioning and productive. DM's dramatic rise would demonstrate that.
And no, Germany wouldn't be "scrapping their industrial base and sending it to China".
Germany's stuff would just get more expensive to lazy ass unproductive people in lazy ass unproductive economies ...like ours.
That's what we NEED. Return to REALITY. Not this fucking GAME everybody's playing.
All bankers care about is keeping USD as WRC. So they can keep fucking the world over, stealing wealth from everybody on the planet.
Every time a German company takes US dollars for their stuff, they're getting ass-raped, because USD is WAY overvalued due to its WRC status ...which ain't gonna last much longer.
Yes, I LOVE the smell of REALITY in the morning ...or any time.
spoken like a true red-blooded libertarian free market fundamentalist! ;-)
you are wishing for a strong currency somewhere and are frustrated in your search. The Game in Town at the moment is devaluation.
the "bunch of fucking bankers" are ready to squeeze every drop of blood out of any currency breaking rank, last seen in the FX pairs between the DM, the GBP, the ITL, etc., where everybody and their mothers were shorting the weaker and going long the DM. we don't want to go there again.
This messes up the production lines for all the high quality products for which Germany is famous - made with parts from Italy, France, Switzerland, Austria, etc.. I repeat: it's industry against banks. and when industries lose, they get shipped to the East.
Your return to reality to be payed by the same misery that the US blue collar worker had to witness? No thanks. The eurozone economy - the part that is really strong, is composed of family-led small and medium businesses from Milan to Lyon to Munich to Vienna to Rotterdam that don't want - if possible - shift their production to the East. They don't put their companies on the stock market, they just lend from the banks, work and produce. This is reality, here.
They would love to have gold instead of the EUR - as long as gold is used everywhere. No, King Dollar rules, the euro is just a way to cope with this fact. All this Germany this and that is all wishful propaganda and misperspection.
In know that at least in The Netherlands there have been talks about a new currency zone - let's call it Strong Euro - encompassing German. Finland, Austria, The Netherlands and Luxemburg.
If the Eurozone split into two currency zones, say the above mentioned Strong Euro and a Weak Euro, I suspect Switzerland would go ahead and peg the Swiss Franc to the Strong Euro (or maybe a basket of both new euro currencies).
Each of those currency areas would still be significant markets in their own right, but if they were allowed to float on their own they would settle down at exchange rates which would be different and better matched to the strength (or lack of it) of the economies of each area.
and what kind of troubles would a strong euro have? the same as currently the CHF. see above.
it all begins and ends with the fiat reserve currency that was born 1971 - all the rest is business as usual
There was talk yesterday regarding Greek exit (together with some type of slow-puncture default) & how the EU banks & govts. were now 'better positioned' to deal with the fall-out from that. German politicians have been heard mumbling about a Greek exit/default as being the best approach - I'm pretty convinced Germany was only kicking-the-can to get this breathing space & now quite happy (happy being a relative concept) for Greece to drachma-tise. It'll be cheaper in the long run to take the hit (and possible need to re-cap their banks) than being bled to death for the next 10-15 years. In fact I see Germany heading up a smallish coterie of northern Euro states inside a DM co-operation zone (although it might not be called that). The southern euro states can then get back to what they're good at - being warm, sunny, good vacations spots, producing excellent olive oil & tomatoes. People in Greece won't be so bad off - they've got a warm climate with good growing conditions & a nice manana attitude to life. The Spanish & southern Italians likewise. We forget that in the modern era, the southern euro states got along quite happily having a cheap currency & living, thus, well within their means. The Euro currency & iPad generations of those countries read the brochure without looking at the fine print at the bottom which says: to get this stuff you've got to make other stuff that people want at a competitive level of efficiency. If not, go back to sipping your coffee outside the dusty cafe in the town square & play cribbage all day. The UK will be toast unless we become more German or the UK will look like the financial district of any city at the weekend - empty with a few unfortunates wandering about. The US, I feel, doesn't have a very cohesive society & there could be big trouble there - like Detroit, but nationwide. This is a shame because Americans are hugely innovative & hard-working, it's a cliche perhaps, but there's a huge get-up-and-go that's simply being squandered & ground into dust currently. Please get back an honest currency & honest officers to administer it. The current custodians of the 'reserve currency' seem more like crack-heads in charge of the pharmacy, from what I can see.
In fact I see Germany heading up a smallish coterie of northern Euro states inside a DM co-operation zone (although it might not be called that).
Just one little problem with that idea. It's not in Germany's nature to do that.
Germany has a history of leading the way or going it alone, going it alone more likely.
No, I don't see any little coalition. I see Germany leaving completely.
Au contraire - Germany has a long(ish) history of wanting vassal states - think 19C Franco-Prussian war, think WW1, WW2 - all expansionist wars.
I think it would suit them to have (effectively) a greater Germany, not quite lebensraum though you understand.
It also would not surprise me if those potential northern european states, let's call them confreres, wouldn't be too unhappy either. It's a big bad world & too dangerous to really go it alone without a 'big brother' somewhere in the background (compare & contrast with American hegemony/alliance over & with Europe via Nato etc.)
In not anti-Germany in any way, and in some ways think they do know & do best - despite my Anglo-Saxon wariness of their Teutonic disposition & absolutist nature.
A shared currency with like (although not entirely) cultured countries would also put a break on too much currency appreciation & allow Germany to gently slap the odd fiscal wrist from time to time in any slacker confederate, should it be necessary.
I beg to differ - in the longer context of the history of Europe is this struggle between economic zones and national zones. And of several "Concerts of Europe", from the Holy Roman Empire to the Congress of Vienna.
Absolutist? Germany? Please note that it's a Federal State - much more Federal than the US, for example.
And we Continentals are also quite wary of the British disposition of trying to set us against each other, btw ;-)
Confederate is the correct word and approach and yes, I agree with you, it's a big bad world, too dangerous to really go it alone without allies.
I would be quite happy for the UK to join such a superEuro zone & I think the superEuro zone would reciprocate - after all it would need a good globally positioned finance centre & 1st class pop music, luxury clothing brands etc. - we would leave all the heavy lifting to Germany of course. ;)
yes, but you know that the Bank of England is leading the pack in devaluation and monetization, do you?
Mr. King is under tons of pressure from the City of London to print, print, print. Of course the MSM is glossing over this...
again, the search for a strong currency at this moment is futile - times are not ripe for it
Yes I do! Precisely why a good bit of Teutonic discipline would be good for us. We currently have UK pretend inflation of 3.6% , the reality in our biflationary real-world is nearer 10% from my experience of buying stuff you actually need & paying utility/local taxes.
The BBC, commercial TV & newspapers carry just enough criticism of govt/bank statements to appear incisive & pukka, but not enough to disturb the fluffy cat-stuck-in-a-tree stories that adorn the end of newscasts. Don't want to upset people do they?
LOL, if only my family in the UK would have the same open mind...
you are echoing the ClubMed countries that are pushing Germany in this current "headmistress role", you know?
The US (and Euro) govts. have had their day in the sun - we've forward consumed with our credit/debt money...
Here's an interesting question for everybody here: WHY does the Fed only issue new currency in exchange for debt paper (promises to pay the currency back)?
If anyone knows the answer to that question, they're way ahead of most people, and they understand the core of how our fiat currency system works.
By the way, that concept of issuing currency in exchange for promises to pay it back is the ONLY check and balance on Fed's ability to print.
If that limitation wasn't there, Fed could run the presses wide open, flood the world with dollars, and destroy the US dollar overnight.
sure. but here is another angle: did you hear anybody writing about FX reserves, in the last years? Specifically why so many CBs hold so many USD, usually in form of bonds?
the "normal" direction of a fiat currency is "gently and slowly" down. from time to time, you have dangerous accellerations of this trend, usually because of fiscal or trade deficits - in the US case both. Then you have monetization, a possible first down leg of currency wars, etc.
but currency wars often have a "braking phase", i.e. when the masters of fiat want to stop the deterioration (last time Volcker).
then, suddently, it's all about FX reserves.
I have a simple answer: The whole FX reserves thing is bullshit.
It's a big fucking GAME everybody's playing, and games depend on ONE thing, CONFIDENCE.
When that confidence collapses ...as it does sooner or later ...and quite suddenly ...as it always does... the unwind will be massive and might just collapse the whole FX system worldwide ...especially when there's over a thousand trillion of unwinding CDS along with it. It would be fucking catastrophic.
That's WHY everybody is treading lightly these days. They KNOW the whole fucking game is on the verge of collapse.
Now, can you answer MY question? :)
I love our discussions, I am envious of your avatars... I think you answered yourself your question. Fiat currencies are disposable.
They decline naturally - hopefully gently, with a small risk of catastrophic collapse.
It's a game of confidence, the human trait that empowers technology, science, entrepreneurship and a lot of other human endevours...
Fiat currencies are disposable.
Good observation, and close to the answer I'm looking for, but not quite.
Let a few more folks take a stab at it, then I'll give the answer.
Fed printing in response to debt paper? Surely it would be hugely deflationary if they didn't & in that case no-one could ever 'pay' anything back that they had to generate from the profit from real production of goods/services. You'd borrow enough to buy 1 cow & have to pay back 2 cows even without the 'interest' (i.e. just repaying the capital requires 2 cows, THEN, add coupon rate of interest)- that's real cows & not an inflated cow-currency equivalent.
In effect, the new money/currency needs to be debased at source/point of creation, to even work.
I appreciate the time from both you Ghordius and from COG. Thank you both. My concerns for hyperinflation stem more from what Underline mentioned about that 'Get up and go' being ground to dust in America. Erosion of purchasing power and political policy has created damning moral hazard. One in three people are a crook here in America and are assisted in robbing the productive. Just as America looks to relinquish WRC. It's gotten rough here, reminds me of Mexico already and it seems we're at only about half time.
Best of success to all, look after your local community for that is where this country will be rebuilt.
Stop by the Town or City Hall and run for office or volunteer. In offering my publishing utility to my city I was offered a contract. Good things can still happen when one cares about others. And then one had a ready network to help assist you as the droves of robbers mill around.
take care and good luck, too. what is your avatar exactly? The Rothschild arms?
ok, another try: "WHY does the Fed only issue new currency in exchange for debt paper (promises to pay the currency back)?"
I study all Central Banks, not only the FED. Standard practice for a CB is to issue currency on the liabilities side against assets. Those assets are usually 1) gold, 2) foreign currencies and 3) debt, sovereign and private, of high quality if possible.
I think you are angling to the fact that the US Treasury & the FED broke the link (Nixon Shock) between the USD and gold by refusing to redeem dollars with gold. This forced all others CBs to stop, too, or go broke - aka the Global Reserve Currency. Since then, the only thing that you can redeem the FRN with is debt, i.e. debt against debt.
Is this what you were looking for?
Since then, the only thing that you can redeem the FRN with is debt, i.e. debt against debt.
Nope, FRNs aren't redeemable for anything.
Their only value is the faith / confidence peple place in them.
An no, FRNs aren't debt either. FRNs being debt is another popular misunderstanding.
They're just bank notes. That's it.
The only debt aspect is the fact that they're issued on a promise to pay them back. The security instrument traded for them is the debt, but FRNs themselves are not debt.
I think you are angling to the fact that the US Treasury & the FED broke the link (Nixon Shock) between the USD and gold by refusing to redeem dollars with gold.
Nope, that's not the answer either. It IS a true statement, but it's not the answer to the question.
careful, the word debt is politically charged in the US so you are applying it in a more specific way - part of the political/cultural difference reflected in the English vocabulary.
debt is the other side of credit. a bank note is a piece of paper giving you the right of immediate exchange at the bank for whatever this note is denominated at - before 1971 gold, though US residents were not allowed to it from 1933 to 1975.
The ancient Italian Lira notes I have in my collection were notes you could exchange for one pound of silver (Lira=Livre=Pound).
You brought one pound of silver to the bank, the bank gave you a 1 Lira note. The bank owes you one pound. the banknote is the document certifying the debt of the bank vs. you and the credit you have vs the bank. A banknote is debt. as much as a raincoat check is a debt - they owe you your raincoat back.
now, when Nixon broke the link in 1971, what happened exactly? American residents were not allowed to have gold, but the rest of the free world was used to exchange FRN with Gold through the FED "as usual".
Promises aka debt in USD were backed by gold for us. this was also the reason why our Central Banks bought FRN-paper (banknotes, bills, bonds) instead of gold. All part of the international agreements. Which were not holding properly, infuriated a few, and started the requests for gold deliveries instead of USD, a "run on the FED", if you want. Which Nixon stopped by showing the finger to everyone.
The FX reserves every CB except the FED holds. instead of gold, the promise of gold. a promise is also a debt. and as Nixon did his magic trick, the debt is still there, but it's not redeemable in anything else except another promise. promises for promises, debt for debt.
this for the "debt aspect" which IMO is the wrong way of explaining this to an european, though it might be necessary in the US because of a different popular understanding of certain concepts - OR it's a bit more under a propaganda fog because in the US the magic of Nixon was amplified by the long lasting magic of FDR.
Or gold is worth $10,000/OZ.
Oh, and the essayist didn't mention silver.
Man, if SHTF, copper jacketed lead will be the most precious metal, but who wants to live in a Mad Max world?
Why would you need to fire your weapon? Because you are potecting your assets, right? So yes, copper/lead, but only if you have something someone wants. Which will be gold.
Umm, grocery stores wiped out in about 4 hours, anarchy in 10 days, cannabalism in 2 weeks.
After some semblance of stability, then, yes, gold and silver. Or medicine. Or fuel. Or horses.
Well I have enough food to last me a few weeks. I have some medicine (some ancient herbs and shit cuz I'm a fuckin' sage). I have some fuel for heating. Waterproof matches. And a bike.
So I think my PMs will come in handy.
No offense/ The best GOLD I've ever had was in a New Years shot of Goldschlager.
You met a chick named Goldschlager? Cool.
You hit the proverbial " Golden Nail" on the head! Keep up the great posts.
sad
all of you
I've thought about this a few ways...
1) Instead of "fixing" the gold price, it could float. In other words, there is a fixed supply of gold, whose value would vary depending on its scarcity relative to productivity and outputs. This could be problematic since it would still allow "inflation" with regard to productivity metrics the same way we have inflation with paper money. The Central Bureau of Productivity Metrics would simply create "productivity" out of thin air when it needed credit.
2) A "basket" of commodites, including gold, and also some real measurements of producitvity. This could suffer from the same problems as #1. Its main advantage is using an aggregate of "real" commodities instead of just gold.
3) Making gold the official money would probably not encourage hoarding, since the incentive for hoarding seems to be a lack of confidence in paper money. Take away the paper money, and there's probably no more incentive to hoard gold.
Gold will buy you some bitchez now - Gold Bitchez
Or food in Greece.
We could have the same effect as a gold standard if the money supply was frozen at any level. Then the value of the currency unit would be subject only to supply and demand. More importantly, people would slowly stop hedging their actions with respect to the currency that are due to their fear of its perpetual dilution.
Of course, no future government is going to be restrained by the freeze. When the public stops demanding a frozen money supply, then the printing presses will start running again.
I was in Jordan a number of years ago. A merchant I was talking with pointed to some wallpaper of Iraqi banknotes. He said that he had been doing a lot of import-export work in Iraq in cash. He awoke one day to find that Saddam had revoked one particular series of notes and they were instantly rendered worthless. The merchant turned the ones he had into wallpaper to show his friends the size of his loss.
100% reserve does NOT mean that there is no credit.
It merely means that there is no credit created through fraud - the function of storing money and loaning money are seperate.
You pay a bank to keep your money safe.
If you want to loan your money to a bank, you make a time deposit and you agree that it is no longer yours until the expiry of the deposit.
This would result in FAR more careful lending, and credit would be constrained to sustainable levels. It would prevent massive bubbles.
but then how would scumsucking slime make their money?
Gold will end up hoarded and deflation will result, transferring more wealth into fewer hands.
The same games can be played on the gold standard.
The only fly in the ointment is that the gold standard disproportionately rewards territories with the stuff in the ground.
As whacked out as our current credit system is, the gold standard is not a viable alternative as all it does is reset the cycle - not change it.
Typically territories with the stuff in the ground will only be able to use that land as a mine. The territory next door may grow lots of food on it's land, and the next territory over may have oil in it's ground. All three territories have to work their land to produce valuable assets which they can then trade with one another. I don't think the territory that produces gold is any better off than the ones that produce food and energy.
At the moment 'gold being free to move' equals 'gold rotten with fraud'.
Through COMEX gold, unallocated gold, gold certificates, GLD, ect, gold demand is dilluted by these gold frauds, and its price is maintained artificially low.
Under a gold standard, of course there is enough gold to go around, just the price will be much much higher.
Nailed that one Mr. S!
Real question is how long before this socia...er fascist government begins the media assisted and coordinated program of accusing hoarders of derailing the recovery?.
Once that incomplete thought is firmly ingrained in the feeble minds of the beer swigging AI crowd of Marge and Homer it is a small step indeed to a unilaterally agreed upon confiscation of real wealth..
eg. gold.
one thing with Eric Holder as chief law administrator the past three years has showed us..
The Rule of Law along with the Constitution is only respected as long as you are willing to defend it..
Let them eat cake. They won't know I have any gold until all my silver is gone.
And that will take years.
Many today propose that banks must back their reserves with 100% gold. They envision a vaulting and payment processing system only. But without realizing it (or in some cases deliberately), this policy rules out credit. Perhaps it is based on this view, that detractors of the gold standard say that there is not enough gold for modern production and trade.
And they would be right!
**************
They would be wrong-there's lots of gold-more than enough for everything and credit would not be a problem-
People put their money (gold) in banks savings for a fee ie: interest rate returns (risk reward)
Just because money supply would be locked to gold has no effect on the amount of credit available--at an agreed rate of return-speculators wont become extinct with a gold standard-
The mistake in believing there is not enough gold is the fact that "prices" for goods and services must self adjust to the availability of the money supply and so a shortage of money would be impossible-
Here's an idea... How about we let people decide what kind of money they want to use, instead of forcing one monolithic system down their throats. Allow competing currencies a level playing field and watch the economy thrive.
Sounds good. I have one and I want all of your goods. My currencie is backed with faith and credit, but I promise to pay you. Deal?
Currencies are difficult to start. If they weren't, everybody would have their own. That doesn't mean there needs to be a central authority to create them for us. Yes, they will arise by themselves.
[Trade partner number two]
Dear X,
We have received your inquiry, and feel honored that you would consider us as a trading partner. Per your question, we will be relieving our debts with sound monie, as our currencie is backed with gold bullion. You are more than welcome to inspect the vault. If you would like a tour, please call xxx.xxx.xxxx to schedule your appointment. Please arrive 30 minutes in advance.
If we do end up doing business, there will be a week long waiting period to make sure you pass the credit check. It will be a pleasure to do business with you. In the meantime, if there is anything we can do to further our business together, please let us know .
Dear Con Artists,
No thanks, I'll do business with someone else.
P.S.
At least I have a choice.
A choice? Like von Nothaus?
He seemed legitimate to me? But I didn't know he issued paper notes. That's interesting...
Anyway... Anyone nabbed by the FBI must be doing something right.
Take care, and if you ever want to do business, feel free to call. And like we mentioned, you are more than welcome to visit our vault.
Shortly after the US created Federal Reserve Notes lots of businesses simply wrote their contracts such that they could demand payment in gold. The US Government responded by refusing to enforce 'gold clauses' in contracts.
In other words, your contract might require payment in gold, but a quick trip to your local court house and the court would be happy to let the other party payoff with FRNs.
Private money will not work because the government will not allow it.
That was when?
This government hasn't had a budget for three going on four years. This government is completely inept. So this government is going to rule that debts need to be settled in fiat, after fiat gets washed? Ha.
There is a town in Espana using pesetas again. Soon all those States will be using their old currencie because they don't trust the new one. Who would?
so i was wondering how much gold had been 'cursed' through all the shadiness of mankind throughout the centuries, and i stumbled upon this.
It doesn't conclude how the truth movement is manipulating the curse, or whatever.
i'll admit the site is comical - and the thought experiment is disporting, but i still can't help but wonder how my stash came to be in the form it is today.
i can only imagine that's it was more likely than not through more strife and surreptitious means than by honest ones.
for whatever it's worth.
here's some more gold pr0n, if interested (pbs).
+1 for disporting, which is now in my vocabulary too.
The post is half right. There is a long history of pirates and debutauntes aquiring gold, but the important thing to understand is, the gun isn't in your hand, it's in mine.
Fascinating. I read the whole article from which this is excerpted. Thanks for the link.
You have presented by far the most interesting portion--the author overall seems too blinded by anti-catholic hatred (and unconcerned about Rothschild/Jewish misbehavior) to be generally reliable. But what you have posted is indeed a "nugget" worthy of consideration.
Antal Fekete has outlined the necessary steps to a gold standard in this paper:
http://www.professorfekete.com/articles/AEFWhatYouAlwaysWantedToKnow.pdf
I think he has it nailed. In summary he lists three indispensable steps which are:
1. Open the mint to free coinage of gold - that is, you bring in your gold in whatever form and have it minted, free of seigniorage charges, to new coins of the realm. This puts the power of money creation into the hands of people, not government!! It also brings gold out of hiding.
2. Eliminate "legal tender protection" for paper money so no one is forced to take paper money for their labor.
3. Rehabilitate the "Real Bills Doctrine" of Adam Smith.
It's a great paper and I highly recommend reading it, along with the rest of his writings. His views differ a bit from the other American Austrians that follow Mises, specifically in regard to the real bills doctrine which they dismiss as inflationary. Real Bills are self liquidating bills of credit, payable in gold after 91 days, and Fekete makes strong arguments why they are the essential ingredient to a successful implimentation of a new gold standard. A gold standard without real bills will surely fail, as it did after WW1.
Gold and PM stocks better start turning back up ASAP
Otherwise, General Jim is going to lose yet another fax machine to Duvall's fire extinguisher.
Miners are cheap. Especially considering the inflation coming down the pipe. I just started buying them again. I had sold what I had about a year ago. They should respond once the CBs are forced to cover their debt positions. The PWG can't keep the lid on the miners forever.
RoboDufusRoach, your wasting valuable space with your rhetorical vomit.
!
men will prosper if there is no draconian rule that bank reserves must be 100% backed by static stocks of gold, no onerous restrictions on who may deal in trade credit, and no reactionary rules against lending based on ancient hatred of “usury”.
Just two questions: 1. Which "men?" and 2. Isn't Weiner Jewish? (Just askin')
This is all hypothetical to the nth degree. No way are we going back to a gold standard until AFTER a SHTF event in which a significant amount of people starve to death. In other words, only after the ratio of unproductive to productive people is much lower, will a currency (which is not a Ponzi bubble) be accepted by the people.
I don't know about this whole starving thing.
What if gas prices rise to $5k this summer and then Iran happens and then gas is at $8, and then gold is at $3300 by the election and everyone is wondering why Mittens is facing off on Obama when Paul has his own show on Fox and talking about gold and then inflation keeps up and soon gold is at $5k and finally mom and pop put 10% of their IRAs long gold and the price pops again to $8500 but inflation is still raging and Paul is on TV everynight talking about how gold is money, and then everyone understands, so the Fed says "Ok, we will have a sound money policy" and then gold goes to $11k and then finally it all settles down, but in that time no one made any money because wages didn't rise, they didn't own gold, and they spent all of their wealth driving in circles?
So, will Paul be co-hosting with Napolitano?
Zacly.
And just like that everyone becomes productive again? Haha... I don't think that's possible without a major event.
I'm not saying it's all fruitcake and lobster. WHat I am saying is the economy muddles through while real asset prices rise vs fiat.
kesef
If you bet on gold, you're fundamentally betting against human ingenuity, and the human institutions that create wealth.
A long-term believer in gold, is inherently a misanthrope.
Read more: http://www.businessinsider.com/heres-why-gold-bugs-are-such-angry-people-that-are-always-constantly-freaking-out-at-critics-2012-2#ixzz1mWIhn5UmYep. That's why I buy silver.
That, and I can't afford gold.
I find it quite amusing; reading through the comments here on ZH that completely glaze over what the "gold standard" really means, or what commenters believe it should mean. In my humble opinion, most people don't truly understand that a return to the gold standard means a return to upholding the integrity of a verbal contract or handshake. We live in a world where it's always someone else's fault, and there is a class of sheer scumbags who profit from breeding these ill thoughts.
Humanity is nothing more than a peculiar crossbreed by a higher power or nature, whichever you so choose to believe. At our roots, each person is nothing more than an animal in nature. In our hearts and minds, each one of us is nothing more than an honest or dishonest person within society. Our nature expects and demands compromise; however, our minds will forever desire cooperation.
Therefore, I will be bold in saying; a return to the gold standard is not just a return to relying on the shiny metal; it is a return of honesty and cooperative societal behavior. Words shall be treated as gold, until an individual's word is proven otherwise. If this were to take place, those who choose a life of deception would no longer be accepted as productive members of our society. They should then be exiled to a wilderness of their own creation. When a man's word is once again revered as gold, this will be a magnificent inflection of societal and evolutionary forces.
I leave you with these two quotes that I coined last year (after a messy divorce):
"Will the manipulation ever cease to a point where minds can work together and meet the needs of a task at hand?" ~TSS 2011
"Concluding with Z, recent generations have been misguided into a belief of compromise when we live a life of adaptation. Dig deep within yourself and ask, do you demand compromise while expecting adaptation?" ~TSS 2011
All that talk about gold is great but for now gold is very much like the euro. They have been trading together fo years and with a few rare exceptions moving in the same direction even during the Greek crisis. I wonder what to think of a commodity that is not very much different from a dying currency for now. I am not saying it makes sense or that it will last but what matters is the world I live in not the perfect fantasy world we all dream of.
All that talk about gold is great but for now gold is very much like the euro. They have been trading together fo years and with a few rare exceptions moving in the same direction even during the Greek crisis. I wonder what to think of a commodity that is not very much different from a dying currency for now.
************
huh?
http://3.bp.blogspot.com/_nSTO-vZpSgc/Rspgm1gHg1I/AAAAAAAABOU/mVFqETxkBy...
Changing the monetary system's fundamentals is not about creating a system that does not or cannot collapse.
It's about creating a system that will not permit the pitfalls of excessive debt that we currently face.
We should first and foremost acknowledge we live in an uncertain universe and as such we will have credit crises, and we will misallocate resources because of our imperfect knowledge.
A gold standard is an anchor that prevents credit expanding to infinity. Credit will still be extended and it will contract.
Economic decisions will be shaped by the reality of limited financial resources, and not infinite capacity to print - which is really just a way to deny our mistakes and hope they go away, or kicking the can down the road as is now popular in the economic vernacular.
If you kick enough cans down the road, one day you wake up, can't see the road because it is covered in cans and you have lost your way!
not one comment, thought or fear on this page has not been discussed to death by FOFOA (and his commentors) over the past 3 years...if you want to see the coming Nash EQ system that allows the fiat (cause deep down you YES you want it) but provides for a wealth asset that is stable check him out and no I'm not him. I have been more than impressed though and I believe nothing at least at first.
The gold standard.. You have to be kidding!!!
I can't believe people buy into this stuff. Are people unable to comprehend that a gold standard would be controlled by the same exact players who control the fiat system? It does'nt matter what system is devised for us peasants, the end result will be the same.
We don't need a gold standard. What we need is an interest-free currency, backed by the productiveness of the United States. A modern day Colonial Script issued by a congress which is made up of people with morals, character and integrity, not a gold system controlled by bankers who have as their top agenda, the destruction of America.
It's not the system that needs changing.. It's the people running it that need changing. The current fiat system is a failure not because it uses fiat currency but because it is run be criminals.
I believe we will return to a gold standard of some kind but it will be another racket.. Same players, slightly different game... same results.
The thing that makes me nervous is Soros has invested into a Gold ETF. It warms the cockles of my heart but also makes my lower sphincter pucker up.
Inye ancient days currency was copper, silver, Gold, and notes. While all of them could be counterfited or adultrated it was a damn risky thing to do. Loss of hands and heads where common for those who did it. Even Kings could only get away with clipping their coinage for a while.
...may be you read what Martin Armstrong thinks about a return to goldstandard:
http://silverdoctors.blogspot.com/2011/07/martin-armstrong-return-to-gol...
Will Gold be Confiscated? - Martin ArmstrongIt's surprising that in such an intense debate on flowing gold and a "gold standard" that also allows credit, hardly anyone mentions FOFOA and the Freegold idea. There's a lot - a LOT! - of writing on the subject, but this might be a good place to start:
http://fofoa.blogspot.com/2011/05/return-to-honest-money.html
FOFOA and the Gold Trail (FOA) are why I traded my silver for gold and haven't looked back. And after reading that Whither Gold report, I feel even more confident with my decision.
perhaps you should mention that the freegold hypothesis of FOFOA is very strongly in favour of Central Banks set up like the ECB
uppsss, perhaps this is not PC here? ;-)
There's nothing wrong with how the ECB is set up, generally speaking. What I don't like is the euro currency as such, because the only way it can really work is by integrating the economic policies of the member countries. This essentially means a United States of Europe, and I'm not in favour of that. More to the point, neither are the peoples of Europe, but the guys in charge seem determined to make it happen anyway. In this, I have a problem with FOFOA, who is uninterested in the political side of it and only looks at the monetary system. But I guess that's an easy enough view to take when you're just looking at it from across the pond, and don't have to live inside it.
The euro is not a requirement for Freegold, though. National currencies would work just as well, as long as they're similarly floating against the reference point that is gold.
I'm also against this (mostly French) idea of a United States of Europe, I like the current setup the way it is, perhaps we should not call it European Union but Confederation of Europe, instead. A club of sovereigns, with a secretary's office and a few crappy burocrats. I'm often astonished how much this gets misunderstood in the UK and the US - but of course for the City of London all things beginning with Eur- are seen as a mortal threat and an unused possible frontier to exploit.
The euro is still a requirement of the integrated industries at the core of Europe, a response to the unbacked fiat reserve currency that was born 1971, a shield from FX speculations from global banks with unlimited hyperleveraged fiat firepower. But this will pass, too.
The amount of ignorance here would be funny, if it weren't so sad.
"The first gold ETF denominated in Yuan was launched on the Hong Kong stock exchange this week"
http://www.hkex.com.hk/eng/invest/company/quote_page_e.asp?WidCoID=83168...
http://bank.hangseng.com/1/2/investment/etf/etf
Fun video: http://www.youtube.com/watch?v=GTQnarzmTOc
re fractional reserve banking backed by gold (anything)
The question to ask is:
Why should you be allowed to create inflation and take my wealth?
If you own gold, inflation does not take your wealth. It is the ultimate wealth "preserver", and will be recognized as such when it becomes reborn in the global economy.
It is simply the matter of time. Gold standard will be automatically in effect when An ounce will be selling @ US$23,000. And it is approaching fast.
Doesn't all of this come down to the simple proposition that:
1. We all need or want some thing;
2. To obtain this thing, we need to offer something of value;
3. We use something that represents value since it is impractical to always exchange good or service for good or service;
4. Historically, gold is a much more reliable representation of value than fiat because of the ease of manipulating fiat;
5. So, while not true at all times and in all places, gold generally is more valuable and safer than fiat.
6. (And, when fiat is dying, it is gold is especially valuable and especially safe when compared to fiat.)
This essay is a load of crap designed by the very brain that decided to allow the House of Rothschild to control global currency creation (inflation) which is the natural chain on the neck of the populace. They knew that in Europe since the 1600's and then thrust it on the U.S. in 1917 on Jekyll Island. Banks thrive because they charge fees on the fiat that is created so the more fiat, the more fees. The only method of keeping the greed-driven bankers in check is to put a limit on their credit cards which appears in the form as gold-as-collateral. No gold, no fiat, end-of-story. However, it won't happen because the "system", which includes those fat little politicians, is the Atlas Shrugged World of fat bankers and fat pols all in one continuous reflationary circle jerk at the expense of the entrepreneur and the people they (used to) employ. Good luck with your "Gold must flow!" Utopian dream. Gold will "flow" allright - right from your vault directly and without passing "GO" into the hands and vaults of the fat little bankers and their fat little wanking politicians.
How the gold standard may be established.
http://tradewithdave.com/?p=9344
Dave Harrison
I am concerned with the definition of “sound money”
My skeptisism is based on my reading of the History of the Gold Standard and comparing and contrasting different historical examples of other methods, such as the tally stick for example.
http://useconomy.about.com/od/monetarypolicy/p/gold_history.ht
What is "Sound Money" is very much open to debate IMHO
Here are some good critiques...
http://www.optimist123.com/optimist/2007/05/sound_money_ver.html
http://libertyrevival.wordpress.com/?s=monetary
http://www.optimist123.com/optimist/2007/01/stubborn_irony__3.html
m
This article touches on the flow of gold, and it too, has many connotations. FOFOA comes to mind, but so does this thought...
- My gut tells me we are going to need gold for more than just money going forward. -
http://geology.com/minerals/gold/uses-of-gold.shtml
scrappy
this article is superb and very feketean....the trumpeting of gold hoarding is always a signal of fetid economic times....it is of utmost importance to distinguish between gold hoarding and gold circulating....