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Guest Post: Myths and Realities of Returning to a Gold Standard
Submitted by Terry Coxon of Casey Research
Myths And Realities Of Returning To A Gold Standard
The gold standard, under which any holder of paper dollars could redeem them for gold at the US Treasury, is now within the living memory of just a few million Americans, nearly all of whom would be dangerous behind the wheel. But thanks to the money printing and the federal deficits that have grown to astounding scales since 2008, and thanks also to the clashing pronouncements of Ron Paul and Ben Bernanke, the idea of a gold standard has resurfaced in the public's consciousness.
I'm happy to see the concept enjoying a revival. Reading about it in the mainstream press and hearing it mentioned on the cable news shows makes me feel a little less like a Martian. It has almost made me feel avant-garde.
Despite my enjoyment of the revival, I've noticed that the idea seldom is presented as a clear and definite proposal or as an invitation to revisit an institution that worked well in the past. Too often, it shows up as little more than a slogan or a taunt aimed at central bankers or as just a political fashion statement. So let's take a closer look at what it really means. It's not that complicated.
What Isn't at Stake
The abolition of the gold standard has been the source of considerable mischief, but it hasn't been the source of all mischief.
I've heard the lack of a gold standard indicted as part of a government scheme to force the public to use paper money. It isn't.
The legal-tender laws are usually part of the story, but the story doesn't hold up. Declaring irredeemable paper dollars to be legal tender merely defines what a creditor may be forced to accept in satisfaction of a debt that is denominated in dollars. Operating under that regime is entirely voluntary; if you don't like it, you can avoid it by declining to accept anyone's IOU or other promise denominated in dollars. Despite the legal-tender laws that define what is a (paper) dollar, you are free to buy and sell and enter into contracts without using dollars.
The legal-tender laws amount to no more than the government's claim that it owns "dollar" as a trademark that it can apply to pieces of paper or to anything else it decides to – just as General Motors owns the trademark "Chevy" and can apply it to any piece of machinery or any other product it chooses. GM and GM alone is free to serve up Chevyburgers, and you are free to eat one or not.
Any two parties are free to use gold coins (or silver coins or strawberries) as a medium of exchange if they agree to. Pesos, francs and Canadian dollars are permissible as well. A return to the gold standard wouldn't alter that situation or expand the range of your choices.
I've also heard the lack of a gold standard blamed for overall economic instability. Defenders of the current system of fiat money do just the opposite – they blame the gold standard of the past for preventing the Federal Reserve from stabilizing the economy. It's quite a debate – little economic logic and much cherry picking from the big tree of history. It all comes down to which system gets stuck with responsibility for the Great Depression of the 1930s, which occurred at a time when US citizens couldn't redeem dollars for gold (no confidence-building gold standard to help the economy recover) but foreign governments could redeem dollars for gold (that old gold standard, still causing so much trouble).
What It Wouldn't Fix
A return to the gold standard wouldn't make you any freer than you are now. You'd still be filing tax returns and still be getting massage therapy from TSA employees; Congress wouldn't reform its big-spending ways, it would merely switch from taking and wasting fiat money to taking and wasting gold-backed money; and the Supreme Court, the guarantor of your liberties, would continue making things up as it goes along.
A new gold standard wouldn't be an elixir of stability for the economy. A severe depression in 1919-1920 demonstrated the Federal Reserve's ability to engineer financial train wrecks even when the dollar is redeemable for gold by anyone and everyone. And before the advent of the Federal Reserve, the US Treasury demonstrated the same ability through its borrowing operations, as did Congress on a few occasions simply by creating uncertainty about possible changes in the monetary system.
And a return to a gold standard wouldn't ensure long-term preservation of purchasing power for the dollar and dollar-denominated obligations – because, as we've seen, a gold standard adopted one day can be abandoned the next.
What It Would Fix
Now that we've dampened expectations, here's what a gold standard would do: threaten the individuals who run monetary institutions (such as the Federal Reserve) with embarrassment for bad behavior. It narrows their opportunities for dodging responsibility.
Every issuer of money promises to protect its value. The promise is the same whether it is made on behalf of a fiat currency or for a currency backed by gold, silver, copper, other currencies or seashells or pelts. A gold standard doesn't prevent an issuer from breaking the promise. It merely makes it difficult for the issuer to pretend that it is keeping the promise when year after year it isn't.
With a fiat money system, you don't need any special talent in order to deceive the public with insincere talk about avoiding inflation and protecting the money's purchasing power. The years-long lag between printing and the effect on prices makes deception easy.
If you print more money this year, well, it's only a temporary measure and only because of the recession you're trying to avoid. Next year, you'll slow down the printing or maybe not print at all – you'll have to wait and see what conditions are next year. And don't forget to mention the odd years of rapid monetary growth that coincided with almost no price inflation at all. And when price inflation does pick up, there's always someone or something to blame – OPEC or terrible growing conditions for the soybean crop in Brazil or a war. You'll think of something.
Short of the complete destruction of a fiat currency, there is nothing that can demonstrate beyond doubt the shallowness of the promise to protect purchasing power that is being made on any day. There is no bright line separating performance from talk.
With a gold standard, deception is much more difficult. Creating too much money will lead to redemptions that drain away the official gold stockpile. Everyone can see the inventory shrinking. If it shrinks to zero, then the managers of the system have failed, period. There is no ambiguity about it, and the politicians in charge at the time have little room for denial.
The formal adoption of a gold standard holds no magic. It's just another promise. But it is a promise that carries an assured potential for egg-on-face political embarrassment if it is broken, and the only way for the people in charge to avoid that embarrassment is to refrain from recklessly expanding the supply of cash. That's why a gold standard protects the value of a currency, and that is why the politicians don't want it.
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Tradition!
it's not just about gold. Tie the dollar to anything, fucking poplar trees if you want to, just anything that can't be massively printed instantly. but yeah, sure hope it's gold, kinda banking on that.
Gold has outlasted any paper currency ever printed, period.
A loaf of bread could cost 10 cents under a gold standard says Dr Ron Paul.
You want to fix this? Simple:
1.) Let GOLD trade free of taxation and derivatives. No more levered futures contracts. 1:1 allocated only. No tax on gold sale, capital gains or otherwise. Do it with silver too, while we're at it.
2.) Impose a national progressive real estate tax with a super high threshold, say $10,000,000. No federal taxation below that level. Amend The Constitution to allow the threshold to rise based on the true rate of inflation measured against gold, silver, energy and food. Amend The Constitution so that the states cannot tax real estate below a threshold of $5,000.000.
3.) Ban all other forms of taxation (including fees, tolls etc.) with a Constitutional amendment.
I would include an amendment that the Fed Gov't cannot own more than 15% of the country's land, and the states cannot own more than 15% of their respective state's land AS ASSESSED BY DOLLAR VALUE....
That fixes the problem for about 1000 years. Taxation is progressive, but only above a very high threshold, allowing those who want to live simply and self-sufficiently to do so if they wish. This forces the monied elite to deploy their capital towards CAPITALISM (seeking profit via production of goods and services), as opposed to their current method of seeking a return on their money, COLLECTING RENT.
Regarding the legal tender laws, they're a bit more pernicious than we make them out here. It's true that anyone can agree to transact in gold/silver/whatever, but the issue arises when your trading partner breaches that contract.
The only time you'll get gold from a court action in a fiat system is if your contract is eligible for specific performance -- and unless it's a real estate deal, it's pretty much certain that it isn't.
The court will award you the fiat-value equivalent, which is cold comfort if you're the type who was contracting in gold to avoid fiat in the first place.
>>Regarding the legal tender laws, they're a bit more pernicious than we make them out here.
Agree.
I think the author needs a refresher:
http://en.wikipedia.org/wiki/Gresham%27s_law
refresher won't help
he is paid to do this so the muppets whom casey (& jMauldin, now, too?) is targeting w/this marketing will respond appropriately to investment and research products and newsletter prices
just bidness
but the propaganda is designed to be PC and not raise the muppets' brows, not trigger any questions about the correctness of the pitchman's delivery
this guy knows of which you speak; he don't get paid to talk about it
why, i'm not sure, but probably b/c challenging legal tender + tax disagvantages of current crinimal fiat money ponzi scheme is best left to fringeTM types as are found on zH
don't wanna scare the fish away
It seems the trolls have woke up early and are ill prepared as usual to discredit the author of this article. History has shown us that a gold standard has kept the government in check... how? Lets say they do ANYTHING to debase fiat, make stupid spending decisions, etc., what recourse to the 99% have? Right now, none. When we were on the gold standard people could "vote" by exchanging their PM backed fiat for physical PM as soon as the corrupt/corporate owned cronies did something special interests wanted/bribed them to do. Go ahead and have your political debates, try to reason with big money interests, lobby your government officials, work to change the laws and regulate/deregulate all you like. Not me, I'd prefer to simply hit em where it hurts in one simple step... trade the fiat they debase for physical PM (along with millions of others) sit back and watch how fast they backtrack.
And you'd make approximately that much per hour, assuming you could even find a job.
#Winning!
... and what would your wage be?
Gold may well have "outlasted any paper currency" but both Gold and Silver got trashed (debased and debauched) as money like any Fiat currency
hard assets are not a solution to the problem of monopolising money
the only solution to monopolisation is the free market (no rules, no Govt, no central banks, just the productivity of a free competitive market)
No laws either I guess?
And if you'd still allow laws, who'd enforce them?
absolutely no Laws
the Law is just another crap Dept of Govt producing garbage
can you give me one Law, out of the thousands on statute, that works?
Try Freedom ..it couldn't possibly be worse than the legalised shit we're now
you've just described Somalia
Glad to see a sensible Gold Standard article.
embarass central banking....that is the best gold can do. Fascinating eh? Counter this to FIFIFOFAFUM's hyperbole.
Actually, the best known form of un-debasable money outside of the Au/Ag realm is/was tally sticks.
Tally sticks are wooden sticks with notches cut in to them to indicate value ["The manner of cutting is as follows. At the top of the tally a cut is made, the thickness of the palm of the hand, to represent a thousand pounds; then a hundred pounds by a cut the breadth of a thumb; twenty pounds, the breadth of the little finger; a single pound, the width of a swollen barleycorn; a shilling rather narrower than a penny is marked by a single cut without removing any wood.. "]
The British Exchequer kept the national accounts using tally sticks until the late 1780s. In 1834 the Government decided to destroy the stock of tally sticks which had been stored in a basement in the Houses of Parliament.
Unfortunately, the fire got out of control and burned down the House of Commons.
Symbolic? I think so. :-)
So, yes, Gold is no answer, even wood would work. It's the lack of intent on the people who manage the system to have an honest system that really matters.
ori
towers-of-baabel-and-levers-of-control
It is absolutely obvious that China strongly intends to make Yuan a world reserve currency.
China cannot continue to support a hostile US regime by continuation of the US$ as an only one world reserve currency. However, the only way for China to gain for Yuan a world reserve currency status is to backup it up with gold. The world will not accept another irresponsible and insolent reserve currency printer.
I think you are absolutely right about China, but it is still possible for the West to "cut the Chinese off at the pass" by launching an alternative reserve currency (a new Euro, or new dollar) backed by gold. This is not likely to happen, because Western central bankers have the collective wit of a tally stick.
One think seems certain - the current crop of fiat currencies are doomed to the bonfire, and that the next global reserve currency must be tied to gold to escape the conflagration.
ORI - Interesting thing these tally sticks. But I believe they were more a tool for internal accounting assets rather then being the tradable representitives of the assets (ie. money) themselves. No one actually traded them for something in a marketplace.
But they were used as money, fungible, un-counterfeitable and acceptable through the land...
THE TALLY STICKS (1100-1854) King Henry the First produced sticks of polished wood, with notches cut along one edge to signify the denominations. The stick was then split full length so each piece still had a record of the notches.
The King kept one half for proof against counterfeiting, and then spent the other half into the market place where it would continue to circulate as money.
Because only Tally Sticks were accepted by Henry for payment of taxes, there was a built in demand for them, which gave people confidence to accept these as money.
ori
"wood would work"
Wood rots therefore it would not!
Oh and devisible, my wood(y) is bigger than yours, come on Ori!
Toco, close to a thousand years of use says otherwise? See above.
Do thine research:
The tally stick system worked really well for 726 years. It was the most successful form of currency in recent history and the British Empire was actually built under the Tally Stick system, but how is it that most of us are not aware of its existence?
Perhaps the fact that in 1694 the Bank of England at its formation attacked the Tally Stick System gives us a clue as to why most of us have never heard of them. They realised it was money outside the power of the money changers, (the very thing King Henry had intended).
;-)
ori
It could only work if the rate of exchange remained fixed to a valuation that is accepted. As society became more efficient and expanded, the valuation had to change, or the number of sticks had to increase. The tally sticks were a fixed value in a long and relatively stable system. Tally sticks could be created if needed as they grew on trees, so revaluation was not neccessary as long as they were increased prudently. Gold can be used but it can not remain fixed, because it does not grow on trees. It must be able to increase in value as the money supply needed is increased, if it is to be used as money. Money units are not the problem, its the expansion of credit (and the inevitable contraction) that causes the problems.
Sooo.. the King has to count sticks to find out how much money is in the Kingdom.
Cute.
Especially when the Crown deemed all trees larger than 2 foot, Crown Property (Hence the King James Plank 16 inches wide and some inches thick for flooring) in our Colonial times.
I remember the Gold Standard. Those Dollar Bills were worth something. However, just try to redeem those old bills for silver or gold today. Aint happening.
ORI, thanks for the refresher on tally sticks. And for the hint about the B of E and its opposition thereto. Hard for people to get the point sometimes.
You're welcome Optimus. I got refreshed too.
The B of E thing, history, repeat.... round and round they take us, eh?
ori
it's not just about gold. Tie the dollar to anything, fucking poplar trees if you want to, just anything that can't be massively printed instantly. but yeah, sure hope it's gold, kinda banking on that.
Forget it, not gonna happen.
This article is bullshit, waste of ZH bandwith. There won't be any gold standard nor anything else standard in America ever again.
Fiat currency that can be printed to the moon is the easiest way to loot everybody's wealth. They're not about to end such a perfect looting scheme.
The looting scheme would continue under a newly imposed gold standard, the government would do as the kings of old...call in all private gold holdings and reissue government minted coinage of "equal" (cough) value which isn;t "equal" because the government just skimmed some and replaced it with common base metal. Hence the term "debasement".
The looting will never stop until enough people say it will stop and act accordingly.
A Gold Standard is better than No standard which is basicly what we have now, the neverending lie!
you mean the SHIT MENDACITY STANDARD that we have now?
Yes Big Daddy! Mendacity! It STINKS around here of that.
And you don't know that this stuff that fills this basement was one big fire sale from Europe! All Crap.
I aim to grow the Cotton, sell it and weave it too.
Gold is not money. Money is an 'association of values' in our heads.
Gold is a wealth reserve asset -- the best.
A gold exchange standard is the beginning of the con (ask Americans in '33 or the rest of the world in '71).
Gold: physical only, fully allocated, no fractional lending and no transaction taxes.
What we might call true savings. If a day's labor is saved in gold then that saved purchasing power will be preserved.
Sure gold is money, just because the "association of values" in our head is skewed does't mean gold(and its associated money junior silver) isn't the standard by which all value is measured. An "association of values" is nothing more than just that; a concept. Money is something tangible. I can put my hands on money. The concept of trade value is not money. The money(gold) taken in 1933 didn't cease to be money. The "association of value" for some was deliberately and forcibly changed(At least it was an attempt to do so). Just ask the Rockefella's or Rothchildren or any of the other world owners.
Debt pre-dates coinage. In antiquity money was a measure of that debt, it was not a thing.
Please consider re-thinking your position.
Gold is great as savings, but is not necessary nor efficient as a medium of exchange.
As a coin collector I have read much of the literature about our young nation's use of precious metal as coins. Some of the greatest battles in Congress were over ensuring that intrinsic value matched stated value, i.e. a quarter contained 25 cents of silver.. Our FF certainly considered gold /silver as currency., they could not comprehend a currency where value was not related to the metallic content.
As for not being usable, normal transactions between nations involved exchanges of vast quantities of gold and silver. Who is to say that our way of creating worthless value out of thin air is superior?
"...normal transactions between nations involved exchanges of vast quantities of gold and silver."
I was speaking of transactions within the same currency zone. You are speaking of 'squaring accounts' when the trade is out of balance between differing currency zones.
Gold and silver can be money, but 'the pure money concept is an association of values in our heads'.
Political necessity will always trump hard money dreams.
The real power of gold is that it is a wealth reserve that is not dependent on anyone else's performance.
Gold is like owning a piece of a Rembrandt (impractical). How do we know this? Make a big enough stack and you'll own the whole Rembrandt.
Exactly, the concept of money is perception. Throughout history (and our Founders in particular) "money" was precious metal and bonds backed by gold. By 1880 the nation had finally accepted paper money and gold was essentially driven from circulation, used only for foreign exchanges. When the government offered to redeem paper for gold, the end was foretold. Intrinsic value had disappeared.
When Roosevelt demanded that nations exchange the vast amounts of gold in their banks and central banks for paper he was universally ignored leaving them far richer than before. Not a single nation was so foolish as to trade gold for paper.
horse=25 chicken=1 ozt au=1/4 acre land=25ozt ag=small diamond=3 goats=whatever fair exchange
gold is the common denominator. debt may pre-date coinage but does does not pre-date gold. Check Genesis ch.2 and the last 6000 yrs of human history.
That gold pre-dates debt in human conciousness is just plain wrong.
You can know this just by thinking about it for a moment. You do me a 'favor' 5000 years ago -- maybe I hurt my back, and you share the fruits of your hunt with my family -- and I am now in your debt and owe you some favor or payment in kind.
That gold is wealth is not in dispute. That gold can act as money is not in dispute. But gold is not the money concept (a measure).
I can't trade a concept for a pig and some seeds. The oldest common denominator is gold. It and it alone is real money. Everything else is a derivative of real money. You are confusing an attribute of gold with the real deal. You hurt your back and you give me money(gold) and I give you a couple pieces of cheese and a biscuit with some squirrel gravy on it. Were you around before this "debt in human consciousness concept" pre-dating payment in gold became the norm?
"You just don't get it, do you Scott." -- Dr. Evil
"Piss off bitch"--Likstane
I think there's at least three concepts of money going on here.
The debt as money concept - you hurt your back, I help you out, you are in my debt. But the only way of turning that debt into some form of 'money' is by creating some transferable token of that debt, which a third party knows is going to be redeemable by the original debtor. The token itself could be of no intrinsic value (ie, like a tally stick), but as long as it wasn't easily forged it would carry the weight of the debt. Of course, if your bad back then causes you to starve to death, that token will revert to its intrinsic value - nothing. ie, with such money, there is counterparty risk.
Then there is what I call 'get out of jail free card money', eg, the tally stick system. This isn't backed by debt, but by the notion of punishment by the government if you don't have enough of them to pay 'your' taxes. If the government in question actually provides some value via the provision of services, I suppose at a stretch it could be said that this kind of money was a form of debt, but as governments throughout history have been pretty poor on this front I think we have to regard this money as 'protection money'. This is fiat money, pure and simple - the government can manufacture as much of it as it likes.
Both of these are quite different to money that arises because it solves the 'double coincidence of wants' problem that inevitably arises through the voluntary exchange of value (ie, goods & services). The only counterparty risk here is that people may value it less some time in the future.
It took Labor, Hunt Time and Resources to acquire the Food Goods back then. Still does today.
At the moment we are eating salad by simply walking outside to pick and process the greens, onions and tomatoes. No food store for us.
At least just for the greens anyhow.
Listen to Ron Paul on this subject. There are LOTS of reason to use gold - beauty, lasting power, ability to shape, divide, ease of counting - but many things can (and have) served as money. What's important is that it be rare enought (not too rare) and accessible to all. If you are talking about the civilized world you are corrrect for the most part. Since pre-Egyptian days we have had a fascination with gold that transformed it into something special that could be saved or traded.
You are both right and wrong. Anything can be money, but gold has all the ideal properties to be the best money.
A gold standard makes a nation more vulnerable to mercantilists. Mercantilists will enslave their population so that they can collect all the gold. They care more about the ounces of gold than the lives of their citizens. The only way a gold standard can work is if the free traders implement exchange controls and refuse to deal with mercantilist nations. The British Empire learned this the hard way when all of their gold sovereigns disappeared into China and India.
Actually perhaps you are stuck on Gold?
China and India WAS ALL ABOUT SILVER.
Research it. SILVER, most decidedly NOT GOld.
ori
so, uhm, all them golden Buddhas n other religious type iconography that littered the East from the Brahmaputra to the Yangtze were like, tungsten?
Holy perspective break, Batman, looks like the Joker's on the loose again!
Hmm, better call the Commissioner, Robin, before he calls us...I suspect there's gonna be alarms goin off all over Gotham City in a few minutes!
Joyful,
Gold for worship (for it's Nobility), Silver as monie! ;-)
Check it out...
http://aadivaahan.wordpress.com/2012/01/19/shattering-midass-curse-gold-de-spell-ed/
Be not of a single mind, since you were born of two, with two.
The return to unity is through the Pure land....
ori
ORI, that piece marked the high point of yur work this year, and I remember lauding it here at the time....which is why it is strange that so many of yur recent comments here have been coming up short of yur own standard...lot's of pontificating, and harping about 'truth' but little of the grace and wisdom with which I previously associated yur contributions - which I consider an intrinsic and valuable part of the ZH tapestry.
In an economy which be reflective of our collective grace and wisdom, gold and silver, worship and money, the sacral and the profane would be equally valued, and understood as expressions of the same, non dual energy at the core of our cosmos and our being...and where every small act is an expression of our appreciation of self and other...
India and China were all about silver....was a singularly one sided comment, which, when made in the context of hectoring others to study history[are Kushanan gold coins not an integral part of Indian and Central Asian 'history=because the Kushans were"white"?!?!], struck me as made from the same dualistic cloth with which you weaved the oppressively divisive hair shirt all about whitey and his evil ways the other day...the advice I gave yu about headin north on the pilgrim trail...still stands bud...take some time to find the 'pure land' inside yu...as yu yurself pointed out some time ago!
Joyful Dada,
The Opium wars, as referenced above WERE all about Silver. It was teh SIlver dis-appearing in trade for Spices, Cotton, Opium etc. etc. that the British finally launched the Opium wars. It was to re-take their Silver hoard. Not gold.
See my comment in context. Gold was not a prt of the mix or the reason for the Opium wars.
And Whitey and his evil ways IS the history of the last 4-600 years as far as the near AND the far east is concerned. Do you see it other-wise? It's perfectly fine to dis-agree, ne? I find what-ever you say usually interesting, often fascinating, and use my own discrimination to decide what I "take" and what I "discard". No offence taken. Ever.
Why are you appearing so thin-skinned recently? Hmmmm?
All good though Brother. All good.
As for going North, all directions are with-in, as are all the vistas. Fro now, that is my travel. If I change my plans, perhaps you'd like to join me on a Gurdjieffesque journey? ;-)
ori
...Why are you appearing so thin-skinned recently? Hmmmm?...my thoughts xactly, brother, in reverse...it occurs to me that we both might have attenuated radar that picks up minute oscillations in the body politic, and resonates accordingly -
which is why I'd like to see a free and open debate come out of what I truly consider to have been yur "franz fanon moment" here the other day: that yu mobilized an arsenal of semantic weaponry that I consider to cabbalist in origin is [imho] as seminal moment in western real politik...that nobody other than little ol me gave yu a slap on wrist is also a sign that the west is truly done...ie...won't\can't even stand up for itself in the face of spurious abuse(of the same kind as can n have stood up against here on behaf of yu!)
I don't blame yu a'tall for such outburst...rather I am thankful for it...my thesis is clear, consistent, and uncompromised...we all hang together as a family against the cabbalist crusade to crush us all, or we gone...it's been clear to both of us that Merikans still have the time of day for other voices, even those most concerned for their welfare...but thems' my haplogrouping buddy, an it'll be a frosty friday for somebody pins crimes pon whitey what don't belong...damn, the sheep are trying to sneak by me agin...gotta go, still tryin to master the art of shepherding and blogging at the same time....ORI, we on the same team...let's keep the dialogue goin!
and so began the Opium Wars...
http://www.youtube.com/watch?v=y1jAByECNc0
Forget India...
Take a look at the Spanish Main and those Convoys of great ships (Superships of the Day) hauling mountains of Silver and Gold back to Spain.
I suppose if we look hard enough, we will eventually return to Spain all the shit that got sunk.
Mercantilists will enslave their population so that they can collect all the gold.
______________________________________________
US citizens enslaved people. So it is irrelevant at this point.
____________________________________________________
The British Empire learned this the hard way when all of their gold sovereigns disappeared into China and India.
_____________________________________________
That is a way to put it. A US citizen way as self indiction is a big thing.
Quite funny to read that while this site is crowded wit the meme living within your means.
It is funny because actually with this version, it means that anyone who start a consuming streak can blame the mercantilist trend of the seller.
The english tea purchasing habit was not sustainable as they ran out of silver before running out on their tea consumption habits.
And it is more the implementation of free markets that gave out the result as production was diverted from the periphery to the center that could not absorb all of it. But had to to maintain its position as a center.
US citizens are notorious slavers as shown by history. Slavery is just once again the hijacking of humanity US citizens want to use to hide they are at the core of the current trend, which is overconsumption.
I don't know what a Meme is, but I just finished the Checkbook for the month. We are in the black by a little after silver purchasing.
Since everything is electronic, we wont be touching the check book again because the cash already sits in the safe for the food and gas, if necessary.
Next month we do a new roof. The only question remains... do we do Metal and reduce insurance costs by 15% or simply do the ordinary shingle as we don't expect to outlive it's shorter life expectancy.
Chinese citizizm are America's slaves. STFU and get back on the Foxconn assembly line.
A gold standard makes a nation more vulnerable to mercantilists. Mercantilists will enslave their population so that they can collect all the gold....
Adam Smith argued this, as I recall, but he was wrong. Ruling classes enslaving their populations has nothing to do with gold. Gold makes it easier for them to trade outside their areas of dominance, but that's about it - the sociopathic urge to conquer, dominate, and control exist within any monetary system, and fiat actually makes it easier for them to do it, because they can create as much of it as they like, without having to risk military or policing actions to physically extract value from people.
REALITY!:
http://www.youtube.com/watch?v=1DoEsG7lcRY&feature=related
all its good for is creating a mean to measure things like money.... and economic theory
.
gold is just a point in space
indeed - a nice point in space i'd like to be resting on in this present time
Well, they are not precious (although some of them cost more than silver), but if you like metals, Google my blog article "Meet the Rare Earth Metals". An interesting bunch they are...
you should google my article "How DoChenRollingBearing whores himself out on ZH yet Tyler won't give him a column". It's gone viral: http://www.youreadouchebagwherestrav777whenyouneedhim.com
Then why is Molycorp (MCP) always draggin' ass? IMHO it should be in 3 digits by now. Any ideas?
I do not have the expertise to answer that. It does seem like a reasonably class act.
Bearing, thanks for the link
Rare Earths, now that is quite something.
I own some rare earth magnets for a hobby and I will not sell those for anything.
Old 7200 RPM or slower hard drives contain rare earth magnets... probably extraction value is greater than the retail cost of the drive itself these days.
[deleted]
..which is why there will be confiscation.
governments can create gold too. i think the term "love/hate relationship" is more accurate.
One thing you left out; if we REALLY went back to a Gold standard, an ounce of the yellow metal could well be $1,000,000 or even more using today's metrics (i.e. $4.00 gasoline, $2.00 bread, etc.).
Which would make many of us VERY happy!
James Rickards defined the range $4k - $10k. He's actually done some thoughtful projections on this. What will the purchasing power be? The higher the peg the lower the PP.
I don't think the people with the guns are going in this direction, though. They've put too much effort into this NATO, IMF, Carbon/financial tax regime stuff to not go for more force imposed trickery.
If that becomes the range, Silver will become very useful... and Thieves will start stripping out Converters.
Wait until the Refiners learn to use Palladum instead of Platinum for Refined fuels.
I believe Rickards estimates are based on a fractional backing. Once/if that process started at anywhere near that valuation, there would be a gold rush of epic proportions. To truly back all of the currency and paper, the dollar value would have to be way higher, and not FIXED. Unless of course cb's stopped printing currency...
There were fractional reserves even in the free banking era. The peg is an estimate of base money needed with normal velocity. If anything, the peg would give arbitrary fiat value to gold, so I think the opposite of what you suggest is possible. Especially, since those nations without gold may be reluctant to accept an arbitrarily inflated value for their products & resources.
This is a dart throwing contest. There's a ton of worthless credit in the system now, from sovereigns to private debt based on massive deficits & low future rates to non-zeto sum bets on future interest rates. This crap has to & probably will be involuntarily purged anyway.
"and the Supreme Court, the guarantor of your liberties, would continue making things up as it goes along."
Fuck the Third Branch. Fucking idiot Founders. But I love the Constitution!
The third got co-opted after the first two fell. Stay on target.
Yellow metal is just sexy. Anyway prices are beginning to chug along again
A gold standard would only work until "Gold Certificates" are accepted as good delivery/good as gold. Then we're right back where we started.
Try redeeming one now.
You would get arrested probably.
Hell, just paying for groceries with bills and Silver certificates older than the cute girl at the register is just not worth the trouble.
It always takes a 65 year old Supervisor to sit and think back for a few minutes to the days we had those all over.
While people wait in lines longer and longer.
Forget giving "people a choice." Give the Central Bankers a choice. Adopt a global reserve currency backed by the gold of "meteor mining." those that pony up the 100 billion get first dibs...unless of course the private sector beats the government hacks to the punch. if the latter is the case then we'll see what REAL competition means as "the goal of the private sector would be to keep the gold off the market thus driving up the price" such that they could get an "appropriate (maximum pain) return" on their investment. of course this is why GOVERNMENTS institute a gold standard to begin with...and indeed why we did back in the 19th century. to PREVENT these "huge speculative run ups in price followed by decades long depressions." worked pretty darn well too. At it's inception the US was still a second rate power in a 1st rate European dominated planet. Within 50 years the USA was top dog "providing global stability" as well. Currently we seem to be a force for instability which in a world of "all against all" isn't necessarily a bad place. Still...it could be more...what's the word?..."Progressive"?
What an utterly worthless article devoted to straw man questions nobody asks. How about answering these: How much gold would the Fed have to buy to back up the money supply and what would that do to its price? Why replace the Fed with gold miners--why should production of gold influence value of a dollar? Is there never a time when money supply should be increased by a central bank?
How much gold?
Well Uncle Sam knows where every pound of the stuff is, who owns it and where it is located.
Take the current money supply in circulation, peg that to the fixed amount in existence of the United States and there you will have the true price per ounce of gold and silver.
At one time it was expected to exchange 35 US Dollars for one gold.
It ain't the printing you dopes it's the banks running the show cause Congress lets them. If the goverment just printed it's own and controled itself, then all is well. Blame Timmy and Ben all you want, gold is not going to solve anything.
The problem is global government spending & intervention. Bankers are no better or worse than the hundreds of other big company or union special interests fleecing us. Who controls the printing press would not change our predicament. It could arguably be worse in the hands of Congress.
The author's analysis of legal tender laws and their effects is remarkably shallow. It ignores mechanically how involuntary transactions are controlled & financed by the state. Other than that, he makes some good points.
People in charge? We are the people in charge. Take responsibilty of your own investments. Great post by Casey Research.
when the end game arrives, the politicians need to offer some scapegoats for sacrifice. be careful, jp moron.
Gold has been, is now, and will continue to be the standard. Just because nations/corporations/banker states have convinced/forced/conned most persons to accept paper instead does not remove it from being the standard. This author is one more person who doesn't understand that gold is money and everything else paper is a claim on money.
I like the cut of your jib, but it has to be said, the 'moneyness' of the gold loan of government & their banking cohorts is not done yet.
Don't worry my fellow Martian. You are not alone. I thought that I was the only Martian on Earth. Looks like there is a bigger martian community here on Earth than I thought.
Looks like all those hippies and consipracy theorist were right! There are aliens here. Us gold standard Martians!
now you're just talking like a man with a paper asshole
you don't belong here
you don't know shit and neither does the asswipe author you're trying to rehabilitate, here
bullshit, but not jackShit
this guy is weak for zH
you are nada
buh-bye!
Congress wouldn't reform its big-spending ways, it would merely switch from taking and wasting fiat money to taking and wasting gold-backed money; and the Supreme Court, the guarantor of your liberties, would continue making things up as it goes along.
**************
Maybe you need to explain how Congress can print the gold to spend big-
Curbing government spending was one thing gold standard was meant to do--it was intended to give the people the power of controlling governments-
Governments can't spend more gold than they collect from tax revenues and if they raised taxes and spent-people could actually vote them out and every politician knew it-
I think what he is implying (when combined with the "what a GS would do"), is that a "sound currency" (it's not as if this can only be done with gold, even though gold is in theory most efficient for this purpose) DOES let one do a deficit budget and year after year see one's own savings deplete (or worse, if gov debt is not outrightly banned (which it should) accumulate debt)..... until there quite simply is nothing left to spend.
With a sound currency (and proper public verification... any sound currency is worthless, if there are no trustworthy checks "what's actually in those vaults").... you can deplente your savings, can raise taxes, can until creditor says "where's my money????" accumulate debt..... but what you cannot do, is stealth-taxation via inflation.... what you do is transparent to the public. Imagine if all the bits that get printed nowadays were instead tax increases.... the populations would go nuts!
So, what casey implies in this regard, is actually technically correct.... yet the way he phrases it, and what he tries to imply, is at best contradictory, and at worst misleading. In other words: Spin.
Correct me if I am wrong, but money supply should increase with population (with a timeline looking at generations). Otherwise, you'll have too many people chasing a fixed number of dollars. Under a gold standard, you can only increase the money supply when the supply of gold is also increased. At some point, the population growth would outpace the extraction of gold from the earth (if it hasn't already). Further down the road, we'd reach peak gold and no more would ever be added to the supply, but the population would continue to grow. Either a new renewable commodity or fiat would have to work.
For right now, I'd vote for a gold standard if I had that privaledge. The article makes a point that it's great for keeping our economic policymakers accountable. The future will just have to fend for itself.
Under a gold standard, you can only increase the money supply when the supply of gold is also increased. At some point, the population growth would outpace the extraction of gold from the earth (if it hasn't already).
*********
We could have a gold standard right now and continue having a gold standard without one new ounce of gold being added-
There can never be too many people for the amount of gold there is-
Gold is divisible and with a GS everything (prices) must adjust to the amount of gold available-
The way gold comes into a country is through positive trade balance (inflation) it is also the mechanism for gold flowing out of a country through a negative trade balance (deflation)
Ah, US citizens 'debating' so working in duo to hide the problem.
A gold backed currency has none of the properties as claimed. A gold backed currency can allow dilution as fiat does (as shown by history)
It is only through physical exchange of the hard currency that the dilution is supposed to be ended.
But at this point, gold is so little compared to goods that the circulation of a gold currency would mean tiny amounts of gold being circulated, dust and the rest.
Unpracticable.
Added to that, as gold is the medium, people owning gold will want to be rewarded for providing the medium for money etc
It would just mean that the purchasing power of gold would increase over time. Presumably over time your rate of productivity increases at a rate much higher than the gold coming out of the ground. And that's a good thing. You'd rather be more productive at doing or creating something than becoming more productive at pulling metal out the ground.
So prices would fall over time even as the population grew. It's true that gold becomes too scarce or valuable for everyday transactions. People for centuries used silver, copper, and ledger transactions to clear exchange instead. So there are creative alternatives that get employed based on the level of trust.
Japan is expected to decrease to nothing by population within the decade. Fukushima will simply hurry that along.
All those vacant homes will be VERY nice to have for the 125 mil or so new residents of this USA.
I'd say money supply correlates with interractions within a population, which may be closer to a geometric growth based on density, though the net is reducing the need for physical proximity.
You've never heard of Gresham's Law, have you? Do you realize what effect making a currency legal tender has on other competing currencies?
Even if we could suspend Gresham's Law, the government still forces people to pay taxes on capital gains from gold appreciation. That creates a HUGE disincentive to do business in hard money.
Edit: Honestly Tyler, why do you let these fools guest post on ZH? A little background in economics (Austrian, Keynesian, Neoclassical, ANYTHING) should be a requirement beforehand.
"GM and GM alone is free to serve up Chevyburgers, and you are free to eat one or not."
No. Well actually they can sell Chevyburgers, but if someone else already has a trademark for Chevy brand hamburgers then GM loses in court. GM only has the trademark for cars, not for food products or furniture. And the government does not have a trademark on "dollar" so it is not "just as General Motors". I am not a lawyer but the OP apparantly knows zero about trademarks. Some kind of knowledge of law should be a requirement before posting making statements about the law.
we already have theConstitution and can own gold (since mid-80s?)
almost anywhere, world-wide, gold and silver can be used if two people agree, already
to me a gold standard would entail something of what theUtahLaw has, i think, tried to do: restore real money in the USA to where it is not at a disadvatage to derivative currency by "vigs" and "taxes"
THIS IS FUKING IILEGAL BULLSHIT BEING PERPETRATED ON THEpEOPLE BY THEaSSWIPbANKSTERS&pOLS
so, is this topic so freaking impossible to get to the discussion table b4 we fucking die of old age, here for pete's sake? huh?
WE are entitled to the protection of LAW here, in my HUMBLEST fuking opinion, BiCheZ!
i'm talking constitutional m.o.n.e.y.~ US Mint-produced PM coinage~i say again: consitutional money is being taxed as "collectibles" under fiat banster-pilitical-fascism known asLegalTenderLaws
just isn't right, i'm saying; fuking shakedown-artist bullshit operating throughout our fair fuking land and let's see if we can put an end to it b4 it puts TheEnd to Us/We
if you're here, think about it
if your're not, how does this "dynamic" work for you and using real bullion-related money marked2market as we already do now?
can only daBoyz get these breaks where YOU live & work, also? fuk that tooski?
if i missed where this guy covered this, ...long day
The only thing I deciphered from this comment is that you love making love to female dogs.
Beastality?
His rambling kinda comes across as a drunk post.
/dev/null .
/dev/null: Permission denied
Try using a '>'. ;)
dougCasey and his robotic minions such as the author of this shallow piece don't give 2 shits about the USA or ony laws anywhere, do they?
mr 40 passport-man?
but he sure is these asswipes' favorite red-headed stepchild!
hard to believe my comment only attracted shitheads who are incapable of understanding the UtahLaw inplications, isn't it, BiCheZ?
the red-head phoney baloney and his paid touts may not like the utah law for the USA
maybe it costs them "money", for example
this is usually the case with touts of this caliber, imo and would totally explain the trolling involved, here, too!
The Utah law isn't constitutional and its implications are thus moot.
case?
GMad: you may be right; i respect you of those here, ok?
imo, they drafted this law pretty carefully, but not without court exposure, just by definition here
so it might be struck down or maybe already has been at some level, as you suggest
see ya!
It's not cut and dry since they specifically mentioned 'intrastate' commerce to slip past 'interstate' regulatory jurisdiction of the Fed, but I'm 99 44/100ths sure that Article 1, Section 8 + Article 1 Section 10 says that only the Fed can declare what is or is not money (for better or worse, obviously). There isn't a precise 1:1 analogy, but it is similar to McCullough v Maryland in many respects. They make great hay out of the reference to "gold and silver coin", but entirely miss the point that it was a very specific subjugation of control to the Fed being outlined.
"... it may be observed that the same reasons which shew the necessity of denying to the States the power of regulating coin, prove with equal force that they ought not to be at liberty to substitute a paper medium in the place of coin. Had every State a right to regulate the value of its coin, there might be as many different currencies as States; and thus the intercourse among them would be impeded." - Madison
I admire what they're doing and hope the attention alone makes it worthwhile, but it's a slim chance it'll stay on the books.
hey, divineBreakWind!
you talking bout me?
wherever you live, do you hafta pay extra to use gold and silver money? to use it to insure against certain things? is it an "investment" or is it just like, say, a dollar or a dime?
i'm sorry if you couldn't understand what i was trying to get to
since i've only gone to the same square about three dozen times, thanks for understanding; also i don't use alcohol, so maybe you are projecting?
anyhow, maybe youre just a fuking dumbass, eh? or sick?
hey, sonofaSorry-assWhore!
how about DeathMatch, asswipe?
tyler kicks one of us off, forever?
if you didn't say yes, you're a fuking coward and don't belong here, anyway, right?
whaddya say toy-boy, wanna play?
Hell yeah, that's the only way to play! I'd go for that if I had something good to fight you about.
well, good!
Hey, looks like the old Slewie's back, n lookin for trouble!
I've kinda been enjoying the new 'thoughtful' Slewie, but it's good to see the ol stilletto comin out from time to time...
keeps the customers round these part more honest!
beastiality?
no way I'm gonna click on a link with that title...(unless yu promise it's all about how the sionists treat their minorities in that small outpost of 'democracy' outthere in the middle east!)
he started it! L0L
(it's a 1986 beastieBoyZ video)
Stopped reading at the first cuss word. Try harder.
Slewie is saying that in the U.S. we are getting screwed by the fiat money system; and it works so well for the 1% they aren't about to let money be tied to tangilbe immutable assets like Gold or Silver.
hey, eb!
theConsitution establishes sound money as theLaw0'theLand; this requires an amendment to void not some acivist judges on the payrolls of the banksters "for the common(ist?) good"
so many interests are "vested" in this that even in the "goldCamp" we have douchebags who could care less about the economic rights of THE INDIVIDUAL to be free in his person and possessions, and not an agent of pawn ofTheState and to have money= gold&silver USMint-produced coinage and not some fuking bullshit IOU
furthermore theMint is s'posed to coin our (citizens') bullion for next to nothing and give US the fuking coins b/c they are ours, not some fuktard corporation's "reserves" against which legal TINDER can be issued like pus from a serious INFECTI0N
just do it right
then the lying will HAFTA stop, no matter what bullshit dCasey or prez0 or rPaul craps out for us, next...
...BiCheZ!!!!!
YOU CANT WAGE ENDLESS WAR ON GOLD, YOU SOON RUN OUT OF GOLD,
Exactly, we learned that from all the other imperialist empires through history. So to fix the problem of running out of gold, The imperial country must first enslave your own people to "money" it can create (print), then get them to enslave the rest of the world to accept the "money" that the imperial masters can print.
Do it with Diesel fuel then. Cheaper.
That is a scary thought.
A US Armor Division sitting still or moving requires about one tank car's worth of fuel each hour.
Preposition and GPS based JIT has gotten pretty damn good these days... but the spectre of 350 tanks sitting still out of gas or insufficient fuel for anything but tactical battle maneuvers...
How in hell did we allow ourselves to be on the hook for 5K per truck at the Paki border. Or the former USSR to truck the stuff in.
We don't need to be there, to me that is Sun Tzu's Fatal Terrain.
I call bull on this. The fiat system has been great for the US and OECD countries as a whole. Got a free ride to consume way beyond their production. The governments are not so concerned about the unit as store of value, just as long as it allows consumption. So, people are making unwarranted assumption that the government wants this fiat to be store of value -- only suckers believe such claims.
That only works until people stop trusting in the system. Then you will need to start providing things of actual value in exchange for other goods and services.
This is a well-worn cycle that has repeated many times over millenia. Currency keeps getting devalued until it is no longer useful, then barter/gold-standard returns, then people find that too constricting, and currency starts getting devalued again. Rinse, lather, repeat ad infinitum.
there, there
if constitutional money and legal tender laws didn't exist, leoK would still be here, too, right?
That statement is utterly false and belies a rather large ignorance of history.
http://en.wikipedia.org/wiki/Gold_clause
Sure you can agree to whatever form of exchange you want, but when it comes to collecting on the debt **in court** you get dollars (in the US) no matter what your agreement may be.
When the FRN was invented everyone put "Gold clauses" in their contracts, so FDR had the clauses invalidated.
Sure, congress reinstated them in 1977, but no one believes. The government already has precident to toss them again when they become inconvenient.
If the price you are compensated for your gold reflects the debasement of the currency in which that compensation occurs and you are free to use that considerably larger stack of fungible funny papers to replace your precious, then who should care?
There was a family who had a coin or three hidden from the confiscation era.
If memory serves that was taken care of in Court when the Government was able to complete it's confiscation without monetary comp to the family of the deceased who had the coins.
That would be one Probate I wont be bothered with.
To my dearest nephew Wigglethorpe, I bequeath: this map. :)
Sounds like this is a gold exchange standard. Yes. Those can be defaulted on. A gold standard is to use gold itself to clear the transaction. And you denominate gold weights in the ledger.
What a gold standard allows for, and this is the truly "magical" part about it, is economic calculation for entrepreneurs. You can determine much more precisely a P&L statement with a gold standard. Your revenues aren't being juiced by hot credit money because creditors are unwilling to part with gold in this fashion. Your cost structure can be better estimated over time depending which part of the supply chain you operate in. And what you realize very quickly under a gold standard is that risk capital tends to work it's way toward capital investments that improve the productivity of assets. You don't play bigger sucker finance games under a gold standard. You don't evaluate a social media site at 100 p/e. Capital finds its way into the projects that improve real productivity. It's the only way you increase your wealth, fiat or otherwise.
The gold standard also exposes how destructive the military adventurism is. You realize very quickly that throwing your gold away on projects that can only destroy is a total and complete waste. Since war is the lifeblood of the tyrannical state, a gold standard arrests popular support for a government to engage in war. Without war, the state cannot grow. People stop putting their faith in government. Your liberty and wealth increase.
A gold standard is useless because if there are only around 150,000 metric tons or so of gold, then that leaves us with less than one troy oz. per capita worldwide. Also, such a standard works both ways: just as you know your paper money is backed by gold, you can also have your paper money redeemed. Which is what took place during the years before 1971, and which is why the gold standard was dropped.
I'm confused. Was the "gold standard" dropped because there was too little gold or too much paper representing gold at a certain price?
why does everyone keep thinking either/or?
we ALREADY have both systems! just open the eyes and see! world-wide, people can buy, sell, and hold gold and silver coinage BUT THEY HAFTA PAY EXTRA UNLESS THEY ARE BANKSTERS
this isn't quantum dimesionality theory here; you can get this, no matter how fuking smart you think you are!
is everybody completely htpnotized for life, here? just change a coupla accounting/tax rules and WE ARE THERE!
trust me!
I'm not against a gold standard. But I highly doubt changing a coupla accounting treatments and tax rules are going to change much.
Even though people can exchange gold and silver now, the taxes aren't what's stopping them now. It's the other people don't recognize it as money. People do not know what to do with it or how it works. Yes, these people are morons. But you have to trade with morons to get what you want as well.
Congress disposed of it (Bretton Woods...) because it wanted to spend and spend.
However today's Congress and it's actions make the 1971 congress look like a bunch of Misers doling out a dime at the food shop.
Surely that just means it isn't nearly expensive enough.
Absolutely right, There is always enough gold. One gram could be enough to live on for a lifetime, if it is revalued accordingly and is revalued as the currency supply is increased. I think someone calls it freegold.
No. The Gram is a useful measure to sell at a price low enough to be affordable by drug dealers, thuggish and other ilk who wish to flash it.
Gram sales coming soon to walmart.
And you wonder why Coinstar is such a good business... stripping out anything older than 1970 for it's own gain.
Reinstate Glass-Steagell, Gold standard, and Corzine and his ilk in chains.
If the world did not already consider Gold the standard - the backing of any currency - it wouldn't be up over 500% in the past 12 years or so.
Max talks to Hugo Salinas Price, who appeals to Alexis Tsipras to propose bringing a silver standard to Greece.
Recommended by q99x2
Check out the second half of this Keiser Report #295
It is always as funny as usual.
US citizens looking for storing purchasing power into the medium and not in the availability of goods.
US citizens are just duplicitous.
If ever a production of goods plummets, no medium can store purchasing power as US citizens imply.
The main way to insure stability of purchasing power is to make sure that in the future goods will be produced as they are being.
Hence the smaller marker of no inflation etc
But as US citizens aim for resources depletion, which will jeopardize the production capacity, well, preservation of purchasing power is a US citizen pipe dream.
But once again, US citizens are duplicitous. They know of that. Their speech on sound money is a diversion to hide the fact they have been working hard on ending the age of abundance. With their money stuff, they are looking for something else.
US anybody as well as an eskimo or a child in sriLanka can use any fuking "medium" they want: candy, art, copper, bikes, pigs, gardens, wells, fishing boats, water buffalo
STFU!
the problem is not in the lack of productive capacity (we have excess of it) but in the lack of payable demand
Production of gold plummets mean nothing.
In fact it is the Powers that have sold the same gold bar... 10 times? 100 times over on paper shares to anyone who wished to think they own that gold bar.
Wait until THAT burns down. You can take a sheet of paper, silver or gold crayon and write Gold or Silver as you wish.
It's free.
xcuse my buttin into another closed conversation, but there's an obvious disconnect here tween the brothers what hold gold, an the big picture.
Yu have a system based upon usury, yu gonna have a lot of bagholders and a few kriminal elements pullin off heists an calling it "commerce" - till that changes don't get to excited upon any variations on the theme of free societies, free enterprise, or free -dom in general. Yu don't knock down a tower by running an aluminium object into it...yu hafta put explosive devices at the base of the structure/Even the cabbalists know that!
http://youtu.be/4QCXr79Rkcw [Jill Scott\Golden]