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Guest Post: Open Letter To Ben Bernanke

Tyler Durden's picture




 

Submitted by Keith Weiner

New Austrian School of Economics
Gold Standard Institute

Benjamin Bernanke
Chairman of the Federal Reserve

Mar 25, 2012
Re: Open Letter to Discuss Your Misunderstandings About Gold

Dear Ben:

You have publicly gone on record with some off-the-wall assertions about the gold standard.  What made you think you could get away with it?  Your best strategy would have been to ignore gold.  Although I concede that with the endgame of the regime of irredeemable paper money near, you might not be able to pretend that people aren’t talking and thinking about gold.  You can’t win, Ben.  In this letter I will address your claims and explain your errors so that the whole world can see them, even if you cannot.

Before I get into your specious claims, I want to point out two of important facts.  First, the gold standard exists when people are free to choose what they wish to use for money.  Gold has won this market competition over thousands of years, but the key is that when people are not forced to use government-issued scrip they choose gold.  And that’s the shabby little secret of your irredeemable paper money, Ben.  You have legal tender laws to force creditors to accept it, whether they would or not.  Will you please let people be free?

Second, central planning does not work.  The Politburo in the since-collapsed Soviet Union did not know how many shoes to make of what sizes.  And you don’t know what rate of interest to set.  Central planning has always led to the collapse of the specialization of labor and the economy with it, to the degree that it is attempted.  The Federal Reserve, the central bank of the USA, is the central planner for money, credit, interest, and discount.  Given the importance of money to every single aspect of the economy, it is no exaggeration to say that there is no such thing as a free market built on top of a centrally planned monetary system.

In your speech at George Washington University, you made the following claims:

  1. The gold standard hasn't really worked since the end of WWI.
  2. To have a gold standard, you have to go dig up gold in South Africa and put it in a basement in New York.  It's nonsensical.
  3. The gold standard links the currencies of every country, causing policy in one country to transmit to another.  So for example, if the U.K. fixes the number of pounds to an ounce of gold, and the U.S. fixes the number of dollars to an ounce of gold, then the pound and the U.S. dollar inadvertently become linked.
  4. It creates deflation, as William Jennings Bryan noted.  The meaning of the "cross of gold" speech: Because farmers had debts fixed in gold, loss of pricing power in commodities killed them.
  5. The gold standard tends to cause interest rates to rise during downturns and interest rates to fall during good times, the exact opposite of what monetary policy should be doing.
  6. The economy was far more volatile under the gold standard.
  7. The only way the gold standard works is if people are convinced that the central bank ONLY cares about maintaining the gold standard.  The moment there's a hint of another priority (like falling unemployment) it all falls apart.
  8. Gold standards leave central banks open to speculative runs, since they usually don't hold all the gold.
  9. The gold standard is based on the "desire to maintain the value of the dollar"—implying a "desire to have very low price stability.”
  10. The gold standard is based on an aversion to allowing the central bank to respond with monetary policy to booms and busts, and a desire not to give the central bank that power.
  11. There's simply not “enough” gold
  12. The commitment to the gold standard is that no matter how bad the economy gets, we're going to stick to the gold standard.
  13. The gold standard was one of the main reasons the Great Depression was so bad and so long.

Please forgive me if my takedown runs a little bit long.  I’ve found that it is much easier to commit a logical fallacy in a sound bite than it is to explain the full context.  I will take your assertions in order.

1. The gold standard hasn't really worked since the end of WWI.

This is true.  Just prior to Christmas in 1913 (which is before the beginning of the war, by the way) the Federal Reserve Act was passed into law.  Ever since, the Fed has taken for itself and been granted more and more power to try to centrally plan money and credit.  You and your predecessors have been in power for a century, but this fact is in no way an argument against the gold standard.

2. To have a gold standard, you have to go dig up gold in South Africa and put it in a basement in New York.  It's nonsensical.

The fact is that for thousands of years, people have been digging gold up and putting it in basements.  To call the behavior of so many people over so many years “nonsense” is arrogant.  A free country has room for arrogant men, but no place for arrogant men to back their whims with a gun.  From 1933 until 1975, one could be imprisoned for the “crime” of possessing gold.  To this day, it is not legal for a creditor to demand payment in gold.  If you are so confident that you are right and all good men should be happy that you print dollars at your discretion, can we agree on an experiment?  Let’s repeal the laws that force creditors to accept paper, and the laws that nullify gold clauses in contracts, and the taxes on the “gains” in gold, and the laws that force taxpayers to use dollars as their unit of account for bookkeeping purposes, and see what people choose when the gun is not compelling them.  I will wager one ounce of good gold against a frayed old dollar bill that people will choose gold if you let them.  Should I book my flight to Washington to pinky-shake on our bet?

3. The gold standard links the currencies of every country, causing policy in one country to transmit to another.  So for example, if the U.K. fixes the number of pounds to an ounce of gold, and the U.S. fixes the number of dollars to an ounce of gold, then the pound and the U.S. dollar inadvertently become linked.

Actually, Ben, you are describing the gold exchange standard that prevailed from the insane treaty at Bretton Woods until it collapsed in 1971 with Nixon’s default.  The choice is not between price fixing vs. excluding gold altogether.  The choice is between the freedom for people to choose gold vs. your smart and efficient central planning.

4. It creates deflation, as William Jennings Bryan noted.  The meaning of the "cross of gold" speech: Because farmers had debts fixed in gold, loss of pricing power in commodities killed them.

By the way, Ben, the Coinage Act of 1792 fixed the price of silver in terms of gold at (15:1).  Like every instance of laws that attempt to interfere with the markets, this provision was an unmitigated disaster.  Whichever metal is officially valued at less than its market value will be pulled out of circulation and sent elsewhere for its market price.  Whichever metal is overvalued will be imported from every corner of the earth and come flooding into the country.

In 1873, the government was ready to open the US Mint again.  But when they wrote the list of which coins the Mint was authorized to coin, they somehow “forgot” to include the one ounce silver coin.  Silver was demonetized.  I am sure it had nothing to do with lust for power by the good men who ran the government, nor with any lobbying that might have occurred around that time.  This was dubbed the “Crime of ‘73”.

Demonetizing silver destroyed enormous amounts of capital, Ben.  Just imagine that a farmer, to use your example, has been working hard and saving all his life.  And then the government, in callous and cavalier fashion, passes a law that destroys the value of his savings.  But this is the power you crave, isn’t it?  This is the power of central planning, to sit in an office in Washington, taking into account your whims, pet theories, and the desires of lobbyists and casually dispose of the income and wealth of the people without their consent.
 
5. The gold standard tends to cause interest rates to rise during downturns and interest rates to fall during good times, the exact opposite of what monetary policy should be doing.

You have pushed interest rates down to zero on the short end.  This has achieved nothing good, and yet you are unwilling to consider that, just maybe, your pet theory is wrong?  Good thing your pet theory is enforced on the rest of us at gunpoint, eh Ben?

We should pause for a moment to reflect on the nature of downturns.  The original promise of the central bank was that it would prevent downturns!  As recently as the “Great Moderation” which abruptly ended in 2001, this myth was widely believed.  But we see that downturns are not prevented by the central bank.  Instead, much larger downturns (such as the one which began in 2008) are caused by the central bank.

Let us look at the nature of these downturns.  For a while, the bank encourages credit expansion by various means.  The bond speculators (which did not exist under the gold standard) jump onto the bandwagon and the result is that interest rates have fallen for more than 30 years in a row.

During this long period, as you can imagine, much counterfeit credit is created.  By counterfeit credit, I mean where either the saver is unwilling to lend or even unknowing (such as anyone who deposits in a bank nowadays) or when the borrower lacks either the means or intent to repay (such as the government, or many bond issuers and banks).  Sooner or later, the game is up.  The borrower can no longer keep current on the interest payments.  Not even by “rolling” the debt.  As an aside, Ben, this is another dirty secret of the irredeemable currency: there is no way for any debt, ever, to be repaid; it only moves from one debtor to another and ultimately ends up at the Fed or the Treasury.

So what you blithely call a “downturn” is the painful process of writing off bad loans.  Capital has been destroyed, and everyone who made bad loans must write it off.  You are correct that interest rates should rise as a result!  Capital is far more scarce than people believed during the boom.

6. The economy was far more volatile under the gold standard.

I don’t think even you believe this, so I will not comment further except to note that the 1929 crash occurred under the tender ministrations and brilliant central planning of the Fed.

7. The only way the gold standard works is if people are convinced that the central bank ONLY cares about maintaining the gold standard.  The moment there's a hint of another priority (like falling unemployment) it all falls apart.

8. Gold standards leave central banks open to speculative runs, since they usually don't hold all the gold.

No, Ben.  I will address these points together: a gold standard is when there is no central bank.  What you are substituting in your confusion is if the Fed were to somehow try to centrally plan gold.  But you know that doesn’t work, so I need not spend time arguing against it.

Speaking of unemployment, as you know, if the portion of the population who is deemed to be “in the workforce” hadn’t been shrinking so much, the unemployment rate right now would be just below “staggering.”  And this is despite (or perhaps because of) your central planning activities.

9. The gold standard is based on the "desire to maintain the value of the dollar"—implying a "desire to have very low price stability.”

The gold standard is about many things.  Speaking of the value of the dollar, you are aware, I am sure, that it has lost about 98% of its value in the 100 years since your organization began centrally planning.  Under gold, prices do not remain constant.  That kind of stasis is neither possible nor desirable.  Prices, and more importantly changes in prices, signal to consumers and entrepreneurs what is scarce and what is in demand.  No, what remains stable is the rate of interest.  And it is this rate that is manifestly unstable under the Fed’s careful designs.  As recently as 30 years ago, the rate on the 10-year US Treasury was almost 16%.  Today it is 2.2%, having recently hit a low under 1.8% (and this rise of more than 22% in a short period of time is both staggering and revealing).

Changes in the rate of interest cause enormous destruction to industry.  A rising rate destroys businesses one by one as each looks at financing new capital projects, or replacement for worn plant.  But at each higher interest rate, fewer and fewer capital projects make any sense.  So factories shut down, and ever more workers join the unemployment line.  Does this strike a note, Ben?

Falling interest rates cause a more pernicious and subtle damage.  Bond speculators make risk-free gains on their bonds.  This money does not come out of thin air, however.  Each bond issuer now has a higher present value of their liabilities.  Good thing that FASB does not require them to mark liabilities to market when the bond price rises, or else there would be a serious problem!  Actually, there is a serious problem even if we all close our eyes and pretend otherwise.  Is that a fair characterization, Ben: that the purpose of the Fed is to help everyone play make-believe?

Under paper, neither prices nor interest rates have been stable.  Have you taken a look at the chart for crude oil or most other commodities, Ben?

10. The gold standard is based on an aversion to allowing the central bank to respond with monetary policy to booms and busts, and a desire not to give the central bank that power.

Here you are correct, Ben.  You should not have that power.  No one should have that power.  A brilliant author by the name of JRR Tolkien wrote a story about power.  Have you ever read The Lord of the Rings or seen the version Peter Jackson made into film?

11. There's simply not “enough” gold

How much gold do you think there is, Ben?  How much gold do you think a gold standard would need?  You don’t know either number, of course.  This is just an old wives’ tale.  Do you also wear copper bracelets to ward off the common cold, or is that vampires (I forget)?

12. The commitment to the gold standard is that no matter how bad the economy gets, we're going to stick to the gold standard.

This is an interesting logical fallacy.  You are lumping together commitment to gold with bad economy.  This called “begging the question”.  You are presuming what you ought to be asking.

13. The gold standard was one of the main reasons the Great Depression was so bad and so long.

So you think that the disastrous adventure that combined both taxes and protectionism that led to a trade war and thence to collapsing trade had nothing to do with it?  Or FDR’s constant threats to change the rules of the game, thus rendering investments previously made worthless (there’s that problem again)?  What about the various other central planning interventions of both Hoover and the New Deal?

Or how about the falling interest rate structure that I mentioned above?  When the government outlawed the ownership of gold, that herded people into the next-best choice: US Treasurys.  This caused the interest rate to fall.  Have you ever stopped to think what this does to savers, such as the small farmer for whom you weep crocodile tears?

 

Ben, I wrote a paper entitled “Gold Bonds: Averting Financial Armageddon” (http://keithweiner.posterous.com/gold-bonds-to-avert-financial-armageddon) because I am convinced that the regime of irredeemable paper money and hence the Fed is going to come to a sudden and catastrophic end.  One way or the other, your power and the power of the Fed will be ended.  I would prefer that it be ended without also ending western civilization, which is the course we’re headed on right now.  You remember that bit earlier about capital being rare and precious?  Your policies are helping accelerate an unprecedented destruction of capital.  When the capital is gone (if not sooner) the game will be up.

I would like to avoid plunging into a new Dark Age.  Can we agree at least on this, Ben?

Sincerely,

Keith

© Keith Weiner 2012

 

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Mon, 04/02/2012 - 22:08 | 2311633 Dr. Gonzo
Dr. Gonzo's picture

...and P.S. Ben. You're a dick. 

Mon, 04/02/2012 - 22:17 | 2311665 nope-1004
nope-1004's picture

 

 

Ben Bernanke is either a liar or a moron.

- Peter Schiff

 

Mon, 04/02/2012 - 22:34 | 2311724 IAmNotMark
IAmNotMark's picture

I disagree.  Bernanke is both a liar and a moron.

Mon, 04/02/2012 - 22:41 | 2311745 kridkrid
kridkrid's picture

He's most certainly not a moron, he just has a different agenda than you or me.

Mon, 04/02/2012 - 23:36 | 2311892 i_fly_me
i_fly_me's picture

Nope, sorry ... he's a pie-eyed moron.

Tue, 04/03/2012 - 00:43 | 2312029 flacon
flacon's picture

Buy Gold. Bye US Dollar.

Tue, 04/03/2012 - 04:17 | 2312228 peekcrackers
peekcrackers's picture

Keith Weiner

Ben Likes his middle name "shalom"  when adressed

Mon, 04/02/2012 - 23:08 | 2311814 palmereldritch
palmereldritch's picture

He's a moron if he thinks his lies still work.

Mon, 04/02/2012 - 23:34 | 2311883 Clockwork Orange
Clockwork Orange's picture

he can be neither or both as long as the treason charges stick when this sh*tfest blows.

Mon, 04/02/2012 - 22:52 | 2311787 Real Money Wins
Real Money Wins's picture

Hey Ben,do you know what monetary(fiat)policy and avalanches have in common? They don't stop when they hit bottom they keep obliterating everything in their path until their momentum dissipates. And as a result the damage is catastrophic where human beings are concerned when ever their paths cross.

Tue, 04/03/2012 - 00:01 | 2311957 Neo1
Neo1's picture

A Banksters worst nightmare, forced to Return to Real Money=United States Note=Lawful Money

The real reason you pay an income tax, is for the privilege of using a private currency.

Also known As A:  Federal Reserve Note

Demand from your bank or brokerage, lawful money and the tax goes away, with a tax exemption on lawful money, all of your money is yours.

http://www.21silver.com/?show=merrill&read=federal_reserve_act_remedy

http://stormthunder.com/federal-reserve-act/

Tax Exemption: http://stormthunder.com/federal-reserve-act/#ixzz1pOYzDgEm

 Web search these four different phrases:

Redeemed in Lawful Money  or  United States Note  or

Redeemed in Lawful Money Pursuant to Title 12 USC §411  or

deposited for credit on account or exchanged for

non-negotiable federal reserve notes of face value  

Sun, 07/15/2012 - 09:23 | 2617098 MFL8240
MFL8240's picture

He is a puppet for the Rockerfeller/RothChild Courrption team to impoverish the people and control the world.

Mon, 04/02/2012 - 23:38 | 2311899 Esculent 69
Esculent 69's picture

Would love to see Barry do karaoke to this song. This one is for you Benny. http://www.youtube.com/watch?v=fFauBCmtd5E

Mon, 04/02/2012 - 22:10 | 2311637 Everyman
Everyman's picture

My letter would have been much shorter:

 

 

Dear Ben,

Please find in this package a shiney new Smith and Wesson .357 and one bullet.  It is my gift for you to "do the right thing".  Please insert the bullet in the cylinder, line it up with the barrel and cock the hammer.  Point it at your temple as it woudl transect from temple to temple, and PULL THE TRIGGER.

Thank you for your sevrice at the Federal Reserve.

Signed,

An American Citizen

Mon, 04/02/2012 - 22:31 | 2311711 Chariots of the Feds
Chariots of the Feds's picture

This reminded me of a very appropriate comment somone once made,

'Central bankers are out of bullets, they should have saved the last one for themselves. -Cursive'

Tue, 04/03/2012 - 00:23 | 2311999 AL_SWEARENGEN
AL_SWEARENGEN's picture

"I am persuaded history will write it [the act of 1873 - demonetizing Silver] down as the greatest legislative crime and the most stupendous conspiracy against the welfare of the people of the United States and of Europe which this or any other age has witnessed."  Senator John H Reagan 1890  

Tue, 04/03/2012 - 09:34 | 2312594 Benjamin Glutton
Benjamin Glutton's picture

I find it interesting that most here fail to realize Ben is little more than a servile peon of the Bankster/poltico tax machine.

 

he is an intelligent liar with an economic background whos job it is to sell a product. his replacment will differ only by the sales pitch itself.

Mon, 04/02/2012 - 22:10 | 2311641 akak
akak's picture

I have two letters for Ben Bernanke: FU

Mon, 04/02/2012 - 22:12 | 2311645 Dre4dwolf
Dre4dwolf's picture

Inflation is when the rich steal the wealth of the poor.

 

Deflation is when the poor take some of that wealth back.

 

Too much of either and the slavery system breaks.

 

 

Gold Standards eliminate the prossiblity of either occuring so long as everyone plays by the rules (no counterfeiting/fractional banking).

 

Mon, 04/02/2012 - 22:25 | 2311691 blunderdog
blunderdog's picture

I think fractional banking should exist.  The cost and profit required for it to exist should balance even.  Seems like a simple and reasonable enough concept, no?

Mon, 04/02/2012 - 23:37 | 2311897 trembo slice
trembo slice's picture

did you upvote yourself?

Tue, 04/03/2012 - 01:40 | 2312101 xtop23
xtop23's picture

genius comment. strong work sir.

Tue, 04/03/2012 - 12:15 | 2313263 blunderdog
blunderdog's picture

No, actually, apparently there are a few others here who understand the value of a flexible money supply.  Good to see there are actually some folks who've looked into this.

Fractional reserve banking itself isn't harmful--it permits economic development in regions which cannot be funded through local investment.  Reserve banking BECOMES harmful when the profits collected from the interest become a greater economic drag than the benefit from the banker selecting legitimate loan opportunities, OR when the laws become so corrupt as to permit the banker to pass all losses onto the taxpayers.

Fractional reserve banking also has nothing to do with the Fed, or any other central bank.  The collection of power in a central bank is a big risk, but it's totally unnecessary.

Although I knew I'd be junked to hell for that post, I was really hoping someone would've had the brains to raise a real argument against fractional reserve banking.

I guess that's too difficult, though.  Why should anyone here think about this stuff when all you have to do is say "gold bitchez"?

Mindless jingoism.

(I realize too--many here won't realize that fractional reserve banking ALSO doesn't conflict with a gold standard.  You can maintain a real commodity backing for currency and still permit some flexibility in money supply.  Seems a safe bet that many would think "fractional reserve banking" = "fiat currency," which isn't true at all.)

Tue, 04/03/2012 - 16:41 | 2314212 akak
akak's picture

Any time your promises (debts) exceed your assets and/or income, you are by definition, and by common sense, engaged in fraud.  And, as history has shown countless times, an unsustainable fraud.

Those who support the crime of fractional reserve banking are merely a reflection of the ever-growing juvenilization of our culture and our society, always grasping for more, unwilling to save before spending, and wanting to eat tomorrow's dessert today --- that is, if they are not rent-seeking, fraud-peddling sociopaths.

Bank runs and banking crises would be IMPOSSIBLE without fractional reserve banking --- not to mention the whole perverted, unnatural boom-bust economic cycle.  But you apparently believe that the short-term pleasures of dangerous, unhealthy and addictive drugs justify the long-term damage and pain that are their true legacy.

Tue, 04/03/2012 - 17:34 | 2314659 blunderdog
blunderdog's picture

I guess you tried, bro, but that was pathetic.  This doesn't say much for your ability to reason about this subject.

Any time your promises (debts) exceed your assets and/or income, you are by definition, and by common sense, engaged in fraud.

That's categorically false.  Income occurs over time, debt has a fixed value at any given time.  If I have my $100 paycheck coming on Friday and borrow a $20 from someone on Thursday night, you'd call that fraud.  That's bad craziness--I doubt even YOU believe that kind of bullshit.

The second paragraph is just an ad-hominem.  If you'd like to call me names, don't be a pussy about it.

Third paragraph starts off OK w/the claim about bank runs and banking crises, but the boom-bust cycle is not a result of fractional reserve banking, it's a result of speculative grandeur on the part of the financiers.  Yes, when the bankers think they can get something for nothing and are permitted to gamble other people's money on that goal, they can cause economic disruption. But you know what?  Even non-bankers can cause economic disruption by sinking sufficient resources into non-productive endeavors.  The only difference between a bank making a loan and a guy spending his own money is that the bank can potentially lose someone else's money in the process.  And a company that fails because of mismanagement can just as easily create a bust as a successful company can cause a boom.

Tue, 04/03/2012 - 18:20 | 2314771 akak
akak's picture

It is interesting to read a pro-bankster, pro-corruption, pro-fiat advocate here on ZeroHedge.  Your pompous arrogance, like Bernanke's, is exceeded only by your ignorance.  You are a disingenuous, malicious pro-Establishment troll --- was that name-calling suitably direct for you?

That's categorically false.  Income occurs over time, debt has a fixed value at any given time.  If I have my $100 paycheck coming on Friday and borrow a $20 from someone on Thursday night, you'd call that fraud.  That's bad craziness--I doubt even YOU believe that kind of bullshit.

Idiotic and specious analogy, and you know it.  It would be MUCH more pertinent to compare the fraud of fractional reserve banking to you borrowing $1000 in advance of your $100 paycheck, then constantly kiting checks to try to maintain that borrowed balance.  Total fail on your part.

Third paragraph starts off OK w/the claim about bank runs and banking crises, but the boom-bust cycle is not a result of fractional reserve banking, it's a result of speculative grandeur on the part of the financiers.

More disingenuous bullshit.  Lacking fractional reserve banking, from where would those speculative financiers obtain the funds used to engage in said speculation?  From NOWHERE, that is where!  Without the FR-ing banks' ability to create money out of thin air, that speculation would not and could not occur in the first place.  But again, in the perverted and twisted world of statist, Keynesian, pro-fiat finance and monetary corruption existing today, such unbacked, fundamentally mal-invested funding is considered "healthy economic growth" --- that is, until it inevitably collapses in the inevitable bust to follow.

Really, your arguments in favor of financial and monetary corruption are as laughably weak as those of the Bernankster in attacking gold.  (And yes, that was yet another name-calling on my part).

Wed, 04/04/2012 - 13:25 | 2316960 blunderdog
blunderdog's picture

  a pro-bankster, pro-corruption, pro-fiat advocate

That has nothing to do with what I believe.  Personally, I oppose both corruption and fiat-currency, but I guess a semi-literate toothless Downs-syndrome couch-monkey wouldn't be able to properly interpret my writing.  Sorry about your genetic handicaps, bitch, but they don't have anything to do with me.

  from where would those speculative financiers obtain the funds used to engage in said speculation? 

Exactly.  Perhaps there's a teaching moment here! 

If the money cannot come from NOWHERE, the economic development of, say, the American Southeast, could NEVER EVER BEGIN TO APPROACH the economic development of, say, the Northeast and the West Coast.

There's simply not enough money in Alabama to permit the financing of some types of capital-intensive work-projects.  There's money in CA or NY, but there's no reason for that money to migrate to Alabama. 

That's what motivated the development of a flexible money supply.

Now run along and bounce a ball or something.  Something you're better equipped for.

Tue, 04/03/2012 - 04:28 | 2312234 peekcrackers
peekcrackers's picture

i think free kegs of single malt scotch should exist .. seems like a simple and resonable enough concept no?

Mon, 04/02/2012 - 22:15 | 2311657 blunderdog
blunderdog's picture

   You have legal tender laws to force creditors to accept it, whether they would or not.  Will you please let people be free?

This is too weak to be your open. 

A merchant can float the cost of his services on the gold price, but only if he's worth it.  That's the MARKET!

Mon, 04/02/2012 - 22:15 | 2311660 Arnold Ziffel
Arnold Ziffel's picture
Why China Loves Gold (WSJ)

 

http://blogs.wsj.com/chinarealtime/2012/04/02/why-china-loves-gold/

 

"There is a long tradition, in China’s imperial dynasties, of hoarding vast quantities of gold. According to an article in the May 1942 issue of The Journal of Economic History by Homer Dubs, a scholar at Duke University, the treasury of Emperor Wang Mang held roughly 5 million ounces of gold around A.D. 23."

 


Mon, 04/02/2012 - 22:20 | 2311679 quartshort
quartshort's picture

Damn... and the gloves come off. Anyone with a mild understanding of real money vs. fiat should head for the exit, pronto. Many thanks for the effort put forth above.

Mon, 04/02/2012 - 22:23 | 2311686 Sleepless Knight
Sleepless Knight's picture

I can't wait until he's a "has Ben".

Mon, 04/02/2012 - 22:23 | 2311688 hustler etiquette
hustler etiquette's picture

My open letter to the bernanke- "Fuck your couch!"

Mon, 04/02/2012 - 22:25 | 2311693 alphabrew
alphabrew's picture

Re #4: I think what you want is a bimetal standard, not a pure gold standard. What we had in this country until the crime of 1873 when silver was demonetized was a bimetal standard.

Tue, 04/03/2012 - 00:06 | 2311965 i_fly_me
i_fly_me's picture

Sorry but no.  Read the article again, there is a reason that doesn't work.  By the way it is the same reason a fixed price gold-standard doesn't work either.  It doesn't matter.  No conceivable US government would willingly choose to bind itself again to a hard currency.  Gold will soon free itself of its current shackles, however, and return to its rightful place as the recognized premier store of wealth it has always been.  All currencies will then be forced to bid for it on the open market and countries that try to fix the price will lose their gold and fast.  Once we are back there, the central planners will have a huge problem of their own making and it will be generations before enough people forget and allow them to regain their power.

Tue, 04/03/2012 - 02:33 | 2312150 Deo vindice
Deo vindice's picture

As much as I would love to vote for your comment, I have a feeling it is more optimism than reality.

It would be nice, but I don't think it will happen.

But then, maybe that's just my pessimism kicking in.

Tue, 04/03/2012 - 06:38 | 2312296 i_fly_me
i_fly_me's picture

It isn't hope; this is as inevitable as currency collapse.  It is hard to see it because of the unprecedented nature of our current situation, but if you think through how the end of this dollar-based system has to occur you can only come to one conclusion.  No paper promises will be trusted to store wealth on the other side of the collapse.  Gold, in your hands, will be the only real long term option.  Once you see that, the rest follows.

Tue, 04/03/2012 - 08:57 | 2312500 alphabrew
alphabrew's picture

If the author is not advocating for a bimetal standard his answer to #4 makes no sense.

Tue, 04/03/2012 - 16:21 | 2314470 i_fly_me
i_fly_me's picture

"Like every instance of laws that attempt to interfere with the markets, this provision was an unmitigated disaster.  Whichever metal is officially valued at less than its market value will be pulled out of circulation and sent elsewhere for its market price.  Whichever metal is overvalued will be imported from every corner of the earth and come flooding into the country."

How are you reading that as advocacy?

Mon, 04/02/2012 - 22:29 | 2311707 kito
kito's picture

TERRRIRIST!!!! WEINER IS A TERRRIRIST!!!!!!!!!!!!!!!

Mon, 04/02/2012 - 22:37 | 2311735 Chariots of the Feds
Chariots of the Feds's picture

So he has gold, silver, copper, lead and brass?

Mon, 04/02/2012 - 22:31 | 2311709 trembo slice
trembo slice's picture

While I think nearly everyone at ZH is an advocate of the gold standard, methinks this article is weak sauce.  I'm watching the National Championship right now so I'm not going to elaborate, but if your going to write an open letter to the ChairSatan... kick his ass seabass!

Mon, 04/02/2012 - 22:46 | 2311762 alfred b.
alfred b.'s picture

 

  The bernanke is the front man for the banking cartel....don't expect any response or acknowledgement from this clown....he's too busy entertaining the Washington hoods with numbers of fantasy and voodoo economics!

 

 

Mon, 04/02/2012 - 23:02 | 2311793 SillySalesmanQu...
SillySalesmanQuestion's picture

A brilliant repudiation to Ben's gigantic ego and misguided theories! May he debate you one on one, and be lanced like  a boil of putrid puss. Many thanks for your post and putting the Bernank in his place. May Ben hang from a helicopter rotor twirling at full speed. Maybe WB7 can help out with that visual...Gold and Light Sweet Crude Bitchez.

Mon, 04/02/2012 - 23:06 | 2311809 williambanzai7
williambanzai7's picture

A HOLE NEW MUSTACHE

Mon, 04/02/2012 - 23:14 | 2311836 palmereldritch
palmereldritch's picture

Please don't show us where QE3 is growing....

Mon, 04/02/2012 - 23:27 | 2311810 Aquarius
Aquarius's picture

It is clear that Mr Bernanke is an academic; indeed a very narrow and highly specialized academic as well as an economist. What would you expect from this man when placed in a positon of running the World's economy at a time when all the cycles are in a downturn; the global economies have been so manipulated and contorted that nobody knows what is where; the corruption in "leadership" across the board has never in written history been so blatant and pervasive at every level of government and bureaucracy and that the Banks and all that hang off them have never had it so good from the free money and no risk open season on humanity?

That Bernanke is a US patriot of the elite "leadership" is obvious; Bernanke can and must be expected to put upper Wall Street and the WH as his top and only priority.

That his specialization in Economics has not only left him totally cognitively vacant in other fields such as physics, biology, astronomy, the humanities, human behaviours, etc., but has blinded him from knowing just what Gold actually is and what it represents throughout the World at individual level.

It is now made ever so clear in the past few days that the so-called illustrious and Nobel Laureate and Economist Paul Krugman, clearly has no clue; not ever one ioto of certain nor reliable knowledge in his "Economic Theory" of just how the so-called free World of Banking and Accounting actually works. What is clear, is that the World runs to a different set of rules, a completely different tune, on a minute to minute basis, that those of Krugman's ilk, Bernanke, and most other so-called Economists.

In fact, "leadership" don't really give a damn about Economists, as the corrupt politicians will have their own set of Laws and Regulations, but if they don't the Authoritiies (read: bureaucrats will do things their way anyway.

Today it is clear; the US Economy is run as a crime scene: MF Global proves this beyond any doubt. Bernanke's acts to prop up the Banks with wealth and productivity from the people and from people not yet born, is precisely analogically to the unnatural act of "buggery". 

Such is the state of Mr Bernanke's "Economic Theory".

Add to this, that a few, if any, anywhere in this World today know where this banking system came from, how it works and for whom it works for best; on top of this, just what the Fractional reserve banking system, along with its Central Banking apparatus as well as the dual role of Banks in a. a risk-free protected milieu with open access to all the highest offices of Government, whilst, OTOH, b, free privileges of full commercial access to all and any markets: in other words nuanced, unleashed, unregulated and finnessed Usury -- as well as monetarty control which captures and centralizes all wealth and productivity on the face of the planet for an on behalf of a few well placed Bankers.

Nobody knows, ie nobody with influence or academic knowledge knows. Rothbad knew.

Most Economists, Yes, most don't even know what money is; or debt, or credit or wealth! Such is the state of our Profession of Economics, those entrusted (and paid well) to secure the Global Economy.

Hence, the above being definitively factual; it begs the question as to what is running the Global Economy today and on what basis; the best guess would be a mixed bag of convenient "opinions" by those influential few who intend to profit for themselves in obtaining the only thing on the planet that has real retained value: Gold. Opinions, that is, that are spurious at best but targetted for theft and looting.

For those few, the target is Gold and Silver metals, and argricultural land, and water; security is the challenge for these people know that Bernanke's and Krugman's World of Economics is in the same condition as Tepco's Nuclear Reactors at Fukishima.

Benanke and Krugman "Economic Theory" ends each cycle with WAR, always and, a priori.

Keywords: buggery "Economic Theory" "unnatural act" Fraud Criminal Fukishima Gold Silver finis

Mon, 04/02/2012 - 23:54 | 2311935 TheDavidRicardo
TheDavidRicardo's picture

Please add Larry (we must find a way to increase aggregate demand after the largest credit bubble in the history of the world) Summers to that list.

Mon, 04/02/2012 - 23:17 | 2311841 Aquarius
Aquarius's picture

"The guilt for the Great Depression 
must, at long last, be lifted from the shoulders of the free-market
economy, and placed where it properly belongs: at the doors of
politicians, bureaucrats, and the mass of “enlightened” economists.
And in any other depression, past or future, the story will be the
same."

Rothbard on The Great Depression p.337

Mon, 04/02/2012 - 23:24 | 2311860 trembo slice
trembo slice's picture

After I finish up Human Action, I plan on powering through America's Great Depression.  Is it too nasty?

Tue, 04/03/2012 - 00:53 | 2312043 Bookdoc
Bookdoc's picture

It seems too many of the Depression books become hagiographies of fdr and the dimocrats, You may want to read "New Deal or Raw Deal" by Folsom to know what really happened. It is interesting to compare it to what is going on now.

Tue, 04/03/2012 - 09:02 | 2312512 trembo slice
trembo slice's picture

I'll check it out after I check out Rothbard's book.  To even consider that Rothbard may be a cheerleader of the official account is a dead giveaway that you're unfamiliar with his work.  He smashes the state-sanctioned history and accounts of its granduer in every line.  Murray Rothbard is the shit!

Tue, 04/03/2012 - 02:41 | 2312157 Aquarius
Aquarius's picture

Piece of Cake

Walk in the Park

Mon, 04/02/2012 - 23:21 | 2311853 loveyajimbo
loveyajimbo's picture

Bernanke is not a moron, but he IS a liar... and, more importantly, corrupt.  He serves the elite cabal of bankers and scum such as Goldman, JP Morgan, and the big cancerous 'roid Rothschild, among other evil turds...  It is with good reason he fights against a full audit of his actions AND the gold reserves... he should be either strung up or jailed for life... an enemy of the people.

Mon, 04/02/2012 - 23:39 | 2311895 BLOTTO
BLOTTO's picture

Yes love,

And if i may add - that we need to cut the head off further up the food chain so to speak. Because their are far worse enemies at the top unfortunately.

They're thousands of Bernankes...pos - intelligent - lap dogs... waiting to take his place. Get $ and paid off. As in music, movies, etc... Puppets are dime a dozen.

The problem is way further up the creek - the top is the REAL issue and problem.

 Now what do we do?

 

Tue, 04/03/2012 - 08:20 | 2312409 TWSceptic
TWSceptic's picture

You should learn how to spell right.

Mon, 04/02/2012 - 23:21 | 2311854 Cult_of_Reason
Mon, 04/02/2012 - 23:30 | 2311871 digalert
digalert's picture

Hopefully there's a few nations that will hit the Bernank like a ton of BRICs. Others are getting tired off the anglo bankster cartel grift.

Mon, 04/02/2012 - 23:31 | 2311873 BLOTTO
BLOTTO's picture

'Ben Shalom Bernanke' - a few of many interesting anagrams:

'Hes Banker Nobleman'

'Nobleman Banks Here'

'Been Born Elk Shaman'

'Been Nobleman Shark'

 

 

 

 

Mon, 04/02/2012 - 23:32 | 2311874 lolmao500
lolmao500's picture

Kill yourself Ben and take Greenspan, Krugman and Geithner with you.

Thanks

- The world

Tue, 04/03/2012 - 01:48 | 2312110 xtop23
xtop23's picture

No Dimon !!??? 

 

Mon, 04/02/2012 - 23:32 | 2311877 blindman
blindman's picture

Could the Gold Standard Save the World Economy ?
http://geraldcelentechannel.blogspot.com/2012/04/could-gold-standard-sav...
.
02 April 2012
The Bi-Partisan Criminogenic Fraudulent JOBS Bill
"
When the Republicans and the Democrats agree wholeheartedly about something these days hold on to your wallets.
"
william k. black
http://jessescrossroadscafe.blogspot.com/2012/04/bi-partisan-criminogeni...

Tue, 04/03/2012 - 00:00 | 2311954 TheSilverJournal
TheSilverJournal's picture

My open later would be: Ben, do you take pleasure in being the most destrucrutive person on the planet by siphoning off the wealth of the world?

Tue, 04/03/2012 - 00:07 | 2311967 BrokeDayTrader
BrokeDayTrader's picture

Butthead Bernanke's single purpose mission is to screw over short-sellers like me.

Tue, 04/03/2012 - 00:21 | 2311993 TheDavidRicardo
TheDavidRicardo's picture

Thats the whole point!  In a FIAT world, it is those that have access to the leverage and go "all in long" that win.

Now, when you get off the Merry-Go-Round, I have no clue. 

But, there are some folks around here lurking that swear that not riding the Merry-Go-Round is the only way to go. (PM)

 

Tue, 04/03/2012 - 00:22 | 2311996 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

@brokedaytrader...being short you might one day reap great rewards...it's the other 364 of 'em (a year) that are a bitch.

Tue, 04/03/2012 - 00:28 | 2312008 q99x2
q99x2's picture

Time to go off of the Central Banker Standard. Those people are animals.

Tue, 04/03/2012 - 00:45 | 2312034 barwar
barwar's picture

Great piece, kudos.  Keep thinking critically.  Lucas Jackson, war hero

Tue, 04/03/2012 - 01:12 | 2312070 Dre4dwolf
Dre4dwolf's picture

The funny thing is, we are looking at the end of the wold if only a small portion of the capital is destroyed further (maybe another 5 ~ 10%).

 

Which is completely possible. . .  we are walking on a tight rope right now trying to juggle a set of school buses.

Tue, 04/03/2012 - 01:37 | 2312099 dcb
dcb's picture

funny when I look at what he says I see the work of minsky and all are created at teh minsky moment when there is too much excess credit creation. backing by gold helps to limit exces credit creation. prevetns the things he talks about.

asking nhim to tell the truth would be like asking the pope to make fun of jesus. you can't aswk a guy at the head of a powerful organization to turn his back on the voodoo that gvave him power prestige, money, him and his cronies.

ben is a sociopathi, a liar, as all of those (99%) are in those power positions.

Tue, 04/03/2012 - 02:20 | 2312142 YesWeKahn
YesWeKahn's picture

Bernanke is simply an idiot. He studied the great depression and truely believed that he knows how to avoid causing another one and how to get out of it if there is ever another one.

Look, he actually caused another depression we are still experiencing, he has no actual plan to get out of it without plunge the great USA to Zimbabwe style of economy.

Tue, 04/03/2012 - 02:36 | 2312152 Deo vindice
Deo vindice's picture

Callling him an idiot suggest he doesn't know what he is doing.

I believe he does.

Tue, 04/03/2012 - 03:11 | 2312176 awakening
awakening's picture

That right there is what makes him more worthy of our displeasure of him and all those beyond that he represents.

Tue, 04/03/2012 - 08:26 | 2312418 TWSceptic
TWSceptic's picture

He knows what he's doing, he just doesn't understand the consequences correctly. That still makes him an idiot.

Tue, 04/03/2012 - 04:04 | 2312217 Tsukato
Tsukato's picture

Although I've been one for the longest time, thinking that the end is coming to the U.S., I'm starting to wonder if that's the case. About 15 years ago when I was living in america, I remember some discussion on tv, and they were saying the dollar had to be devalued in the future in order that manufacturing would again be competitive. Also, something was said regarding american workers needing to lose their primadonna attitude, and work for longer hrs, and less money. Well it looks like that is coming. Also, wages in the cities here in China, rose 49% last year.

It doesn't seem to matter if the BRICS start their own world bank. Everything boils down to who controls the oil, and that it remains priced in dollars. Looks like america/nato is taking care of that.

I'm starting to wonder if it might not be a bad idea, to start, incrementally, increasing my exposure back home. For starters, I see tons of palatial homes in the hills outside Sacramento (where I'm from) in the $500-700,000 range. Hell, here in Chongqing, we've been thinking to buy a villa for around that price, but they are piles of concrete shit. Also, wages are lower in the US now, so I wonder if it might not be a bad time to start up sthg over there. Any advice?

Tue, 04/03/2012 - 04:14 | 2312225 i-dog
i-dog's picture

 

"Any advice?"

Yes ... lay off whatever drugs you've just taken! You were doing OK until this post.

At least wait until next year before putting any more thought into it.

Tue, 04/03/2012 - 04:42 | 2312243 Tsukato
Tsukato's picture

Thats probably some sound thinking, thanks. Actually, I haven't been back since 2005, so I think my views on everything back home may be  a little off these days.

Cheers

Tue, 04/03/2012 - 06:42 | 2312297 XitSam
XitSam's picture

Since 1997, the dollar has been devalued.  See Inflation.

Tue, 04/03/2012 - 05:06 | 2312256 I am Jobe
I am Jobe's picture

Ben is qualified because he has PhD in Econ from Sloan. Makes a big diffrence. Yeah right, lacks the common sense.

Tue, 04/03/2012 - 05:20 | 2312261 jjsilver
jjsilver's picture

Please stop with all this gold standard nonsense distraction, this is a worldwide criminal syndicate that needs to be stopped. Why don't you focus on the criminal nature of this beast!!

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