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Phoenix Rising, the Return of the Gold Standard

by on January 28, 2012
Rothschild

What has been in the cards for decades is now fully on the agenda: the returning Gold Standard. Gold as currency is a weapon. It is a wealth transfer to those holding Gold and will precipitate a massive deflation. The ensuing chaos will help usher in their coveted New World Order and World Currency.

This article was written for Henry Makow

The number of stories pertaining Gold as currency has seen a major peak recently. This week alone it was reported that India will pay Iran in Gold for their oil imports. In another development, China, Japan, Russia, France and a number of Arab states will pay each other with a basket of currencies, including Gold.
Yet another story was Robert Zoellick, who has been promoting a Gold Standard for years, ‘admitting’ the demise of the dollar reflects ‘a changing balance of power’ in the world.

These stories are framed as resistance against the dollar hegemony and of course that is a part of the story. Another dialectic, US against the Rest of the World.

But were these Nations really acting independently, they would barter amongst each other, based on current account bookkeeping and basically crossing off all mutually outstanding debt. That would save them massive sums of currency and associated capital costs. They would need ‘hard currency’ only to settle negative balances.

Of course, when these developments run their course it could have a devastating effect on the dollar, as it would mean trillions of dollars would be repatriated from overseas as they are no longer used to finance international trade.

It helps the Money Power in her plan to bring the US down a few notches, indispensable in her drive to World Government.

But the loss of the importance of the dollar is only part of the story. Because the dollar is only the current vehicle the Money Power uses to rule international finance. It doesn’t care for the vehicle itself, as long as it has a suitable successor.

And in the US itself there also is a strong drive towards Gold as currency. The onslaught by Austrian Economics in the Alternative Media comes to mind. And Ron Paul of course. He openly calls for Gold as currency. In this respect he clearly is the ultimate internationalist candidate. This contrasts sharply with his patriotic ‘constitutionalism’. But when he must chose between constitution and the monetary, it is clear what his priorities are. Ron Paul lies about ‘contitutional money‘, saying the constitution says we should have Gold (and/or Silver) as currency. But it doesn’t, it says we may have Gold as currency. But other units are also allowed.

This ‘little detail’ is really very telling. It is typical of Money Power change agents. They hide behind a sympathetic and credible theme, meanwhile actively supporting the implementation of a worse and more important agenda.

And control of the money supply is all important. To the Money Power, anyway.

It also reminds us of how internationally the Money Power operates. We must not allow our national priorities to obscure the international context.

Austerity and Deflation
A Gold Standard would be an unmitigated disaster. It will lead to an excruciating deflation. Deflation is a horror for debtors, who see their debts and the interest they pay over them grow worse in real terms. And since everybody is complaining of debt so much, we might reconsider making it worse with deflation.

Winston Churchill, who was involved in the reinstatement of the Gold Standard in Britain in the twenties testified to the House of Commons in 1935, when the deflation of the Great Depression had made Gold untenable:
Look at the enormously increased volume of commodities which have to be created in order to pay off the same mortgage debt or loan. Minor fluctuation might well be ignored, but I say quite seriously that this monetary convulsion has now reached a pitch where I am persuaded that the producers of new wealth will not tolerate indefinitely so hideous an oppression. . . . I therefore point to this evil, and to the search for the method’s of remedying it as the first, second and third of all the problems which should command and rivet our thoughts.

Deflation destroys the economy, because people have an incentive to hoard cash, instead of using it for production and consumption.

The Banking Fraternity is well aware of the disastrous deflation that Gold promotes. For instance, the Protocols say in their financial program (Protocol 20): You are aware that the gold standard has been the ruin of the States which adopted it, for it has not been able to satisfy the demands for money, the more so that we have removed gold from circulation as far as possible.

This quote also confirms that they are able, willing and known to withhold vast amounts of Gold from the market. So the idea that Gold is a safe bet because ‘it cannot be printed’ does not stand: the volume can be manipulated, because most of it is in the hand of the Money Power, who can inflate and deflate at will.

The social and economic havoc it created through the Great Depression led to the rise of fascism. It is quite likely that weaponized Gold is being used for similar purposes this time.

And of course we should also consider the one off wealth transfer that reinstating Gold as currency brings: it’s price would have to go up maybe 10 or 20 fold to replace all the fiat currency in the world. The 99% having no Gold will as usually be holding the bag.

Conclusion
Far from a ‘solution’, the coming Gold Standard is the logical next step in the Money Power plan of destabilization and order out of chaos. We will have a long and painful depression and although it is not certain that Gold will completely replace paper, it is obvious that we will know scarce money and contraction for years to come. The austerity and deflation that the Money Power’s agents in the IMF, Bank of International Settlements and (Central) Banks are promoting will set the stage for major upheaval and the usual problem-reaction-solution, dialectically driven march to World Government.

Our answer must be to have the Government reclaim the monopoly it has surrendered to a private Central Banking Cartel. But the goal is not to ‘end the Fed’. The goal is better money.

Government must print debt free money, preferably Social Credit. Since this is not going to happen any time soon, we should build free market currencies, which can actively compete with national currencies. Ellen Brown’s Public Banking is another approach in the Populist spirit.

And we should take our money out the banks of course. Why would we patronize a business that is enslaving us with credit by bookkeeping, slapping interest on it, creating booms and busts and trillions worth of bail outs?

I’m reposting this article because of the continuing momentum in discussing the Gold Standard, AM

Read more:
Top Ten Lies and Mistakes of Austrian Economics
the Ron Paul Challenge: 10 Reasons why the Alternative Media is failing this Test
Austrian Economics still is ‘Jewish’ Economics

And here’s an interesting article at the Daily Kos

The latest news is that Newt Gingrich is now also plugging Gold as currency.

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79 Comments
  1. REN permalink

    The original sin of gold backers: Conversion of surplus wealth to money. The lie: Surplus wealth degrades, and their money of choice does not. Because gold is a Noble metal and does not degrade, it has characteristics that human’s desire; that is – it is a touchstone, immovable and cold, that does not degrade or move, while the world moves. It is a weakness in the human mind, to want to grasp something that is unchangeable.

    The lie again, converting wealth that is surplus and degrading, to something that is not: Gold. This is an original sin. During the conversion, the surplus wealth holder is asking something he/she is not entitled to.

    The wealth holder is asking society to make his degrading surplus wealth mutate and transform into Gold money that does not degrade. The wealth holder is demanding insurance from society where none should exist. In effect, rich merchants and landowners who have already have advantage of production and own surplus goods, want to enshrine their advantage into the law (making Gold money) and simultaneously want society at large to insure their original sin.

    The hubris of converting degrading excess goods to “stable” gold comes with another sin, thus adding insult to injury and greatly compounding the original sin error: Usury. The degrading excess goods, converted to money, now demands usury. Usury implies that wealth would have produced more wealth. But, money does not beget more money, it is sterile. Sand cannot breed with sand and make more sand.

    Usury capital pools form, then debt instruments form as a natural outgrowth. People are put into debt by way of debt instruments, and are then traded as goods in markets. The original sin has now grown to debt slavery, and has reduced people to commodities.

    From Kitson:
    “Why should a man lend his wealth without having some benefit over and above the mere return of the wealth loaned ? The answer to this is that wealth is perishable. If we confine ourselves to the consideration of commodities—omitting those forms of wealth included under land, natural opportunities, money, bonds and legal claims—we shall see that wealth is naturally and inevitably perishable.”

    The original sin error is compounded yet again by making double entry bank credit, and/or gold legal tender: also from Kitson:
    “By virtue of certain legal enactments, wealth is, as stated by Professor Bohm-Bowerke, immortalized. By a system of exchange a man’s surplus commodities are converted into money, and when capital is borrowed it usually takes the money form, so that perishable wealth is transformed into an order on wealth producer’s at all future times to reproduce wealth in any form, and at any time the holder may choose.“

    Thanks much to Name and Yamaguchi:

    http://www.yamaguchy.com/library/kitson/kitson_index.html

    • I am only one person; ‘name’ is the result of some signup/login error; ‘yamaguchy reading cage’ is the title of my website (which, by the way, is almost 15 years old; in June 1998 loaded I up the first batch)
      =======

      Kitson’s money idea: government notes by quantity, which government notes maintain their purchasing power: “There cannot be an invariable unit of value ; there can be an invariable unit of purchasing power.”

      “The following principles should underlie sound banking : first, bank notes should be issued against wealth and not against debt ; second, banks should not undertake obligations which they cannot always perform ; third, banks should be established and operated for the convenience and assistance of commerce, not for enriching bankers and shareholders. These conditions are admirably fulfilled in what is known as the Mutual Banking System. A mutual bank is one established by commercial men for the purpose of issuing notes or paper money against satisfactory credit, or wealth, and for the sole purpose of facilitating trade. There is no bank stock, and there are therefore no dividends. Any member of a community can become a member of the bank, providing his credit is good and he has wealth suitable for monetization. No regular rate of interest is exacted for monetizing wealth or for borrowed money, but charges sufficient to defray the running expenses of the bank, and for insurance, are made.”

      Above (quote) is exactly what William Gouge had proposed 100 years earlier (a discount house)

      International commerce is a system of barter, pure and simple, and there is no such thing as an international currency.”

      ===================

      [quote]
      If interest were abolished, the desire to escape the irksomeness of toil would be none the less keen, and since this escape would depend upon the creation of sufficient wealth for support by the consumption of principal, it seems to me apparent that the incentive to wealth production would be greater without interest than with it.

      It is also taken for granted that loans would cease if interest were abolished. Why should a man lend his wealth without having some benefit over and above the mere return of the wealth loaned ? The answer to this is that wealth is perishable. If we confine ourselves to the consideration of commodities —omitting those forms of wealth included under land, natural opportunities, money, bonds and legal claims— we shall see that wealth is naturally and inevitably perishable. The vast bulk of wealth is consumed soon after it is produced. Imagine, for the sake of argument, a society where the capitalist’s wealth consisted wholly of perishable commodities. Knowing that such wealth would decay and disappear within a certain time, would not an offer to take it and return its equivalent at some future time, or say in instalments paid regularly at the end of certain periods, be readily accepted without interest ? In fact, would not such an offer meet with, and merit, a reward ? Surely the man who saves for me wealth which otherwise would perish, is entitled to a remuneration. Under modern conditions the loan, however, takes a very different form.”

      By virtue of certain legal enactments, wealth is, as stated by Professor Bohm-Bowerke, immortalised. By a system of exchange a man’s surplus commodities are converted into money, and when capital is borrowed it usually takes the money form, so that perishable wealth is transformed into an order on wealth producers at all future times to reproduce wealth in any form, and at any time the holder may choose. To negotiate a loan the modern industrian has recourse to the bank, and it is in this direction that our present investigation must be conducted.

      When a merchant seeks to negotiate a loan of money from a bank he must first provide security, either in the form of collateral or personal credit for the return of the money, so that the element of risk is eliminated ; in fact, it is customary for banks to exact a deposit of collateral of much greater worth than the amount of the loan. Having provided sufficient wealth to guarantee the return of the sum borrowed, he has further to agree to pay a percentage as interest. Let us take a special case. A manufacturer, having been informed that there was likely to be a strike amongst the coal miners, and, in consequence, the price of coal would advance, he determined to lay in a good supply. He applied to his bank for the loan of £5,000 for six months. He offered as security for the loan, a mortgage worth £10,000 on an improved property in a neighbourhood where rents were advancing ; the loan was made, and at the end of the six months he returned the £5,000, plus £100 interest. The information regarding the strike proved to be erroneous, and in place of the price of coal advancing as he expected, it actually declined, and he found he had paid £500 more than if he had waited and bought it as required. He therefore lost not only this amount and the interest on the loan, but had to pay for the storage of some of the coal during this period. The question arises, what did the bank give in exchange for the £100 ? It made no sacrifice, nor underwent any risk, since it held the power to convert the amount covered by the mortgage into currency. The wealth of the bank was not decreased by one penny in making the loan. What justification was there in asking a sum for the loan of the money ? This is the real interest problem under modern industrial conditions.

      Economists would say that the bank was deprived of the use of the money during the six months which it might have profitably invested to bring a return. It is customary in giving illustrations and examples on this subject for writers to say that the borrower gained considerably by the use of the loan, and then to add that the bank might have placed the money in the same investment, and made all the profit, and that the payment of interest is only fair, since without the loan the borrower could not have made the profit. But the instances of such investments being unprofitable are by no means uncommon—in fact, it is questionable whether fully one-half are not so, and, if the bankers undertook to direct the investment, it is doubtful whether they would be any more successful than the average merchant and manufacturer.

      The correct answer as to why interest is chargeable and obtainable on loans of the nature similar to the example given, is because the demand for money is practically always in excess of the supply—a condition existing by virtue of special legislation. The purchase of commodities and the payment of debts are effected in the legalised medium of exchanges, and mortgages are not legalised means of payment, whilst bank notes and coin are, and so the holder of mortgages and every other form of wealth except gold and government or bank money, is unable to pay his debts unless he can exchange his wealth for money by means either of a sale or the loan. The loan is really an exchange of stationary for circulating credit, of special for general purchasing power, and interest is a tax for the privilege of converting the one into the other. All the bank has done was to enable the manufacturer to fluidize his wealth. Governments having conferred this privilege upon one form of wealth, gold, has thus given the power of those controlling this metal to exact a tax upon all other wealth. Interest is therefore the price of a legally created monopoly.”
      [/quote]

    • This is really a very subtle appreciation. Thanks for it, perishable commodities are also a very important argument against Usury that I was not yet aware of. It’s also the idea behind demurrage, of course.

      One little comment: It’s the most profound human longing, to find the Immutable. And He’s real, unchangeable. People are just wrong to stop looking when they find Gold.

      • pay attention to what Kitson wrote:

        omitting those forms of wealth included under land, natural opportunities, money, bonds and legal claims—

        not to your pot-induced vision;
        Kitson is NOT advocating drunken sailor money. What Kitson is talking about is that even without interest, people would lend things if someone offered them to return its equivalent at some future time

        • I know name, I know you old swashbuckler! I understood!

          I didn’t add, but I could have, that in this day and age, with money printing about the easiest thing around, it is no longer an issue: we can provide all the credit we would need interest free, no sweat.

          Kitson, if I recall correctly, would have known this was possible too, even in his day.

          My friend: are you sure you have smoked enough yourself? Pot kills mind control, did you know that?

          2013/3/4 Real Currencies

          > > New comment on your post “Phoenix Rising, the Return of the Gold Standard” > Author : name789 (IP: 96.54.160.143 , 96.54.160.143) > E-mail : yarmulka@geocities.com > URL : http://name789.wordpress.com > Whois : http://whois.arin.net/rest/ip/96.54.160.143 > Comment: > pay attenti

          • Leninism and the dictatorship of the proletariat protected me from dope and porn (weed, and acid, makes you a liberal)

            Kitson did NOT advocate your dead-head (grateful or not) concept of credit(credulity) currency, either:–
            “The first step in the solution of this all-important question is to repeal laws which forbid or interfere with free banking, and which make gold or silver or any other commodity or instrument compulsory legal tender. To one who is not blinded by superstition, custom and tradition, it will appear just as unreasonable for governments to prescribe the form or method in which payments shall be made, as to set up a compulsory standard for the manufacture of boots and shoes or any other commodity. That there should be a legally constituted monetary unit –for public convenience — similar to the unit of weight, length and capacity– goes without saying. Such a unit could be the purchasing power of a pound sterling, a dollar, a franc, a mark –at a given time. Instead of being or representing a certain weight or mass of a particular commodity, such as gold, it would represent a certain fraction of all the exchangeable wealth at a given time. This fraction may be 1/1,000,000th part to-day, and 1/1,000,001th part next month, but it would always bear the same relation to the same amount of wealth which existed at the time it was first issued. As to whether this unit shall be expressed on paper, gold, silver, copper or cabbage leaves, no government should attempt to determine.”

            Which is what I said we could have learned from the ‘greenback experiment':– at the time the asset value of the United States was estimated to be 16,000million; 400million notes produced inflation, general prosperity, cash-based economy, general debt-free-ness;
            if monetizing 2-3% of the asset value produced all this at one time, it could produce it at another; and it certainly could be a good starting point for a new deal and experiment, and adjust it later as needed

            =========
            ” If I had been suddenly called to my great reckoning in another world, I should have felt that one duty was left unattempted, if I had no measure to recommend, no expedient to propose, no hope to hold out to this suffering community.

            Would to God, sir, that I could draw around me all these twelve millions of people; would to God that I could speak audibly to every independent elector in the whole land. I would not say to them, vainly and arrogantly, that their safety and happiness required the adoption of any measure recommended by me. But I would say to them, with the sincerest conviction that every animated man’s heart, that their safety and happiness do require their own prompt and patriotic attention to the public concerns, their own honest devotion to the welfare of the State. I would say to them, that neither this measure, nor any measure, can be adopted except by the cogent and persisting action of popular opinion. I would say to them, that the public revenue cannot be restored to their accustomed custody; that they cannot be again placed under the control of Congress; that the violation of the law cannot be redressed, but by manifestation, not to be mistaken, of public sentiment. I would say to them, that the Constitution and the laws, their own rights and their own happiness, all depend on themselves; and if they esteem these of any value — if they were not too dearly bought by the blood of their fathers –if they be an inheritance, fit to be transmitted to their posterity, I would beseech them –I would beseech them to come now to their salvation.”

  2. REN permalink

    Mercantilism is when an exporting nation tries to capture markets e.g. Germany and China. Increased goods production is spread across the domestic market as well as foreign markets. This creates economy of scale, especially if distribution costs are low enough. Eventually the foreign competitor can be driven out of the market, and then prices will be raised, allowing extra profits to be skimmed off. The exporting nation exports goods, but imports the difference in the foreign nation’s cash. In a gold environment, the mercantile exporting nation would drain foreigners gold in proportion to the trade imbalance. Presumably, in a gold standard, the foreign nation would have to devalue their currency in order to make domestic goods desirable for export. In a race to the bottom, eventually the lost Gold may be recaptured.

    With floating currencies, each nation holds the other’s currency, and should recycle it to buy goods. If the trade imbalance is great enough, then the debtor’s currency should be devalued. But, nations do something else. Mercantile countries put others into debt, taking their (foreigner’s) monies and converting them to debt instruments. This embeds the usury cancer into trading money systems and leads to war. A mercantile country will return the foreign money won in trade, and convert it buying a debt instrument rather than buying goods. China for example buys U.S. T Bills, putting Americans on a debt hook while taking markets. A twist on this debt version is how Greece and other PIIGs export Euros to Germany in trade imbalance, and make up the difference by borrowing newly created Euro’s from private commercial, usually German banks. A PIIG simply creates a new sovereign Bond and trades it for newly created bank money Euros. Of course along with new debt comes usury, forcing an impossible contract on the future.

    In a demurrage environment, floating currency has a holding tax, so the compulsion will be to spend rather than hoard. In the unlikely event a debt instrument is created it will be “low interest or even zero” and thus will not have usury compounding, hence short circuiting our debt driven war cycle.

    In a positive interest regime on money, there should be an independent international currency, so that mercantile countries can be punished. Trade imbalance would soon have the mercantile country holding too many of the “international currency units.” This was the main feature to Keyne’s bancor, a system that allowed politicians cover for dealing with trade debts. With a Bancor system, automatic circuit breakers would not allow debt compounding, and force political negotiation. But is it possible a bancor, a Terra, or some sort of Special Drawing Rights (SDR) supranational money, be taken over by usurious money powers? Gold systems imply positive interest and mercantilism. Positive interest floating currencies imply debt instruments. Positive interest also implies some sort of supranational SDR or Bancor type money system as fix. The answer to the complexity seems to be – stay away from a positive interest regime. Gold equals positive interest due to its “asset” nature. Debt and usury compounding is always bad.

  3. >>>>But were these Nations really acting independently, they would barter amongst each other, based on current account bookkeeping and basically crossing off all mutually outstanding debt.

    No; what they would do is: a merchant would take a truck-load of something from one country to another, sell it; buy something, take it somewhere else, sell it…… no outstanding balance, no trade deficit

  4. Abu Aardvark permalink

    What’s the matter, Anthony?

    Too busy to unlock my comment or is this some foretaste of what is to come when the likes of you would be in control of things?

    • Jesus Abu, get a life man….this from a DB groupie, where they felt force to shut down all comments because the truth was hurting so much?

      Listen: everybody knows that Rothbard hated a free market for currencies, although he ‘seems’ to have warmed to it somewhat just before he died.

      • Abu Aardvark permalink

        Gee, Anthony, why did you cut out the crucial quote I was replying to? You know, YOUR quote where you claimed that:

        “only a short while ago no Austrians would talk about a free market. They were just discussing a Gold Standard.”

        This claim is utter nonsense, of course.

        See:

        http://anonymouse.org/cgi-bin/anon-www.cgi/http://en.wikipedia.org/wiki/Free-market_anarchism#History

        “Ten Ethical Objections to the Market Economy” from Man, Economy, and State, with Power and Market by Murray Rothbard (1962)!

        http://www.mises.org/daily/1469

        “Economic Sophisms” by Frédérick Bastiat (1845) !!!

        http://www.econlib.org/library/Bastiat/basSoph.html

        Now, will you take a stand or will you suppress and/or censor my comment like you did with the last one?

        PS: You also claim that:

        “everybody knows that Rothbard hated a free market for currencies”

        Well then, prove it!

        And please refrain from blaming me for decisions (The Daily Bell’s, that is) that I didn’t make.

        • I didn’t cut anything out. I found the same comment three times and posted only one.

          you know as well as I do that Rothbard promoted a full reserve gold banking system under a Governmental Gold Standard. Ask the elves, they know.

          • Abu Aardvark permalink

            “It must be emphasized that gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium. Above all, the supply and provision of gold was subject only to market forces, and not to the arbitrary printing press of the government.

            The international gold standard provided an automatic market mechanism for checking the inflationary potential of government. It also provide an automatic mechanism for keeping the balance of payments of each country in equilibrium

            (…)

            It is true that the interventions of governments previous to the nineteenth century weakened the speed of this market mechanism, and allowed for a business cycle of inflation and recession within this gold standard framework. These interventions were particularly: the governments’ monopolizing of the mint, legal tender laws, the creation of paper money, and the development of inflationary banking propelled by each of the governments. But while these interventions slowed the adjustments of the market, these adjustments were still in ultimate control of the situation. So while the classical gold standard of the nineteenth century was not perfect, and allowed for relatively minor booms and busts, it still provided us with by far the best monetary order the world has ever known, an order which worked, which kept business cycles from getting out of hand, and which enabled the development of free international trade, exchange, and investment”

            Murray N. Rothbard, “What Has Government Done to Our Money?”

            http://mises.org/money/4s1.asp

            And what about your claim that:

            “only a short while ago no Austrians would talk about a free market. They were just discussing a Gold Standard.”

            Will you take a stand on that nonsense or will you chicken out again?

  5. Abu Aardvark permalink

    Anthony Migchels says: “Austrianism exists to create this temporary Gold Standard. The Free Market fable is just a story to sell it.

    <<>>

    But they got busted badly, because it is clear that Gold is manipulated and controlled to the core.

    So they cooked up the Free Market story. You know, Choice! Grand, not?”

    —————————————————————

    Anthony, how come you feel the need to utter such ludicrous nonsense as in the above? Your claims are so easy to debunk that one wonders if your real intention maybe is to entirely discredit the ideas you supposedly propagate on your websites. This from Wikipedia:

    “One of the first individuals to propose the concept of market protection of individual liberty and property, i.e. free-market anarchism, was France’s Jakob Mauvillon in the 18th century. Later, in the 1840s, Julius Faucher and Gustave de Molinari advocated the same. Molinari, in his essay The Production of Security, argued, “No government should have the right to prevent another government from going into competition with it, or to require consumers of security to come exclusively to it for this commodity.”[6] Molinari argued that the monopoly on security causes high prices and low quality. He says in Les Soirées: “The monopoly of government is no better than any other. One does not govern well and, especially not cheaply, when one has no competition to fear, when the ruled are deprived of the right of freely choosing their rulers…The production of security inevitably becomes costly and bad when it is organized as a monopoly.”[8] The brunt of Molinari’s argument for free-market anarchism is based in economics rather than on moral opposition to the state.[7]

    In the 19th century, Benjamin Tucker in the United States theorized free-market anarchism: “defense is a service like any other service; that it is labor both useful and desired, and therefore an economic commodity subject to the law of supply and demand; that in a free market this commodity would be furnished at the cost of production; that, competition prevailing, patronage would go to those who furnished the best article at the lowest price; that the production and sale of this commodity are now monopolized by the State; and that the State, like almost all monopolists, charges exorbitant prices.”[9] He noted that the anarchism he proposed would include prisons and military.[10] Later, in the mid 20th century, free-market anarchism was revived by Murray Rothbard. David D. Friedman proposes a form of free-market anarchism where in addition to security being provided by the market, the law itself is produced by the market.[11]

    http://en.wikipedia.org/wiki/Free-market_anarchism#History

    See also:

    “Ten Ethical Objections to the Market Economy” from Man, Economy, and State, with Power and Market by Murray Rothbard (1962)!

    http://www.mises.org/daily/1469

    “Economic Sophisms” by Frédérick Bastiat (1845) !!!

    http://www.econlib.org/library/Bastiat/basSoph.html

    • Abu, please watch the following video, this will save us some time (after all, this is why we posted this on the Daily Knell):

      http://thedailyknell.wordpress.com/2012/10/13/video-a-street-conversation-between-a-ron-paul-fan-and-the-daily-knell/

      My point (maybe slightly different from Anthony, I don’t know) is that, regardless of the motivations of those who proposed a free market for currencies (an idea that I would support in principle), in the current situation such a free market will almost inevitably devolve into a monopoly or at least a cartel controlled by Money Power. That is not to say that a free market for currencies is a bad idea, but that it would be naive, if not foolish, to implement this without thinking about the immediate consequences.

      See also:

      http://thedailyknell.wordpress.com/2012/09/24/analyzing-austrian-economics-memes-who-benefits-from-the-anarcho-capitalist-utopia/

      • Abu Aardvark permalink

        Memehunter, I watched the thing the day you posted it. In fact, YOU are the one(s) who could have saved some time since everything that is being said there was eloquently debunked before all of us were born. If you actually did what you claim to have done (reading the standard pre-/austrian works, that is) you’d know that.

        You’d also know, by the way, how ludicrous some recent statements made by your co-blogger Anthony Migchels are, given that the relevant literature is just a click away (all for free!) – like when he wrote: “only a short while ago no Austrians would talk about a free market. They were just discussing a Gold Standard.”

        Proofreading could help a lot, facts too.

        • Well, I’d be curious to see where “everything” that is said in the video was debunked. Could you give me some pointers?

          Also, I don’t mind admitting that these guys were discussing a free market a long time ago, but Anthony was (I believe) specifically referring to Austrian economists. Mauvillon, Tucker and others might be free-market/laissez-faire proponents, but I’m not sure you can count them as Austrian economists. That seems like a bit of a stretch.

          • Abu Aardvark permalink

            Memehunter wrote: “Well, I’d be curious to see where “everything” that is said in the video was debunked. Could you give me some pointers?”

            —————————————————-

            AA: In you video two males are talking. Here’s their FIRST exchange on the subject:

            Dude 1: “Austrians always talk about central bank printing. But did you know that 97% of the money supply is created by commercial banks – not by central banks.”

            Dude 2: “Really?”

            Dude 1: “Yes”

            This implies that Austrian economists are NOT talking about commercial banks’ role as creators of fiat-money in a central banking environment. This is not true, of course. Austrian/free-market economists wrote, write and talk about it at length – all the time. Why you would suggest otherwise in your video seems baffling. It took me ONE minute to google numerous relevant references. Here’s one:

            “The commercial banks lend in terms of the reserves created by central bank debt holdings. The central bank and the government protect com- mercial banks from bank runs by depositors.

            (…)

            Commercial bank inflation causes the economic boom, which persuades capitalists to misallocate capital, including capital purchased with bank debt. Commercial bank inflation produces this widespread error among entrepreneurs by tem- porarily lowering the market interest rate below the originary rate, i.e., the rate which allocates the production of present goods vs. future goods in terms of consumer demand for both forms of goods.

            (…)

            The market-enforced readjustment of prices—consumer goods vs. capital goods—is called a recession. It is the outcome of a prior State-authorized expansion by commercial banks of the supply of credit money. It is the free market’s response to a prior interference of the free market’s money supply by State- licensed, State-protected fractional reserve banks.”

            (…)

            To the extent that a national government adds another layer of protection from free market sanctions in the form of a cen- tral bank cartel that has the power to issue money—sometimes called high-powered money, because it serves as legal reserve for the expansion of commercial bank credit—responsibility shifts from commercial bankers to central bankers.”

            Gary North, “Mises on Money”, 2002

            You can read it for free here:

            http://library.mises.org/books/Gary%20North/Mises%20on%20Money_Vol_3.pdf

            Here’s another one – Mises Wiki on Fractional reserve banking: “Fractional-reserve banking (or FRB) is the widespread banking practice in which only a fraction of a bank’s demand deposits are kept in reserve and available for immediate withdrawal (as cash and other highly liquid assets), whilst the remaining cash is lent out to borrowers (and so is never actually available for immediate withdrawal to legitimate deposit-holders).[1][2][3][4] The bank in effect lends out most or even all of the funds it receives in demand deposits, whilst at the same time guaranteeing that all deposits are available for immediate withdrawal upon demand. Fractional reserve banking is currently legal and practiced by all commercial banks.

            The practice of fractional reserve banking expands credit and therefore also expands the money supply (demand deposits and cash) beyond what it would otherwise be in a stable money system. Due to the prevalence of fractional reserve banking, the broad money supply (deposits created via the issuance of loans plus cash) is a much larger multiple than the amount of “real” paper currency created by the country’s central bank. That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators, and by the excess reserves kept by commercial banks.”

            http://wiki.mises.org/wiki/Fractional_reserve_banking

            Now, if you’d like to have more “pointers”, look at your video, stop at any point and cross-check the information given with austrian writings. There, you’ll find that, indeed, each and every point you make is debunked in a matter of minutes – in many cases, as I’ve noted before, your points were debunked before we were even born.

            Maybe you want to try this fact checking thingy by yourself BEFORE posting your next video/article/website – considering your track record, however, I wouldn’t hold my breath …

            • Memehunter permalink

              See my reply here:

              https://thedailyknell.wordpress.com/2012/10/13/video-a-street-conversation-between-a-ron-paul-fan-and-the-daily-knell/#comment-205

            • REN permalink

              Banks are not reserve constrained. They loan before receiving deposits. There is a three week window before deposits need to be on hand. If they don’t get their reserve requirement, they simply borrow from the FED at the discount window, or they borrow from other banks on the overnight market. In other words, fractional reserve mechnism is not operative. An unlimited amount of banker money can be created if enough credit worthy people show up.

              The FED will always honor a loan request at the discount window. To do otherwise would mean a loan recall. This behavior would suggest that private banks are in the drivers seat. The government is a rump on the private banking system. The loan request serves as the reserve requirement, and the rate is .2%. The spread is covered by profits from the hypothecated debtor.

              The more accurate portrait of our government is one that has been hosted by private banking parasites.

              To deficit spend, the Treasury issues a TBill into a primary dealer bank. The primary dealer will create new bank money to buy the TBILL. Or, the PD will recycle money from overseas to buy new TBills. FED then relieves PD of TBill by doing an asset swap. Our government is in thrall to private bankers.

              This notion that our money supply should be controlled by unelected money masters is false to its core. Also consider that hypothecation is the borrowing of debtors credit, just so debtor can be put into debt peonage. Private banks do not put their capital at risk anymore, they use it to gamble. It is a monstrous system whereby a parasite has hosted our political brain, and we fund the parasite.. Pointing a finger at government should boomerang to our hidden masters, our private banking parasites. The relevant question has always been, “who controls the money supply, and to what ends?”

  6. there is nothing more humiliating in the whole circle of political economy than the speech of a paper system orator in praise of paper money

    All his notions are drawn from England England is the object of his study, the example of his imitation, the idolatrous subject of his worship. All his notions of finance and currency must be drawn from that source

    When Bonaparte became First Consul, in 1799, the currency of France was far worse than that of Michigan or Mississippi at this moment. Neither the Government, nor the people, had specie; nothing but assignats and mandats, wholly inconvertible and ruinously depreciated, yet, in six years, that great man had chased away paper, and brought in above five hundred millions of gold and silver; enough to revive industry, to sustain prices, to reward labor, to defray the expenses of wars and of the Imperial Court; to make roads, canals and docks, and to build a navy; enough, in a word, for the habitual currency of the forty millions of souls who constituted the population of the Empire.

    Holland is another subject for the study of the American statesman. A small territory of eleven thousand square miles, lying below the level of the sea — drawing fifty feet water as Hudibras rhymes it — and walled in to keep the sea out; a soil of clay, sand, and loam; a disadvantageous climate; without a mine, a fossil, a stone, a mineral, or a forest tree: this little country, so small in itself, and so little favored by nature, besides the pre-eminence which it attained in agriculture, manufactures, and commerce; in military and naval warfare; in learning and in science; in the useful and in the fine arts; besides all this, this little country constituted itself the specie warehouse of Europe and America! lending gold to all nations; to emperors, kings, and princes; to cities, states, and corporations; to this city even, which, with its six millions of chartered bank capital, was unable to pay back either principal or interest; and must have been sold upon thirty days’ notice at public auction, if the United States had not assumed the debt.

    This is Holland: a country which has no paper money banks, but which has merchants who are able to save the Bank of England, and the Bank of the United States, from breaking like glass; merchants who are able to lend gold by the million at four per centum per annum, while we give two per cent. a month for depreciated paper; who are able to purchase every dry goods store in such a State as Missouri, (St. Louis included,) pay down for them in gold, then set fire to them and burn them up, and never know that they had lost any thing except by the change of figures at the foot of the balance sheet. This is Holland, and her merchants, who never saw a bank note; and yet we have dry good merchants in Missouri, whose store a real strong man could run a stick through, and hang over his shoulder, and walk off with; and who undertake to persuade people that they can do no business at all — can credit nobody, and must sue every body — unless they have a branch of the United States Bank to accommodate them with paper credits.

    Yes, sir; this is Holland, the specie magazine of Europe and America; the meadow and the garden of Europe; the happy home of a rich, moral, and tranquil population of 200 to the square mile; and which has made itself what it is, not by building paper credit banks, and borrowing money on the resources of posterity, but by INDUSTRY, economy, HARD MONEY, and short credit.

    • REN permalink

      When the Portuguese broke the EAST WEST mechanism via the Southern Trade Route (around horn of Africa), Sephardic Jews followed Portuguese to Amersterdam where cargo was unloaded. This is why the Portugese got rich so quick, and how a little island nation could populate Colonies in South America. Gold vectored by Portugese shipping to Amsterdamnnnn, where Gold took its exchange rate seingniorage pound of flesh, while silver went east, draining the money supply.

      Gold Banking manuevers from Holland busted out England, evenutally culminating in the Orange Kings. Oliver Cromwell along with Calvanism (which emphasize old “Jewish” testament) served to undermine Catholic provisions against Usury. The money power was soon to jump from Holland to England.

      These same Goldmen from Holland were the founders of the PRIVATE bank of england in 1694. For history on this see Eustace Mullins writings on the FED. The horror of this private bank soon tried to Host America, leading directly to the revolutionary war. Hamilton used this bank as his model. Talley sticks and other fair money systems were subsumed under an avalanche of private debt peonage. England was mounted and hosted.

      Holland also had a PUBLIC bank in addition to its Goldmen operating openly. As well they invented many of todays banking theft schemes.

      • You sure know your stuff REN…..

      • >>>>see Eustace Mullins writings
        Eustace Mullins ? the one who considered gold-silver coin the constitutional money of the United States ?

    • Omg, should I have been part of this class that is so eloquently elevated to the level of calvinist sainthood, I would have been glowing with patriotic pride.

      I was married to a woman of this class though.

      She bankrupted me.

      • As opposed to the degenerate population and society that exists today….
        (wasn’t Holland the European beach-head of the maggot-infested pot-culture?)

        =====
        “paper money is an instrument in the hands of the rich to prevent the poor from accumulating”

    • The passage is from Thomas Hart Benton; the same Senator Benton, whom your friend, Dick Eastman, likes to quote, often.

  7. A different view, from the old days (1842):

    the Charleston Mercury.
    Specie as Currency.

    The old Merchants of Charleston speak with enthusiasm of the noble trade of this city thirty and forty years ago –before the establishment of the bank dynasty in the country– when we had a direct trade with many nations — when payments were made mostly in gold and silver — when Merchants themselves poured their surplus resources into each others’ hands with the freedom and confidence of brothers — when bad faith was as little suspected as it was rarely practiced. –Those who have dealt with the Merchants of Cuba give the same account of the prompt payments, confiding trust, and sterling honesty that characterise the course of business there. The curious science of checks and balances –stately rows of books “by double and single entry”– that vast complicate web spun about the circle of business to prevent sharpers from preying on each other, is little known in those regions, where men buy only what they can pay for, and are careful to pay for what they buy.

    In the system under which we now live our currency is a vast debt of the banks –our capital a still greater debt to the banks– our retail trade another to wholesale capital — our meat, drink, and clothes, a debt to the retail trade. We are wound up, intercogged and hooked in by a system of debt and credit, overlaced, underlaced, network, crosswork, binders, braces, and all conceivable sorts of intertwistifications, till we resemble very much one of those bewildering mazes of machinery that have grown up under the crazy dream of making “perpetual motion” — and with much the same object and success, too — for our whole system is founded on the universal desire to live and get rich without capital, without economy, and without toil — and the result, as in the case of the said perpetual motion, is that when we are just on the point of bringing our scheme to perfection, it is sure to stop with a crash, and the whole to tumble about our ears. A crazy chemist in one of Boz’s whimsical tales, complaining of the same malice of fate, says “the Philosopher’s Stone would have been discovered a thousand times, if it had not been for the remarkable fact that the crucible is sure to blow up just at the very moment when the grand result was about to be realized.” Our system is such that if a single wheel break, the whole stops, or rushes off in a terrible rattle and crash — the protest of a note may set the whole world in an uproar — the bankruptcy of a broker may produce all the dismay and confusion of an earthquake. In our states of “high prosperity,” we have been compared to an inflated balloon — stick a pin in it and the whole goes off in a whizz and a crack and a sputter, leaving nothing but emptiness and collapse, in place of the round, elastic air-ship that could shoot into the clouds and outstrip the bird of Jove.

  8. >>>>And we should take our money out the banks of course.
    When ? :-)

    >>>>“But it doesn’t, it says we may have Gold as currency.”
    To everyone who signed and ratified that constitution “to coin” meant to make gold/silve/copper into round shape, and “to coin paper”. You may say they were wrong; but that is what they decided. What the constitution does allow congress is, to debase the coin.
    Anyhow: Ron Paul or anyone else in the gold camp, does not call for gold/silver currency, they call for bank paper, promising to pay

    >>>>>patriotic ‘constitutionalism’.
    what is that ?
    Prior to the civil war it meant coin alone and no bank paper what ever.

    >>>> led to the rise of fascism.
    Are you saying that Ezra Pound’s hero, Mussolini, and the form of government recommended by Ezra Pound, was bad for us ? (not to mention Ellen Brown’s Hitler and the nation state)

    Economic depression is necessary, because only on an empty stomach are people able to think and make right decisions

    ====
    money and store of wealth

    So, in your system (which you actually practice), people would get paid in notes that expire in 7 to 45 days; then the prudent ones among us would go to the silver store, purchase gold/silver to store our earnings; when rainy day or old age comes, go back to the silver store, exchange silver for notes with expiry date

    • correction: and not “to coin paper”

    • Indeed Name789! don’t hoard the means of exchange. Use it to buy a good store……..

      “Anyhow: Ron Paul or anyone else in the gold camp, does not call for gold/silver currency, they call for bank paper, promising to pay” you know what: although everybody knows the devil is in the detail, the truth is that nobody knows what the Paulites actually want. They call for a ‘free market’ for currencies, but none of them have even the faintest clue what it would look like.

      But we would have ‘choice’. For instance: the ‘choice’ to sell our children to some fat assed money changer, with their despised state enforcing the contract, when we were completely gutted as a result of their ‘free market’ for currencies.

      They call it Liberty!

      • the point was: that they called for “coin alone” that would be one thing; but they are just calling for a different paper.

        ======
        b.t.w.
        The Guernsey Meat Market Notes retained their purchasing power throughout their 10 years existance
        Had the greenbacks been what they should have been, they, too, would have retained their purchasing power (from 1862 to 1917)
        the continentals, also, were intended to maintain their purchaing power and redeem-ability
        all three, hoarded or unhoarded

        • coin alone is completely useless. This is not the stone age. How are you going to pay on-line with coin?!

          paper is just fine. As long as it is not boom/busted by maniacs, let alone printed for nothing and lent out at interest.

          The whole gold/coin thing is just, well, a barbarous relic of days long gone.

          • You are purposely talking about something else.
            “coin alone” is what the framers and ratifiers decided on; and Ron Paul does not lie when he says that coin is the money of the constitution

            • REN permalink

              So, how did Hitler’s Germany go from being flat out busted in 1932 to being the richest country in Europe by 1939? They did it without gold. In 1939 Hitler was feted as Times magazine man of the year.

              I’m not an aplogist for Hitler, but we can learn something about money. He coined “MEFO” bills also known as Federer money. This was direct spend and required a unit of labor. It also paid interest when turned in, but circulated as money.

              I’ve read analysis that suggest to “coin” was not the same as “striking a coin”, and generically meant the creation of money. At the constitutional convention, Payne was not present, and Franklin was too old. The best minds on money and hence the colonial experience (Franklins’ money, Mass Bills, Continentals) was not codified. There was also a private banker funded operation to skew history during this period. Same old. Same old. Private powers always want to control money for their own parasitic benefit.

              • In 1932 Germany was not flat out busted, the economy was already on the mend (had Bruning been allowed recover, it would have been done without Hitler; but that would not do, Bruning would not have stood in the way of Stalin’s progress); not to mention the sizeable infusion from the Bank of England

              • Thomas Paine ? the same Thomas Paine who allegedly wrote this ?

                Money, when considered as the fruit of many years’ industry, as the reward of labor, sweat and toil, as the widow’s dowry and children’s portion, and as the means of procuring the necessaries and alleviating the afflictions of life, and making old age a scene of rest, has something in it sacred that is not to be sported with, or trusted to the airy bubble of paper currency.

                By what power or authority an assembly undertakes to make paper money, is difficult to say. It derives none from the Constitution, for that is silent on the subject. It is one of those things which the people have not delegated, and which, were they at any time assembled together, they would not delegate. It is, therefore, an assumption of power which an assembly is not warranted in, and which may, one day or other, be the means of bringing some of them to punishment.

                I shall enumerate some of the evils of paper money and conclude with offering means for preventing them.

                • From the looks of it, this Thomas Paine would piss on Silvio Gesell and his demuir money idea

          • >>>barbarous relic
            You, of course, don’t know this, but that is exactly what Senator Daniel Webster said (the same Daniel Webster who received regular payment from Nicholas Biddle)….

            • I didn’t know about Webster, but Bankers every 50 years call Gold a barbarous relic, only to say paper is theft when they intend to swap their monopoly back from paper to Gold

              • if you had the courage to read Mr. Webster’s speeches, you may find the source of your finagled money ideas

  9. Anthony, thank you for another fine article. No doubt; the dollar hegemony will eventually end and with its demise, the people in the U.S. can ultimately benefit.

    The Triffin Paradox “is a theory that when a national currency also serves as an international reserve currency, there could be conflicts of interest between short-term domestic and long-term international economic objectives.” — http://en.wikipedia.org/wiki/Triffin_dilemma

    Basically, the theory goes on to say that the host currency nation must import more than it exports in order to fund international trade. This is obviously bad for domestic employment as jobs are exported in the process.

    No nation in history has been able to maintain chronic trade imbalances (importing more than they export) while keeping a domestic economy vibrant. We see this today as the U.S. economy is dying.

    As far as gold is concerned, we suffer from collective amnesia as it was discovered some time ago that gold does not work as a productive currency. Witness the fact that the U.S. and most Western nations had to get off the gold standard after it bankrupted many during the 1920s and finally, in 1933, the U.S. pulled the plug while deep in a depression. A depression is nothing more than a sharp decrease in the money supply which is inevitable when something as scarce as gold is used for currency. Why would any nation limit its productive capacity based on an arbitrary commodity dug from the ground?

    Today, China leads the world in mining the most gold. All nations should carefully consider this in choosing a way to settle accounts. And more importantly, gold is a commodity that is controlled by speculators. A parallel may be seen in the diamond trade as the value is artificially skewed by a monopoly (diamond cartel). In truth, diamonds are not worth much when one considers the huge untapped potential laying under ground in places like Siberia. — http://www.huffingtonpost.com/2012/09/17/russian-diamonds-siberian-meteorite-crater-carats_n_1891691.html

    Synthetically produced gold may already be practical and we should keep that in mind as well. Are the gatekeepers already keeping this technology in check to artificially prop up the price of gold?

    People should be free to store their accumulated wealth in commodities such as gold but we need to understand that this is a speculative investment and not the basis for a sound currency.

  10. The Greatest Scam On Earth

    http://www.safehaven.com/article/5266/the-greatest-scam-on-earth

    http://watch-unto-prayer.org/synarchy-1.html#part1

  11. Nik permalink

    But the Gold people/Austrian economics crowd are for something called “Free Competition in Currencies Act” are they not?

    Sure, the Gold system will have a huge advantage to start with but why should it not?

    When the nature of power in organisation is political, the aspect of human nature that thrives is a constant – that of zero-sum oligarchical pyramids. And given that we are in a political paradigm (no matter how obsolete & redundant to the potentials of the modern social construct ) why shouldn’t the Gold people have an upper hand to start with?

    NATURALLY, the playing field isn’t gong to be fair, and other monetary systems have to take into account this dynamic of human nature before they can transcend these aspects – which most monetary advocates grasp in the theoretical hopes of their particular systems.

    At the least the Austrain crowd seem to embrace CHOICE, sure they want every advantage for what is their conception of what is best ( & simply put, other monetary advocates are not against this so much as being against not also being in that position), but they include CHOICE in their conception of what makes it best and that is something that has to be shared with any system that wants to be better than what the Gold Standard offers. The Gold standard system will to a great degree represent the consciousness & conception of organization for it.

    This is what other advocates of diff. more Giving monetary systems need to learn to apply to the characteristics of what they want too.

    • Hi Nik, something similar was suggested at Makow’s, here’s my reply:

      You can find the links in the ‘faux economics’ page

      “I’ve written extensively on Austrian Economics’s ‘free market for currencies’, which is a total hoax:
      Just google:

      What Gary North is not saying about Interest
      Discussing Gold and Interest with the Daily Bell
      Top Ten Lies and Mistakes of Austrian Economics (see point 7)

      Paul may have called for broader Gold ownership, the fact remains that a pathetically small percentage of Gold reserves is in the hands of the common man. So it’s quite clear who will be winning with a new Gold Standard.

      My statements are well considered and I stand by them fully, but is of course impossible to cover everything in a thousand words.
      However, the ‘free market’ thing is quite often used by Austrians: they are suggesting the free market would see Gold rule.

      This is complete and utter rubbish, as I’ve proved without a doubt in the above articles. However, because many libertarians believe Gold would win out in a free market anyway, they’ll settle for a Gold Standard by decree as second best.”

      • Nik permalink

        Hi Anthony.

        The basic ‘change’ involved with a Gold Standard as i understand it involves:

        1) Transfering all real world wealth production to the relativity of the supply of Gold, thus creating an new mechanism for the indirect middle man of sorts, in it’s arbitrarily shifting of the value system in the wealth creation layer to the middle man layer.
        2) Driving up the value of Gold via it’s substitution as a primary factor for economic activity.
        3) Reverting to a reserves ratio model that allows a greater degree of control over financial speculation through more direct centralisation rather than regulation ( which got removed).

        As far as Freedom of Currencies goes, the decree to make the Gold standard system is no problem in that particular CHOICE for people, it is part of that CHOICE just as your ‘mutual credit’ system or others, will have certain dictates involved in their nature.

        The issue isn’t the particular dictates involved, it is the CHOICES involved to those dictates, & as the Austrian School of Economics, maybe inadvertently but all the same, seems to hold this aspect as a central tenant to their thinking, they are not the opposition in terms of what the nature of monetary systems really are.

        • Well Nik, I’m trying to look at it from another angle: How would the Money Power see all this?

          the Gold Standard is not coming to last for ever. They know exactly what it will do: create mayhem which allow them to push for more powercentralization: world government.

          Austrianism exists to create this temporary Gold Standard.

          The Free Market fable is just a story to sell it. Keep in mind only a short while ago no Austrians would talk about a free market. They were just discussing a Gold Standard. But they got busted badly, because it is clear that Gold is manipulated and controlled to the core.

          So they cooked up the Free Market story. You know, Choice! Grand, not?

          Here’s how this Free Market is going to work out. Gold is going to be pushed gigantically. By billions of investments by banks, the academic world turning paper after paper concluding it is strange we never thought of it before, the press, you name it.
          Nothing else is going to get financed or any attention at all.

          Now you’re a customer in this ‘Free Market’.
          The only choice you will have is bank A, B, C, X, Y, Z. There will be a wonderful choice of all kinds of banks all offering you the same gold based mortgage at 5% per year, id est: you pay 300k interest over your 200k mortgage over 30 years.

          Meanwhile, currency will be very scarce and we will suffer a horrible deflation. Please read the articles on this site about deflation, if you feel that’s not so bad. It is bad. And it is completely unnecessary.

          You must not get so hung up about beautiful words like Choice, Liberty. Or Change, for that matter.
          They are just slogans.

          You must find out what will actually happen. Visualize what it will look like. The actual implications of the proposals.

          That will give you an impression of what choices you will really have.

          • Nik permalink

            Anthony, there are other choices that transcend the energies of what you have summarized, are more powerful than those in practicability.

            Putting ones focus less into other choices that are not of one’s own, and more into the workings of what one is drawn to, is the way to first learn and then create them.

            For your particular regional currency system to happen to it’s optimum for example, you will need to look at it from another angle also, that being how do other people relate to it? What is it’s optimum strength? Is this is sync. with the understanding of the natural group behavior that happens when other people interact with your system in some way. What are the particulars that work and don’t work etc

            None of this is related to lack of choice.

            • Why are you telling me this Nik?

              The point of the previous answer was to make you realize you are not the only one chosing.

    • Nik wrote: But the Gold people/Austrian economics crowd are for something called “Free Competition in Currencies Act” are they not?

      …At the least the Austrain crowd seem to embrace CHOICE, sure they want every advantage for what is their conception of what is best ( & simply put, other monetary advocates are not against this so much as being against not also being in that position), but they include CHOICE in their conception of what makes it best and that is something that has to be shared with any system that wants to be better than what the Gold Standard offers.

      As it stands now, we are free to use many forms of money including gold money. GoldMoney is one of several gold currencies that are available – few choose to use it. You can store gold or silver at one of their vaults and conduct trade with other users by moving “goldgrams” between accounts. Very few people use that service choosing instead to store their PMs and using other forms of money to trade.

      Choice is already there but it seems that many want to force us to a gold standard rather than simply using PMs that we own. We are to “trust” that someone, somehow and somewhere; the money will actually be fully backed by PMs. In the U.S., there has never been enough gold or silver to back up the money supply.

      The international gold standard, which was foisted on the people at around 1900, never required that the money be fully backed. Only a percentage was backed and that gold was probably stolen (does anyone think there is 99% pure at Fort Knox?). They hide the gold and expect us to trust them.

      Nik, I agree, there should be multiple ways of issuing/creating new money and rather than adding another private system, I suggest that congress get back to issuing money – debt free. They should pay off the national debt as the bonds mature. And, they should immediately repay Social Security and Medicaid ($2.7 trillion?).

  12. This is one of the more persuasive and concise arguments against the gold standard I’ve seen in a while. Keep up the great work!

  13. Prudentia permalink

    The author says, “But when he must chose between constitution and the monetary, it is clear what his priorities are. Ron Paul lies about ‘constitutional money’, saying the constitution says we should have Gold as currency. But it doesn’t, it says we may have Gold as currency. But other units are also allowed.” According to the Constitution for the United States of America, the Congress shall “. . .coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures” (Art. I, Sec. 8, Cl. 5). The author is right in this respect, the aforementioned does not mention what type or types of metal shall be used as coin; however, I assume the author did not read the original Coinage Act of 1792. According to the Coinage Act of 1792, three metals were used, they are, gold, silver, and copper. The founding fathers understood the value and the stability of metals used as currency, in particular, gold and silver, as opposed to fiat currency or “bills of credit.” Metals have been used as currency since recorded history. That is why the Congress of the United States of America is delegated with the power “to coin Money,” not to print money as the Federal Reserve, which, by the way, central banking and fiat currency is not permitted in the Constitution. Again, the founding fathers understood the history of currency. They wanted a currency that was tangible and valuable to be used as legal tender for all intents and purposes, whether public or private. They knew the dangers of central banking and fiat currency, both of which are used throughout the world today. There is nothing wrong with gold as currency. We (United States of America) used it before. Why would it be wrong to use it again? If you ask me, I would rather have a currency that has value and will never reach the value of zero. All metals, whether gold, silver, copper, platinum, zinc, etc., do fluctuate in value, but they never have reached the value of zero in history. If Dr. Paul wishes to return to the gold and silver standard, then he is right to do so. I wish Dr. Paul would return to the original Coinage Act of 1792, so we would have tangible and valuable currency. By doing so would make us a prosperous nation with a stable currency. If the author compares the early republic (1788 – 1913) with the current republic (1913 – present), then he will notice that the early republic was strong, prosperous, and stable owing to a wise monetary policy. Yes, indeed, the bankers caused much economic turmoil throughout our federated republic’s existence to bring down Constitutional money; but, we need to return to that Constitutional money and Dr. Paul is the only one advocating it. If there is anything that the bankers hate the most, then it is a sound, tangible currency. Dr. Paul wants to rid the Federal Reserve (central banking, which our founders, in particular, Mr. Jefferson, warned against) and return to sound currency. What is wrong with that?

    • Well, most of the pre 1913 era saw fiat currencies in the US. The Colonial Scrip, the Continental, the Greenback.

      It was these that brought the US supremacy. Not Gold.

      Just do a little research on the Great Depression and the deflationary nature of Gold in general and you should quickly get the picture.

      The key thing to remember is, that money is a means of exchange, NOT a store of value. These two functions resist each other: storing value is the opposite of circulation, which is what money should do to be a good means of exchange.

      So the stability of the currency is absolutely irrelevant. In fact: if money is more stable in value than durable goods, you will see deflation with all its horrible implications.

      • Money is a convenient way to transfer debt. Things are exchanged in the process. The value lies in the borrowers pressure to extinguish the debt. Stability lies in the control of how much debt each person can create and not having an environment that ensures defaults on the debts.

      • Prudentia permalink

        I concede that the Colonial Script was powerful money. Mr. Franklin said so himself. You must remember, that was before the independence of the colonies. After the independence, the Continental Congress issued the paper currency, as you said, known as Continental; however, I am sure you know the saying, “Not worth a Continental.” The Continental was horrid money and caused many problems. As we know, the Articles of Confederation did not work as anticipated, particularly, economic and monetary reasons, thus the Constitution was born. What was the purpose of Article 1, Section 8, Clause 5?

        Mr. Madison, author of the current Constitution, explains, “All that need be remarked on the power to coin money, regulate the value thereof, and of foreign coin, is, that by providing for this last case, the Constitution has supplied a material omission in the articles of Confederation. The authority of the existing Congress is restrained to the regulation of coin struck by their own authority, or that of the respective States. It must be seen at once that the proposed uniformity in the value of the current coin might be destroyed by subjecting that of foreign coin to the different regulations of the different States. The punishment of counterfeiting the public securities, as well as the current coin, is submitted of course to that authority which is to secure the value of both. The regulation of weights and measures is transferred from the articles of Confederation, and is founded on like considerations with the preceding power of regulating coin.”

        “Coin,” in the verb sense, means, “[T]o fashion piece of metal into a prescribed shape, weight, and degree of fineness, and stamp them with prescribed devices, by authority of government, in order that they may circulate as money” (see Legal Tender Cases). “Coin,” in the noun sense, means, “[P]ieces of gold, silver, or other metal, fashioned into a prescribed shape, weight, and degree of fineness, and stamped, by authority of the government, with certain marks and devices, and put into circulation as money at a fixed value” (again see Legal Tender Cases).

        Mr. Wharton explains, “Strictly speaking, coin differs from money, as the species differs from the genus. Money is any matter, whether metal, paper, beads, shells, etc., which has currency as a medium in commerce. Coin is a particular species, always made of metal, and struck according to a certain process called ‘coinage'”

        With all of that said, the founders elected to have coin as money over paper and the Constitution explicitly says “coin;” therefore, paper money, bills of credit, fiat currency, or whatever you wish to call it is not permitted. This coin, as money, is issued at interest and debt free; to be used as legal tender for all intents and purposes, whether public or private; and under the authority of government to prevent special interests controlling it. While the Constitution clearly forbids fiat money, we use it anyway owing to bankers, since it is easier for them to control and to manipulate markets. Dr. Paul wants to return to sound, tangible money and wants to rid the central banking power (i.e. Federal Reserve). Central banking (previously First and Second Bank of the United States and currently the Federal Reserve–I am sure you know the history of these institutions) and fiat currency are destroying these United States and other nations.

        As Mr. Jefferson warned us, “[T]hat banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale. . . . Bank-paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs.” This is why the founders elected coin as money, not paper as money. “Constitutional money” is coin, the Constitution requires coin as money, and no other species, whether paper, sticks, shells, etc., are permitted.

        In re Mr. Lincoln’s “Greenbacks.” His Greenbacks were, technically, unconstitutional owing to the fact that the Congress has delegated power to issue money, not the President. Then again, Mr. Lincoln did many questionable acts. At any rate, Mr. Lincoln issued the Greenbacks only to compete against the bankers who usurped the Constitutional money power.

        The solution to our problem is to discard the bankers who seized our Constitutional money power (i.e. Congress). Return to coin (I favor the original Coinage Act of 1792), in particular, gold and silver, as money, thus eradication of paper. By doing so we will once again become a prosperous nation.

        • If you did a little more research into colonial/continental script, you would know that it failed only because it was sabotaged by British agents. They made counterfeits and flooded the colonial marketplace with them causing a hyperinflationary collapse.

          Fiat national currencies have been discontinued throughout history because of sabotage or subterfuge — but not because they caused economic harm. Greenbacks financed the entire Civil War leaving no debt in its wake. Yet, it was nonsenically was supplanted with a ususorus monetary fiat that immediately created ongoing unrepayable national debts.

          I have no problem with coins as long as it is not a commodity and functions purely as a medium of exchange. Rome prospered for centuries with copper coins and only fell into ruin when precious metals were introduced in its stead.

  14. If I’m a banker with a huge pile of gold and I loan you 10oz of gold and require 11oz of gold back after a year, you have to sell something to me for the extra old coin in order to extinguish the debt you believe has been legitimately accrued. I end up with all the gold I started with plus something you produced when I produced nothing in return.
    There is no such thing as debt-free money. All currency issued must be returned eventually.
    A public bank would mean bureaucrats making decisions they don’t have a right to make. The bank of ND is just as much a fraud as any. Bank = fraud pure and simple.
    Banks don’t care if you take your money out. Those credits exist because there are corresponding debits on the banks books. They only care about the accruing debits added to the borrowers balance and corresponding credits added to their own balance.

    • “Banks don’t care if you take your money out. Those credits exist because there are corresponding debits on the banks books. They only care about the accruing debits added to the borrowers balance and corresponding credits added to their own balance.”

      This may be true for the Banking System as a whole, but individual banks DO need the deposits.
      Also, taking the money out in cash creates other pressures: there is not enough cash money compared to what is in the accounts. Of course the System should print enough, but for historical reasons it doesn’t.

    • Keep ‘m coming Philo, very few get the bookkeeping bit.
      Hank Monrobey trained me, otherwise it would have been completely beyond me too.

      • Does Hank Monrobey understand that for a bank to have any deposits in a checking or savings account there has to be promissory obligations at that bank or another for the equal amount?
        Yes, physical bills and coin represent a small fraction of the book entries. If a person wants to make sure they have liquidity in the transition to post bank, they should withdraw physical bills forcing the bank to have them printed. For all we know, there are already boxcars of bills in existence waiting to be unleashed in the event of the bankers deciding to collapse the currency in their “order out of chaos” modus operandi.

  15. Reblogged this on Recovering Austrians.

  16. BIBO Standard now! scientifically and technologically sound, philosophically and morally undeniable and whose only real obstacle is our will to demand, in the name of all that we cherish most:

    So be it!!!

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