Surprise...the game is rigged

[whodare]

You've got the social Darwinism down pat.

Does anybody actually read this stuff? Narrative that speaks as authority. No less than 10,000 internet links chronicling human and environmental exploitation and suffering - can't knock a dent in gold-fever dogma.

IMO, you're better off sticking to all the financial pros and cons. Sarcasm off.

Is there a parrot in here?

I acknowledged the problem, the companies who operate like that and the people who buy their gold from those mines, and the consumers who buy jewelry not sourced from environmentally responsible mines are at fault.

To say the gold standard is a bad idea because of how we allow it to be procured is not a valid argument against the the gold standard", it's a bit specious to say the least.


Your pocketbook is your only vote, and the best. You don't like how a company operates or the power they wield spend your money elsewhere and starve the beast. Being an informed consumer is your responsibility.

 

[trem0lo]

Not only that, but they are digging new gold out of the ground everyday. The US and other countries are also printing paper currency. Makes you wonder why people think gold is so rare and hard to find when they dig those shiny rocks out of the ground every single day.

Gold, silver and platinum are rare elements created in the last few seconds of large supernovae. It's the only time in the universe when the energy is great enough to fuse those metals out of lighter ones, which the star also manufactures plenty of during its death cycle. As the star's gravity collapses in on itself, the heat and pressure fuse heavier and heavier elements, all the way down to iron. Once iron is created, it cannot fuse and causes the star to explode, sending those elements blasting into space. If the blast is hot enough, gold, platinum and silver are fused in those few seconds. The scraps come back together to form planets and moons, the gasses get sucked in to form more stars, and the process begins again.

All elements on earth, all atoms inside you and me, were born within a star.

Obviously since it takes a rarer type of supernova to create gold, platinum, etc., there is not as much out there.

That's why gold is rare.

Also gold is not tied to the dollar. We left the last remnant of a gold standard in, what, 1976? Now we just print however much we want, when we want it, for whatever we want.

 

[DiscoBiscuit]

Is there a parrot in here?

I'm parroting application.

Where does your rubber actually hit the road? Look at gold price swings. In just one example, people who traded the 90 day period between Sept 2011 and December 2011 took as much as a $300/zip loss.

You're parroting ideology that doesn't pay attention to application.

I acknowledged the problem, the companies who operate like that and the people who buy their gold from those mines, and the consumers who buy jewelry not sourced from environmentally responsible mines are at fault.

To say the gold standard is a bad idea because of how we allow it to be procured is not a valid argument against the the gold standard", it's a bit specious to say the least.

Flippant comes to mind.

Your pocketbook is your only vote, and the best. You don't like how a company operates or the power they wield spend your money elsewhere and starve the beast. Being an informed consumer is your responsibility.

Exactly how informed are you of environmentally friendly gold mines?

 

[SpasticGramps]

We left the last remnant of a gold standard in, what, 1976? Now we just print however much we want, when we want it, for whatever we want.

1971 was the Nixon shock. Countries started to lose faith that America had enough gold to back all of the dollars in circulation given that we were fighting perpetual wars (Vietnam) and building Johnson's "Great (statist) Society". They started selling dollars and demanding gold back.

Nixon stop sovereigns and central bank's ability to convert USD into gold. Essentially we went bankrupt on the gold standard and started the new fiat regime which has lasted until now. Default via the printing press.

However, now sovereigns are losing faith in the fiat regime so who knows were we all go from here.

 

[whodare]

I'm parroting application.

Your parroting nonsense.

Where does your rubber actually hit the road? Look at gold price swings. In just one example, people who traded the 90 day period between Sept 2011 and December 2011 took as much as a $300/zip loss.

Riding the ups and downs is far different then a long term hedge.

Speculators and day traders worry about the short term, people preserving their wealth worry long term.

And since when is anything in the stock market a guaranteed, and who said it?

You're parroting ideology that doesn't pay attention to application.

Flippant comes to mind.


Exactly how informed are you of environmentally friendly gold mines?

Well now that you mention it your arguments usually are flippant.

And I don't buy gold or jewelery so I haven't look for any...

There was an environmentally and socially aware silver mine that opened in South America a few years ago I read about a couple month ago.

But I'm not into that right now so I haven't done my research yet.

 

[bentom187]

James Rickards, James Grant, Gold!

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[FlowerFarmer]

flower, I get your point, but it is not true what you are saying.

the price of gold goes up since the paper-money becomes inflated, and so do prices of everything, so you'll end up getting more dollars for your gold, yes, but they will be inflated dollars, and you will have to pay higher prices as well.

the example you give of the silver coin is also flawed; as the value the coin maintains is because it is a collector's item, not because it is made out of silver.

the same ammount of silver that is in that coin will cost less than the coin basically.

peace

Well.. I'm glad we reached an understanding. Inflatable dollars are the cause.. not gold...it is the effect. Which side of the currency crisis do you want to be on?

What you say is true.. but the alternative is paper dollars.
Its not flawed.. you can choose to save in hard assets to avoid losing your buying power. Profit generation? No.. but a good hedge? Yes. This is what I've been saying for pages now.

I'm not talking about gains...which is why the current capital gains tax on metals is ridiculous If $1000 gold is later $1500 gold its not a profit, but its better then the alternative. Why should we be required to pay a gains tax when the gain really isnt there.. Because gold competes with their paper scheme and they don't want that. It goes against their trap of paper money and debt based fiat creation.

But in regards to the dime.. your just talking to talk now with little understanding.

The value of the silver coin is because of the metal content - nothing related to it being a collectable. I'm referring to melt value. Unless it has a rare mark or something a 1964 dime is only more valuable then 10 cents because its made of real money. Something that they can no longer "mint" because its too expensive. They've stolen our money and replaced it with an inferior composition..

A nickle for instance is actually worth more then 5 cents because of the copper and nickle it contains. The metal is worth more then the nickle because of debasement. This is likely why the nickle will be replaced with something of tin and clad instead of copper/nickle... or done away with all together.


The problem is the masses are OK with it! People used to know and understand the value of real money. Now they don't care provided they have their cable and Chipotle while the money makers do as they please with our money to their benefit (not ours). Because of this they will continue to devalue until our standards of living is very poor..a transfer of wealth from the working class to the elite. Unless WE do something about it and hold/save in honest money. This shit isnt new though....lots of fiat currencies have went through this with the same intention and end result. Here - take a look using the link below:

http://www.zerohedge.com/news/thousand-pictures-worth-one-word-worthless

Anyways.. whats up with that Facebook IPO? lol
My apologize to the OP if we totally re-railed your thread.. but this shit is way funner anyways..

 

[DiscoBiscuit]

Your parroting nonsense.

Bullshit. You've already admitted you don't buy or trade gold.

Riding the ups and downs is far different then a long term hedge.

Speculators and day traders worry about the short term, people preserving their wealth worry long term.

And since when is anything in the stock market a guaranteed, and who said it?







Well now that you mention it your arguments usually are flippant.

And I don't buy gold or jewelery so I haven't look for any...

There was an environmentally and socially aware silver mine that opened in South America a few years ago I read about a couple month ago.

But I'm not into that right now so I haven't done my research yet.

Do tell.

 

[MadBuddhaAbuser]

The point of gold is when the dollar collapses, you can still go to a major international market and trade your gold in for roundabout the worth you paid for it. Its not a get rich quick scheme.

and the only reason the dollar is "so respected" or "better than visa" is its status in pricing oil. Oil is an international comodity and pretty much the only thing used by everyone in one way or another (fuel, wax, asphalt, plastics, pharmaceuticals etc.). Supposedly china and russia are going to be buying iranian oil with something besides the US dollar, including gold. Venezuela and others have been pushing for a change as the USD being reserve currency for some time. Once this goes through your dollar wouldn't be worth the same sized piece of toilet paper to wipe your ass. Thats when gold starts to look real nice, even if you can't wipe your ass with it.

 

[Plant Early]

"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."
- Daniel Webster


"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
- William F. Rickenbacker

"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."
- Murray N. Rothbard

"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
- Antony C. Sutton



"Start buying gold now, regardless of the price. By acting now, you will not have to react when it's too late. Too late will be when the majority of the public finally figures out what is happening to paper money and frantically tries to get aboard. Remember, if you're one of the ones holding paper in the end, you will have given away your products and services for nothing."
- Robert Ringer

 

[Captain Ginyu]

The stock market is so friggin rigged, you might as well put all your money on red or black for the roulette wheel in Vegas. At least over there, you'll be able to look at the dealer in the face as he/she takes your money!

What's sad about the whole thing is that the SEC is completely out-gunned, & or told to look the other way. In truth, the market is predatory, and the average trader is nothing more than an antelope on the Serengetti, (you don't stand a chance in Hell!)

 

[bombadil.360]

flower, I dunno if we agree... I'm saying that even if you put your savings in gold, you will still suffer inflation... there's really no way around it, it's the nature of the beast.

as far as silver coins, they are more valuable than the same amount of silver not-worked.

just search and you'll see for yourself; I remember silver 25 cents coins, that would cost 20 dollars in the 90s, and people would buy them to make rings out of them; they'd buy the coin which was more expensive than the same amount of silver because out of the coin it was much easier to make rings with very simple tools.

 

[bombadil.360]

oh, and for those arguing that gold actually gives "the people" more financial freedom, I'd like to know exactly how.

afterall, like it has been said tons of times already, you'd not be able to use gold if you could not trade it in for paper money.

it's a very inmature argument to state that storing in gold will free you from the "evil elites"; if the "evil elites" were so evil, they'd just deny "the people" from exchanging their gold into an useable currency.

and the stock-market has not entered into crisis due to some obscure elite pulling the strings; it entered into crisis thanks to "the people" who have invested in anything but the real-economy; who have invested in gold instead of alluminum for example; who have invested in gold instead of high-tech agriculture.

it was "the people" who have been investing against or in favour of stock in hopes of gaining money just by giving their opinion of "it will go up, it will go down", adding zero real value to society.

"the people" are just as greedy as anyone else, wishing to make a profit without any true work that produces actual value.

 

[HempKat]

Gold fits the 3 criteria of money perfectly.. that it has been for thousands of years.

It doesn't matter what currency comes next. Gold is a good buy now because we are in a currency crisis. People around the globe don't know where to put their savings...gold is this "safe haven" where people will flock into to protect their wealth until the tides turn.

If you had money you wanted to protect where would you put it? What are the alternatives to gold? Real estate, stocks. bonds? All losers..

Mike Maloney said it best.. "Its not that I want gold.. its just a worthless piece of shiny metal.. its just that right now.. I dont want anything else."

Might be a few years off but we are going to see a precious metals "bubble" sometime down the road. There will be a lot of volatility as other countries move into the dollar thinking it is the safe haven..but that is temporary as the USD is just as toast as well.

I really cannot fathom the mindset of those whom argue that gold worthless, etc. ..nobody will want your gold, yada yada. They refuse to hold or understand the point of gold despite the gains that it has made over the last decade as whodare has pointed out.

Lets see..1% in a bank account.. or 400%-600% in precious metals. Even the best stock managers only managing around 10-13% in the markets. Call it whatever.. I know the trend I'm sticking with. Precious metals have a long way to rise before I would even consider exiting the position. (of course if things get a little parabolic I'll certainly trade out to take profits along the way to buy back on the dips).

For those refuting gold I'd love to hear where you would park your savings to protect it. I'm talking about savings.. outside of cash emergency funds and money you've invested into passive income generation like cash rentals.

Us young folks need to take control of our own retirement funds because there is nothing in the cards for us as we grow old. Holding precious metals is like owning your own personal credit union. You are in control of your wealth to do as you see fit...if I lose my ass in precious metals I only have myself to blame..

Nobody knows what our economic outlook will bring. You can only do what you think is best for oneself. The fundamentals for gold/silver are pretty strong.

Well one thing you seem to be missing about those who say gold is stupid is they are envisioning more of a doomsday scenario when/if SHTF. In a doomsday scenario gold wouldn't be so helpful as it has so few practical applications most of which would no longer be practical in a doomsday scenario.Those in favor of gold seem to think that there will be a relatively brief period of unrest and that it will all settle down and we will adopt a new system with gold as the standard.

Who is to say which future is more accurate? I tend to lean towards the doomsday scenario myself because if you listen to alot of the music coming out these days and listen to the protests coming from the youth and look at things like the occupy movement it seems like there is alot of anger and hatred that will likely express itself violently should the system fail and the focus of that violence will be rich folks. If that's how it plays out I don't really see those people wanting to return to anything even close to what we had before.

Now I do agree if the future ends up more like those who are putting thier money into gold think it will then gold was a good place to park their wealth. I say was because it's already down a fair amount from it's peak but still way high from what it was just a few years ago. People who started doing this back when gold was around $500 per ounce are the smart ones though. People getting in now are really benefiting those people more then they are benefiting themselves as it's the ones buying now that keep prices at historical highs. Those people though are having to spend nearly 3 times the wealth to get the same amount of gold though.

 

[HempKat]

Gold speculation is the reason that central banks are forced to create digital dollars?!?!?!

You cant by fucking serious?


Without digital dollars governments would never have been able to create the hazard that is the main cause of our economic woes today.
You want a pro for gold?
No moral hazard.

So you mean that if we never invented the internet (the only way to have digital dollars) we wouldn't have to fear economic failure? Gee what did it to the Romans then?

 

[dagnabit]

So you mean that if we never invented the internet (the only way to have digital dollars) we wouldn't have to fear economic failure? Gee what did it to the Romans then?

sorry i did not choose my words well...

by "digital dollars" im not really talking about internet money im trying to express the broader concept of created dollars and the ease of which they are created out of nothing.

just add a couple of zeros and viola.

 

[HempKat]

gold is a safe investment... value goes up and up and up, safe and solid investment.. banks collapse, companys collapse, collapsing all around us but gold never collapses... stays solid and increases - gold is probably the safest investment there is

The information at this site tends to contradict what you're saying about gold always going up. Last year it was near $2000 per ounce, now it's nearer to $1500 an ounce. Anyone having gotten in during the last year has actually seen thier investment shrink by 20 to 25%

http://thestockmarketwatch.com/metal/gold-price.aspx

 

[HempKat]

sorry i did not choose my words well...

by "digital dollars" im not really talking about internet money im trying to express the broader concept of created dollars and the ease of which they are created out of nothing.

just add a couple of zeros and viola.

Okay that I can agree with.

 

[bentom187]

Murray N rothbards the mysytery of banking chapter 1.

1. THE IMPORTANCE OF MONEY
Today, money supply figures pervade the financial press.
Every Friday, investors breathlessly watch for the latest
money figures, and Wall Street often reacts at the opening
on the following Monday. If the money supply has gone up
sharply, interest rates may or may not move upward. The press is
filled with ominous forecasts of Federal Reserve actions, or of
regulations of banks and other financial institutions.
This close attention to the money supply is rather new. Until
the 1970s, over the many decades of the Keynesian Era, talk of
money and bank credit had dropped out of the financial pages.
Rather, they emphasized the GNP and government’s fiscal policy,
expenditures, revenues, and deficits. Banks and the money supply
were generally ignored. Yet after decades of chronic and accelerating
inflation—which the Keynesians could not begin to cure—
and after many bouts of “inflationary recession,” it became obvious
1

to all—even to Keynesians—that something was awry. The money
supply therefore became a major object of concern.
But the average person may be confused by so many definitions
of the money supply. What are all the Ms about, from M1-
A and M1-B up to M-8? Which is the true money supply figure,
if any single one can be? And perhaps most important of all, why
are bank deposits included in all the various Ms as a crucial and
dominant part of the money supply? Everyone knows that paper
dollars, issued nowadays exclusively by the Federal Reserve Banks
and imprinted with the words “this note is legal tender for all
debts, public and private” constitute money. But why are checking
accounts money, and where do they come from? Don’t they
have to be redeemed in cash on demand? So why are checking
deposits considered money, and not just the paper dollars backing
them?

One confusing implication of including checking deposits as a
part of the money supply is that banks create money, that they are,
in a sense, money-creating factories. But don’t banks simply channel
the savings we lend to them and relend them to productive
investors or to borrowing consumers? Yet, if banks take our savings
and lend them out, how can they create money? How can
their liabilities become part of the money supply?
There is no reason for the layman to feel frustrated if he can’t
find coherence in all this. The best classical economists fought
among themselves throughout the nineteenth century over
whether or in what sense private bank notes (now illegal) or
deposits should or should not be part of the money supply. Most
economists, in fact, landed on what we now see to be the wrong
side of the question. Economists in Britain, the great center of
economic thought during the nineteenth century, were particularly
at sea on this issue. The eminent David Ricardo and his successors
in the Currency School, lost a great chance to establish
truly hard money in England because they never grasped the fact
that bank deposits are part of the supply of money. Oddly
enough, it was in the United States, then considered a backwater
of economic theory, that economists first insisted that bank

deposits, like bank notes, were part of the money supply. Condy
Raguet, of Philadelphia, first made this point in 1820. But English
economists of the day paid scant attention to their American
colleagues.

2. HOW MONEY BEGINS
Before examining what money is, we must deal with the
importance of money, and, before we can do that, we have to
understand how money arose. As Ludwig von Mises conclusively
demonstrated in 1912, money does not and cannot originate by
order of the State or by some sort of social contract agreed upon
by all citizens; it must always originate in the processes of the free
market.

Before coinage, there was barter. Goods were produced by
those who were good at it, and their surpluses were exchanged
for the products of others. Every product had its barter price in
terms of all other products, and every person gained by exchanging
something he needed less for a product he needed more. The
voluntary market economy became a latticework of mutually beneficial
exchanges.

In barter, there were severe limitations on the scope of
exchange and therefore on production. In the first place, in order
to buy something he wanted, each person had to find a seller who
wanted precisely what he had available in exchange. In short, if
an egg dealer wanted to buy a pair of shoes, he had to find a shoemaker

who wanted, at that very moment, to buy eggs. Yet suppose
that the shoemaker was sated with eggs. How was the egg dealer
going to buy a pair of shoes? How could he be sure that he could
find a shoemaker who liked eggs?
Or, to put the question in its starkest terms, I make a living as
a professor of economics. If I wanted to buy a newspaper in a
world of barter, I would have to wander around and find a newsdealer
who wanted to hear, say, a 10-minute economics lecture
from me in exchange. Knowing economists, how likely would I
be to find an interested newsdealer?

This crucial element in barter is what is called the double
coincidence of wants. A second problem is one of indivisibilities.
We can see clearly how exchangers could adjust their supplies and
sales of butter, or eggs, or fish, fairly precisely. But suppose that
Jones owns a house, and would like to sell it and instead, purchase
a car, a washing machine, or some horses? How could he
do so? He could not chop his house into 20 different segments
and exchange each one for other products. Clearly, since houses
are indivisible and lose all of their value if they get chopped up,
we face an insoluble problem. The same would be true of tractors,
machines, and other large-sized products. If houses could not easily
be bartered, not many would be produced in the first place.
Another problem with the barter system is what would happen
to business calculation. Business firms must be able to calculate
whether they are making or losing income or wealth in each
of their transactions. Yet, in the barter system, profit or loss calculation
would be a hopeless task.

Barter, therefore, could not possibly manage an advanced or
modern industrial economy. Barter could not succeed beyond the
needs of a primitive village.

But man is ingenious. He managed to find a way to overcome
these obstacles and transcend the limiting system of barter. Trying
to overcome the limitations of barter, he arrived, step by step, at
one of man’s most ingenious, important and productive inventions:
money.

Take, for example, the egg dealer who is trying desperately to
buy a pair of shoes. He thinks to himself: if the shoemaker is
allergic to eggs and doesn’t want to buy them, what does he want
to buy? Necessity is the mother of invention, and so the egg man
is impelled to try to find out what the shoemaker would like to
obtain. Suppose he finds out that it’s fish. And so the egg dealer
goes out and buys fish, not because he wants to eat the fish himself
(he might be allergic to fish), but because he wants it in order
to resell it to the shoemaker. In the world of barter, everyone’s
purchases were purely for himself or for his family’s direct use.
But now, for the first time, a new element of demand has entered:

The egg man is buying fish not for its own sake, but instead to use
it as an indispensable way of obtaining shoes. Fish is now being
used as a medium of exchange, as an instrument of indirect
exchange, as well as being purchased directly for its own sake.
Once a commodity begins to be used as a medium of
exchange, when the word gets out it generates even further use of
the commodity as a medium. In short, when the word gets around
that commodity X is being used as a medium in a certain village,
more people living in or trading with that village will purchase
that commodity, since they know that it is being used there as a
medium of exchange. In this way, a commodity used as a medium
feeds upon itself, and its use spirals upward, until before long the
commodity is in general use throughout the society or country as
a medium of exchange. But when a commodity is used as a
medium for most or all exchanges, that commodity is defined as
being a money.

In this way money enters the free market, as market participants
begin to select suitable commodities for use as the medium of
exchange, with that use rapidly escalating until a general medium
of exchange, or money, becomes established in the market.
Money was a leap forward in the history of civilization and in
man’s economic progress. Money—as an element in every
exchange—permits man to overcome all the immense difficulties
of barter. The egg dealer doesn’t have to seek a shoemaker who
enjoys eggs; and I don’t have to find a newsdealer or a grocer who
wants to hear some economics lectures. All we need do is
exchange our goods or services for money, for the money commodity.
We can do so in the confidence that we can take this universally
desired commodity and exchange it for any goods that we
need. Similarly, indivisibilities are overcome; a homeowner can
sell his house for money, and then exchange that money for the
various goods and services that he wishes to buy.
Similarly, business firms can now calculate, can figure out
when they are making, or losing, money. Their income and their
expenditures for all transactions can be expressed in terms of
money. The firm took in, say, $10,000 last month, and spent

$9,000; clearly, there was a net profit of $1,000 for the month.
No longer does a firm have to try to add or subtract in commensurable
objects. A steel manufacturing firm does not have to pay
its workers in steel bars useless to them or in myriad other physical
commodities; it can pay them in money, and the workers can
then use money to buy other desired products.
Furthermore, to know a good’s “price,” one no longer has to
look at a virtually infinite array of relative quantities: the fish
price of eggs, the beef price of string, the shoe price of flour, and
so forth. Every commodity is priced in only one commodity:
money, and so it becomes easy to compare these single money
prices of eggs, shoes, beef, or whatever.

3. THE PROPER QUALITIES OF MONEY
Which commodities are picked as money on the market?
Which commodities will be subject to a spiral of use as a medium?
Clearly, it will be those commodities most useful as money in any
given society. Through the centuries, many commodities have
been selected as money on the market. Fish on the Atlantic seacoast
of colonial North America, beaver in the Old Northwest,
and tobacco in the Southern colonies were chosen as money. In
other cultures, salt, sugar, cattle, iron hoes, tea, cowrie shells, and
many other commodities have been chosen on the market. Many
banks display money museums which exhibit various forms of
money over the centuries.

Amid this variety of moneys, it is possible to analyze the qualities
which led the market to choose that particular commodity as
money. In the first place, individuals do not pick the medium of
exchange out of thin air. They will overcome the double coincidence
of wants of barter by picking a commodity which is
already in widespread use for its own sake. In short, they will
pick a commodity in heavy demand, which shoemakers and others
will be likely to accept in exchange from the very start of the
money-choosing process. Second, they will pick a commodity
which is highly divisible, so that small chunks of other goods can
be bought, and size of purchases can be flexible. For this they

need a commodity which technologically does not lose its quotal
value when divided into small pieces. For that reason a house or
a tractor, being highly indivisible, is not likely to be chosen as
money, whereas butter, for example, is highly divisible and at least
scores heavily as a money for this particular quality.
Demand and divisibility are not the only criteria. It is also
important for people to be able to carry the money commodity
around in order to facilitate purchases. To be easily portable,
then, a commodity must have high value per unit weight. To have
high value per unit weight, however, requires a good which is not
only in great demand but also relatively scarce, since an intense
demand combined with a relatively scarce supply will yield a high
price, or high value per unit weight.

Finally, the money commodity should be highly durable, so
that it can serve as a store of value for a long time. The holder of
money should not only be assured of being able to purchase other
products right now, but also indefinitely into the future. Therefore,
butter, fish, eggs, and so on fail on the question of durability.
A fascinating example of an unexpected development of a
money commodity in modern times occurred in German POW
camps during World War II. In these camps, supply of various
goods was fixed by external conditions: CARE packages, rations,
etc. But after receiving the rations, the prisoners began exchanging
what they didn’t want for what they particularly needed, until
soon there was an elaborate price system for every product, each
in terms of what had evolved as the money commodity: cigarettes.
Prices in terms of cigarettes fluctuated in accordance with
changing supply and demand.

Cigarettes were clearly the most “moneylike” products available
in the camps. They were in high demand for their own sake,
they were divisible, portable, and in high value per unit weight.
They were not very durable, since they crumpled easily, but they
could make do in the few years of the camps’ existence.1

In all countries and all civilizations, two commodities have
been dominant whenever they were available to compete as moneys
with other commodities: gold and silver.
At first, gold and silver were highly prized only for their luster
and ornamental value. They were always in great demand.
Second, they were always relatively scarce, and hence valuable
per unit of weight. And for that reason they were portable as well.
They were also divisible, and could be sliced into thin segments
without losing their pro rata value. Finally, silver or gold were
blended with small amounts of alloy to harden them, and since
they did not corrode, they would last almost forever.
Thus, because gold and silver are supremely “moneylike”
commodities, they are selected by markets as money if they are
available. Proponents of the gold standard do not suffer from a
mysterious “gold fetish.” They simply recognize that gold has
always been selected by the market as money throughout history.
Generally, gold and silver have both been moneys, side-byside.
Since gold has always been far scarcer and also in greater
demand than silver, it has always commanded a higher price, and
tends to be money in larger transactions, while silver has been
used in smaller exchanges. Because of its higher price, gold has
often been selected as the unit of account, although this has not
always been true. The difficulties of mining gold, which makes its
production limited, make its long-term value relatively more stable
than silver.

4. THE MONEY UNIT
We referred to prices without explaining what a price really is.
A price is simply the ratio of the two quantities exchanged in any
transaction. It should be no surprise that every monetary unit we
are now familiar with—the dollar, pound, mark, franc, et al.—
began on the market simply as names for different units of weight
of gold or silver. Thus the “pound sterling” in Britain, was exactly
that—one pound of silver.2

The “dollar” originated as the name generally applied to a
one-ounce silver coin minted by a Bohemian count named
Schlick, in the sixteenth century. Count Schlick lived in Joachimsthal
(Joachim’s Valley). His coins, which enjoyed a great reputation
for uniformity and fineness, were called Joachimsthalers and
finally, just thalers. The word dollar emerged from the pronunciation
of thaler.

Since gold or silver exchanges by weight, the various national
currency units, all defined as particular weights of a precious
metal, will be automatically fixed in terms of each other. Thus,
suppose that the dollar is defined as 1/20 of a gold ounce (as it
was in the nineteenth century in the United States), while the
pound sterling is defined as 1/4 of a gold ounce, and the French
franc is established at 1/100 of a gold ounce.3 But in that case,
the exchange rates between the various currencies are automatically
fixed by their respective quantities of gold. If a dollar is 1/20
of a gold ounce, and the pound is 1/4 of a gold ounce, then the
pound will automatically exchange for 5 dollars. And, in our
example, the pound will exchange for 25 francs and the dollar for
5 francs. The definitions of weight automatically set the exchange
rates between them.

Free market gold standard advocates have often been taunted
with the charge: “You are against the government fixing the price
of goods and services; why then do you make an exception for
gold? Why do you call for the government fixing the price of gold
and setting the exchange rates between the various currencies?”
The answer to this common complaint is that the question
assumes the dollar to be an independent entity, a thing or commodity
which should be allowed to fluctuate freely in relation to
gold. But the rebuttal of the pro-gold forces points out that the
dollar is not an independent entity, that it was originally simply a
name for a certain weight of gold; the dollar, as well as the other
currencies, is a unit of weight. But in that case, the pound, franc,
dollar, and so on, are not exchanging as independent entities;
they, too, are simply relative weights of gold. If 1/4 ounce of gold
exchanges for 1/20 ounce of gold, how else would we expect
them to trade than at 1:5?

If the monetary unit is simply a unit of weight, then government’s
role in the area of money could well be confined to a simple
Bureau of Weights and Measures, certifying this as well as
other units of weight, length, or mass.5 The problem is that
governments have systematically betrayed their trust as guardians
of the precisely defined weight of the money commodity.
If government sets itself up as the guardian of the international
meter or the standard yard or pound, there is no economic
incentive for it to betray its trust and change the definition. For
the Bureau of Standards to announce suddenly that 1 pound is

now equal to 14 instead of 16 ounces would make no sense whatever.
There is, however, all too much of an economic incentive
for governments to change, especially to lighten, the definition of
the currency unit; say, to change the definition of the pound sterling
from 16 to 14 ounces of silver. This profitable process of the
government’s repeatedly lightening the number of ounces or
grams in the same monetary unit is called debasement.
How debasement profits the State can be seen from a hypothetical
case: Say the rur, the currency of the mythical kingdom
of Ruritania, is worth 20 grams of gold. A new king now ascends
the throne, and, being chronically short of money, decides to take
the debasement route to the acquisition of wealth. He announces
a mammoth call-in of all the old gold coins of the realm, each
now dirty with wear and with the picture of the previous king
stamped on its face. In return he will supply brand new coins with
his face stamped on them, and will return the same number of
rurs paid in. Someone presenting 100 rurs in old coins will receive
100 rurs in the new.

Seemingly a bargain! Except for a slight hitch: During the
course of this recoinage, the king changes the definition of the rur
from 20 to 16 grams. He then pockets the extra 20 percent of
gold, minting the gold for his own use and pouring the coins into
circulation for his own expenses. In short, the number of grams
of gold in the society remains the same, but since people are now
accustomed to use the name rather than the weight in their money
accounts and prices, the number of rurs will have increased by 20
percent. The money supply in rurs, therefore, has gone up by 20
percent, and, as we shall see later on, this will drive up prices in
the economy in terms of rurs. Debasement, then, is the arbitrary
redefining and lightening of the currency so as to add to the coffers
of the State
.6
The pound sterling has diminished from 16 ounces of silver
to its present fractional state because of repeated debasements, or

changes in definition, by the kings of England. Similarly, rapid
and extensive debasement was a striking feature of the Middle
Ages, in almost every country in Europe. Thus, in 1200, the
French livre tournois was defined as 98 grams of fine silver; by
1600 it equaled only 11 grams.

A particularly striking case is the dinar, the coin of the Saracens
in Spain. The dinar, when first coined at the end of the seventh
century, consisted of 65 gold grains. The Saracens, notably
sound in monetary matters, kept the dinar’s weight relatively constant,
and as late as the middle of the twelfth century, it still
equaled 60 grains. At that point, the Christian kings conquered
Spain, and by the early thirteenth century, the dinar (now called
maravedi) had been reduced to 14 grains of gold. Soon the gold
coin was too lightweight to circulate, and it was converted into a
silver coin weighing 26 grains of silver. But this, too, was debased
further, and by the mid-fifteenth century, the maravedi consisted
of only 1½ silver grains, and was again too small to circulate.7
Where is the total money supply—that crucial concept—in all
this? First, before debasement, when the regional or national currency
unit simply stands for a certain unit of weight of gold, the
total money supply is the aggregate of all the monetary gold in
existence in that society, that is, all the gold ready to be used in
exchange. In practice, this means the total stock of gold coin and
gold bullion available. Since all property and therefore all money
is owned by someone, this means that the total money stock in the
society at any given time is the aggregate, the sum total, of all
existing cash balances, or money stock, owned by each individual
or group. Thus, if there is a village of 10 people, A, B, C, etc., the

total money stock in the village will equal the sum of all cash balances
held by each of the 10 citizens. If we wish to put this in
mathematical terms, we can say that
M = Σ m
where M is the total stock or supply of money in any given area
or in society as a whole, m is the individual stock or cash balance
owned by each individual, and Σ means the sum or aggregate of
each of the ms.
After debasement, since the money unit is the name (dinar)
rather than the actual weight (specific number of gold grams), the
number of dinars or pounds or maravedis will increase, and thus
increase the supply of money. M will be the sum of the individual
dinars held by each person, and will increase by the extent of the
debasement. As we will see later, this increased money supply will
tend to raise prices throughout the economy.

CHAPTER 4.3

3. GOVERNMENT PAPER MONEY
The inventions of paper and printing gave enterprising governments,
always looking for new sources of revenue, an “Open
Sesame” to previously unimagined sources of wealth. The kings
had long since granted to themselves the monopoly of minting
coins in their kingdoms, calling such a monopoly crucial to their
“sovereignty,” and then charging high seigniorage prices for coining
gold or silver bullion. But this was piddling, and occasional
debasements were not fast enough for the kings’ insatiable need
for revenue. But if the kings could obtain a monopoly right to
print paper tickets, and call them the equivalent of gold coins,
then there was an unlimited potential for acquiring wealth. In
short, if the king could become a legalized monopoly counterfeiter,
and simply issue “gold coins” by printing paper tickets with
the same names on them, the king could inflate the money supply
indefinitely and pay for his unlimited needs.

If the money unit had remained as a standard unit of weight,
such as “gold ounce” or “gold grain,” then getting away with this
act of legerdemain would have been far more difficult. But the
public had already gotten used to pure name as the currency unit,
an habituation that enabled the kings to get away with debasing
the definition of the money name. The next fatal step on the road
to chronic inflation was for the government to print paper tickets
and, using impressive designs and royal seals, call the cheap paper
the gold unit and use it as such. Thus, if the dollar is defined as
1/20 gold ounce, paper money comes into being when the government
prints a paper ticket and calls it “a dollar,” treating it as
the equivalent of a gold dollar or 1/20 gold ounce.
If the public will accept the paper dollar as equivalent to gold,
then the government may become a legalized counterfeiter, and
the counterfeiting process comes into play. Suppose, in a certain
year, the government takes in $250 billion in taxes, and spends
$300 billion. It then has a budget deficit of $50 billion.
How does it finance its deficit? Individuals, or business firms,
can finance their own deficits in two ways: (a) borrowing money
from people who have savings; and/or (b) drawing down their
cash balances to pay for it. The government also can employ these
two ways but, if people will accept the paper money, it now has a
way of acquiring money not available to anyone else: It can print
$50 billion and spend it!
A crucial problem for government as legalized counterfeiter
and issuer of paper money is that, at first, no one will be found to
take it in exchange. If the kings want to print money in order to
build pyramids, for example, there will at first be few or no pyramid
contractors willing to accept these curious-looking pieces of
paper. They will want the real thing: gold or silver. To this day,
“primitive tribes” will not accept paper money, even with their
alleged sovereign’s face printed on it with elaborate decoration.
Healthily skeptical, they demand “real” money in the form of
gold or silver. It takes centuries of propaganda and cultivated
trust for these suspicions to fade away.

At first, then, the government must guarantee that these paper
tickets will be redeemable, on demand, in their equivalent in gold
coin or bullion. In other words, if a government paper ticket says
“ten dollars” on it, the government itself must pledge to redeem
that sum in a “real” ten-dollar gold coin. But even then, the government
must overcome the healthy suspicion: If the government
has the coin to back up its paper, why does it have to issue paper
in the first place? The government also generally tries to back up
its paper with coercive legislation, either compelling the public to
accept it at par with gold (the paper dollar equal to the gold dollar),
or compelling all creditors to accept paper money as equivalent
to gold (“legal tender laws”). At the very least, of course, the
government must agree to accept its own paper in taxes. If it is
not careful, however, the government might find its issued paper
bouncing right back to it in taxes and used for little else. For coercion
by itself is not going to do the trick without public trust (misguided,
to be sure) to back it up.
Once the paper money becomes generally accepted, however,
the government can then inflate the money supply to finance its
needs. If it prints $50 billion to spend on pyramids, then it—the
government—gets the new money first and spends it. The pyramid
contractors are the second to receive the new money. They
will then spend the $50 billion on construction equipment and
hiring new workers; these in turn will spend the money. In this
way, the new $50 billion ripples out into the system, raising
demand curves and individual prices, and hence the level of
prices, as it goes.
It should be clear that by printing new money to finance its
deficits, the government and the early receivers of the new money
benefit at the expense of those who receive the new money last or
not at all: pensioners, fixed-income groups, or people who live in
areas remote from pyramid construction. The expansion of the
money supply has caused inflation; but, more than that, the
essence of inflation is the process by which a large and hidden tax
is imposed on much of society for the benefit of government and
the early receivers of the new money. Inflationary increases of the

money supply are pernicious forms of tax because they are covert,
and few people are able to understand why prices are rising.
Direct, overt taxation raises hackles and can cause revolution;
inflationary increases of the money supply can fool the public—
its victims—for centuries.
Only when its paper money has been accepted for a long
while is the government ready to take the final inflationary step:
making it irredeemable, cutting the link with the gold. After calling
its dollar bills equivalent to 1/20 gold ounce for many years,
and having built up the customary usage of the paper dollar as
money, the government can then boldly and brazenly sever the
link with gold, and then simply start referring to the dollar bill as
money itself. Gold then becomes a mere commodity, and the only
money is paper tickets issued by the government. The gold standard
has become an arbitrary fiat standard.7
The government, of course, is now in seventh heaven. So long
as paper money was redeemable in gold, the government had to
be careful how many dollars it printed. If, for example, the government
has a stock of $30 billion in gold, and keeps issuing more
paper dollars redeemable in that gold, at a certain point, the public
might start getting worried and call upon the government for
redemption. If it wants to stay on the gold standard, the embarrassed
government might have to contract the number of dollars
in circulation: by spending less than it receives, and buying back
and burning the paper notes. No government wants to do anything
like that.
So the threat of gold redeemability imposes a constant check
and limit on inflationary issues of government paper. If the government
can remove the threat, it can expand and inflate without
cease. And so it begins to emit propaganda, trying to persuade
the public not to use gold coins in their daily lives. Gold is

“old-fashioned,” outdated, “a barbarous relic” in J.M. Keynes’s
famous dictum, and something that only hicks and hillbillies
would wish to use as money. Sophisticates use paper. In this way,
by 1933, very few Americans were actually using gold coin in
their daily lives; gold was virtually confined to Christmas presents
for children. For that reason, the public was ready to accept the
confiscation of their gold by the Roosevelt administration in 1933
with barely a murmur.

 

[magiccannabus]

Who is to say which future is more accurate? I tend to lean towards the doomsday scenario myself because if you listen to alot of the music coming out these days and listen to the protests coming from the youth and look at things like the occupy movement it seems like there is alot of anger and hatred that will likely express itself violently should the system fail and the focus of that violence will be rich folks. If that's how it plays out I don't really see those people wanting to return to anything even close to what we had before.

There is a lot of anger yes, but amazingly almost all of the violence surrounding this issue has been directly perpetrated by the police, and supported by the system. The system is already broken, I think it's a question of how much further down the slope we'll allow it to go. I think so far, protesters around this nation have shown an incredible amount of restraint and focus. Moments like this, where people are just talking without censors or other conventional boundaries are what drive change like this. It's the fact that now people all over can talk to each other and they're really starting to see for themselves how people everywhere are like people anywhere when you get down to the basics. Conventional boundaries, and the hatreds that rely on them are breaking down. I think we really have some hope for progress if we don't lose the current momentum. Making sure people keep talking to each other is probably the single most important thing we can do. Change always happens eventually, but I think it's up to us to try to keep that change civil.