Gold Standard and Nepotism

[planning4acrash]

http://campaignforliberty.com/blog.php?view=5146

Some libertarians, including Alex, are getting cold feet at the last minute and talking out, against a gold standard. They, led by those behind the film, the Money Masters, advocate government produced fiat currency, because they believe that a gold standard would give power to the governments and corporations that they consider harmful, that own most of the gold.

This perspective is flawed, because it forgets that those institutions purchase gold and manipulate its price via issuance of fiat money. One can therefore only empower government and corporations if they replace central bank fiat with government fiat, which would only lead to big government, and, further down the line, via lobbyists, a return to central banking.

One should remember that government issued fiat will never have real value over gold, so must be forced upon the public via legal tender laws. Government issued fiat would therefore be an act of aggression against the people and their liberties. It would force gold from the economy into the hands of the establishment. Fiat and legal tender laws are therefore inherently incompatible with freedom and liberty. A repeal of the legal tender laws would result in free people choosing the best currency available. They would choose gold, with the more volatile silver as a backup, followed by other stores of wealth such as land and industry.

The establishment doesn't want individuals to buy gold to put themselves on a personal gold standard, nor do they want countries to put themselves on a gold standard because the supply of gold is very constant. Any purchase of gold by free individuals takes gold from the establishment and puts it into the hands of the general public. This empowers them with a currency that grows in value and purchasing power by the amount that the economy grows, because, as the economy grows, you have more productivity, yet the same volume of money. Gold therefore democratizes the growth in the economy. Fiat money, in contrast, lets government and corporations steal economic growth via inflating the currency and using that additional money to buy up the real assets, including gold, and anything else of real value.

Institutions that gained gold and other assets via the fraud of fiat money would be dealt a harsh blow from the free market within days of legal tender laws being repealed and the natural gold standard spontaneously re-establishing itself. Corporations and big government that thrived via issuance of fiat money would have to settle their obligations via fire sale of their gold and other real assets and many would go bankrupt immediately, assets distributed amongst creditors and shareholders, private court actions remedying fraudulent transactions.

Gold and other real assets would quickly fall into the hands of savers and entrepreneurs. It would reward productivity. Savers and entrepreneurs would then win in this war that is raging, between them and the free ride speculators of the establishment.

http://campaignforliberty.com/blog.php?view=5146

[zdux0012]

Some libertarians, including Alex, are getting cold feet at the last minute and talking out, against a gold standard.

I don't believe this statement to be accurate. Perhaps Alex would be againt the world "elite" starting up any standard.

[planning4acrash]

In a gold standard, productive economies buy the gold, and their reserves grow until they represent the productivity of the economy, taking from economies that are unproductive and rely on speculation.

You don't need a gold standard to do this, just an end to legal tender rules that force us to accept fiat and an end to taxation of gold and silver coinage. Coinage will work privately if government step out of the way: http://mises.org/story/3158

People having coins in their private possession is a gold standard, it takes gold from the elite, it is run by us, it reduces the power of the elite. Whenever we take real assets, we take them from the elite. We don't disempower the elite by sticking our fingers in our ears and refusing to claim it as a currency. The less we claim it, the more they have. The power base of the elite is via fiat money or via giving government a monopoly over coignage so that they can clip and reduce the gold in a coin, forcing us to use it, thus pushing quality gold coins from the system, from the people, into the hands of the elite, who use the lower quality coins to buy the higher quality coins via legal tender laws that force people to accept them as if they were pure.

[CalebJamesDeLisle]

This is a very important topic which I don't think gets enough attention. I think Alex is right in not supporting a gold standard currency.

I know it sounds really weird to support paper, but here are the threats to a gold based economy:

1. Once you fix your currency to the price of gold, the global elite clean out their cellars full of gold and buy up everything.

2. The global elite dump 1 ton of gold on the market in one day, what will your poor central bank do?

3. The global elite sell gold for $500/oz THEIR currency while simultaneously driving up the price of oil (in gold), your currency looks like shit.

You have to understand that gold doesn't mean money, it is just soft yellow metal in short supply. I would rather the people own the world and the elite own the world's gold then the people own the world's gold and the elite own the world.

With a local currency, the bankers can't affect it without counterfeiting it or selling in the market to get some of it first, and both these activities are detectable.

My paper on how to insulate communities from the financial chaos with local currencies:
http://forum.prisonplanet.com/index.php?topic=63558

[planning4acrash]

The elite already have the gold and could already buy up everything. Us getting a gold standard means OUR government buying loads of gold and issuing sound money. It shifts gold from the elite to us, and, over time, our purchasing power rises. It is fiat that pushes sound money from the system into the hands of the elite.

Believe me, if the elite gained via gold standard they wouldn't avoid it, and, wouldn't have debased gold and silver coinage throughout history.

Alex covers an important question and point but comes to the wrong conclusion. Mises was right on this one.

[planning4acrash]

Local currencies are awful. To attract people, one must offer more paper than the face value. In Lewis, England, they offered 11 Lewis pounds for every 10 English pounds. It was instantly inflationary. We already have local currency, silver and gold, shopkeepers can simply work out the exchange rate for transactions.

[CalebJamesDeLisle]

You still don't understand that if the people renounce gold as wealth, the elite will be stuck with a bunch of soft metal which is essentially useless. We can print our own paper (non debt backed) and tell the bankers they aren't allowed to do business with us. If all their gold is considered worthless, they're broke.

Distributing currency by offering at under face is bad but gold has it's own problems. The Money Panic of 1907 http://en.wikipedia.org/wiki/Panic_of_1907 was caused by bankers slowly making gold more available, then suddenly jerking back the supply causing money problems. This convinced the people to accept a central bank.

Read Money the greatest hoax on earth by Merrill M. E Jenkins
http://www.amazon.com/Money-greatest-hoax-earth-Inflation/dp/B0007ALU3E

It's charts are very clear about the way wealth moves vs. the way money moves.

I'm with Merrill M. E Jenkins, and Milton Freedman, Patrick Carmack, and Alex Jones on this one.

[Revolt426]

Alex doesnt understand economics. the Gold standard is merely to prevent inflation and make the currency strong, the actual value of the currency is reflected by its economy. A gold standard would not put power in anyones hands, gold is constantly being mined. You cannot  just take a currency, back it by gold and say it has value - the currency has to reflect a prosperous economy. A Gold Standard would prevent abuse  of the printing press.

[Revolt426]

Just because you have GOLD it doesn't mean you will be able to buy as much of the currency you want. As i said the gold standard is to prevent over printing of money, the economy reflects the actual value of the currency.

[Revolt426]

You still don't understand that if the people renounce gold as wealth, the elite will be stuck with a bunch of soft metal which is essentially useless.

What are we to replace it with, Fiat systems fail, ALWAYS. Shall we replace the scarce gold backing with aluminum?, it needs to be something scarce with intrinsic value to some extent because of its scarcity.  To maintain a FIAT system will always invite the people whom operate the printing press to print more money.

[Ghost of Oliver Cromwell]

The Debt free fiat currency does not require legal tender laws to circulate. It only requires that taxes be paid with them to make them circulate. If you eliminated the legal tender laws then private coinage and even private fiat currencies would be allowed to circulate. The market would decide which currencies thrive and which fail. With a 100% reserve government currency and even alongside that a 100% reserve gold backed currency. If the governments manipulated the currency then it would become immediately evident compared to the free market currencies and so people would leave the government currency and only convert market money to pay taxes. This I think would be a good system that would allow a transition as Ron Paul has said, to a system of free markets and sound money. Just having a Gold standard alone would not solve the problem. Remember governments do not print money, private central banks do. The fractional reserve system acts as a multiplier by more than 10 times inflation of the money printed. Eliminate fractional reserve banking and a large amount of the inflation would disappear. There were many bank runs when we were on a gold standard precisely because of fractional reserve banking. The U.K Libertarian party seems to have a good mixture of the Milton Friedman system and the free market Mises/Rothbard system http://lpuk.org/pages/manifesto/economy/monetary-reform.php. It seems to me that America was founded on a system of checks and balances, by having a free market banking system it acts as a check and balance on government created debt free notes. After all if a government can issue bonds then surely it can issue debt free notes, both are promises to pay essentially an I.O.U. If that is manipulated you can leave it.

[Revolt426]

If the currency were FIAT and we had no central bank the Congress and treasury would print it into inflation - there has to be a strong backing

[CalebJamesDeLisle]

"Shall we replace the scarce gold backing with aluminum?"

YES!

Or better, a basket of agricultural, energy, internet bandwidth, copper, steel, aluminium, and lumber.

Let the bastards keep their gold

[planning4acrash]

A gold backing is a backing of ALL the economy. Any currency is, because, theoretically, the entire money supply could be exchanged for all the goods and services on offer, that is why prices go up if the money supply goes up. Backing a currency with something like grain isn't as good as using gold, because grain goes up and down. The country could end up going into default if the grain harvest was lost one year, but, if the grain harvest is lost, and you have gold, you can import to make up the losses. In addition, with a gold standard, the wheat supply rises, and gold becomes cheaper relative to wheat, so, its all interchangeable, and all you must do is choose the best store of wealth, which is, and has been for 5000yrs, gold.

If we demand a gold standard, we take gold and real assets from the establishment. That is why they don't want us to have a gold standard.

[vcif]

It would be very helpful if everyone here read Rothbard's What has Government Done to Our Money?
http://mises.org/money.asp

It is free here:
http://mises.org/rothbard/rothmoney.pdf

Please read this even if you think that you understand this subject already.

[CalebJamesDeLisle]

Due to my extreme laziness I read the summary, and it said that there should be no forced currency. I AGREE. However I think the government should responsibly print paper money according to what is needed and make this good for the payment of tax, and pay it to government workers.

Gold has it's place especially if your "planning4acrash" but a gold standard will place an undue burden on the government's ability to spend (never thought I'd be concerned with that). This will eventually bring them back to the very bankers we detest, to beg for gold.

Instead they could print their own money, and require popular vote for any tampering with the quantity in circulation.

Then the government could (and should) be banned from borrowing from anyone. We would become the sole creditors and the true owners of our government.

[clearmyst]

I support a truly fee market and by that I mean that any and all means of transaction should be legal at the local level decided by the people amongst competition.
Whether the people decide on gold, paper, barter or any combination of, it would serve us well to get away from the monopoly of the dollar and that is the only option that would destabilize the centralized economic system we have and effectively end the bankers monoply.

[planning4acrash]

clearmyst, absolutely right. Given freedom, and protection of personal property, we would see a natural move towards other currencies, particularly gold. It doesn't need to be imposed, it is repressed, by legal tender laws where the bad quality dollar pushes the good quality gold (and other things) from the system, aided by tax on gold and repression of its price on fractional markets like COMEX.