Yes/No to the return of the Gold standard?

[llanlad2]

Re: Yes/No to the return of the Gold standard?

This may not be exactly the "catastrophic collapse" I anticipate, but for EJ's more measured tone, it's pretty close.

Out of interest and at risk of ruining my sleep tonight what are you anticipating a "catastrophic collapse" to be like?

[charliebrown]

Re: Yes/No to the return of the Gold standard?

based upon a couple of rules of thumb, and if all the variables maintain their current rates which never happens.
day of collapse 3/14/2014


Anyhow, back to gold. There were panics and booms and busts under a gold standard too.

Is a gold standard more honest? in that people can keep their wealth in currency, and not take speculative risks if they are happy with more or less constant purchasing power?
Look what we have to do know, be speculators or have our wealth confiscated, either by outright inflation (rising consumer prices) or by capital gains on phantom increases in capital.

[ThePythonicCow]

Re: Yes/No to the return of the Gold standard?

Out of interest and at risk of ruining my sleep tonight what are you anticipating a "catastrophic collapse" to be like?

I anticipate one of three scenarios.The first is along the lines of what I understand of EJ's analysis (beware -- my understanding of EJ's analysis is often unreliable), and the other two are along the lines of what Damon Vrabel is describes (I've only recently begun to read Vrabel.)

We could muddle along, with perhaps a double dip and a second round of crisis and crashes such as we had in 2008. Some more banks and other financial institutions would fail and unemployment would get a little worse. We would have some more inflation in the things we need (food and gas) but not in our wages. However, all in all, the majority of Americans would feel some more belt tightening, not an existential crisis. A successful transition from a FIRE economy to something like EJ's TECI economy could underlay a long, initially slow, recovery.

Or as Vrabel describes, we could be under the grips of a financial elite, controlling the world's individuals, corporations and nations by means of debt-backed money. In this view, the elite are presently trying to extend their control by instituting a global governance, reducing national governments to administrative units. An important aspect of this extension is cutting the United States "down to size", subordinating it to world governance, completing the conversion of the U.S. from a republic of free and self-governed individuals to a nation governed more along the lines of present-day mainland China, using control rather than consent to manage its people.

Observe by the way the how great is the control obtained over a people by controlling their monetary system, instituting a debt-based system in which all money is lent into existence, with all branches of the government strongly enforcing the repayment of that debt with interest and taxes, under penalty of foreclosure, repossession, liens on future income or prison.

In Vrabel's view (by my meager understanding) two outcomes are possible: either the financial elite succeed in establishing this global monetary tyranny, or we the people once again throw off the yoke of these big banking interests.

For the financial elite to succeed, they are going to have to finish beating the American people into economic servitude, destroying their remaining thirst for freedom, especially property rights. Americans will have to be subjected to sufficient economic depression to force them to give up and accept a form of tyranny. The appearance of American political institutions and law may remain, but only an appearance.

For them to fail, enough Americans will have to wake up, soon enough, to alert their fellow Americans to the danger and regain control of their political system, throwing off the oppression of these financial elite.

There will be times, by either of these two scenarios, when the normal monetary system shuts down. No ATM's, no credit card or check clearing, no withdrawal of cash from banks. This will cause rapid failure of the just-in-time delivery of food to almost all Americans. The starvation of some and the fear of starvation in many will be necessary, by either of these two scenarios. The elite might prefer to subordinate the U.S. financial institutions to world governance without risking too much starvation, because (as Celente notes) when people lose everything and they have nothing left to lose, they lose it.

Portions of the U.S. financial system are already being setup as the "bad guys", in expectations of widely publicized show trials and public drama, sending some of them off to prison, and justifying the imposition of new rules (consistent with the dictates of the G20 and BIS) on U.S. centered big banks, regulatory agencies and other financial institutions. We the American people will be threatened with economic collapse, riots and starvation if we resist.

Of course, the major banks and related financial institutions already have more control over the American national government than anyone else. If the debt-based money system remains in place, which has the banks controlled by the financial elite issuing all money to nations, corporations and individuals, then the financial elite remain in control. They primarily need to bring these financial institutions under more explicit and uniformly mandated central world governance. The rest would follow, and human civilization would enter another feudal Dark Age. Welcome to debt serfdom my friend.

If I see the existing American monetary and banking system subjected once again to tighter regulatory control, if I see the Federal Reserve constrained to international governance, if I see JPMorgan take over Bank of America, if I see a world wide governed reserve currency (used for international trade and Forex) replace the Dollar in that role, while leaving debt-based national and regional currencies in place, ... then we the people will have lost.

If I see JPMorgan, the Federal Reserve and the Bank of England demolished, stone by stone, if I see debt-based money (such as Federal Reserve Notes!) eliminated, if I see many of the great frauds, lies, false flag events and grand deceptions of the last century exposed to public view, ... then we the people will have won, for now. This battle is never won forever.

The financial elite will claim that they are defending our Dollar, our freedom, our prosperity and our way of life. They will lie. It is their dollar (lent to us at their discretion), their prosperity, their way of life, and our debt servitude, that they defend.

[Thailandnotes]

Re: Yes/No to the return of the Gold standard?

http://www.nytimes.com/roomfordebate...and-old-rivals

Here you go. The NYT started a discussion after Zoelick's FT article.

So far there are no comments. Of course it's 4 PM in Chiang Mai, 4 AM in NY.

“The world – and the G20 -- needs to confront its main problems: global banks have become far too powerful, financial reform has failed, and we are setting ourselves for another dangerous credit cycle – which will again devastate jobs. “

Simon Johnson

“I doubt very much if Mr. Zoellick has in mind a return to the gold standard, though goldbugs and critics alike are talking as if he does.”

Jeffery Frankel

“The total number of dollars earned as wages and salary by American workers today is about what it was a year and a half ago. The dollar price of an ounce of gold has gone up about 40 percent over that the same period. If we had been under a gold standard that required us to maintain a fixed dollar price of gold, that relative price change would have required a 40 percent cut in the dollar wages of a typical American worker.”

James Hamilton

[ThePythonicCow]

Re: Yes/No to the return of the Gold standard?

If we had been under a gold standard that required us to maintain a fixed dollar price of gold, that relative price change would have required a 40 percent cut in the dollar wages of a typical American worker.”

That would have gone over like a lead gold plated tungsten brick .

[bungee]

Re: Yes/No to the return of the Gold standard?

I have watched that and there are some good points in it. However, I think there is a compelling case to be made for gold's ability to control how much is issued. It also seems like we would still have the same problems if politicians control the money supply whether it is debt-based or not.

I agree gold (or some other limited resource) would control how much currency was in circulation.

The problem as I understand it is that under many circumstances a limit to the amount of currency is bad as it limits economic growth and progress. Gold can be taken out of circulation to reduce total currency just as the total amount of fiat currency can be reduced.

Additionally politicians do not control the money supply the bankers do. If we go to a gold standard the bankers will control the gold also and manipulate it in the same way as they do fiat currency now to control the economy to their advantage.

I can't think of a problem with paper money as long as it is spent into existence rather than borrowed into existence although I am sure someone can point one out.

[shiny!]

Re: Yes/No to the return of the Gold standard?

Additionally politicians do not control the money supply the bankers do. If we go to a gold standard the bankers will control the gold also and manipulate it in the same way as they do fiat currency now to control the economy to their advantage.

As long as we allow bankers to create our money supply and loan it to the government, we will be at the mercy of their greed, no matter whether it be fiat money or backed by gold or whatever. Bankers should only be in the business of running their banks, and sovereign nations should be in the business of issuing their respective currencies without interest due. Currently politicians are just as corrupt as bankers because they've been bought and paid for by said bankers.

If our government were to be issuing our currency as the Constitution stipulates, Congress would be required to show spending restraint or else lose their jobs. Failure to operate within a budget would result in inflation which would make the voters unhappy as they watch their purchasing power decline. We could then vote them out of office.

In contrast, look how hard it is to get rid of the Fed and the TBTF banks which are not accountable to the Citizens and are operating without constraint.

[DSpencer]

Re: Yes/No to the return of the Gold standard?

The problem as I understand it is that under many circumstances a limit to the amount of currency is bad as it limits economic growth and progress. Gold can be taken out of circulation to reduce total currency just as the total amount of fiat currency can be reduced.

I can't think of a problem with paper money as long as it is spent into existence rather than borrowed into existence although I am sure someone can point one out.

This is why I suggest letting the market (the general public) decide what to use as currency. If gold becomes too scarce, people will start using silver. If silver becomes too scarce people will start using platinum or crude oil or rhodium or whatever makes sense.

The problem with paper money is almost exactly the same whether it's spent or borrowed into existence. It has no inherent value or scarcity. All the problems of inflation, debasement, currency crisis etc still exist. The money supply is still controlled whether by politicians or bankers.

[DSpencer]

Re: Yes/No to the return of the Gold standard?

If our government were to be issuing our currency as the Constitution stipulates, Congress would be required to show spending restraint or else lose their jobs. Failure to operate within a budget would result in inflation which would make the voters unhappy as they watch their purchasing power decline. We could then vote them out of office.

I don't understand this logic. Why would people vote them out any sooner? We still have inflation and declining purchasing power and nobody "throws the bums out".

Furthermore, what percentage of American voters have even a vague understanding of how our currency is issued or what is debt-based money? These people thought Obama was going to pay their mortgage and fill their cars with gas! Honestly, even a much smarter than average voter probably believes that our money is simply printed by the treasury. I've spent dozens of hours from a variety of sources trying to understand the whole system and would still struggle to explain it to the average person.

Just so I'm clear: I agree that our current debt-based system is criminal, insane and unconstitutional. I just think the idea that fixing that part while retaining fiat money with its supply controlled by corrupt and incompetent politicians and fractional reserve bankers would solve everything or even much at all is pure fantasy.

[ThePythonicCow]

Re: Yes/No to the return of the Gold standard?

I don't understand this logic. Why would people vote them out any sooner? We still have inflation and declining purchasing power and nobody "throws the bums out".

...

I just think the idea that fixing that part while retaining fiat money with its supply controlled by corrupt and incompetent politicians and fractional reserve bankers would solve everything or even much at all is pure fantasy.

Currently, bankers lend all money into existence, even what the nations government spends.

Hence those bankers control that government.

What Shiny! describes breaks that chain of control. We no doubt would still have corrupt and incompetent politicians, but at least they would be our corrupt and incompetent politicians, not the bankers.

Fractional reserve lending to individuals and corporations has some possibility of being restrained by a government, if that government has not also itself become a captured servant of those same lenders.

The essential mechanism for providing a limited government is a division of powers. Presently all money originates with lending by the banks, heavily dominated by a few very large money center banks. This results in a single power center. Pretty much every person, corporation and government is in deeply in debt to that money center and deeply dependent on a continuing flow of lending. (A few aren't, but they run conservative balance sheets and have limited power.)

Those banks are no longer even constrained by fractional reserve lending. With securitizations, special purpose vehicles, swaps, derivatives and all manner of other monetary voodoo, they have no limit to their ability to lend as much as the rest of us can borrow.

We must break the bankers hold over our government by having our government issue its own sovereign money.

[sishya]

Re: Yes/No to the return of the Gold standard?

The problem with a fixed gold standard is the mirror image of the problem with a fiat currency: the gold standard restricts growth just as a fiat currency encourages inflation/devaluation.

Just because we are at one extreme, does not mean we should swing to the other.

I read an article about EU pricing Gold in realtime. Wouldn't that be ideal ?

- Currency is not backed by Gold but Gold is used as reserves to settle trade and store of wealth.
- The Bonds of a currency has yield relative to price of Gold rise(x%). if a country prints more currency, yield increases to x%+y%.
- Currency only plays the 2 role of medium of exchange and unit of account.

[ThePythonicCow]

Re: Yes/No to the return of the Gold standard?

Sishya -- I don't think that our biggest problem is the quantity of money. Rather it is the quantity of debt.

Debt has been growing far more rapidly than money in circulation. Debt presents an unfunded liability on our future, laying claim to all that we have or might produce, many times over. Never have so many owed so much to so few.

The essential problem facing mankind at the present is severing the claims that the money lenders have on all that we have or might produce and depriving them of any opportunity to re-establish those claims.

[HDLee]

Re: Yes/No to the return of the Gold standard?

I anticipate one of three scenarios.The first is along the lines of what I understand of EJ's analysis (beware -- my understanding of EJ's analysis is often unreliable), and the other two are along the lines of what Damon Vrabel is describes (I've only recently begun to read Vrabel.)

We could muddle along, with perhaps a double dip and a second round of crisis and crashes such as we had in 2008. Some more banks and other financial institutions would fail and unemployment would get a little worse. We would have some more inflation in the things we need (food and gas) but not in our wages. However, all in all, the majority of Americans would feel some more belt tightening, not an existential crisis. A successful transition from a FIRE economy to something like EJ's TECI economy could underlay a long, initially slow, recovery.

Or as Vrabel describes, we could be under the grips of a financial elite, controlling the world's individuals, corporations and nations by means of debt-backed money. In this view, the elite are presently trying to extend their control by instituting a global governance, reducing national governments to administrative units. An important aspect of this extension is cutting the United States "down to size", subordinating it to world governance, completing the conversion of the U.S. from a republic of free and self-governed individuals to a nation governed more along the lines of present-day mainland China, using control rather than consent to manage its people.

Observe by the way the how great is the control obtained over a people by controlling their monetary system, instituting a debt-based system in which all money is lent into existence, with all branches of the government strongly enforcing the repayment of that debt with interest and taxes, under penalty of foreclosure, repossession, liens on future income or prison.

In Vrabel's view (by my meager understanding) two outcomes are possible: either the financial elite succeed in establishing this global monetary tyranny, or we the people once again throw off the yoke of these big banking interests.

For the financial elite to succeed, they are going to have to finish beating the American people into economic servitude, destroying their remaining thirst for freedom, especially property rights. Americans will have to be subjected to sufficient economic depression to force them to give up and accept a form of tyranny. The appearance of American political institutions and law may remain, but only an appearance.

For them to fail, enough Americans will have to wake up, soon enough, to alert their fellow Americans to the danger and regain control of their political system, throwing off the oppression of these financial elite.

There will be times, by either of these two scenarios, when the normal monetary system shuts down. No ATM's, no credit card or check clearing, no withdrawal of cash from banks. This will cause rapid failure of the just-in-time delivery of food to almost all Americans. The starvation of some and the fear of starvation in many will be necessary, by either of these two scenarios. The elite might prefer to subordinate the U.S. financial institutions to world governance without risking too much starvation, because (as Celente notes) when people lose everything and they have nothing left to lose, they lose it.

Portions of the U.S. financial system are already being setup as the "bad guys", in expectations of widely publicized show trials and public drama, sending some of them off to prison, and justifying the imposition of new rules (consistent with the dictates of the G20 and BIS) on U.S. centered big banks, regulatory agencies and other financial institutions. We the American people will be threatened with economic collapse, riots and starvation if we resist.

Of course, the major banks and related financial institutions already have more control over the American national government than anyone else. If the debt-based money system remains in place, which has the banks controlled by the financial elite issuing all money to nations, corporations and individuals, then the financial elite remain in control. They primarily need to bring these financial institutions under more explicit and uniformly mandated central world governance. The rest would follow, and human civilization would enter another feudal Dark Age. Welcome to debt serfdom my friend.

If I see the existing American monetary and banking system subjected once again to tighter regulatory control, if I see the Federal Reserve constrained to international governance, if I see JPMorgan take over Bank of America, if I see a world wide governed reserve currency (used for international trade and Forex) replace the Dollar in that role, while leaving debt-based national and regional currencies in place, ... then we the people will have lost.

If I see JPMorgan, the Federal Reserve and the Bank of England demolished, stone by stone, if I see debt-based money (such as Federal Reserve Notes!) eliminated, if I see many of the great frauds, lies, false flag events and grand deceptions of the last century exposed to public view, ... then we the people will have won, for now. This battle is never won forever.

The financial elite will claim that they are defending our Dollar, our freedom, our prosperity and our way of life. They will lie. It is their dollar (lent to us at their discretion), their prosperity, their way of life, and our debt servitude, that they defend.

I LOVE articulate cows - best I stop eating beef . . . grew up eating bultong (dried meat - African style) from game hunted by my father . . . giving up fillet / rump is as daunting as giving up smoking or wine (my vices) so TPC - my reaction to your response to the question posed was - Thank %@#& there ARE honest people out there!

I wish there was an "Nguni" (African Cow) for an alternative perspective, how the "rest" of us (emerging / developing markets) are going to be affected in the above scenarios

Nguni cattle maybe a better investment option on this continent than gold - they're valuable to ALL tribes - they're self sustaining (breed) and you CAN eat them : )

[ThePythonicCow]

Re: Yes/No to the return of the Gold standard?

I LOVE articulate cows - best I stop eating beef

You're too kind. But continue to enjoy eating that beef. I do.

So does my cat. I get some fine grass fed, drug free, fresh ground beef from a local farmer. Cats were born to eat quality fresh bloody meat!

Sorry, but like most Americans, as I'm sure you've noticed, I have little understanding of the ways of Africa.

[tsetsefly]

Re: Yes/No to the return of the Gold standard?

based upon a couple of rules of thumb, and if all the variables maintain their current rates which never happens.
day of collapse 3/14/2014


Anyhow, back to gold. There were panics and booms and busts under a gold standard too.

Yup, but never as long as the ones under fiat currency... not even close...

Imo, a central bank is not even needed. It's just another tool for poilticians and bankers of influence...