For Opponents of The Gold Standard

May 24, 2011 in Uncategorized

In this article, which announced a big win for those interested in asset backed money, the mainstream could not help itself and in all fairness was likely correct in including a paragraph from opponents of what would be called “The Gold Standard”. This part entertained me and I was actually thankful for the easy target it provided. There’s no better time to give voice to your opponents than when they are dead wrong and easily shown to be so. I took aim and was prompted to write an absurdly long comment. Instead of once again having it die in exile on some server I’m putting that comment here on my wee blog. Here’s the Original Article from AP: Utah making gold and silver coins legal currency, pushing debate about national gold standard

He’s my commentary:

My favorite part is this: “Opponents of the law warn such a policy shift nationwide could increase the prospect of inflation and could destabilize international markets by removing the government’s flexibility to quickly adjust currency prices.”
This charge is almost laughable except for the fact that so many people have bought it. Printing money, low interest rates, legalized 10% bank reserve rates and rampant borrowing increase the prospect of inflation. I would only agree with these oppositions in saying that giving Americans a vehicle to back their purchasing power with an asset backed money would probably hasten a massive inflationary trend as people will move to the currency which cannot be debased by arbitrary, bureaucratic and banker whims. This by no means would indicate that introduction of a gold backed option causes inflation. Gold is only the MRI which reveals the cancer underneath the surface of the dollar. No one ever blames the MRI for their cancer so it would also be foolish to blame a gold backed money for inflation. It only reveals the horror beneath. It does not create the horror of hyperinflation. They go on to say that introducing a valuable money could “destabilize international markets by removing the government’s flexibility to quickly adjust currency prices.” Ladies and gentlemen I submit to you our current world economy. The system which the opponents of gold backing are citing is the system we have had in one form or another for 100 years since the creation of the Federal Reserve in 1913. It has in fact been the policy to erode the gold standard since at least 1913, an aim finally achieved completely in 1971. Opponents of Gold backing always say something like “We’d be going backward in financial development”. I’d happen to disagree. Ask the Spartans about inflation and money debasement, ask the Romans. Ask the Germans of the 1920s and above all ask our founders about the Continental Dollar, which inflated to ZERO along with all of the others. This is why in the constitution they mandated that “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” The game of something for nothing and currency debasement is thousands of years old and its lesson is clear: Any time you give a person or group the ability to get something for nothing they will abuse it for their own benefit. In ALL cases where some body is given the prerogative of money printing or diminishing the gold content of coins or whatever means were used to debase through artificial injection of value the result has ALWAYS been the collapse of that currency to zero. These Keynesian ideas parade around as if they are the economic equivalent to fusion power but they date back to the days of wood fires in mud huts. They have new names and new terminology with formulas and heavily titled men backing them up but it is nothing more than legalized counterfeiting for the benefit of one class at the expense of another. At the benefit of the US and other world governments and their banking class who control issuing of currency at the expense of everyone else. It’s true that artificial injection of credit and currency have stabilized some situations but these ‘victories’ for Keynesianism have dire consequences (i.e. dot com bubble and crash, housing bubble and crash) because they distort reality. They make it appear that the USA needs more houses, so massive resources and labor are redirected and they are built. What we are left with is now a housing surplus which the US population will not be able to absorb until 2020 and a skilled profession full of men who can no longer apply their hard earned knowledge to earn a living because there is no demand for it. These distortions of markets could not occur in a society where capital could not be artificially injected. It is plain to me that these opposition arguments are weak even to the casual observer.