That Barbarous Relic: Transactional Hard Money vs. The Gold Standard

By L. Reichard White
©February 5, 2012

It [the French ruling body, the National Convention] decreed that any person selling gold or silver coin, or making any difference in any transaction between paper and specie [gold and silver coin], should be imprisoned in irons for six years; that anyone who refused to accept a payment in assignats, [paper money not convertable to gold or silver] or accepted assignats at a discount, should pay a fine of three thousand francs; ...Later, on September 8, 1793, the penalty for such offenses was made death ...To reach the climax of ferocity, the Convention decreed, in May 1794, that the death penalty should be inflicted on any person convicted of "having asked, before a bargain was concluded, in what money payment was to be made." --Andrew Dickson White, Fiat Money Inflation In France, -pp. 78 & 79

Doesn't it seem a bit harsh, imposing the death penalty for "having asked, before a bargain was concluded, in what money [paper or specie] payment was to be made?" "Specie" is just a fancy word for "gold or silver."

Imagine that. One little "Paper or specie, sir?" and it's off to the guillotine. Literally.

Yes, I can see why you would think that was harsh. But that's just the tip of a very big and very submerged iceberg.

A bit later in "Fiat Money In France," Andrew Dickson White goes on to explain why, from the bankster/government point-of-view, it had to be harsh:

The great finance minister, Cambon, soon saw that the worst enemies of his [inflationary] policy were gold and silver. Therefore it was that, under his lead, the Convention closed the Exchange and finally, on November 13, 1793, under terrifying penalties, suppressed all commerce in the precious metals. --Andrew Dickson White, Fiat Money Inflation In France, -pp. 78 & 79

This points the way to the reasons the price and availability of gold for every day transactions -- transactional gold -- is still repressed to this day. And that's the hidden story this article tells.

'Worst Enemies' vs. Price Inflation

Given the circumstances in France at that time (CIRCULATING OR "TRANSACTIONAL" HARD MONEY), that insight of Cambon's recognizes something universal. Circulating gold and silver coinage is always the worst enemy of inflationary paper monetary schemes. Since, unlike paper, the supply of gold is irrevocably limited, gold holds it's supply-and-demand-based unit value. As a result, a twenty-dollar gold piece buys about the same amount of stuff it did last year -- or even 100 years ago. Maybe even a little more.

A paper twenty on the other hand, only buys about one thirty-second as much stuff as it would have 100 years ago. That is, that twenty today is worth only about $.62, sixty two 100-year-ago cents. Meaning a 2007 dollar is worth about $.03, that is three, 100-year-ago cents.

So, because of the law of supply and demand, the ever increasing (inflating) supply of printed paper notes causes their unit value to decrease, causing what's interpreted as "price inflation." IF you're paying with paper. A $20 paper note gradually begins to buy only $19 worth of stuff, then $18. Then $15, etc. Despite the printing that says, "TWENTY DOLLARS" (and originally, "REDEEMABLE IN GOLD ON DEMAND.")

Or worse, "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE." When you see that on your paper money, you know your countrymen are in trouble. Or will be.

Imagine this: During a gold standard -- perhaps immediate post-revolution France -- you go into a store, and just before you settle up for that double-breasted suit with the $20 dollar price tag, the shopkeeper asks you, "Paper or specie, sir?" Let's say the banksters have only doubled the supply of printed paper so far and so a paper twenty will still manage to buy $10 worth of stuff. You say, "Paper, shopkeep," and he says, "That'll be $40, sir."

Today, it would be more like $600.

Right away you know there's something different about the paper as compared to the gold piece. Especially, when seeing the look on your face, the shopkeeper hastily says, "Of course, it'll only cost $20 in gold, sir."

Without the comparison to gold, you would probably mistake that $40 for "price inflation" but with gold circulating, you can see that prices aren't increasing, the value of the paper money is decreasing. That tells you it's "monetary inflation" instead. . That's always the case with a general inflation -- prices aren't going up, the value of your money is going down. Maybe you should visit the bank and get your $20 gold pieces back. When they say "TWENTY DOLLARS" on them, they really mean it. And soon they may get "confiscated" by the government/bankster axis to protect their inflationist paper money scheme - - -

Cycles of Destruction

It's at about this point in the cycle of destruction that the axis begins to print that fiat -- "THIS NOTE IS LEGAL TENDER" etc. -- on their "bills." And, actually, they really are "bills" or I.O.U.s against the bank (printed by the banks against themselves), to help convince you to give them that gold of yours they were desperately wanting) -- as the word "bill" clearly explains. Shortly thereafter, harsher methods -- such as the death penalty -- may be attempted to accomplish the same thing, remember. [1]

And this sort of thing isn't at all unusual. Take Rome for example. After a bout of inflation caused by debasing Roman coins, as Thayer Watkins of San Jose State explains,

In 301 AD Emperor Diocletian issued an edict declaring fixed prices; i.e., price controls. His edict provided for the death penalty for anyone selling above the control prices. the long-run the results were disaster. Merchants stopped selling goods but this led to penalties against hoarding. People went out of business but Diocletian countered with laws saying that every man had to pursue the occupation of their father. The penalty for not doing so was death. ...The effect of this was to turn free men into serfs.

This is, unfortunately, typical. Under inflationary pressures, governments often morph into totalitarian regimes and impose serfdom and slavery of various kinds. Tax slavery for example.

Don't worry. It couldn't happen here. Could it?

Perhaps you wonder, as I did, how the shopkeepers know to charge more in paper than in gold. How did the Law of Supply and Demand cause that price increase -- but only for paper? Was it magic?

Not really. As people get more "money" -- in this case, mostly paper money (spent by the bankster & cronies or more likely loaned into circulation to collect interest too) -- they get more willing to spend it. Supply and demand again. When they do spend more, this begins to cause shortages in what people are spending it on. AND a temporary local "boom." By experience, shopkeepers know how much of what they sell to keep on hand so the shortages are a cue to the shopkeeper that he has hot-selling items and, as is normal in his line of work, that he can raise prices. Which he does. Which is, naturally, "price inflation" by definition.

So the shopkeepers don't need to know the supply of paper money is increasing, just that they can get away with raising their prices.

The shopkeeper also learns -- or hears rumors -- that the local banker is living well, and there's been gossip about the true value of those paper bank notes, rumors that perhaps the banker doesn't have enough gold to redeem all the notes he's been printing up.

Since, in that period of history, people were quite aware that the bank notes are just I.O.U.s for real money and not real money themselves, that is, not gold, this causes an immediate devaluation in the paper I.O.U.s. as people -- especially shopkeepers -- get suspicious that they can't get real money for these paper bills and thus the shopkeepers gradually become less willing to accept them at face value. And this portends a possible run on the bank.

The Bankster-Government Axis vs. Barometers and We The People

So the price of gold (and silver) acts as an automatic barometer, revealing any significant increase in the supply of paper bills (or megabyte money) by exposing their decrease in value. Because, unlike printed paper bills, gold isn't an easily inflatable, obviously perishable I.O,U. -- and instead has "here-now" visible "intrinsic" value that can't be diluted by printing presses -- it maintains it's buying power. AND its barometric function.

Gold still the ultimate means of payment. ...So if you begin to get a undermining of five currency values [dollar, Euro, Yen, Yuan, pound], you get the whole -- the whole structure go down. ... I've been trying to understand why gold has the fascination it has for generations. ... it's the ultimate means of payment. And it is a signal that there is a problem with respect to currency markets globally. I don't think it's a serious problem unless you short gold. But it strikes me that it's the canary in the coal mine to keep an eye on. --A Conversation with Alan Greenspan - Council on Foreign Relations

So banksters -- as opposed to bankers -- are always worried about circulating hard money. VERY worried. And rightly so. They were still barometrically worried -- undoubtedly very worried -- on April 5, 1933, which is why they got newly minted U.S. President F.D. Roosevelt to sign Executive Order 6102. Which said in part,

BY VIRTUE Of the authority vested in me by ..."An Act to provide relief in the existing national emergency in banking... I, Franklin D. Roosevelt, President of the United States of America, do declare that ...
Section 2. All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve Bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion and gold certificates now owned by them or coming into their ownership on or before April 28, 1933 ...
Section 9. Whoever willfully violates any provision of this Executive Order or of these regulations or of any rule, regulation or license issued thereunder may be fined not more than $10,000, or, if a natural person [2], may be imprisoned for not more than ten years, or both; and any officer, director, or agent of any corporation who knowingly participates in any such violation may be punished by a like fine, imprisonment, or both. --Executive Order 6102 Requiring Gold Coin, Gold Bullion and Gold Certificates to Be Delivered to the Government. April 5th, 1933

Don't say I didn't warn you!

Keep in mind a $10,000 dollar fine in those days would be 500 one ounce twenty-dollar gold pieces. With gold at, say, ~$1,700 per ounce as it is today, Feb. 5, 2012, that would be a $850,000 fine today. So, FDR told our ancestors to "stand and deliver" their gold, or be fined $850,000 dollars -- and spend 10 years in prison.

At least it wasn't the guillotine!

Yep, during F.D.R., the bankster/government axis still took transactional hard money very seriously indeed!

But don't worry. It couldn't happen here - - - again.

And Executive Order 6102 wasn't the first "favor" F.D.R. did for the banksters either. Nor the last. For example, in a completely unprecedented move on March 6, 1933, by a proclamation issued just two days after being inaugurated, F.D.R. declared a bank holiday. This prevented citizens from continuing to trade-in their Federal Reserve Note I.O.U.s for the gold those notes promised -- "REDEEMABLE IN GOLD ON DEMAND" printed right on their face, remember -- which, as we know, the banksters didn't have.

Our ancestors knew too - - - that's why they were, en masse, trading them in for that gold they promised. It was a classic bank run, but now, rather than relatively small and local, on a hugely expanded national scale. Rather than the 2% or so of banks being insolvent in earlier similar "panics" -- caused by what would in retrospect seem puny bankster counterfeiting -- now fully half of all U.S. banks had been counterfeited into insolvency.

So, in what has to be considered a brilliant if desperate move, these and other government actions stole our ancestors' gold right out of circulation. Despite the hard money clause in the body of the U.S. Constitution which states:

No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts; --United States Constitution, Article I, Section 10, Clause 1

And, with Roosevelt's direct complicity, they stole it despite the fact that in his oath of office [3], he had just sworn to "preserve, protect and defend" said constitution -- which included the hard money clause -- which is still the law of the land even today. And, believe it or not, that 1933 banking "emergency" is still a regularly re-declared state of emergency today (2007A.D.).

Institutional Memory

And at least the institutional memory of the bankster establishment of a later period clearly remembered the dangers posed to their operations by that "barbarous relic" barometer, A.K.A., "gold," particularly after Nixon "closed the gold window" in 1971 [4]- - -

The original Bretton Woods requirement that each currency have a declared parity against gold (or the U.S. dollar) was reversed into an actual ban on gold parities. Further to reduce the monetary role of gold, in 1976 the IMF began a program of disposing of part of its gold stocks, partly by returning gold at the low official price to member governments, partly by selling gold in periodic auctions. --Leland B. Yeager, From Gold to the ECU, The International Monetary System in Retrospect, The Independent Review, Vol.1, No.1, Spring 1996, ISSN 1086-1653, Copyright 1996, Pg. 17 & 18

So, beginning in 1976, the IMF, via amending the failed Bretton Woods agreement, [5] banned gold as the "unit of account," even among banksters. And, in addition, by "disposing of part of its gold stocks, ...partly by selling gold in periodic auctions," the bankster/government axis began increasing the gold supply by selling gold (the gold they had stolen from "we the people" -- in the U.S. by EO 6102), and thereby kept it's price down, protecting their paper money scheme by "spoiling" the gold price.

So, as long as banksters hold a significant proportion of gold (in places like The Federal Reserve Bank of New York -- and, perhaps, Fort Knox), gold is still the banksters' gal. That's why you need to be a bit cautious in "dating" her.

But that was 30 years ago. Surely they don't still worry. Do they?

MORE Institutional Memory

Yes, they do. For example, as a result of the 1995 gold price run-up, a remarkable civil law suit was filed by lawyer Reginald H. Howe on December 7, 2000 in the U.S. District Court in Massachusetts -- naming the following luminaries as defendants - - -
Bank for International Settlements (BIS),

Alan Greenspan, U.S. Federal Reserve Chair

William J. McDonough,

J.P. Morgan & Co. Inc.,

Chase Manhattan Corp.,

Citigroup, Inc.,

Goldman Sachs Group, Inc.,

Deutsche Bank AG and

Lawrence H. Summers, Secretary of the Treasury

The suit begins this way:

This is a complaint for damages and injunctive relief arising out of manipulative activities in the gold market from 1994 to the present time orchestrated by government officials acting outside the scope of their legal or constitutional authority and certain large bullion banks active in the over-the-counter gold derivatives markets and on the Commodities Exchange ("COMEX") in New York.

Do you suppose those "manipulative activities" were designed to manipulate the price of gold higher? Or was the bankster/government axis trying to manipulate the price of gold lower?

Well, in case you aren't sure, in that suit you find the following:

55. The fifth wave of preemptive [gold] selling in excess of two standard deviations occurred in reponse to this rally as the Fed, the Bank of England and the BIS struggled to halt and reverse it. According to reliable reports received by the plaintiff, this effort was later described by Edward A. J. George, Governor of the Bank of England and a director of the BIS, to Nicholas J. Morrell, Chief Executive of Lonmin Plc:
We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K. --Civil Action No. 00-CV-12485-RCL

The value of gold -- compared to the "value" of fiat -- and reported simply as the price of gold, is still like a barometer on price inflation -- which indirectly exposes monetary inflation. That's true price inflation, not the fantasies reported these days by central banksters and government bureaucracies.

Or NOT reported at all - - -

The last duty of a central banker is to tell the public the truth. --Federal Reserve vice chair, Alan Blinder, PBS Nightly Business Report, 1994

So, while you may not know, the banksters do -- remember, the FED no longer reports M3, the broadest measure of U.S. money supply. What have they got to hide? I bet you already know.

The best check on axis counterfeiting is to have hard money circulating along side fiat currency. That is, TRANSACTIONAL HARD MONEY. Historically, that invariably sinks bankster counterfeiting. That's why, in what has to be considered an innovative coup, the banksters got Roosevelt to issue Executive Order 6102, essentially taking all gold in the U.S. out of circulation, and making it illegal to own -- as if it were heroin, cocaine, or SAMs! Exactly like French Minister Cambon above. Only more efficient.

Clearly, by the end of 1932, the banksters were ready for whoever got elected -- EO 6102 was signed on April 5, 1933, just 32 days after F.D.R.'s first inaguration on March 4, not enough time for a new U.S.A. Corp. C.E.O. to embark on such a dangerous, radical, and clearly unconstitutional -- not to mention immoral -- course of action on his own. [6]

Larry Summers?

I stumbled on Larry Summers in the International Herald Tribune while in the Far East somewhere, probably the Philippines. He and his wife had been forced to pay double for a motel room because the Super Bowl was in town. His wife suggested they call the authorities to punish the motel but Summers, with an ivory tower flavor, told her, "No, honey. This is just the free market working to solve a temporary shortage in rooms."

In one of my few pescient moments, I turned to my wife of that time and said, "They're grooming him for something." And he indeed ended up as President of Harvard. Yep. And drew heat for a paternalistic attitude -- and other politically incorrect sins.

Just kidding. Well, not entirely. He DID get forced out of Harvard for politically incorrect sins.

But that was after his stint as Secretary of Treasury at the end of the Clinton administration. Little did I know at the time that his post-graduate claim to fame was that he'd studied an obscure way to keep interest rates low during times of monetary inflation by manipulating the price of gold. It's called Gibson's Paradox. In fact, I believe that's the work that got him the Bates Award. And probably the U.S. Treasury Secretary gig as well.

Do they still manipulate the price of gold? Absolutely. Even though they deny it when they can. But there's the Howe lawsuit above. And then there's the Blanchard & Company law suit - - -

Barrick Gold has confessed that it and its bullion banker, JP Morgan Chase & Co., are the direct agents of the central banks in the international control of the gold price.
Barrick's confession was filed in U.S. District Court in New Orleans as part of a legal maneuver to gain dismissal of the federal anti-trust lawsuit brought against it and Morgan Chase by Blanchard & Co., the New Orleans-based coin and bullion dealer. Barrick moved to dismiss the Blanchard lawsuit on the grounds that the suit had failed to include as defendants some indispensable parties whose vital interests are at stake, the central banks; that the central banks, having what is called sovereign immunity against suit, simply could not be included in the suit; and that the suit therefore had to be dismissed.
The judge concluded that Barrick's motion to dismiss argued in effect that an illegal action involving so many powerful entities from all around the world is going to be immune from being challenged.
That's, as we say, not acceptable, Judge Berrigan said, denying Barrick's dismissal motion. --Bush's Barrick Corps drops bombshell From Gold Anti-Trust Action Committee (GATA), Tuesday 10 June 2003, 1:19a ET

According to GATA's Bill Murphy, Barrick settled with Blanchard & Co. out of court, admitting the manipulation -- AND that they were agents of the central banks.

So the defendants (Barrick and J.P. Morgan Chase) ran for cover behind "sovereign immunity," admitting they indeed were manipulating the gold price. But that was O.K. because the bankster/government axis told them to. (Axis? Well, U.S. Sec. Treas. Henry Paulson is past chair of bankster Goldman Sachs -- and of course, Robert Rubin, Clinton's longest serving Treas. Sec., had been bankster Goldman Sachs' Co-Chair too. Etc.)

But that sort of gold price manipulation is unusual. Isn't it?

Not exactly - - -

Who Does It?

In 1934, the year after FDR signed E.O. 6102, he also formed the, at the time, super secret ESF, short for "Exchange Stabilization Fund" to attempt to keep the value of the dollar stable once it was no longer redeemable in gold. According to the U.S. Treasury Department,

The legal basis of the ESF is the Gold Reserve Act of 1934. As amended in the late 1970s, the Act provides in part that "the Department of the Treasury has a stabilization fund ...Consistent with the obligations of the Government in the International Monetary Fund (IMF) on orderly exchange arrangements and an orderly system of exchange rates, the Secretary..., with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities." --U.S. Treasury Exchange Stabilization Fund,

They don't normally admit to dealing with gold anymore, but we can surmise from the Howe law suit, the Blanchard law suit -- and rather indirectly, from Larry Summers appointment as Treas. Sec. (U.S. Sec. Treas. Henry Paulson was appointed because of a perceived ability to handle a "global economic crisis," why not Larry Summers because he knew how to manipulate the price of gold?) -- and particularly BOE Pres. Eddy George -- that they still do anyway. In fact, "at any price, at any cost, the central banks" try "to quell the gold price, manage it."

And now, there's the "Working Group on Financial Markets," also known as the "Plunge Protection Team," which metasticized out of Roosevelt's " ESF," is much better funded - - - and, apparently, has much broader lattitude in what it messes with - - - -

"They [the FED during the 1987 stock market crash] had the legal power to buy up the entire national and private debt, theoretically infusing the system with billions, even trillions, of dollars, more than would ever be necessary to restore liquidity and credit. Of course, the result of that would be Latin American-style inflation.
In addition, there was an ambiguous provision in Section 13 of the Federal Reserve Act, the lawyers told Greenspan, that could allow the Fed, with the agreement of five out of seven members of its board, to loan to institutions - brokerage houses and the like - other than banks. Greenspan was prepared to go further over the line. The Fed might loan money, but only if those institutions agreed to do what the Fed wanted them to do. He was prepared to make deals. It wasn't legal, but he was willing to do it, if necessary. There was that much at stake. At that moment, his job was to do almost anything to keep the system righted, even the previously inconceivable." --Bob Woodward, Maestro: Greenspan's Fed and the American Boom (New York: Simon & Schuster 2000)

And here's Greenspan in his own words:

... rememeber we are not limited with respect to purchasing only assets which affect the over-night federal funds rate, we in the past have engaged in purchasing assets all along the maturity spectrum ah, of, ah, the yield curve and indeed during WWII and until the accord with the Treasury in 1951, the Federal Reserve essentially pegged the long end of the treasury market, accumulating at some points very significant amounts of treasury issues. So if we ever got to the ...point where we could no longer lower the target federal funds rate, we could none the less increase the liquidity in the system by moving out on the maturity schedule as far out as we wanted, and as a consequence, there's virtually no meaningful limit to what we could inject into the system were that necessary. " --FEDERAL RESERVE CHAIRMAN ALAN GREENSPAN TO JOINT ECONOMIC COMMITTEE OF CONGRESS, November 13, 2002, 11:36:58

And we have this clue as to where that led:

Just days ahead of a war, the US and Japan are prepared to co-operate to support the financial markets if there is a crisis.
A deal was struck last week in the US between a former Japanese finance minister and the head of the US central bank, the Federal Reserve's Alan Greenspan. "There was an agreement between Japan and the US to take action co-operatively in foreign exchange, stocks and other markets if the markets face a crisis," Chief Cabinet Secretary Yasuo Fukuda said. --US and Japan to protect markets, BBC NEWS / BUSINESS, Wednesday, 19 March, 2003, 06:25 GMT

And another crack in the wall of silence:

"Avoiding a depression is, unfortunately, going to have to involve either a large, quasi-permanent increase in the budget deficit -- preferably tax cuts -- or restoring overvaluation of equity prices," Connolly said on Monday.
"If conventional monetary policy is not enough to produce that result, the government may have to buy equities, financed by the Fed," Connolly said. --Depression risk might force U.S. to buy assets, Reuters, Tue Feb 12, 2008 4:19pm EST, By John Parry

So, as GATA Secretary Chris Powell quipped, " There are no markets anymore, just interventions."

Heck, they even manipulate the statistics they try to feed us. On inflation, for example. And jobs. And, more generally, just about ALL government statistics.

That 'Barbarous Relic'

And about the title to this piece: "That Barbarous Relic: Transactional Hard Money vs. The Gold Standard"?

Well, the original Keynesian, Lord John Maynard Keynes, coined "Barbarous Relic." He was hep to the extreme difficulty transactional hard money created for the bankster/government axis in it's inflationary schemes. In fact, as Cambon, et al. recognized, "the worst enemies of his [inflationary] policy were gold and silver." Especially when they are circulating as money.

In fact, this motivation didn't wait till the French Revolution to begin - - - because the nature of banks is quite uniform. As is the outcome of allowing them:

"In Chapter Two of Jesus Huerta de Soto, Money, Bank Credit, and Economic Cycles, Ludwig von Mises Institute , de Soto traces the history of the vampire bank, back into Greek and Roman times. Archaeologists have laboriously dug up the dusty records of many ancient banks. The records have a unifying feature: the banks, from whatever century, were fractional-reserve frauds, and every single one eventually defaulted. And the histories of Athens, Ptolemaic Alexandria, and Rome indeed show the effects of monetary expansion and contraction."
The author points out that one overriding factor pushes bankers into fraud. Of course there is always the desire for short-term gain, but that would generally be overcome by the desire for good reputation and long-term business. The deciding factor is the threat of confiscation by government. Banks with actual precious metal in their vaults were more tempting targets for gangsters like Alexander, Caesar, Herod, Cleopatra, etc. than "banks" which had loaned out their reserves a couple of times over. Fractional-reserve banks offered an opportunity for cooperation with the gangsters, in the form of armed force against depositors who wanted their money back. --jomama

And we know that the government-bankster axis still wants to ply it's inflation scam. And they always have excuses. I particularly like this one - - -

In the 1930s, Lord Keynes predicted that some day everyone would have a four-bedroom house, at which point, the American dream having been fulfilled, people would lose their incentive to work. ...Therefore, he argued, the government would have to adopt fiscal policies designed to keep people from hoarding [saving] too much of their income. --Unlimited Wealth by Paul Zane Pilzer, pg. 17

So they wanted to keep us working -- rather than living lives of leisure -- by taxing away our incomes and inflating away our savings. And, they've been remarkably successful. And, of course, such scams are always for our own good - - -

- - - and these days, well-intentioned folks from the "left" still seem to believe that if only they could get the right politicians and bureaucrats in office, all that apparatus of government would be used for our own good.

A few words on that subject: Mao Zedong, Joseph Stalin, Adolph Hitler, Benito Mussolini, Pol Pot, Kim Jong Il, George W. Bush - - -

But the heart beats ever hopeful, so, if you're comfortable with that record -- or believe it will improve significantly, well, I hope you're right. And that the close connection between banking and war -- or as we know it today, the "militaryindustrialcongressional complex" -- will wither away, I fervently hope so.

But for those of us who aren't quite sure -- and don't find the current record -- 43% of 2007 taxes spent for war for example -- very encouraging, there's the classical "Gold Standard." At least for starters.

The idea was:

1. It would keep governments on a short economic tether, and bankers -- and others -- honest, and

2. It would create an instant market for transactional hard money in the amount required to pay taxes.

Number two is always successful to the extent people pay taxes. Number one, however, as Jake points out and history proves, is abbrogated by governments at the drop of a bomb - - -

Ah, see, all it takes is the drop of a - - - ah, bomb - - - Ah, normally you'd say "drop of a hat," but, ah - - - [FROZEN grin. Think newbie comedian, dying in front of a large audience].

At any rate, transactional -- that is circulating -- hard money pre-dates the gold standard, and is more basic and much more effective than the classical gold standard in keeping the axis honest. So, if you have the choice between transactional hard money vs. the Gold Standard, which should you probably choose?

Of course today, we have neither. Or do we?

Blind Date With Unconscionable Profits - - -

Why might gold "be a bit of a risky investment -- but might also produce 'unconscionable profits'?" That's because the central bankster/government axis has strong motivation (and an extensive history) of manipulaing the price of gold, invariably depressing the price in order to defend their inflationary schemes. So, an investment in gold is dating the bankster's gal.

The thing is, though, gold always rises to the occasion. Eventually. As, in the effort to protect their paper money scam, the axis divests itself of its stolen gold -- as they did after Bretton Woods, remember -- to 1. depress the price of gold through sales and 2. cause fluctuations in price to tarnish gold's reputation, they'll eventually run out of gold and lose control.

When? Don't ask me, but you can look up GATA (the Gold Anti-Trust Action Committee) and see their latest speculations on that very question.

And then there's the monetary thing. The banksters have done quite a good job of suppressing the monetary use of gold, and we know why by this time. But should gold re-emerge as a monetary instrument, it's value would shoot to the moon. Why? It would be like discovering that the tarry black liquid seeping to the surface in Titusville could be used to replace whale oil for lighting -- and could power replacements for horses and buggies.

"But," you say, "that's not going to happen?" Odds are in your favor. BUT the one characteristic of "money, missing from all fiat currencies is "limited supply" which translates as "safe store of value." While the axis continues to work diligently to discredit gold in this department, eventually they will run out of golden ammo.

Oops! The odds have changed.

In a commentary published in Monday's Financial Times, World Bank President Robert Zoellick wrote that an updated gold standard could help retool the world economy amid tensions over currencies and the United States' monetary policy... --World Bank chief calls on G-20 to reconsider gold standard | Business | Deutsche Welle | 08.11.2010

In fact, there's increasing evidence there may be A Golden Future waiting in the wings.

And, in the mean time, there is still indeed transactional gold. Among other places, here:

And remember, there are still vast populations around the world which traditionally maintain their belief in gold as a store of value. Particularly India, China, etc. And any country that saw their currency hyperinflate or melt-down.

And, during the Reagan Administration, they had a serious inflation problem -- and knew they SHOULD go back to gold.

Transactional Hard Money & Free Banking

Where there are no legal tender laws -- or they can't be enforced (cyberspace) the opposite of Gresham's law applies, that is, since sellers prefer "good" money, "The good money drives out the bad."

Transactional hard money implies "free banking" which predates the "Classical Gold Standard" and was quite successful in Australia, Scotland, and a few other places. Till some of the bankers decided a monopoly with a government as partner would be better for them, and thus, joining the mercantilist ranks, became newbie banksters, and often the first mercantilists in fact.

Free banking is just what it implies: Anyone can start a "bank" and issue notes, toothpicks, wampum, or anything else. Including gold and silver coins. If other people freely decide to avail themselves of such products and services -- including, even, the use of toothpicks as money -- then that's cool. I'd bet gold and silver coins would beat the heck out of the alternatives.

The question is, can gold and silver re-assert themselves as transactional instruments in the complex modern world. Again, by the same logic as above, without forcible government intervention, I'd bet gold and silver would beat the heck out of toothpicks, and, yes, even out of fiat paper money and/or megabyte money.

In fact, no one knows, and the discussion has been suspended pending the outcome of such experiments as mentioned above. As the wiki link to "free banking" puts it, "There is speculation that with electronic currencies free banking can evolve into Anonymous internet banking. The implications of this for the monetary system are unknown, and much of the rigorous theory in this area has been abandoned for a wait and see attitude."

So far, shows "over $199 million of gold and silver in circulation as of 28 February 2007."

Of course, this really amounts to "off-site storage" for your gold and silver, and like warehouse banking of old, could get dishonest eventually. But, unlike the US Government at Fort Knox, they do have good regular and apparently "transparent" independent audits of their gold holdings, but their money isn't directly redeemable.

But there IS some actually circulating hard money. The "Liberty Dollar" for example. But guess what?

If you guessed the Feds are trying to stop people from using it, you win! Yep. The headline reads, "Feds lower boom on alternative money". They still have a knee-jerk reflex against competing hard currency. And as you now know, for good reason. And not the reasons they give in the article. In light of the U.S. Constitution's hard money clause, I particularly love "It's unclear how many people or businesses are unknowingly holding Liberty Dollars, which cannot be exchanged for real money at banks."


[1] Remember Cambon and the French. And you can see this beginning to happen in the current Zimbabwe inflation - - -

"The [Zimbabwe] central bank's latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30 [2007], anyone who raises prices or wages will be arrested and punished. As Inflation Soars, Zimbabwe Economy Plunges By MICHAEL WINES, NYT, Published: February 7, 2007 return

[2] A "natural person" means a real flesh-and-blood human as opposed to a corporate "person" (corporation) which was a well understood distinction, "corporations" being relatively new inventions at that time. return

[3] The U.S. Presidential "Oath of Office" as prescribed by the U.S. Constitution, Article II, Section 1, Clause 8:

I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States. return

[4] The Bretton-Woods Agreement tried to stabilize international trade by declaring foreign currencies redeemable in gold OR DOLLARS. By Fiat. From the U.S. side of the equation, it looked like another license to steal, and, not surprisingly, in the solid tradition of the second oldest profession, the bankster/government axis had been busily counterfeiting away, creating way more paper dollars than could ever be redeemed for even all the gold they had already stolen from "we the people." And eventually there was the inevitable "run on the bank" as foreigners realized that in terms of gold, the U.S. Axis was bankrupt. The dollar hadn't been redeemable in gold for U.S. citizens since E.O. 6102 remember, but, perversely, as a result of Bretton-Woods, foreigners could redeem dollars for gold -- and were doing so at a rapid rate in the late 1960s. So, at behest of the same experts that had puppetized Roosevelt, Nixon ended the convertibility of dollars to gold even by foreigners -- which, in a close analogy to older banking practices, was referred to as "closing the gold window." return

[5] Bretton Woods was an ultimately failed attempt to compensate for the cross-border currency fluctuations which disrupt trade to this day, and were guaranteed as a result of abandoning transactional gold. And the world is just beginning to shake off some of the worst problems return

[6] In 1933 new President Franklin D. Roosevelt signed a bill forcing all the American people, to hand over all their gold at base rate. With the exception of rare coins. He disowned himself from the bill claiming to not have read it and his secretary of the treasury claimed this was "what the experts wanted". XAT3, THE HISTORY OF MONEY PART 3 return

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