Taking the Glitter Out of Gold-Based Currency

February 17, 2010

wampum2.jpg(left- Dutch colonists, upon discovering the importance of wampum as a unit of exchange among tribes, mass-produced wampum in workshops.)


by Anthony Migchels
[email protected]

author of "Dutch Barter System Challenges Bankers"



"You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold" - William Jenning Bryan

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Although debunking Gold completely would take too long, there are three points I would like to make. I believe some contemplation of these are quite sufficient for all who want to be armed suitably for the monetary struggles ahead.


In the first place, it doesn't matter at all what means of exchange you use. Paper, bits and bytes, shells, tally sticks, salt. They have all been used successfully in the past.


The question is, who is in control of the supply? And what is he doing with it?


Let's just one more time repeat a worn out quote: "Give me control of a nation's money supply, and I care not who makes the laws."


We all know who said this and we all know he knew his trade.This was said when Britain was on the Gold Standard.


What is gained by control of the supply of money?


In the first place the ability to inflate and deflate creating the so called 'business cycle', not a force of nature, but an effect of tampering with money.


Inflation leads to higher prices, growth, optimism. Deflation then comes, forcing many to sell below normal prices and in this time of scarce liquidity, a few insiders with lots of cash buy up the whole lot for practically nothing.


All this doesn't change at all with Gold. The 19th century is riddled with asset bubbles followed by depressions. It is quite clear that there is an inverse relationship between monetary stability and Gold as money. Even though Gold's record is probably not as bad as paper, it is at best the lesser evil.


GOLD-BASED CURRENCY = DEFLATION & DEPRESSION


Most often, however, periods with Gold as money are characterized by deflation. The controllers of the system keep Gold scarce. Also, global gold output is insufficient to keep up with economic growth, implying structural relative decline of amount of money in circulation, compared to total output of production.


Even more important when controlling money is Interest. Now, this really exasperates me.


The Gold people say that interest is a normal free market pricing mechanism for money. It allows for 'optimal allocation of capital'.


Yeah, right in to the bankers pockets..........

Don't the Gold people care about the enormous price that Labor pays for this?


Isn't it totally atrocious to allow a few capitalists to control such an important factor of production and reap such massive profits from it just for their own sake?


Let's get over this.


So it is not about what means of exchange you use, it is about whether we, as a people, are in control of it, so that its supply is steady and dirt cheap.


ILLUMINATI LIKE GOLD CURRENCY


The second item of interest with the Gold narrative is, that it was financed by Rockefeller. He imported Ludwig von Mises to the US in 1940 and gave him a grant...............


The self styled 'Illuminati' would invest in people supporting gold and hiding this message in other, less relevant (dis)information. It would simply be a typical tactic for them, to have some people make some noise about the bankers and perhaps 9/11, at the same time selling gold as a solution and in this way leading the opposition in to a blind alley.


Third, interest free money is not an idea, it is an established fact. It is all around us in the various barter schemes around the world.


Hitler financed his war machine with his own capital and bartered internationally without one dime of gold or 'hard' currency. Declaring stuff like 'breaking the thralldom of Interest is the kernel of National Socialism' time and again..................


Hell, the greatness of the US itself is built on non interest bearing government notes! Franklin's Colonial Scrip, Washington's Continental (even though this was inflated into oblivion, if we take the money supply out of the hands of the bankers, please don't give it to some career politicians.........) and of course Abe Lincoln. He won the war by throwing 30% interest gold out of the window, spitting in Rothschild's face and buying everything he needed to hammer the South by printing a few hundred million Greenbacks, some of which are in circulation even today!


Of course, he got shot for that, but that just emphasizes the point.


NO CASE FOR GOLD


So is there really a case for Gold? I think not. It is just one more of their memes, and a particularly nasty one.


Gold classically had its uses as a store of value in times of crises and the last couple of years it is making a comeback as a hedge against inflation and total systemic breakdown. But even for that it is a second rate tool. Terrible manipulation of the gold market, and now Tungsten bars all over the place........ Gold is not very credible, really.


And at the end of the day, all this focus on 'wealth preservation' is rather tiring and a big problem in itself. An old friend famously said you cannot serve two masters and it is simple truths like these that need more focus and we need money more in line with it.


For real money, serving the needs of the community, instead of its producers, we need at least a few percent of the people to know about these things. We need people who have a basic literacy on monetary matters and who can see through the basic schemes.


The import of the matter is such, that the Truth community both has a major opportunity and responsibility to facilitate the necessary education and debate.


Because the production of the means of exchange is simply a trade and science like all the rest and is in urgent need of demystification.


And when it comes to making money in the real sense of the word, there is no reason at all to wait until the governments clean up their act and start doing their job. Its suicide to do so. Commercial barters around show that we can NOW start creating all the liquidity we need.


Waiting for the nanny state to solve our problems IS our problem.


TAKING CONTROL OF MONEY.


Because "money is anything that is generally accepted by agreement as a medium of exchange", and although most of the current barter units do not qualify as high quality money (because they are either not convertible to other currencies, or can't supply interest free credit as I worked out here), it is clear that private, not for profit organization can start issuing interest free money right NOW. The bigger the networks in which these units circulate, the more effective they become, and the more they alleviate the plight of slavery through usury and of course function as a hedge against the continuing financial turmoil.


Let's not forget that WIR is turning over the equivalent of 2 billion CHF per year in Switserland and is universally seen as an important factor in that nation's stability and prosperity.


However, privately created high powered working capital is quite something different from simply printing some interest free government notes, since there is no coercion available to make people accept it. Nor are taxes payable in private money.


These challenges have not been sufficiently met. Yet.

But that is an other story.

----


Anthony Migchel's whole article: "Gold Revisited".







Comments for "Taking the Glitter Out of Gold-Based Currency"

Anthony Migchels said (February 20, 2010):

The story on Gold really occupies me and this morning I have done something I promised myself a long time ago: to analyze the protocols for their content on money.

It has been some time since I last studied them, but they remain a treasure.

Look what I found: http://realcurrencies.wordpress.com/2010/02/20/the-protocols-on-money/

So clear and outspoken about circulation of currency, the Gold Standard, Interest. Amazing stuff really, I'm sure it will be of interest to you.


Gene said (February 20, 2010):

The only real currency is food. There are two hungry men. One has a bar of gold and the other has a potato. Who has the best currency?

Even though the bankers via their multinational corporations have made great progress in cornering the market on food, it still only takes a seed, dirt, water, and sunshine to multiply your currency and live while you do it. The meek will certainly inherit the earth.

As long as there are bankers that practice usury, there can be no liberty. Usury is merely the legalized thievery of assets and souls involved in the folly.


Michael said (February 18, 2010):

Gold is the closest thing to a univerally accepted standard, which is beneficial for international trade (normal trade, that is; forget "free" trade).

As "abc" wrote, currency "must have some rarity and desirabilty, so it has value. it must be something that does not degrade in storage. it must be something that can easily be manufactured to a standard weight and shape. it must be something that can not be easily counterfeited".

A gold standard does not -have- to be a bad thing (it all depends on who controls it). When one is making a large transaction (like buying/selling a house), it is more convenient to exchange notes or even cheques (which represents notes which ultimately is redeemable in gold) than to keep lugging all that gold around.

Government-issue notes should ultimately be -redeemable- in gold; thus, the amount of gold kept in reserve should be enough to redeem the notes in circulation at a fixed value.

It is government which should have the power to issue gold-redeemable currency, of which the banks are only custodians. If all the citizens of a nation accept a government and its laws, then they should also accept and use a common means of exchange between themselves and their government. The process by which government issues a nation's currency should be open and accountable; and perhaps supervised by a separately elected body which is not involved in politics or any of the banks. Both the government and this theoretical body should be governed by a rule of law regulating the issuance of currency, perhaps ratified by a national referendum so that almost everyone can agree on it.

Today we have private banks, like the "Federal" Reserve in the United States, lending money to the government with -interest- so that the debt is created out of thin air and can -never- be paid off, even if the country is taxed to death. But if the government issues currency which all of the citizenry can use, without interest, then the government can finance its own existence without too many taxes.

There should be no usury (lending at high rates of interest). Lending with interest is not lending. If banks operate as -businesses-, instead of custodians, then they will want to make loans with interest, in order to make a profit. This tends to stymie business growth, since business will have pay back not only the initial loan, but also the interest, which is adverse to their own profitability and of the workers who are employed.

The monetary system need not be too complex.

However, the world is so enmeshed in the current unstable system that nothing less than an Apocalyptic shake-down will change it.


abc said (February 18, 2010):

AM: In the first place, it doesn't matter at all what means of exchange you use. Paper, bits and bytes, shells, tally sticks, salt.
They have all been used successfully in the past.

wrong, it does matter: currency must not be able to created out of "thin air", because otherwise those with the power to create it eventually control everything. power corrupts, and absolute power corrupts absolutely, thus nobody should have the power to create currency for free. it must be earned, and have a free-market value.
it must have some rarity and desirabilty, so it has value. it must be something that does not degrade in storage. it must be something
that can easily be manufactured to a standard weight and shape. it must be something that can not be easily counterfeited.

AM: The question is, who is in control of the supply? And what is he doing with it?

and the answer is: nobody should be in control of the supply, so we don't have to wonder what anybody is doing with it.

AM: Let's just one more time repeat a worn out quote: "Give me control of a nation's money supply, and I care not who makes the
laws."

and the good answer is "the people and free market" should have control of the money supply.


AM: GOLD-BASED CURRENCY = DEFLATION & DEPRESSION

wrong. they are natural cycles of any economy that can never be avoided under any circumstances. they are as natural as rain and
sunshine, each doing what naturally benefits the outcome as a whole.

AM: Most often, however, periods with Gold as money are characterized by deflation. The controllers of the system keep Gold scarce. Also,
global gold output is insufficient to keep up with economic growth, implying structural relative decline of amount of money in circulation, compared to total output of production. wrong. there is no controllers of a gold-based system. gold can only be gotten the honest way: working for it. economic growth
isn't an imperative in life, and it will settle to where it should naturally find balance; the likely outcome being "sustainability
and limited growth" as opposed to "rapid growth" which cannot be sustained.

AM: The Gold people say that interest is a normal free market pricing mechanism for money. It allows for 'optimal allocation of capital'.
Yeah, right in to the bankers pockets..........

wrong. in a gold system, anyone is a banker as much as any other person. the only reason banks are a select group of limited and appointed and controlled and regulated business today is because
they are the only ones allowed to create money out of thin air.


AM: The second item of interest with the Gold narrative is, that it was financed by Rockefeller. He imported Ludwig von Mises to the
US in 1940 and gave him a grant............... The self styled 'Illuminati' would invest in people supporting gold and hiding this message in other, less relevant (dis)information. It would simply be a typical tactic for them, to have some people make some noise about the bankers and perhaps 9/11, at the same time selling gold
as a solution and in this way leading the opposition in to a blind alley.

it is difficult to see the facts in those statements that lead to a logical point. it is true that acquiring wealth off paper-money
does allow "them" to buy more gold and have more wealth, but that is just the price we have to pay for allowing paper money in the 1st place. regardless, all they can do is spend it under a gold standard, because they will only be able to acquire more wealth the honest way: by working for it.


Dick said (February 18, 2010):

This article was "on the money," pun intended. Mr. Migchels expresses the basic point of "The Money Masters" or Stephen Zarlenga's "The Lost Science of Money"; money has no intrinsic
value, but is a legal contract representing credit. There are a few very basic concepts to understand, which are thoroughly explained
in the late Charles Walters' "Unforgiven":

1. Say's Law of Markets: Production creates the credit required to consume the product.

2. Income = Production X Price.

3. Trade Turn: Credit created by production recirculates through the economy at a certain rate, based on the level of development in
the economy. For example, each dollar paid to the corn farmer results in seven dollars in national earned income (this ratio has held steady for about 60 years). Why? Producing corn creates credit (represented by new money) that is traded for seeds, tractors, loans, etc.

Ergo: If you short-change production with inadequate price (corn, on average, earns about 10% of what it costs to produce - the rest
is debt and welfare), you short-change the national economy of the credit it requires to function. This is the root cause of debt,
unemployment and falling living standards.

An ideal national currency would combine what gold purports to do (fixes currency to objects of value) with what Lincoln proved with
the fiat Greenback. The fiat power of congress must be used to guarantee a minimum, parity price for corn, wheat, iron and other basic commodities (parity is where average income equals average
expenses. For example, it would become illegal to pay less than $10/bushel or whatever at a grain elevator or futures exchange).

This would have the following effects:

1. The currency would significantly represent assets of real,permanent value. Wheat and iron are a more legitimate means of foreign exchange than gold, or certainly pieces of paper.
2. The money supply would expand at exactly at the rate of real growth of the economy. This is a good thing, as income expands while debt contracts.
3. Removes debt at the source of wealth creation. New wealth enters the economy at the farm, forest and mine. If that basic production
is paid its fair price at full production, full income recirculates
through the economy to create full national income.
4. Stability of price and income removes debt and speculation from the national economy.

I would strongly urge Mr. Migchels or any of your readers to buy a copy of "Unforgiven" and read it several times. It's not a very sexy idea, but this is the essence of the Hamiltonian credit system in the US Constitution. Fair farm prices (not war or Fed policy)led our country out of the depression, and they can do it again.


Jerry said (February 18, 2010):

I picked up an interesting quote on the Solari website
http://solari.com/blog/wp-content/uploads/2010/02/gold_quote-hitler-2.jpg

Interesting to say the least and for any who didn't know the Treaty of Versailles and its reparations for Germany came in at an astounding
132 billion gold marks or 33 billion dollars! That was 1921. Is it any wonder the screaming about the thralldom of interest payments!


Henry Makow received his Ph.D. in English Literature from the University of Toronto in 1982. He welcomes your comments at