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Cash, not Gold, is King in a Crash (Updated)

September 22, 2011

stock-panic.preview.jpgSept. 22 -- "Gold Plummets as Investors Scramble for Cash"

Dow Down 400 Thursday Sept. 22, Gold Down $45 Silver down almost 10%

Unless we reform money creation, we will be fed to the wolves.

"Again, the market reacted negatively to lack of "stimulus" and talk of "austerity." The central bankers and their minions are deliberately causing a Depression."   

Updated From August 4, 2011

by Henry Makow Ph.D.

"Everyone predicted the market would crash if the US didn't raise the debt limit and defaulted.

Well, the debt ceiling was raised and the market crashed anyway. Even gold went down today. Why?

They crashed because the specter of "lower government debt" meant less spending i.e. The medium of exchange would not keep pace with economic growth. And since the dollar is the world reserve currency, this puts the world economy in a straightjacket."

I wrote this on August 4. A month and a half later, the pattern continues. The market reacted negatively Wednesday to lack of stimulus from the Fed and talk of debt and default in Europe. The central bankers and their minions are deliberately causing a Depression. The catalyst for today's decline was the Fed saying the US economy has "significant down-side risks." Sounds like a deliberate provocation to me.   

As long as money creation is tied to debt, we will continue to suffer. Money can no longer be produced as a debt to the private central banking cartel. It must be produced debt-free.

Here is an explanation of money I posted in August:

Imagine that you were charged a penny for every breath you took. After a month, this would amount to a lot of money. Wait! you would say. Nobody owns oxygen!

The same applies to money. Money is a medium of exchange. It has no intrinsic value.

It is a coupon used to facilitate trade. Each product or service is worth so many coupons. 

The economy is like a fire which needs a certain amount of oxygen to burn steadily. The job of the government is to provide this oxygen in terms of spending i.e. injecting coupons.

Just like oxygen, nobody can own a medium of exchange.

But the Illuminati bankers do own it. They create money in the form of a debt to them!  Anytime the government wants to stoke the fire, it must go further into debt.

Fiscal conservatives like Ron and Rand Paul, and the Tea Party,  perpetuate and legitimize this fraudulent and dysfunctional system  by harping on the dangers of "debt." 

The economy would collapse if the debt were repaid. There would be no money in circulation. We're not meant to repay it.

Half the US debt is owed to the Fed and should be repudiated since the money was created as a book entry. Why should we repay it with our sweat and blood?

Fiscal Conservatives are going to tie the hands of government and precipitate a major depression.

Looks like this is coming true.


In an economic collapse, people will seek refuge in paper currency,  especially the $US. This happened in 2008 and it is happening again.

Gold and silver are just rocks. They are much more expensive to produce than paper and for that reason they are inferior as a medium of exchange i.e. coupon.

A gold bug sent me this:

"The financial crash will render worthless everything that is denominated in paper. Only real things will retain value, and the royalty of real things are gold and silver, for the simple reason that they are the most liquid, i.e. universally accepted."

I replied:

if "universally accepted" and "liquid" are the criteria , the US dollar is far better than either metals... people are going into cash today!

There isn't enough gold and silver to back currencies, and in any case, no government can afford to acquire it.  


The economy needs liquidity (i.e. an effective medium of exchange that stimulates productivity.) As long as this medium is created in the form of debt, the economy will be severely constrained. We will have deflation - too many products chasing too little cash. Deflation is poison for gold.

We don't need bankers to create currency based on our government's credit. The government can do that itself. 

We must unite and demand debt-free currency creation or suffer the consequences. The politicians and mass media won't do this without pressure. They are chattels of the central bankers.


Related- Sept. 22 Gold Plummets as Investors Scramble for Cash

See "A Gold Bug Replies"

Ellen Brown - The Problem is a Shrinking Money Supply

August 8 --  Market Crash is Because of Debt Cut

Scruples - the game of moral dillemas

Comments for "Cash, not Gold, is King in a Crash (Updated)"

Gooch said (September 26, 2011):

Am a fan of most of your articles but I do disagree with this one. Investing in Gold will not get you rich, it is a way to preserve the wealth you have, look no further than Argentina to see what happened to people's wealth after the crash of 2001, people who held cash were left poor overnight. You are correct in that gold should not be used to back currencies but that is a mute point.

As for Ron Paul whether he is sincere or not is irrelevant. I believe he is but am not foolish enough to believe he can save the republic, the powers that be would easily knock him off if it ever reached that point. Daniel Etulin even reported that at the Bilderberg a few years back that the issue of assassinating Ron Paul was being contemplated by the bi boys.

Daniel said (September 24, 2011):

your article on gold was one of worst pieces of trash i have ever read. i am disappointed not because i am a bug, but because your line of reasoning is terrible. otherwise, your other articles are good.

Bruce said (September 23, 2011):

Surely you have seen the famous photo of the Weimar German man pushing his wheel barrow full of paper money to the store to buy a loaf of bread. Fiat money always becomes worthless, while precious metals retain their buying power. Hyperinflation of the US dollar isn't happening at present, but it soon will. We have already been experiencing larger than normal price increases in food and energy for some time. Monetary inflation is a hidden tax that enslaves humanity.

I wish you would stop disparaging Congressman Ron Paul. He's the only honest politician we have in the US. I don't doubt that he is a member of a secret society. No one can be elected to any public office at any level unless he is connected to a masonic secret society.

Every politician has to seek support from people who are connected to money and power. I don't think all Freemasons are evil, or that all Jews are evil. I am convinced that most Blue Lodge members have no idea they help support a criminal syndicate.

They agreed to be hoodwinked dupes and chumps when they swore those bloody loyalty oaths. Masons aren't much different than the millions of bloodthirsty, zionist, evangelical lunatics in the US who call themselves Christians, while at the same time they support the genocide and slaughter occurring in the Middle East and elsewhere.

Ron Paul is the only politician who publicly supports peace for all humanity, which is the main reason why so many people hate him. A lot of US soldiers support Ron Paul because he is the only politician who wants to put an end to these reckless and illegal wars. It would be political suicide for Ron Paul to publicly express any any doubts about the government's official 9/11 story. For 95 percent of the American public, it is sacrilegious to doubt the official 9/11 story, or speak about any of the government's criminal enterprises.

Ron Paul is the only politician with the courage to end drug prohibition, which has increased drug use and destroyed civil liberties. Ron Paul knows that morality laws always increase crime and government corruption. Alcohol prohibition was a disaster. Ron Paul is a licensed physician who is very much opposed to drug addiction. He supports public health programs for addicts, not prison. Drug laws are immoral. Yes, Ron Paul is being used as a political opposition, but that's not his doing.

Ron Paul is the only politician who has consistently supported the US Constitution. He has never been accused of any unethical behaviour. He is vastly more educated in history and economics than any other politician. I might not agree with everything that Ron Paul says, and I know the GOP will never allow him to be nominated for POTUS, but he is still the best and only hope that humanity has to become more civilized and prosperous.

Jarek said (September 23, 2011):

I totally disagree with you on that one. Gold has been a currency for at least 5,000 years, way before today's paper money was invented. Besides, even if the recent drop in its price may seem to some as the beginning of its end, let me tell you that gold has been going up, up, up and down, up, up up and down for quite a long time. Just take a look at the long-term chart.

For instance, precisely one year ago I bought some gold and it cost me ca. $1250 an ounce, while in September 2009 it was ca. $1000/oz and the year before ca. $820/oz. Even today, after the price drop, it sells for 1720 bucks. So taking these plain facts into account, I wouldn't claim that "In an economic collapse, people will seek refuge in paper currency" because there's been a worldwide recession since 2008 and the demand for gold keeps rising in the long run, not falling, as we can tell by its prices. But hey, when the real depression strikes, we shall definitely find out which one of us was right.

As for Ron Paul, I wouldn't say he's a Freemason only because he flashed the sign of the horns once or twice. That's what many people do, myself included, e.g. at metal concerts and believe me, I have nothing to do with masons. Don't know about the secret handshake, though... Still, in my eyes this man is the best presidential candidate the Americans have got and I wish we had someone like him in Poland. Well, we do, but he and his party are virtually unknown and stand no chance against the Illuminati puppets that pretend to control our country, which does not in the slightest discourage me from voting for him time and again.

CR said (September 23, 2011):

If people want to know why the Talmud says what it says about black people you must first understand it is not an ancient document but one written in the 1700s to discredit the Moors.

]Secondly, one needs to understand certain connections such as locations and descriptions of the ancient Egyptians and Hebrew tribes. The best book to explain to the average man and woman is When Rocks Cry Out by Horace Butler. The reader can easily verify Mister Butler's research on the Internet and at their local library.

V said (September 23, 2011):

Any politician (Ron Paul, etc), president who would seriously consider or try to create debt free paper script (money) by using the treasury would end up with a bullet in the head. Lincoln ended up with a bullet from Booth (banking cartel minion)
for creating and using usury free American Greenbacks ($449,338,902 in total). Kennedy got his head blown off in Dallas for having the US treasury print US Dollar Treasury Notes (debt
free public US Treasury Notes and not usury, private Federal Reserve Notes).

The London based banking cartel does not like anyone taking away their monopoly of creating usury debt script notes (money). With the worldwide power they yield over the politicians, courts, media they are almost unstopable
know. They know that the fictitious debt cannot ever be fully paid. As long as the interest income doesn't stop flowing everything is fine for know for them.

Cash is king know and not gold because everybody has cash and it is very liquid. As long as inflation remains low (for how long ?) cash will be king. As long as the US Federal Reserve Notes remains the worlds defacto currency and the US can
'export' their inflation there will not be a catostrophic financial collapse. When hyperinflation kicks in (like in pre-WWII Germany) cash will not be king. Cash will be useless. Good time to implement a one world currency at this time by our
plantation masters.

I believe that the big crash will happen when a few predetermined events start to take place and one of them is the rebuilding of The Jewish Temple (Sol-Om-On) in Jerusalem
where the Jewish messiah (Antichrist) will take his place on the mercy seat above the Ark of the Covenant. This has not happened yet. We will have a large, prolonged worldwide depression but it will not be "the big one", yet.

I would be worried about the one quadrillion dollar worldwide derivatives market. On paper it is larger than the GDP of every country on this planet earth.

Tony said (September 23, 2011):

You are right on the money on the money issue, as usual. But the comments still show tons of ignorance. It's baffling that even well meaning people refuse to actually study and understand money, that is, mediums of exchange.

To say that money has to be something that is scarce is to say that everyone (except the elite) must forever be in want. Pretty simple.

Why is it that silver, which has many uses which gold does not, is always priced at a small fraction of gold when it is much more in demand for those uses? Again, pretty simple to see that something is phony as hell here.

To say that "the market" should decide what is the medium of exchange is simply to say that barter is a better than using money. Pretty stupid.

Ron Paul is a lifetime politician from a small district in Texas. If he was a real threat to the big boys he would have been run out of office many years ago. He and his also masonic son are damned Judas goats, sometimes called "controlled opposition." But Americans have a "Sesame Street" attention span. Many have already forgotten that Paul the elder took the people's money and coped out in the last presidential election a la Ross Perot years before him (another Texas fake).

Dan said (September 23, 2011):

I may be missing something in the logic of the article, but I recall that when the Mexican peso crashed in 1983, people I knew with most of their assets :"sheltered" in Mexican banks in Cancun, and Acapulco were broke overnight. A dollar in pesos was worth 30 cents overnight. People in that position were financially ruined.

The next crash facing the US is a Depression for sure, and hyperinflation at worst, if (when) a sudden devaluation of dollar value takes place.

But why wait for sudden? Look at the cost of food in the US compared to September 2010. We are experiencing dollar devaluation at a steady clip. Not a 'dump' yet on the order of the 1983 peso plunge, but for wage slaves and fixed income folks the only difference is time. The result is the same. The Sword of Damoclese for most Americans is the dwindling jobs.

Food, clean water, housing space, mechanical skills, established community alliances - not cash or gold - are king in a global Depression.

Also have been wanting to mention that people who rely on guns and hoarded bullets in a crash are called 'looters' by police an FEMA. It's much safer to be part of a community of unarmed families than an armed desperado.

I hope people will learn from the lessons of the Great Depression. Read Steinbeck's Grapes of Wrath. Take a look at your local charities and food banks and think about participating in those organizations. Work locally - avoid dependence on the State.

(I thought this was a Steve Miller song, but found that I was off by about 20 years.......from the 1950's "Your cash ain't nothin' but trash' Bill Riley )


Dick said (September 23, 2011):

I couldn't agree more. The only gold that will be worthwhile in any
collapsed society scenario are Yukon Gold potatoes.

As for national debt, it seems like most people only consider two
options – eliminate it, or don't worry about it. I like what
Alexander Hamilton wrote in the last paragraph of his First Report on Public Credit, a much better approach than a "balanced budget amendment." Extinguishing debt is accomplished by increasing wealth through publicly-supported advances in technology and production, something most politicians and economists (father and son Paul
foremost among them) seem to forget is possible:

"Persuaded as the Secretary is, that the proper funding of the
present debt, will render it a national blessing: Yet he is so far
from acceding to the position, in the latitude in which it is
sometimes laid down, that "public debts are public benefits," a
position inviting to prodigality, and liable to dangerous
abuse,—that he ardently wishes to see it incorporated, as a
fundamental maxim, in the system of public credit of the United
States, that the creation of debt should always be accompanied with the means of extinguishment. This he regards as the true secret for rendering public credit immortal. And he presumes, that it is difficult to conceive a situation, in which there may not be an adherence to the maxim. At least he feels an unfeigned solicitude, that this may be attempted by the United States, and that they may commence their measure s for the establishment of credit, with the observance of it."

Mike said (September 23, 2011):

I agree with most of your article, including the part about paying down the debt, or more correctly, not allowing the debt to continually expand. The debt must continue to grow indefinitely or the economy will implode due to the lack of liquidity as dollars are removed from circulation. This is how the depression of the 1930s was initiated.

And it's also true that virtually anything that is of sufficient scarcity and not easily counterfeited can serve as the medium of exchange. It doesn't have to be gold and in fact gold is probably not the best option.

But I have to take issue with you about your mischaracterization of the intent of Ron and Rand Paul. They have no intention of "paying" the debt. Ron has said repeatedly that it was created by the stroke of a pen and it can be eliminated the same way. These men understand the importance of liquidity in keeping the economy humming. Ron fully intends to either eliminate or
nationalize the Fed and take back control over the nation's money. And he will, if he can get elected and not be assassinated by the PTB in the process.

Please do not disparage Ron Paul. He is an honest, Christian man and would do this country a lot of good. There is a lot he knows and understands that he is not talking about because he is already marginalized and it would be political
suicide for him to speak up prematurely. I know he understands many of the issues you discuss on this site but he has to hold his tongue if he is to have any chance of getting into a position of doing something about it. More people would reject him if he spilled the beans too fast. Short of the manifestation
of the Kingdom of God (our only true hope), Ron is the best thing going.


Thanks Mike

I would like to believe in Ron Paul as much as you do. I hope I am wrong about him. But the Illuminati "lead" the opposition. Paul is a Freemason. He makes the sign of Baphomet. He exchanges Masonic handshakes. Like I said, I'd love to be wrong and for Paul to be elected and make things right.


JAK said (August 6, 2011):

"When the final crash comes that currency will be traded in for a tenth of its value into the new fiat notes. Gold will trade in at above the former $$$ and more".

And the guys with the guns will come to take your gold and there won't be any trading. Study history.

Karla said (August 6, 2011):

Henry this is a fine article. Has anyone gone to the bank and attempted to get greenbacks without some sort of suspicious look coming from the bank teller or banker? Now, these banks do not mind giving crediting your account with those invisible digits, nor do the banks have a problem with someone using their debit card invisible digits. But when I requested to recieve a few thousands of my dollars, they just freeze up. I've had to politely demand my own money in cash on a few occasions while the employee tells me that they will see if they have that amount!? I am not a wealthy woman, and I did let the banker know that if they did not have the amount of my own money in the bank then they were in really bad shape. LOL! I just invested in 2 barrels of wheat and a large manual/electric grinder. Now that is what I call valuable "commodities" that are in my possession. :)

Zach said (August 5, 2011):

certainly agree with you, debt free fiat money would be a much better situation than the incredible scam we suffer under now. Your solution is also more workable. But if we could break the bankers, why not go all the way? Let the market decide what the medium of exchange would be. To me, if there is anything the state (or a state granted monopoly) should NOT control, it is the supply of money and credit. This is the most obvious thing in the world to me. This would also be an effective way to limit the scope of the state in other areas of our lives as well; it would be more difficult for the state to become so massive.

Michael said (August 5, 2011):

Cash, Not Gold.."...One thing I like about your writings and articles of other contributors is you are very good about pulling in a balance of information, underscoring key problems clearly, and this one is no exception.

Jacques Jaikaran, a surgeon here in Texas, wrote a book "Debt Virus" (1992-Glenbridge Publishing) showing mathematically how the debt in a debt money system as was imposed by the banking/government cartel can never be repaid. The nation and its people adopting such are perpetually in debt.

Americans brag that we are "free and fighting for our freedom (Iraq, etc)" is very deceptive. Proverbs 22:7, "The borrower is servant to the lender." True for people and nations. The way money is created, as you have spotlighted is
probably the biggest blight o n the planet, and the biggest scam. Problem is for those on the take from it--the biggest profiteers have no reason to change it, unless it is forced and I think one day it will be.

Asked to be on the board of a bank, Dr. Jaikaran decided to study money and banking systems of the world and did so for two years. He found the only place on earth issuing debt free money were the Guernsey (Channel Islands) off Britain. They had very low level of unemployment and prosperity unmatched. I
assume it is the same these years later. I do not recall the writer explaining how they avoided exploitation by the "banksters" and who actually controls the Islands.

No question Americans and others are dupes to allow such a scam to go on here.

Ben in Australia said (August 5, 2011):

The start of the inevitable that us 'conspiracy nuts' have predicted for years? It kind of works out well for me. I don't believe in shares and have already used my super. I'll comfortably sit back and watch the greed market collapse. Perhaps those who still think they can accumulate wealth by doing nothing but move a few figures around will have to work actual jobs - you know, the old individual physical and/or intellectual output deal! On the downside, the big collapse will be the catalyst for world government and currency, which wouldn't be such a bad thing if it wasn't guaranteed to be a totalitarian, autocratic, oligarchical police and surveillance state where we'll end up swiping a microchip in our arm to pay at the checkout counter. I would like to see a market collapse WITHOUT the global police state destined to follow. Invest in real wealth, not stocks. But do it under the table so it isn't confiscated, reminiscent of 1933 America. Take measures to protect it. Whatever happens, people will have to realise that we, as a human race, cannot eat or drink money, and that the earth and sky are infinite, and cannot be bought, especially by such temporary beings

Tom said (August 5, 2011):

Not only money but also the earth itself and all its resources belong to everyone.

The value of gold is an illusion of course, it's not very useful and probably like diamonds there is more of it than people think there is. Artificial scarcity drives up the price until the bubble burts. In order for you to make money you have to find a buyer and sell it before this happens at the expense of other people who will lose money because they paid too much. The market for gold is a ponzi-scheme.

The dollar will lose some of its value, but not so much. There won't be hyper-inflation.

In a great depression no one will buy your gold if everyone needs food. The person who will trade your gold in will not pay a high price. Besides, there is the risk of confiscation as well.

Cyberfact said (August 5, 2011):

When the final crash comes that currency will be traded in for a tenth of its value into the new fiat notes. Gold will trade in at above the former $$$ and more.

Ronald said (August 5, 2011):

Rep. Paul introduces bill to cancel $1.6T in debt held by Federal Reserve
By Pete Kasperowicz - 08/02/11 10:13 AM ET

Rep. Ron Paul on Monday introduced legislation that would lower the federal government's debt by canceling the roughly $1.6 trillion in debt held by the Federal Reserve.

Paul has argued for the last few weeks that the idea represents a quick way to make the growing fiscal crisis more manageable. Under his bill, H.R. 2768, the $1.6 trillion that the Treasury owes to the Federal Reserve would disappear.

The Federal Reserve began buying Treasury bonds in earnest late last year as part of its effort to keep long-term interest rates down. But Paul has argued that Fed purchases of Treasury debt represent a debt that the government owes to itself, and one that also leads to an unwanted and inflationary increase in the money supply.

Paul has also said the Fed is allowing the federal government to continue a spending binge it otherwise would not be able to afford, and is forcing the Fed to print money to keep up.


Rep. Paul: When a cut is not a cut

"If the federal government cannot cut spending and bring the budget back into balance, the Fed undoubtedly will be forced to simply monetize trillions of dollars in Treasury debt, which is nothing more than a stealth form of default," Paul said back in May.

Paul is highly critical of the debt-ceiling agreement that the House approved Monday, and said that rather than require real cuts in spending, the bill mostly cuts planned spending levels in the future. According to the legislation, discretionary spending in 2012 would be just $7 billion less than in 2011, and in 2013 it would be just $3 billion less than 2011 before allowing increases above 2011 levels.


Thanks much Ronald,

I am impressed and will be more impressed if Paul makes this a public issue on network TV. It's one thing to introduce a bill that stands little chance of passage, and another to campaign vigorously for it.


Clay said (August 5, 2011):

You are absolutely correct: in the Great Depression, my Granddad was a fairly small-time bootlegger in California and booze was one medium of exchange, cause nobody had any CASH!! gold and silver were not popular!

Ever hear of the Scots War? American-Scots were using whiskey as money, and the federales went to war with them. Don't steal, the govt hates competition.

Thank you for thinking straight, as usual.

JAK said (August 5, 2011):

"In a recession or depression, all bets (on gold) are off".

henry [below]

ALL forms of money are merely a baseline "agreed upon" means of exchange for goods or services. A convenience, just as a credit card is. When that standard no longer applies, watch out.

It doesn't matter how much gold, or silver, or paper you have if the last doctor in town wants your step-daughter in trade for treating your wife's kidney infection with the last remaining medication he has stashed.

Think it can't possibly ever happen? Best think again, it is on the verge of happening right now. This is the Great Collapse.

Weapons, land, water, food- those are the really valuable things. Add knowledge, but you have to have the first four to be able to secure and defend the last one.

Damon said (August 5, 2011):

Hello Henry, you stated that gold and silver are inferior to cash as a means of exchange during a crash... Hold in your possession the same number of dollars today compared to an equal amount of gold and silver at today's prices for 6 you really think that fiat currencies worldwide will increase in value relative to the near certain coming increases in precious metals in the near future? The key to the liquidity question is to hold small denominations of silver or gold ( fractional reserve , pre -1964 dimes, quarters,etc ) which will be far superior compared to worthless paper notes as a means of exchange


In a recession or depression, all bets (on gold) are off.


Mac said (August 4, 2011):


This is so stupid it hurts.

Within a year, they will no longer be taking dollars for oil. Just imagine what happens when you drive into the gas station, and they say, we don't want your US dollars, we want pesos or Canadian? Or silver dimes quarters or halves.

I am living in Ecuador. That is exactly what happened here in 1999, and in Argentina before that, and Brazil before that.

The US dollar has lost 93% of it's purchasing power since 1913. It won't take much to wipe out the other 7%.

Today, I can buy a gallon of gas in the US for one silver quarter. Do you remember when gas was 25 cents a gallon? Thats about the same year my silver quarter was minted That's how metals work. A silver dime can now be exchanged for 28 times it's face value in US dollars. It's worth almost $3.

Waiting on the cosmic ex-lax!!!

William said (August 4, 2011):

Silvio Gesell stated that money can be either a store of value or a means of exchange, but not both; and decried the gold system as a standard of scarcity controlled by Britain. He stated that the velocity of exchange determined prosperity. Woergl put his theories into action and proved how we can do without central bankers.

Peter ((Goldbug mentioned) said (August 4, 2011):

"You know i disagree with you and the market today proves my point. Gold and silver are falling."

Look at some 10 year charts, and then you know what has been going up and what down. Gold is up, cash is down. Another intra-day slam of silver through massive short contracts is only putting silver down marginally. In a month or two it will be past 50.

That (cash is king) is only true for the time being. Soon that won't be the case anymore. Proof is that they had to buy up to 80% of their own bonds in all recent auctions, and prospects are falling.

When bonds crash, people have no more alternatives. Gold and silver, and other real things, will be the big game in town. Just give it a little more time.

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