Currency Debate Intensifies: Paper Vs. Gold
October 16, 2010
by Anthony Migchels
A most fundamental and crucial debate is now in full swing.
The two main protagonists are the Goldbugs and the Interest-Free Money community. The battle was ignited by Gary North who attacked Ellen Brown, calling her a 'Greenbacker'. Brown and North
agree that Fractional Reserve Banking needs to go, but Brown wants the
Government to print debt free (and therefore interest free) money.
To North this is incomprehensible, because he thinks paper money is paper money. It is not though. Interest bearing debt to a bank is a very different beast indeed than is debt free, interest free money printed by the Government. However, North, as do other Goldbugs, fear Government will always print too much money to cover their expenditures and Big Government programs. The question is: will Gold stop these inflation by Government? History suggests it won't."
The Goldbugs and the Interest-Free Money people have been living in peaceful coexistence for many years. They have a common enemy: paper based fractional reserve banking. But now that the chances of the FED collapsing are becoming more real, the question what to do next arises.
Most people awakening to the Fractional Reserve hoax simply assume that the problem can be solved by Gold-based currency. After all: Gold cannot be printed.
But besides the system in use, there is also the question who is in control of it. We cannot solve our current problems without addressing both questions.
Even if your filters do not allow you to accept the 'International Bankers Rule the World' narrative, we can see clearly who is really in control from the trillions that Governments worldwide handed over to the Banking Fraternity.
It is clear that nobody else would have been able to coerce so many States to cough up such massive handouts.
We are all whining about the environment, all those poor hungry African people, our crumbling infrastructures. Not a dime can be found for these causes. Then the bankers start squeaking and all of the sudden a trillion is a mainstream concept.
say that Government cannot be trusted with the control of the money
supply because politicians will always finance their deficits with the
There is much truth in this, but please tell me: what
Government has been in control of its own money the last century? In
Europe privately owned Central Banks were the norm since the 17th
Most Central Banks in Europe were nationalized after WWII but nobody in his right mind can say that they have been under Government control. Although Central Banks will always print all the money politicians ask for, they do so in the form of interest-bearing debts, so it is quite clear who's boss.
We are facing the advent of World Currency, which, quoting Eric Blair "... is not conspiracy theory mumbo-jumbo anymore, but rather cold hard fact."
What is at stake here is this: are we going to cheer lead the advent of this World Currency because it is Gold Based and we are fed up with Fractional Reserve banking? Are we going to be the dumb little serfs they assume we are? Or are we going to get to the full picture and get it right this time.
THE PROBLEMS WITH GOLD
Both inflation and deflation can easily be produced during a Gold Standard. This means that the Goldbugs can't even solve the most basic problem with the current system, which is inflation.
The question of interest is an even more important and glaring oversight by the Gold community. Interest is one of the few things that is better understood in Europe than in America, primarily through the brilliant analysts Helmut Creutz and Margrit Kennedy. They managed to quantify the impact of interest. Their most important conclusions were published on this site recently.
most important aspect of interest is that the poor borrow money and
pay interest, while the rich lend it out and receive interest. This
results in a wealth transfer amounting to trillions per year worldwide
from the poorest 80% to the richest 10%.
Even if you have no debts at all, it transpires you pay 40% of your disposable income because of costs for capital included in prices for daily commodities.
Gold is not a freely traded commodity. The
people at www.gata.org have been exposing the Gold market manipulation
for years, but the fact of the matter is that insiders have been
controlling Gold for much longer than that.
Gold has been controlled ever since Central Banks started to make their impact, starting at the Amsterdamsche Wisselbank in the 17th century.
The controllers of Gold will NEVER allow their Gold to be used as currency without interest.
GOLD AS A STORE OF VALUE
Another function of Gold is that of the canary in the coalmine. When paper sinks people notice because Gold rises. But the simple fact is that prices of everything rise when paper is inflated. So even for this we can do without this precious metal.
Gold does, of course, has a use as a store of wealth in times of inflation. But even for this it is superfluous. Silver at this point is a better investment, but why not just hoard a good stash of Scotch and other spirits and cigarettes and other (semi) durable goods? You'll be fine in the coming periods of scarcity and your wealth intact. Goods such as these are always in demand and easily bartered. They do not loose their value when money does.
It must be admitted, however, that Gold is a good
investment. So if you want to enhance your wealth, instead of
safeguarding it, Gold is a good bet, although silver, again, is even
better. The reason is, that, unlike the case with Scotch, there is no
free market price for Gold. In a free market Gold would probably be at
3, 4 or even 5000 dollars.
And just like the era of the FED is ending, JP Morgan's short positions on the Comex seem to be at their end of life too. Therefore another major wealth transfer is in the offing: from those who don't own gold to those who do.
in mind though the Tao states it is unwise to hoard scarce goods and
there is a lot of wisdom in that. We cannot serve two masters and Gold
is the archetypal symbol of the Adversary.
PROS AND CONS OF INTEREST-FREE PAPER MONEY
Of course, paper money is now a metaphor for electronic money. We still have paper cash, but the printing press of today is a computer program. This is wonderful, because it is now even cheaper to create money than 'slapping ink on a perfectly useful commodity like paper'.
there is one thing the Banking Boys have shown us, it is that we can
produce all the money we will ever need at virtually no cost at all. Let
this lesson not be wasted!
This state of affairs is easily abused. The community is flooded with excess
cash resulting in rising prices. We don't want that. The reason it
always happens is because we have sociopaths controlling the
To say then that we need something intrinsically scarce like Gold is a no-go because of the arguments above. What we need to do is grow up. To stop hiding behind 'experts', 'economists', 'Governments' and what-have-you and start thinking for ourselves.
We need to decently organize the production
of the medium of exchange. We need printing presses printing ENOUGH (instead of too much) money. And since this production can be done at
virtually no cost, it stands to reason that its supply must be not only
stable, but also dirt cheap.
We need to fire and prosecute those who abuse the powers invested in them when we allowed them to run the system.
GOVERNMENT VERSUS PRIVATE MONEY
However, I do believe that the Goldbugs have a point with their distrust of Government. It is unfortunately the case that sociopaths gravitate to power centers and concentrating too much power in the hands of Government is a recipe for disaster.
Since currency is just a commodity like all others, there is no reason why its production cannot be run by private, free market institutions.
The Goldbugs unfortunately fall for the foolish idea that banking is a free market. It is not, of course. There is instead a Banking Cartel controlling all the production of money.
In a truly free market for money you would have many different currencies competing with each other. On a regional, national or sectoral level.
Already available are electronic, hand held devices which are basically purses containing credits in several units. The future is that you will have income in several units. Some regional, some national, some international, some sectoral.
The unit with which you pay with will depend on the context of your transaction. Where you are, who you are dealing with, which currency you have a lot of, etc.In such a free market for currency interest-bearing units will not have a place simply because they are outrageously expensive.
To save their precious metal the Gold bugs are facing two daunting problems:
Where does their high regard for the banking system come from? Haven't the
banks revealed enough after having run both the Fractional Reserve scam
AND the Gold Standard scams of yesterday? Don't goldbugs see a World Currency run
through and for private interests as a problem?
And even more importantly, they have to come clean on interest. Because Gold is unthinkable without interest. And interest is even far more damaging to the interests of the many than inflation.
Goldbugs have been very useful and powerful allies in the fight against Fractional Reserve Banking. And I sure wish them well for the future. But I fear the worst for their solutions........