Human Freedom Rests on Gold Redeemable Money

28 posts / 0 new
Last post
goes211's picture
goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
Human Freedom Rests on Gold Redeemable Money

Surprising statement coming from Warren Buffets father. The game went on much longer than he would have believed possible.

Human Freedom Rests on Gold Redeemable Money

by Hon. Howard Buffett
U.S. Congressman from Nebraska
The Commercial and Financial Chronicle 5/6/48

Is there a connection between Human Freedom and A Gold Redeemable Money? At first glance it would seem that money belongs to the world of economics and human freedom to the political sphere.

But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold, you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty.

Also, when you find that Lenin declared and demonstrated that a sure way to overturn the existing social order and bring about communism was by printing press paper money, then again you are impressed with the possibility of a relationship between a gold-backed money and human freedom.

In that case then certainly you and I as Americans should know the connection. We must find it even if money is a difficult and tricky subject. I suppose that if most people were asked for their views on money the almost universal answer would be that they didn't have enough of it.

In a free country the monetary unit rests upon a fixed foundation of gold or gold and silver independent of the ruling politicians. Our dollar was that kind of money before 1933. Under that system paper currency is redeemable for a certain weight of gold, at the free option and choice of the holder of paper money.

Redemption Right Insures Stability

That redemption right gives money a large degree of stability. The owner of such gold redeemable currency has economic independence. He can move around either within or without his country because his money holdings have accepted value anywhere.

For example, I hold here what is called a $20 gold piece. Before 1933, if you possessed paper money you could exchange it at your option for gold coin. This gold coin had a recognizable and definite value all over the world. It does so today. In most countries of the world this gold piece, if you have enough of them, will give you much independence. But today the ownership of such gold pieces as money in this country, Russia, and all divers other places is outlawed.

The subject of a Hitler or a Stalin is a serf by the mere fact that his money can be called in and depreciated at the whim of his rulers. That actually happened in Russia a few months ago, when the Russian people, holding cash, had to turn it in – 10 old rubles and receive back one new ruble.

I hold here a small packet of this second kind of money – printing press paper money – technically known as fiat money because its value is arbitrarily fixed by rulers or statute. The amount of this money in numerals is very large. This little packet amounts to CNC $680,000. It cost me $5 at regular exchange rates. I understand I got clipped on the deal. I could have gotten $2½ million if I had purchased in the black market. But you can readily see that this Chinese money, which is a fine grade of paper money, gives the individual who owns it no independence, because it has no redemptive value.

Under such conditions the individual citizen is deprived of freedom of movement. He is prevented from laying away purchasing power for the future. He becomes dependent upon the goodwill of the politicians for his daily bread. Unless he lives on land that will sustain him, freedom for him does not exist.

You have heard a lot of oratory on inflation from politicians in both parties. Actually that oratory and the inflation maneuvering around here are mostly sly efforts designed to lay the blame on the other party's doorstep. All our politicians regularly announce their intention to stop inflation. I believe I can show that until they move to restore your right to own gold that talk is hogwash.

Paper Systems End in Collapse

But first let me clear away a bit of underbrush. I will not take time to review the history of paper money experiments. So far as I can discover, paper money systems have always wound up with collapse and economic chaos.

Here somebody might like to interrupt and ask if we are not now on the gold standard. That is true, internationally, but not domestically. Even though there is a lot of gold buried down at Fort Knox, that gold is not subject to demand by American citizens. It could all be shipped out of this country without the people having any chance to prevent it. That is not probable in the near future, for a small trickle of gold is still coming in. But it can happen in the future. This gold is temporarily and theoretically partial security for our paper currency. But in reality it is not.

Also, currently, we are enjoying a large surplus in tax revenues, but this happy condition is only a phenomenon of postwar inflation and our global WPA. It cannot be relied upon as an accurate gauge of our financial condition. So we should disregard the current flush treasury in considering this problem.

From 1930-1946 your government went into the red every year and the debt steadily mounted. Various plans have been proposed to reverse this spiral of debt. One is that a fixed amount of tax revenue each year would go for debt reduction. Another is that Congress be prohibited by statute from appropriating more than anticipated revenues in peacetime. Still another is that 10% of the taxes be set aside each year for debt reduction.

All of these proposals look good. But they are unrealistic under our paper money system. They will not stand against postwar spending pressures. The accuracy of this conclusion has already been demonstrated.

The Budget and Paper Money

Under the streamlining Act passed by Congress in 1946, the Senate and the House were required to fix a maximum budget each year. In 1947 the Senate and the House could not reach an agreement on this maximum budget so that the law was ignored.

On March 4 this year the House and Senate agreed on a budget of $37½ billion. Appropriations already passed or on the docket will most certainly take expenditures past the $40 billion mark. The statute providing for a maximum budget has fallen by the wayside even in the first two years it has been operating and in a period of prosperity.

There is only one way that these spending pressures can be halted, and that is to restore the final decision on public spending to the producers of the nation. The producers of wealth – taxpayers – must regain their right to obtain gold in exchange for the fruits of their labor. This restoration would give the people the final say-so on governmental spending, and would enable wealth producers to control the issuance of paper money and bonds.

I do not ask you to accept this contention outright. But if you look at the political facts of life, I think you will agree that this action is the only genuine cure.

There is a parallel between business and politics which quickly illustrates the weakness in political control of money.

Each of you is in business to make profits. If your firm does not make profits, it goes out of business. If I were to bring a product to you and say, this item is splendid for your customers, but you would have to sell it without profit, or even at a loss that would put you out of business. – well, I would get thrown out of your office, perhaps politely, but certainly quickly. Your business must have profits.

In politics votes have a similar vital importance to an elected official. That situation is not ideal, but it exists, probably because generally no one gives up power willingly.

Perhaps you are right now saying to yourself: "That's just What I have always thought. The politicians are thinking of votes when they ought to think about the future of the country. What we need is a Congress with some 'guts.' If we elected a Congress with intestinal fortitude, it would stop the spending all right!"

I went to Washington with exactly that hope and belief. But I have had to discard it as unrealistic. Why?

Because an economy Congressman under our printingpress money system is in the position of a fireman running into a burning building with a hose that is not connected with the water plug. His courage may be commendable, but he is not hooked up right at the other end of the line. So it is now with a Congressman working for economy. There is no sustained hookup with the taxpayers to give him strength.

When the people's right to restrain public spending by demanding gold coin was taken from them, the automatic flow of strength from the grass-roots to enforce economy in Washington was disconnected. I'll come back to this later.

In January you heard the President's message to Congress. or at least you heard about it. It made Harry Hopkins, in memory, look like Old Scrooge himself. Truman's State of the Union message was "pie-in-thesky" for everybody except business. These promises were to be expected under our paper currency system. Why? Because his continuance in office depends upon pleasing a majority of the pressure groups.

Before you judge him too harshly for that performance, let us speculate on his thinking. Certainly he can persuade himself that the Republicans would do the same thing if they were In power. Already he has characterized our talk of economy as "just conversation." To date we have been proving him right. Neither the President nor the Republican Congress is under real compulsion to cut Federal spending. And so neither one does so, and the people are largely helpless.

But it was not always this way.

Before 1933 the people themselves had an effective way to demand economy. Before 1933, whenever the people became disturbed over Federal spending, they could go to the banks, redeem their paper currency in gold, and wait for common sense to return to Washington.

Raids on Treasury

That happened on various occasions and conditions sometimes became strained, but nothing occurred like the ultimate consequences of paper money inflation. Today Congress is constantly besieged by minority groups seeking benefits from the public treasury. Often these groups. control enough votes in many Congressional districts to change the outcome of elections. And so Congressmen find it difficult to persuade themselves not to give in to pressure groups. With no bad immediate consequence it becomes expedient to accede to a spending demand. The Treasury is seemingly inexhaustible. Besides the unorganized taxpayers back home may not notice this particular expenditure – and so it goes.

Let's take a quick look at just the payroll pressure elements. On June 30, 1932, there were 2,196,151 people receiving regular monthly checks from the Federal Treasury. On June 30, 1947, this number had risen to the fantastic total of 14,416,393 persons. This 14½ million figure does not include about 2 million receiving either unemployment benefits of soil conservation checks. However, It includes about 2 million GI's getting schooling or on-the-job-training. Excluding them, the total is about l2½ million or 500% more than in 1932. If each beneficiary accounted for four votes (and only half exhibited this payroll allegiance response) this group would account for 25 million votes, almost by itself enough votes to win any national election.

Besides these direct payroll voters, there are a large number of State, county and local employees whose compensation in part comes from Federal subsidies and grants-in-aid.

Then there are many other kinds of pressure groups. There are businesses that are being enriched by national defense spending and foreign handouts. These firms, because of the money they can spend on propaganda, may be the most dangerous of all.

If the Marshall Plan meant $100 million worth of profitable business for your firm, wouldn't you Invest a few thousands or so to successfully propagandize for the Marshall Plan? And if you were a foreign government, getting billions, perhaps you could persuade your prospective suppliers here to lend a hand in putting that deal through Congress.

Taxpayer the Forgotten Man

Far away from Congress is the real forgotten man, the taxpayer who foots the bill. He is in a different spot from the tax-eater or the business that makes millions from spending schemes. He cannot afford to spend his time trying to oppose Federal expenditures. He has to earn his own living and carry the burden of taxes as well.

But for most beneficiaries a Federal paycheck soon becomes vital in his life. He usually will spend his full energies if necessary to hang onto this income. The taxpayer is completely outmatched in such an unequal contest. Always heretofore he possessed an equalizer. If government finances weren't run according to his idea of soundness he had an individual right to protect himself by obtaining gold.

With a restoration of the gold standard, Congress would have to again resist handouts. That would work this way. If Congress seemed receptive to reckless spending schemes, depositors' demands over the country for gold would soon become serious. That alarm in turn would quickly be reflected in the halls of Congress. The legislators would learn from the banks back home and from the Treasury officials that confidence in the Treasury was endangered.

Congress would be forced to confront spending demands with firmness. The gold standard acted as a silent watchdog to prevent unlimited public spending. I have only briefly outlined the inability of Congress to resist spending pressures during periods of prosperity. What Congress would do when a depression comes is a question I leave to your imagination.

I have not time to portray the end of the road of all paper money experiments.

It is worse than just the high prices that you have heard about. Monetary chaos was followed in Germany by a Hitler; in Russia by all-out Bolshevism; and in other nations by more or less tyranny. It can take a nation to communism without external influences. Suppose the frugal savings of the humble people of America continue to deteriorate in the next 10 years as they have in the past 10 years? Some day the people will almost certainly flock to "a man on horseback" who says he will stop inflation by price-fixing, wage-fixing, and rationing. When currency loses its exchange value the processes of production and distribution are demoralized.

For example, we still have rent-fixing and rental housing remains a desperate situation.

For a long time shrewd people have been quietly hoarding tangibles in one way or another. Eventually, this individual movement into tangibles will become a general stampede unless corrective action comes soon.

Is Time Propitious

Most opponents of free coinage of gold admit that that restoration is essential, but claim the time is not propitious. Some argue that there would be a scramble for gold and our enormous gold reserves would soon be exhausted.

Actually this argument simply points up the case. If there is so little confidence in our currency that restoration of gold coin would cause our gold stocks to disappear, then we must act promptly.

The danger was recently highlighted by Mr. Allan Sproul, President of the Federal Reserve Bank of New York, who said:

"Without our support (the Federal Reserve System), under present conditions, almost any sale of government bonds, undertaken for whatever purpose, laudable or otherwise, would be likely to find an almost bottomless market on the first day support was withdrawn."

Our finances will never be brought into order until Congress is compelled to do so. Making our money redeemable in gold will create this compulsion. The paper money disease has been a pleasant habit thus far and will not he dropped voluntarily any more than a dope user will without a struggle give up narcotics. But in each case the end of the road is not a desirable prospect.

I can find no evidence to support a hope that our fiat paper money venture will fare better ultimately than such experiments in other lands. Because of our economic strength the paper money disease here may take many years to run its course.

But we can be approaching the critical stage. When that day arrives, our political rulers will probably find that foreign war and ruthless regimentation is the cunning alternative to domestic strife. That was the way out for the paper-money economy of Hitler and others. In these remarks I have only touched the high points of this problem. I hope that I have given you enough information to challenge you to make a serious study of it.

I warn you that politicians of both parties will oppose the restoration of gold, although they may outwardly seemingly favor it. Als o those elements here and abroad who are getting rich from the continued American inflation will oppose a return to sound money. You must be prepared to meet their opposition intelligently and vigorously. They have had 15 years of unbroken victory.

But, unless you are willing to surrender your children and your country to galloping inflation, war and slavery, then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money.

There is no more important challenge facing us than this issue – the restoration of your freedom to secure gold in exchange for the fruits of your labors.

Thanks to David Stockman for pointing this out to me. Ed.

May 14, 2011

Howard Buffett was an Old Right libertarian congressman and businessman from Omaha, Nebraska. One of his aides was Murray Rothbard. His son is the oligarch Warren.

Thomas Hedin's picture
Thomas Hedin
Status: Platinum Member (Offline)
Joined: Jan 28 2009
Posts: 815
Load of Manure.

This has to be one of the best examples of lies, half truths, and deceptions I've ever read.

I cannot understand why you would post this for people to read.

goes211's picture
goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
I did not know that Warren Buffets father was in Congress

I don't know if I agree with it 100 % but I do find it a very interesting position coming from a congressman that happened to be Warren Buffet's father.  Of course Thomas, I am not surprised that you did not like it.  It basically attacks everything you stand for.

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
Joined: Oct 6 2008
Posts: 1024
This has to be one of the

This has to be one of the best examples of lies, half truths, and deceptions I've ever read.

Why don't you go through the article and point out all the lies, half truths and deceptions instead of just asserting that they are there? It would be very interesting to examine.

doorwarrior's picture
doorwarrior
Status: Silver Member (Offline)
Joined: Oct 13 2009
Posts: 166
 I see where one could

 I see where one could disagree but I don't see any "lies".  I too would like the lies pointed out.

Rich

TommyHolly's picture
TommyHolly
Status: Bronze Member (Offline)
Joined: Nov 9 2010
Posts: 90
It sounds like Warren

It sounds like Warren Buffet's father read the book, "The Forgotten Man" by Amity Shales.  (He paraphrased a few passages form the book.)  I highly recommend it to anyone!

Seeing how I've witnessed Thomas Hedin being a proponent for Marxism and bash Capitalism on here quite often, of course he isn't going to like the article above.  Like Goes211 said, "it goes against everything he stands for." 

gak's picture
gak
Status: Member (Offline)
Joined: Nov 10 2008
Posts: 12
The other way around

Tommy,

It is actually the other way around. Warren's dad gave that speech in 1948. Amity Shlaes wrote TFM in 2007.

gak

TommyHolly's picture
TommyHolly
Status: Bronze Member (Offline)
Joined: Nov 9 2010
Posts: 90
Ooops I saw the 2001 tag at

Ooops I saw the 2001 tag at the bottom and thought...wow his father is still alive?  He's gotten bee 100 years old! LOL

Thanks for the correction.  Amity Shals books was amazing and the "Forgotten Man" term was used quite alot back then to justify some of the Socialist programs brought in during the Great Depression.

Thomas Hedin's picture
Thomas Hedin
Status: Platinum Member (Offline)
Joined: Jan 28 2009
Posts: 815
The whole basis.

Why don't you go through the article and point out all the lies, half truths and deceptions instead of just asserting that they are there? It would be very interesting to examine.

Would you be willing to have a phone conversation?

Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
Thomas Hedin wrote:Why
Thomas Hedin wrote:

Why don't you go through the article and point out all the lies, half truths and deceptions instead of just asserting that they are there? It would be very interesting to examine.

Would you be willing to have a phone conversation?

 

What? So the rest of us don't get to see/hear the conversation.

 

Thomas Hedin's picture
Thomas Hedin
Status: Platinum Member (Offline)
Joined: Jan 28 2009
Posts: 815
Ken C

Ken

You are more than willing to join us if you wish and if he'll participate.  :)

doorwarrior's picture
doorwarrior
Status: Silver Member (Offline)
Joined: Oct 13 2009
Posts: 166
Why not just let everyone in

Why not just let everyone in on the secret Thomas? I am sure your views are better discussed in the open rather than a candestine phone call. It would seem to me that you would be happy to point out all of the "lies" for eveyone to discuss.

 

Rich

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
Joined: Oct 6 2008
Posts: 1024
Would you be willing to have

Would you be willing to have a phone conversation?

Why don't you go through the article and point out all the lies, half truths and deceptions instead of just asserting that they are there? It would be very interesting to examine.

Why a phone coversation?

I believe that human beings should interact voluntarily, that the initiation of force is immoral. If I recall correctly you advocate legal tender laws, you want to force people to use a prescribed currency. I know this because you also advocate that the treasury have an unlimited interest free ability to create fiat currency and without legal tender laws no one would accept this garbage. Take an one dollar FRN and a hundred dollar FRN, the only difference is what's printed on them, it's the same amount of rag. There is a noticable difference between a ounce of PM and a hundred ounces of a PM and the labor required to bring them into existence.

Let's give everyone on earth the ability to create all the interest free money they want, what would happen? Everyone would be trillionaires with nothing to buy. Wealth is created by taking something of lesser value and turning it into something of greater value, iron ore into steel, a tree into lumber, etc. All fiat currency is is theft, by changing the numbers on a piece of paper you rob the productive by forcing them through law to accept promises to pay that required little effort.

Gotta go, work calls

Thomas Hedin's picture
Thomas Hedin
Status: Platinum Member (Offline)
Joined: Jan 28 2009
Posts: 815
Why are you so opposed?

A phone conversation works better for interaction and I am short on time to write a novel about that article.

If you're not interested that's fine.

Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
You made the assertion- now support it.
Thomas Hedin wrote:

A phone conversation works better for interaction and I am short on time to write a novel about that article.

If you're not interested that's fine.

 

Hmmm,

You are the one that said the article was full of lies. You are just being asked to support your assertion in this public forum where you made the assertion of lies.

Ken

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1503
gregroberts wrote: I believe
gregroberts wrote:

I believe that human beings should interact voluntarily, that the initiation of force is immoral. If I recall correctly you advocate legal tender laws, you want to force people to use a prescribed currency. I know this because you also advocate that the treasury have an unlimited interest free ability to create fiat currency and without legal tender laws no one would accept this garbage. Take an one dollar FRN and a hundred dollar FRN, the only difference is what's printed on them, it's the same amount of rag. There is a noticable difference between a ounce of PM and a hundred ounces of a PM and the labor required to bring them into existence.

Let's give everyone on earth the ability to create all the interest free money they want, what would happen? Everyone would be trillionaires with nothing to buy. Wealth is created by taking something of lesser value and turning it into something of greater value, iron ore into steel, a tree into lumber, etc. All fiat currency is is theft, by changing the numbers on a piece of paper you rob the productive by forcing them through law to accept promises to pay that required little effort.

That, sir, was a thing of beauty.  I couldn't have said it better myself.  If we were in the real world, I'd buy you a beer.  Cheers,

FB

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Well I don’t know about

Well I don’t know about “lies, half truths and deceptions” but there are some elements of validity and logic, mixed in with a fair amount of poorly drawn conclusions.

First the part I agree with:

Howard Buffett wrote:

Today Congress is constantly besieged by minority groups seeking benefits from the public treasury. Often these groups. control enough votes in many Congressional districts to change the outcome of elections. And so Congressmen find it difficult to persuade themselves not to give in to pressure groups. With no bad immediate consequence it becomes expedient to accede to a spending demand. The Treasury is seemingly inexhaustible. Besides the unorganized taxpayers back home may not notice this particular expenditure – and so it goes.

Let's take a quick look at just the payroll pressure elements. On June 30, 1932, there were 2,196,151 people receiving regular monthly checks from the Federal Treasury. On June 30, 1947, this number had risen to the fantastic total of 14,416,393 persons. This 14½ million figure does not include about 2 million receiving either unemployment benefits of soil conservation checks. However, It includes about 2 million GI's getting schooling or on-the-job-training. Excluding them, the total is about l2½ million or 500% more than in 1932. If each beneficiary accounted for four votes (and only half exhibited this payroll allegiance response) this group would account for 25 million votes, almost by itself enough votes to win any national election.

Besides these direct payroll voters, there are a large number of State, county and local employees whose compensation in part comes from Federal subsidies and grants-in-aid.

Then there are many other kinds of pressure groups. There are businesses that are being enriched by national defense spending and foreign handouts. These firms, because of the money they can spend on propaganda, may be the most dangerous of all.

If the Marshall Plan meant $100 million worth of profitable business for your firm, wouldn't you Invest a few thousands or so to successfully propagandize for the Marshall Plan? And if you were a foreign government, getting billions, perhaps you could persuade your prospective suppliers here to lend a hand in putting that deal through Congress.

Indeed, the political control of the economy is not really political at all, rather a construct of the capture by large and influential special interests, for the most part entities public and private that have managed to consolidate and control sufficient capital to legislate (and enforce said legislation) unto the rest of us for their specific gain.

OK, fine. Every 6th grader is aware of our flawed system of lobbying, do we really need an article reminding us of this? No. But that is not the point of the article is it? Now perhaps I find more to agree than to disagree with the article, but there are some pretty disturbing sticking points that motivate me to comment.

The point of the article is to once again, under the lexicon of “freedom and liberty”, to introduce yet another addled theory into the mainstream discussion by associating this premise with a famous name, to the objective of adding some type of authenticity to a flawed thesis. We see these missives all the time from the Cato Institute, the Heritage Foundation, and many other think tanks funded by the largesse of corporatist interests, masquerading as some type of grass roots  “return to liberty” front- an equally silly propaganda war that is surprising in its efficacy. In one fell swoop turning perfectly intelligent and well meaning people into foaming at the mouth zealots, disinclined to act in the own best interest, instead, applauding and vehemently defending behavior, systems, and practices that are clearly counterproductive.

Examples?

Howard Buffett wrote:

But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold, you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty.

Also, when you find that Lenin declared and demonstrated that a sure way to overturn the existing social order and bring about communism was by printing press paper money, then again you are impressed with the possibility of a relationship between a gold-backed money and human freedom.

Well gee, that’s interesting. What do the totalitarian dictators of Communist China do and say about their citizenry owning gold? Well, suffice to say, they strongly support it, in fact, recommending that every citizen own gold. I’d say that there is not much liberty in Communist China, as least not the type that the author refers to, yet there is widspread personal ownership of gold. So we have barely passed through the first paragraph and we already have a serious and obvious flaw in the logic- a statement that is clearly not supported by modern culture. Let’s go on:

Howard Buffett wrote:

That redemption right gives money a large degree of stability. The owner of such gold redeemable currency has economic independence. He can move around either within or without his country because his money holdings have accepted value anywhere.

Snip…..

Under such conditions the individual citizen is deprived of freedom of movement. He is prevented from laying away purchasing power for the future. He becomes dependent upon the goodwill of the politicians for his daily bread. Unless he lives on land that will sustain him, freedom for him does not exist.

The correct definition of currency is a medium that acts as an equitable and convenient, yet universally accepted exchange of value, and as a mechanism to store wealth.

But yet the owner of fiat currency has the right and ability to convert his fiat into any form of alternate currency, or commodity, or tangible asset, or even hookers and heroin at any time. He has the freedom to do so. In fact, if he so chooses to reject the US dollar, or the Yuan, or the Peso, or any other currency, one has only to exchange for another. So how exactly, is one held hostage to the issuers of fiat?  Select some other type of mechanism for the store of wealth, and utilize fiat for the convenient exchange of value.  There is no mandate for the individual to use the dollar or any other fiat currently for the storage of wealth. This is a very important point. There is a mandate to use fiat for the transactional relationships that we undergo every day, and we do have to pay taxes in fiat. But the author seems to neglect the obvious opportunity for the skeptic to simply opt out with respect to the storage of wealth component, which is the only category one should be concerned with. Now, if hyperinflation comes about, we will have a problem with these transactional relationships because our earning power has become decoupled from the spending requirements of substinence.  But if the store of wealth is in a stable (or even appreciating commodity such as gold) then we have a hedge against this type of inflationary destruction of wealth.

The claim that the gold standard is inexorably linked to the liberty and freedom is sophomoric, and uses poorly formed logic that can be dismissed by simple observation. Therefore the premise of the article is not valid, although there are some points of truth and certainly points of interest. The article attempts to rely on the use of celebrity to overcome fatal logical flaws.

What apparently is not understood is the role that fiat currency, fractional reserve banking, and debt based currency all share, the reason they are locked together, their “raison d’etre”, which is certainly not the plottings of a mysterious cabal of shadowy bankers.

The reason they exist is that capitalism cannot exist without them. Capital abides no limits. Not limits in labor. Not limits in natural resources and raw materials. Not limits in market, not limits in geography and not limits in size of the markets. There can be no limits.

And most certainly, of all things, there can be no limits to money.

Thomas Hedin's picture
Thomas Hedin
Status: Platinum Member (Offline)
Joined: Jan 28 2009
Posts: 815
The very first question.

Is there a connection between Human Freedom and A Gold Redeemable Money?

The very first question that should be asked is what is the money?

Carl Veritas's picture
Carl Veritas
Status: Gold Member (Offline)
Joined: Oct 23 2008
Posts: 294
Before Amercian money became

Before Amercian money became pure fiat, it had 40% gold backing

Executive Order 6102 is a decree forcing Americans to surrender their gold to the Federal Reserve in 1933. followed by the Gold Reserve Act of 1934 that titled all that gold to the U.S. Treasury.      The acts freed the bankers from their obligations to their customers and allowed for unrestricted government debt.

 

Thomas Hedin's picture
Thomas Hedin
Status: Platinum Member (Offline)
Joined: Jan 28 2009
Posts: 815
You know if it wasn't so serious it would be funny.

This thread really points out the deeper problems with the average American's abililty or willingness to openly and honestly discuss money.

Not one person even attempted to engage in the conversation about the question I propossed.

 

So lets start over and be really honest with ourselves and others.

 

The very first question that should be asked is what is the money?

 

goes211's picture
goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
Enough already!
Thomas Hedin wrote:

This thread really points out the deeper problems with the average American's abililty or willingness to openly and honestly discuss money.

What this thread really shows is this sites vulnerability to trolls.

Thomas Hedin wrote:

Not one person even attempted to engage in the conversation about the question I propossed.

That is because this thread was a discussion about at statement made by Congressman Howard Buffett ( Warren Buffets father ) in 1948.  You started to derail it by calling the statement "one of the best examples of lies, half truths, and deceptions I've ever read".  When people called you on it you showed no interest in backing your statement.  At this point, why should anyone engage you.

Thomas Hedin wrote:

So lets start over and be really honest with ourselves and others.

Why start over?  If you want to discuss your pet monetary project, why not create your own thread.  No reason to hijack this one.

Thomas Hedin wrote:

The very first question that should be asked is what is the money?

What is "the money"?  That is not even proper english.

doorwarrior's picture
doorwarrior
Status: Silver Member (Offline)
Joined: Oct 13 2009
Posts: 166
The currency should be backed.

Well gee, that’s interesting. What do the totalitarian dictators of Communist China do and say about their citizenry owning gold? Well, suffice to say, they strongly support it, in fact, recommending that every citizen own gold. I’d say that there is not much liberty in Communist China, as least not the type that the author refers to, yet there is widspread personal ownership of gold. So we have barely passed through the first paragraph and we already have a serious and obvious flaw in the logic- a statement that is clearly not supported by modern culture. Let’s go on:

This article was written 63 years ago so whats happening TODAY cannot be compared to that time frame. One could also assume that the Chinese looked at the failed attempts of those dictators and decided to make some changes instead of following all of the same failed policies.  Also the Chinese govt. is in complete control right now and they like the system they have set up.  What the writer was refering to were dictators that were trying to start/change the systems they were in.

The correct definition of currency is a medium that acts as an equitable and convenient, yet universally accepted exchange of value, and as a mechanism to store wealth.

I like you definition of currency/money(maybe add it needs to be divisible and a "fixed" store of value).

 

But yet the owner of fiat currency has the right and ability to convert his fiat into any form of alternate currency, or commodity, or tangible asset, or even hookers and heroin at any time. He has the freedom to do so. In fact, if he so chooses to reject the US dollar, or the Yuan, or the Peso, or any other currency, one has only to exchange for another. So how exactly, is one held hostage to the issuers of fiat?  Select some other type of mechanism for the store of wealth, and utilize fiat for the convenient exchange of value.  There is no mandate for the individual to use the dollar or any other fiat currently for the storage of wealth. This is a very important point. There is a mandate to use fiat for the transactional relationships that we undergo every day, and we do have to pay taxes in fiat. But the author seems to neglect the obvious opportunity for the skeptic to simply opt out with respect to the storage of wealth component, which is the only category one should be concerned with

Here again the fact that the article was written 63 years ago is the problem. They did not have instant transactions or currency exchange with a keystroke back then, traders from that era would be astonished the HFT can make 20,000 trades a second today. Even taking that into consideration, today the average US citizen is still held hostage to our fiat system. Most people just get by from paycheck to paycheck, they do not have the extra money to put into another form(pick any of the above). How could a person living in the US barely making ends meet reject the FRN when there is not a bank, retailer, grocery store or gas station that will accept anything else.

After rereading the article and accounting for the time lapse from when it was written I think the author has some excellant points. IMO he doen't want a currency that can be printed  until it loses all value, can be created as debt and was controlled by private interests. This even goes along with a qoute by  Thomas Jefferson:

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

If the govt. were to issue fiat currency as it sees fit then The People would never be in debt. Many say that if that were to happen then the govt. would run amok and print endlessly. I think thats what they have done anyway. I cannot find a single instance where our govt. was told "no mo money" by either the FED or the Treasury. (Well the banks told Lincoln no so he issued the greenback to pursue the Civil War.  But that didn't last very long or turn out very well for Lincoln) They just keep issuing debt anytime they want and raise the debt ceiling with a flick of a pen(why do we have a ceiling anyway if its alway raised everytime we get there). All this does is benefit the power elite as they keep "loaning " the money back to the govt.

The reason they exist is that capitalism cannot exist without them. Capital abides no limits. Not limits in labor. Not limits in natural resources and raw materials. Not limits in market, not limits in geography and not limits in size of the markets. There can be no limits.

And most certainly, of all things, there can be no limits to money.

We live on a finite planet. Whether you like it or not there are limits on EVERYTHING!!!!

Tying fiat to anything ( gold/silver being the most likely suspects) with a fixed value solves the debt as money problem and the constant inflation of the money supply and prices.. A person would not have to constantly "invest" his hard earned savings just to try to keep up with inflation, he would be able to hold the currency as savings and maintain purchasing power indefinately. I know ther are all kinds of problems with this with the population growing exponentialy. However, finished gold/silver products are also growning so maybe a balance of some sort would be reached. Possibly even a decline in prices as time goes on would  allow the currency to be divided into smaller and smaller increments which would benefit savers greatly.

I certainly don't claim to have the answers. Maybe combining the Govt. issued fiat with a solidly backed curreny would be a solution. This would allow the govt. to provide for public works projects and services as needed and force them not to overspend or their own workers would loose too much purchasing power in the process. The govt. could even mandate that taxes would have to be paid only in their fiat.

I only hope that after it all comes down those of us that are left come up with a better system than we have now.

Rich

 

 

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Some great points

Some great points.

I suppose you can take this article as perhaps relevant in a different time, which is a reasonable point. You could also take the view that given the hindsight of history we can now see clearly that the premise of linking liberty to gold backed currency is incorrect.

The notion that fiat currency is a tool for enslavement still persists today, and is a theory prevalent on this site in particular. Further there is also the notion that things were just rosy in an unfettered free market society until the advent of the Federal Reserve system, and the subsequesnt removal of gold backing from the currency. A quick look at the history before the “magic” year of 1913 shows quite a different reality:

The Panic of 1893 was a serious economic depression in the United States that began in that year.[1] Similar to the Panic of 1873, this panic was marked by the collapse of railroad overbuilding and shaky railroad financing which set off a series of bank failures. Compounding market overbuilding and the railroad bubble, was a run on the gold supply (relative to silver), because of the long-established American policy of bimetallism, which used both silver and gold metals at a fixed 16:1 rate for pegging the value of the US Dollar. Until the Great Depression, the Panic of '93 was considered the worst depression the United States had ever experienced.

 

And twenty years previously:

The Panic of 1873 surrounded a severe international economic depression in both Europe and the United States that lasted until 1879, and even longer in some countries. It is nowadays referred to as the Depression of 1873[1] by historians. It was triggered by the fall in demand for silver internationally, which followed Germany's decision to abandon the silver standard in the wake of the Franco-Prussian war.[2] In 1871, Otto von Bismarck extracted a large indemnity in gold from France and ceased minting silver thaler coins. The first symptoms of the crisis were financial failures in the Austro-Hungarian capital, Vienna, which spread to most of Europe and North America by 1873. It was one of a series of economic crises in the 19th and early 20th centuries. In Britain, the result was two decades of stagnation known as the "Long Depression", which weakened Britain's economic leadership in the world.[3] In U.S. literature this global event is usually known as "Panic of 1873", while in Europe it is known as Long Depression or Great Depression.[4]

So the realty of the situation is that in the years proceeding the Federal Reserve Act, and through the Great Depression of 1929, the gold standard proved a serious impediment to economic stability, a fact overlooked in contemporary (and often revisionist) discussions of political economy. Now, Milton Friedman and company disagreed with this theory, and noted that the Central Banks of the day had legislated limits of monetary expansion of FRN (set at 40% gold backing) 

Conventional wisdom holds that decoupling the gold standard destroyed this check and balance system and allowed virtually unlimited monetary expansion, which is certainly true. However, trying to associate this monetary policy with “freedom” and “liberty” seems to me to be borderline demagoguery at worst and simplistic (and nostalgic) thinking at best.

 

Even taking that into consideration, today the average US citizen is still held hostage to our fiat system. Most people just get by from paycheck to paycheck, they do not have the extra money to put into another form(pick any of the above). How could a person living in the US barely making ends meet reject the FRN when there is not a bank, retailer, grocery store or gas station that will accept anything else.

 

I agree with most of this, you are of course right, but we are mixing hyperbole here. There is a demonstrable difference between “living paycheck to paycheck” and not having the resources to utilize a currency to store wealth, but this is because there is no wealth to store for the majority of Americans, which is a very different issue than the intrinsic value of a particular brand of fiat. For more detail on this issue specifically, I had posted some remarks in another thread. Link

I am trying to make the point that for those that do have surplus capital that they wish to save or store, they have innumerable options to store this wealth, and are not bound to fiat and therefore are not “held hostage” at all as the article suggests. Regarding the transactional efficacy of the US dollar, like it or not, its hard to do better regardless of what you like or don’t like about the circumstances of how its issued.

If the govt. were to issue fiat currency as it sees fit then The People would never be in debt. Many say that if that were to happen then the govt. would run amok and print endlessly. I think thats what they have done anyway. I cannot find a single instance where our govt. was told "no mo money" by either the FED or the Treasury. (Well the banks told Lincoln no so he issued the greenback to pursue the Civil War.  But that didn't last very long or turn out very well for Lincoln) They just keep issuing debt anytime they want and raise the debt ceiling with a flick of a pen(why do we have a ceiling anyway if its alway raised everytime we get there). All this does is benefit the power elite as they keep "loaning " the money back to the govt.

I agree totally, and I am not advocating that the current monetary policy is sound..

We live on a finite planet. Whether you like it or not there are limits on EVERYTHING!!!!

Tying fiat to anything ( gold/silver being the most likely suspects) with a fixed value solves the debt as money problem and the constant inflation of the money supply and prices.. A person would not have to constantly "invest" his hard earned savings just to try to keep up with inflation, he would be able to hold the currency as savings and maintain purchasing power indefinately. I know ther are all kinds of problems with this with the population growing exponentialy. However, finished gold/silver products are also growning so maybe a balance of some sort would be reached. Possibly even a decline in prices as time goes on would  allow the currency to be divided into smaller and smaller increments which would benefit savers greatly.

Here is believe you misunderstand my point. I completely agree there are limits to everything, but it is the failure to accept this that has driven the monetary system to where it is today. Gold will never again be tied to a fiat currency as long as we have a capitalistic economy. It cannot be tied to it because it (capitalism)  intrinsically requires exponential expansion.  This is why gold was decoupled in the first place, the money supply was so constrained by this linkage that capitalist expansion was hindered (some might say asphyxiated) by a money supply that could not keep pace with a rapidly emerging industrial revolution that required enormous sums of capital to fund the massive restructuring of the world economy- and still does today.

While the bankers and politicians of the day were the bagmen of this escapade, the “shot callers’ were the industrialists and capitalists of the day, then, as now. Unfortunately, the obsession with free market economics in general, and Milton Freidmans’ failed theories specifically, will prevent any meaningful discussion on corrective action in our current political climate

The change, if there is to be one, will come not from monetary limits, but from limits of another kind-most likely limits of critical natural resources such as oil, which is a game changer with respect to the notion of liberty, freedom and distribution of finite resources on an increasingly crowded plant.

 

MG_Andrew_Jackson's picture
MG_Andrew_Jackson
Status: Member (Offline)
Joined: Jun 11 2011
Posts: 7
Gold vs all

I like gold monies, but gold is far too valuable in industry to be used as monies, gold, I think is the best measure of your nations dollar/mark what have you, and a standard gold index should be used by all nations to fix the exchange rate, on the spot of the exchange( Money Changing ), it's pegging that's making the Middle East blow up, it needs to stop.

If any nation refused to use a standard gold index, updated every 24 hour, say high noon GMT, when their monies go all to shite, the next time the nation they are pegging to inflates( Prints monies for nothing ), we should say," We told you so!", and do nothing other than offer food, if they run low.

BUT, monies need to be regulated by your nations production in real goods, that includes Gold/Silver/Cars etc. etc. etc.

However, regulating the quantity of your monies does not link them to it, monies are exchangeable for gold now, we just need to rid ourselves of the Bull Shite taxes, fees and such that apply to Gold and not cars, what have you, you should be able to buy things with gold( Trade ), just like anything else, sales tax should apply, but not all this other crap.

No Nation/ Bank/ Person should be "holding" another nations monies, unless they are in or in rout to that nation, monies exchanges, like FOREX, are a violation of United States Law:To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

That's the Law, you have to look at the entire phrase, not just "To coin Money", it all goes together, congress is derelict in it's duties, it's not POTUS, vote for any arse you like, CONGRESS is the trouble, congress has been shirking it's duties, giving power to the Fed and POTUS, only congress can take this power back, they don't need the Fed or POTUS to agree!

doorwarrior's picture
doorwarrior
Status: Silver Member (Offline)
Joined: Oct 13 2009
Posts: 166
It depends on the fiat

Fiat in and of itself is not a tool for enslavement, fiat issued as debt is. Fiat can be issued by the Gov. debt free and the people can use it without becomming a slave. Rome did it for hundreds of years and prospered. England did it with tally sticks for hundreds of year and did pretty well. Lincoln issued the greenback and financed a war with it. The problem comes when private financial institutions get to create fiat with interest, this enslaves the people simply because there is NEVER enough money to pay it all back, hence we are always working to pay the man.

If you look at the dates you provided on a timeline you will notice this was right after the civic war. The banks were fighting hard to destroy the greenback as a nationaly issued currency because it was undermining their power and they made no interest on it.  The banks then intentionaly caused a shortage of "paper" which is what caused the panics. This was done to force the public to accept a central bank so that the banks could consolidate the power for themselves. I think the reasons in your post for these events were more a symptom rather than a cause.

http://www.secretofoz.com/     here is a link for free on Youtube 

  I have found many other peices of info that support this but here its all put together pretty well.

I don't believe that freedom and liberty are synonomous with a gold standard. I do believe debt free money is a intrinsic part of liberty, we cannont be beholden to a small gorup of people indefinately.

I am trying to make the point that for those that do have surplus capital that they wish to save or store, they have innumerable options to store this wealth, and are not bound to fiat and therefore are not “held hostage” at all as the article suggests. Regarding the transactional efficacy of the US dollar, like it or not, its hard to do better regardless of what you like or don’t like about the circumstances of how its issued.

I agree with this 100%. However you are talking about a very small % of people. The vast majority of people fall into the other category and are unable to break the bondage.

 

Here is believe you misunderstand my point. I completely agree there are limits to everything, but it is the failure to accept this that has driven the monetary system to where it is today. Gold will never again be tied to a fiat currency as long as we have a capitalistic economy. It cannot be tied to it because it (capitalism)  intrinsically requires exponential expansion.  This is why gold was decoupled in the first place, the money supply was so constrained by this linkage that capitalist expansion was hindered (some might say asphyxiated) by a money supply that could not keep pace with a rapidly emerging industrial revolution that required enormous sums of capital to fund the massive restructuring of the world economy- and still does today.

This is why I suggested a two part system(don't really know if it will work but what the heck we have tried several other ways for no better reasons). There should be checks and balances in everything we do.  I agree in part that was why gold was decoupled but the other reason was so that TPTB could make boatloads of money for nothing(and get their chicks for freeWink). Your right that enormous sums are needed today, I wish we had chosen the slow steady path instead. Constraints on the money supply would have caused the economy to grow more slowly, use resources at a slower pace and given us more time to grow into ourselves. Without the rapid development of farming due to oil the population would have grown slower and maybe, just maybe we would have made better choices. Rapid population increases are at the heart of most if not all of our problems today.

While the bankers and politicians of the day were the bagmen of this escapade, the “shot callers’ were the industrialists and capitalists of the day, then, as now. Unfortunately, the obsession with free market economics in general, and Milton Freidmans’ failed theories specifically, will prevent any meaningful discussion on corrective action in our current political climate

I am not sure what to think of this. I have always thoght that the industrialists and the bankers were in bed ogether, after all back in the early 1900's we are talking about a very small number of families that had most of the control and Jeckyll island was mostly financieers.

Milton Friedman didn't fail he was a god and we should all bow before him. O wait I forgot, I am talking to smart people who know better Laughing. No way we will ever get maeningful discussion until we have a very serious event tht shakes the world. Unfortunately that event will be the end as we know it (not the end of the world just as we know it today). It will be what comes out of the ashes and the way we shape our future from there that will make the difference.

Rich

doorwarrior's picture
doorwarrior
Status: Silver Member (Offline)
Joined: Oct 13 2009
Posts: 166
MG

BUT, monies need to be regulated by your nations production in real goods, that includes Gold/Silver/Cars etc. etc. etc.

If this were the case the US would be dead broke. Yet we have the worlds largest reserve of gold.

Rich

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Rich, All good points, but

Rich,

All good points, but of course now we have come full circle and are now simply validating the notion that there is no reasonable linkage between liberty and gold backed money, which was the original premise of this thread. I am familiar with Bill Still’s work, and the film you reference actually makes the opposite  point regarding gold and liberty, and takes us further into the subject of debt based currency, a theme which has been beat to death on this board and to which I can add no value.

I am trying to make the point that for those that do have surplus capital that they wish to save or store, they have innumerable options to store this wealth, and are not bound to fiat and therefore are not “held hostage” at all as the article suggests. Regarding the transactional efficacy of the US dollar, like it or not, its hard to do better regardless of what you like or don’t like about the circumstances of how its issued.

I agree with this 100%. However you are talking about a very small % of people. The vast majority of people fall into the other category and are unable to break the bondage.

This is a very different issue, although entirely valid and spot on. However, the issue is not that they have been “enslaved” by a particular kind of currency, the issue is that they do not have any wealth at all, and that wealth has been in fact unfairly distributed to a very small number of people- as you point out.

So now we get to the crux of the issue- are these 99% of the population so mal-distributed because of the way currency is issued, or is there some other intrinsic mechanism that dictates the wealth will be unequally (and unfairly) distributed- totally independent of the currency type?

This is an extremely important question, and how each person answers it will largely determine their view of the world and what has possibly gone wrong.

This is why I suggested a two part system(don't really know if it will work but what the heck we have tried several other ways for no better reasons). There should be checks and balances in everything we do.  I agree in part that was why gold was decoupled but the other reason was so that TPTB could make boatloads of money for nothing(and get their chicks for free). Your right that enormous sums are needed today, I wish we had chosen the slow steady path instead. Constraints on the money supply would have caused the economy to grow more slowly, use resources at a slower pace and given us more time to grow into ourselves. Without the rapid development of farming due to oil the population would have grown slower and maybe, just maybe we would have made better choices. Rapid population increases are at the heart of most if not all of our problems today.

Well, this (highlighted)  is an entirely sensible suggestion. However, “we” did not choose the pace “we” grew at, someone did, and that someone was not “we the people”. And it was not the government or the banks either, as the theory of endogenous credit as advanced by economist Steve Keen (linked below) clearly demonstrates. It is dictated by the large industrialists and capitalists who need, and I emphasize the word need, extraordinarily large sums of money to grow their multi-national corporations at a scale compatible with the expectations of their shareholders. Each year. Every year. Forever, at an exponential pace. It is this dynamic that sets the growth requirement, and not the monetary system.

 Rolling Cavaliers of Credit  (Steve Keen)

Note Bernanke’s assumption (highlighted above) in his argument that printing money would always ultimately cause inflation: “under a fiat money system“. The point made by endogenous money theorists is that we don’t live in a fiat-money system, but in a credit-money system which has had a relatively small and subservient fiat money system tacked onto it.

We are therefore not in a “fractional reserve banking system”, but in a credit-money one, where the dynamics of money and debt are vastly different to those assumed by Bernanke and neoclassical economics in general.[10]

Calling our current financial system a “fiat money” or “fractional reserve banking system” is akin to the blind man who classified an elephant as a snake, because he felt its trunk. We live in a credit money system with a fiat money subsystem that has some independence, but certainly doesn’t rule the monetary roost—far from it.

The best place to start to analyse the monetary system is therefore to consider a model of a pure credit economy—a toy economy in which there is no government sector and no Central Bank whatsoever—and see how that model behaves.

a few more remarks:

doorwarrior wrote:

I am not sure what to think of this. I have always thought that the industrialists and the bankers were in bed together, after all back in the early 1900's we are talking about a very small number of families that had most of the control and Jekyll island was mostly financiers.

I urge you to consider that sentence very carefully. You are right in suggesting that the financiers and a small number of families were “in bed together” at the time of the 1913 Federal Reserve Act. And yes, the train ride to Jekyll Island was mostly financiers and politicians. But who were the shot callers? Let us recall the historical context of the time, this was the era of the Robber Barons! Carnegie (steel), JP Morgan (industrialist), Astor (real estate), Schwab (oil), Flagler (railroads), Duke (tobacco), and Mellon (oil). And at the time, what was happening that was of interest to these actors, why, expansion, global expansion and monopoly, all of which require access to massive amounts of capital.

Regarding JP Morgan: (Wiki)

 

At the height of Morgan's career during the early 1900s, he and his partners had financial investments in many large corporations and was accused by critics of controlling the nation's high finance. He directed the banking coalition that stopped the Panic of 1907. He was the leading financier of the Progressive Era, and his dedication to efficiency and modernization helped transform American business. Morgan redefined conservatism in terms of financial prowess coupled with strong commitments to religion and high culture.[1]

I think there is little question as to what group of people were calling the shots in those days, and one can make the case that these factors are largely unchanged today. The implications of this statement is profound with respect to many of the free market theorists and debt free currency advocates- effectively resetting many of the fundamental belief systems backwards. If in fact true, this conclusion profoundly rearranges the discussion of cause, symptom, and affect, and negates many of the unregulated free market principles so popular today, virtually guaranteeing that any change to the way currency is issued simply nets a new way to re-distribute wealth to the same old actors, by mischaracterizing the root cause of the problem.

 

MG_Andrew_Jackson's picture
MG_Andrew_Jackson
Status: Member (Offline)
Joined: Jun 11 2011
Posts: 7
The case?

I'm fairly sure it is the case, and you could be correct, as we produce shite these days, however I don't think we have the largest stockpile of gold, we just have the largest reported stockpile.

Stockpiling gold is use less, it's a shiny rock, if you knew what makes a king a King, you'd know what to do with it.

At any rate, some of my mindless pissings on monies, from http://s6.zetaboards.com/Bill_Still_Reforum/

 
It seems to me, when I think of free market banking, that what we would end up with if we removed all government backing of banks would be fee for service banking, so let's see if we can work through all the pitfalls and come up with a system that still works.When we talk about ending FRL some advocate just letting the Government spend all new monies into the system, I don't think that those who advocate this have thought through how that gives ALL power to the government, or maybe they have.However, let's put that debate aside, for the time being, I'm still working on a compromise that would allow debt free government infrastructure spending, but still have free market means of non-inflationary monies production, but I need more time to think it over.

Let's just assume we're in a debt free monies system, and have ended FRL, there will still be a need for services that banks now provide, the logistics of monies, lending, protection of monies, investment of monies.

With logistics, from the consumer side, this one is a no brainer, a transaction fee, say 50 cents payed by the costumer of the bank, I know this is a lot more than we pay for some transactions now, but if banks were actually competing in a free market, the biggest banks would be charging less per transaction, as they have more transactions, let's assume your competition was charging $2.50 for an ATM charge in St. Louis and your a International bank, so you buy some ATM's and install them in St. Louis, let's say you put in 200 at a cost of $3k each, and you contract some local Co. to service them at a cost of $100 per ATM per week, you're also paying $20 per week of rents of ATM locations and 25% of fees minus service. Your also paying 25 cents per transaction for access to one for the 2 or 3 ATM networks.

Now you're cookn', all you have to do is buy some local add time and drive your competition out, or make them lower there fees below yours, BUT your competition just offers $50 per week rents of ATM locations and 30% of fees minus services, you lose all you locations, and your competition raises it's price to $3.00 per ATM transaction.

So you are stuck, you'll have to offer more than your competition to get locations back and try to lock in a contract for long term, and you're still going to have to raise your rates, to make things even more complex your competition locked down all 200 prime locations to a three year contract, and raised prices to $4.50.

Now just to add insult to injury the ATM networks rise the price per transaction to $1.00, then the government adds a transaction tax of 2%, so your competition tosses on a nice little profit bump and passes the increase in cost on to the costumers, who should be your costumers as you are the one trying to do honest business and compete in a free market, but they are not, so now these suckers( Customers who have no idea how little they could have been paying, nor did they understand when they pulled a lever to vote for someone who claimed to be a free market advocate, that in order for the free market to remain free GOVERNMENT MUST STOP ANTI-COMPLETIVE PRICE FIXING, it's like instead of voting they shoved a hose so far up their own ars the banks and the government could get their cut of his/her food, before they even chewed it.)So they're now paying $6.00+2% per ATM transaction, and you the price completive honest free market capitalist are stuck with 200 useless ATMs.

Now let's fix it, first let's kill the 2% government tax, you've already pay income tax on this money, so that's out, next Government could enforce the price fixing laws on the book, or even make new ones, but that takes a lot of manpower and monies, more tax on you and more useless laws no one is going to enforce, or Government could pass laws fixing the price of ATM charges, but that's not the free market, and just more useless law, and more tax on you to pay the lard arses who already get payed to enforce the laws that they don't enforce, to hire more aspiring lard arses to enforce the new laws, no one is going to enforce.

Now the Government could Nationalize one of the ATM networks, but that's Socialism, and you would have to pay them for it, and why would we want to pay for someone else old junky shite when we can just print debt free monies and build our own public ATM network, then use immanent domain to put some nice prime location ATMs around St.Louis.

State Capitalism, it's just cheaper than paying a bunch of Government lard arses to oversee all the aspiring lard arses, who are more likely than not just going to sit on their ars taking bribes while the laws go unenforced, just like they do today.

The Congressional Rep. for St.Louis offers a bill for funding, the bill asks for funds to pay for the nation wide network, and funds to acquire needed locations in St. Louis, and offers these funds to The Bank of St. Louis in the form of an interest free loan to be repaid by a .02 cent tax on those ATM locations in St.Louis, it also offers contract to be won by the lowest bidder to provide the physical ATMs, service them( you know repair and fill as needed), it levies a fee of .13 cents per transaction for the maintenance costs of the national network, and another low bid contract to get these funds( .13 cents) and whatever is left over is used to pay the lard arses in Congress, Congress debates it, finds it sound( the number add up ), so Congress passes the appropriations bill, thus authorizing United States Treasury(You know the lard arses WE ALREADY PAY TO DO THIS JOB) to print the funds and United States Secret Service( You know the lard arses WE ALREADY PAY TO PROTECT PRESIDENTS(( BOTH DEAD AND ALIVE )) move these monies to The Bank of St. Louis.

So now you, the price competitive honest free market capitalist stuck with 200 useless ATMs step and place a bid for 50 cents per transaction.

Anyone staring to get the idea of how "WE" are getting F***ED, doesn't St. Louis have a FED or a F***ED.

Anyway, before I START SHOOTING CONGRESS PERSONS, I covered ATMs, and most of the logistics of monies in the US, feel free to jump in and offer your solutions to fix the other services offered by banks now.

Now if this were a State issue, then your Senator would handle the Appropriations Bill and monies would go to your State Bank, you know kind of like things worked BEFORE THE CIVIL WAR!!!!!!!!!

 

Let's look at how banks should be handling loans:

In the system below, if the "Builders Bonds" default, the bond holder is out the interests( 20% ) but holds the face value Share ( 10% ) of the bond in the unsold House/Property, so they could still come out ahead , but the State Bank must make good on the Bonds Face Value after( 1k ) after 24 months upon request by the bearer, and as the State bank underwrote the Bond, it must try to sell the house, and the State can't size the property on tax lean, as it owns it.

Picture the Monies from a Nation wide project like a National Electronic monies network going to each State bank, and monies for the physical land/building costs needed going to each City/County Bank.

Now let's look at how this system should operate to help eliminate or reduce the need for FRB.

Say I am a builder, I build Homes, I have good reputation and credit, so I go to a local bank and apply for a loan to by 55 home tracts and monies to build 55 homes, I have the land selected and the investment looks sound so the local bank offers me the loan, but must clear it with the City County bank to get the terms.

The local bank in turn goes to the City/County bank and gets funds, the City/County bank access's the market and looks at the price value of the homes I have offered blueprint to build( say it's tract housing ), they look at my estaminets of building costs as well as my "Required profit"( Say it's going to cost me 85k to build small 3 bedroom homes and I'd like to require 10k profit per home ) These margins look sound, so the City/County bank offers the funds 85k x 55 = 4.675 Million for a term of 6 years( all these funds are not going to be needed at once and some homes are going to be sold before others started so the City bank has the funds over time to handle this loan, but if it did not it could turn to the State bank or go through the Congressional Rep. directly).

Now the City bank prepares an offering for Wall Street, the offering must be approved by the State Bank who will underwrite it( for a fee ) and if it were a larger loan the Senate of U.S. would have to approve it as it's a State bank underwriting. Now the price I need for these houses is 95k each, and the local bank wants a fee of 1k per home, the city bank decides it wants 3k per home fee, and the State bank takes 500h each to underwrite the offering, it's a 6 year term so, but some homes will be done over time so a set of 2 year bonds should work, the City bank breaks up each Home into 1k bonds and adds 20% for the bond holder and the Wall Street broker wants 500h per home to handle the offering( Sell it ).

So per home you end up with 100 1k bonds paying $1200 and the end of 24 months( If I did the math right? ), that leaves the Sale price of the home at $120k with a nice profit for everyone, but the Real-estate agent, but the City bank owns the homes, or is servicing the bonds, so it needs to sell them, so it contracts an agent to sell each one for 5k.

6 months later 20 homes are done.

Now the buyer walks into a local bank and wants to buy a home that has been complete, these homes are a known quantity and all the legal costs are handled in the 5k the real estate agent, the buyer has a credit score of 680 has been on their job for 5 years pays his/her non credit reported bills on time(( doesn't have any extraneous lines of revolving debt, more on that another time)) so everything is in order, the local bank slaps a 1k fee on the loan and goes bak to the City bank, the City bank turn to Congress Rep. who rubber stamps
it and adds it to that weeks home loads appropriations bill( THIS HOUSE IS REAL, IT EXISTS, SO THE MONIES NEED TO EXSIST, PRINTING THEM WILL NOT BE INFLATIONARY, AND IF THE HOME OWNER DEFAULTS, THE HOUSE IS STILL REAL, SELL IT AGAIN ) so Treasury prints the monies and the loan is made, the buyer pays for Insurances at the rate of $75.00 per month or near that, in the terms of the loan.

Say the terms are 15 years, so 126k / 15 / 12 = $700 per month + 75 for Insurance $775 a month for 15 years and no Interests, each payment is Priceable - Insurance and the buyer can pay it off as fast as they want, if they fall behind some, it does not bring down some pyramid scam, there is NOT ONE to bring down.

Looks honest to me, look over my math and see if it's right?

Does anyone think it would be inflationary if the buyer defaulted and Congress printed new monies for the next buyer???

Fee for service banking???

Do we need FRB in this example?

Now let's talk about consumer credit, Usury, and other moral hazards.

We just can't keep doing things the way we have been, the flaw in the credit score system is there is no calculation for income, revolving credit for consumers works fine, and the Usury is minimal, but we need to cap revolving lines of credit to 5k on the credit score system then add means testing above that, the moral hazard is too high and when banks like WaMu were going under they started handing out credit cards like madd to anyone with a credit score over 600 regardless of income or debt level , trying to bail themselves out, but it did not work.

We also MUST MUST MUST, teach good credit habits in our schools, to those above 6th grade, as well as legal contracts, and the true History of world banking( History and banking are the same thing are they NOT?) or nothing we do in the banking system is going to matter.

We also MUST STOP VOTING TO SEND OUR NEIGHBOR JOB AWAY!!!!!!!!!!!

Doesn't work guys, never has never will, there is no such thing as a free launch and there's no such thing as FREE TRADE, if you're buying that product local, it need to be made local, you just can't send jobs away and still buy the product cheaper, FUEL COSTS MONIES, if it's harmful to the environment in CA how can it be less harmful in China?

We are going to have to TAX IMPORTS of environmental and human impact, doesn't mean we won't have imports or trade, but you just can't send your neighbor job away and think it won't affect YOU!!!

I think we need to cap USURY to a 24month term, if the loan is not Interest free, it can't be longer than 24 Months.

If you think these things all the way through, and add it to what I've posted about money changing, you'll see the it's Usury and Money Changing that are a the root of the worlds troubles, not monies, but debt based national monies are Usury and Money Changing( Still Gold changing going on, don't believe the lies, every world Central Bank still has Gold holdings!!!!!!!!!!!!!!!!!!)

Well the title of the topic did not hold true, but I would argue that State/City/County banks are the free market solution, as the market has worked itself out over the last 600 years, only States/City/County have to power and the incentive necessary to run backend banking.

If you look at the system as I've outlined it, you'll also see that the loan repayment is all the Tax necessary to run the grandest Government the world has ever seen, as 100% of these monies go back to Government and can be spent in anyway they/We see fit.

Plus pension can buy 10% APY bonds all day long, and these Bonds are backed by real assets, so the chances of loosing monies is almost nil for the Bond holder.

Moreover, this system works for Manufacturing and Retail backend loans too, with the same 10% APY 24 month Bond offerings, it ends the large markdown of driving a car off the lot for the consumer, and your car would be worth what you payed for it minus the monthly payment, your insurance would cover ware and tear.

Now all the non Government banks can still make loads of loot on revolving lines of credit, run off deposits, and offer very nice % Rates to depositors( Savings/ CD's / Money Market's ), but I would not let the banks lend out "Checking" monies (for terms longer than weeks), in the con game we'd call these monies "The Float", and if it has a term in a con game, it's not a good idea to let banks loan it out, but just because they don't loan it out, does not mean they can't leverage bank holdings and use "The Float( Average Deposits in non investment accounts)" for bank managed investments in short term investments that have very little risk, they still have the City/County Mini-Fed's to clear short term cash shortage, and each Mini-Fed would clear local banks books each night at close to monitor leverage( FRB ), then the State Banks monitor City/County Banks, and the US Senate+Treasury monitors the State banks, but also local banks can monitor City County Banks and on up the food chain, a system of mistrust, or trust but verify.

This really only leaves "The Value of Foreign Coin" ( Money Changing ) and I think I handled that in the Gold Measured Money Changing Thread, so there you have it, I fixed the banking system, eliminated ALL INTERNAL TAX, Balanced All Government Budgets, Payed off all local/state debt, Ended The Fed, Ended Money Changing and Global War, Reduced the Wealth gap, restored the public trust, and Larry paid the National Debt off in a few years, anything else.

Just because these monies represent something real, does not link them to it, that's the job of the Bonds that pay for the Mining/Farming/Building of the object( Services may also be monetized, but I need some more time to think that over ). Reasonable Interests on Builder Bonds are not Usury, they are investment.

After taking the time to think it over, Services/Labor/Maintenance should not be monetized, they are the natural deflationary force at work in your economy, so you should be able to see the need for a tax for government to subsidize them, but look at how I handled that with the maintaining of the ATM Network, Usage Tax.

That won't really work with healthcare, but if we implemented the system I have outlined, AND STOP SPENDING SO MUCH MONIES DRIVING A WAR MACHINE, I see know reason the Government could not provide a high level of Healthcare and Higher Education Free of Charge, and without the need for direct tax, as these would act as the deflationary force, mind you I did away with the interests on all loans over 24 months, add up all the monies pissed away on a 30year note @ 5%, and you'll see where the monies are coming from.

but let me add monies from Debt Free Infrastructure loans, would be Void upon repayment, until they are needed for new infrastructure, otherwise they'd be inflationary.

FRL is only part of the troubles, if you don't limit Usury you create the need for Exponentially Compounding Growth( ECG )

Mortgage type:Fixed-Rate Mortgage
Interest rate:5 percent
Loan amount:$126,000.00
Loan term:30 years
Mortgage Analysis

Mortgage attributesValues
Loan duration30.00 years
Principal due$.00
Principal paid$126,000.00
Total interest expense$117,500.11
Down payment$5,000.00
Points$.00
Other loan costs (legal fees, survey fees, etc.)$.00
Private mortgage insurance (PMI)NA*
Total mortgage cost$248,500.11

In this example you have to cover more than double the monies that actually exists, and remember, the loan monies go to pay the builders loan and profits in most cases these days, as the system is now, so you'll end up needing $200k in your economy over the 30years of the loan, for just this one house, does not work, won't work, can't work, that's what we are seeing today.

The simple beauty of this system is, it puts jobs, wages, and credit scores as the highest priority of State and City County banks, they will fix the trade situation, wealth gap, and educational system, I assure you.

Now Government Projects, Infrastructure spending, this is the real rub, the trouble.

It's best to let the free market dictate the need, if the need is not filled by Honest Private Free Market Capitalists, Government should step in and fix it, however, we better think it all the way through.

Let's look at High Speed Rails:

First, our whole real-estate system is upside down, City labors should live in the country, and large levy systems for cities are not that good of an idea, look at the seawall (20') in Japan that was over flowed by the tsunami, how high would that wall need to be on the west coast, and how damn long?

Worse yet, how are we going to get all those people to the high ground, I've been out west, on a good day it can take hours to get from Newport Beach to Ontario, California.

So let's assume we flip it, move the low raise homes to the high ground many, many, miles from the Cities, now we need high speed rails, not just for the workers, but to get everyone we can away from the coast in the likely event of a large Wave.

So we make interest free loans for a high speed rail system, and all the needed infrastructure of the suburbs, 30 year term on debt free monies, and these monies are voided as they are repaid by the cost of travel on the high speed rails.

Great, we fixed it, right, you better hope so, what happens if CERN comes up with a light weight cool power-source, about the size of a 5 gallon bucket, that lasts 20 years???

All the sudden you've got flying cars, it's going to take some time for them to get into the hands of the masses, but the Auto knocked out the horse in less than 30years, after mass production, and as we already have mass production......Now we're in trouble, we can't pay off our loan with usage tax, and it's going to be inflationary.

Now let's fix it, I'm going to take a gamble, and say anti-gravity is further than 30 years out, so while we may have flying cars, high speed turbines giving lift( So they can auto-rotate if they loose "power" before they reach parachute height.)

What seems to me, I don't want an 80k lb.. tractor trailer hovering over my home, until they have anti-Gravity, so make sure your high speed rails can handle freight, not just people, then, even if Anti-Gravity comes along sooner, you can say, you've done what is reasonable to prevent inflation.

Do you see why we should not let stupid people run our Government.

Full Term Reserve Banking, is a system that could be used to manage investments, over time, if we implemented the 24 month system of banking, I outline above.

I'll have to put more thought it to how it could work and not become a pyramid scam, but here's the quick and dirty.

Banks could still receive funds from government, to cover short term liquidly, in full reserve banking, but if the bank lost more monies than it gained, over time, investment accounts would take the hair cut. Think of it as Term banking, still using a form of FRL, but unlike today, the bank would have to balance it's reserves( investments ) over time.

The government could still step in and liquidate the bank to balance it's books, but the chances of Government loosing monies on the deal, over time would be far less than today, as long as Government was properly monitoring Revere levels, unlike today.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments