GOLD IS THE HAMMER
In this life, there are nails and hammers. The battle over final economic authority is the battle over the monetary system, for money is the central institution in a division-of-labor economy. Thus, the battle is over who holds the hammer.
Bankers and politicians refuse to turn final authority over to the masses. The elite wishes to retain power over scarce resources. This can be accomplished only through their power over the money supply.
Gold is the ultimate hammer, because it has long been the favored money commodity. It cannot be easily counterfeited. It is expensive to mine. It is easily divisible. It has high value in relation to weight and volume. It is widely recognized. So, it has historic value – not intrinsic value, which no asset has, but historic value. It has easily predictable value.
Gold coins allow little people to hold the hammer. Through the market process, individuals exercise their choices. They determine market value through a system of auctions. The free market is a gigantic auction.
Gold coins keep the auction honest. No one can legally print money to gain influence in the auction. No one can easily counterfeit his way into great wealth, outbidding others.
Central bankers want to direct the auction. So do politicians. So do commercial bankers. All three elite groups have an incentive to keep gold coins out of the auction process. Gold coins keep the auction honest, and elites maintain their power through dishonesty – above all, dishonest money. They fear honest money.
Gold is described by ignorant journalists as the money of plutocrats. Fiat money Greenbackers like Ellen Brown agree. (On Ellen Brown's fiat money utopianism, click here.) This reverses the truth. Fiat money is the money of the elites, the plutocrats of all ages. The gold coin standard is the economy of the masses.
Gold coins are mini-hammers. These coins, along with legal IOUs to coins, transfer enormous authority to the masses. The little guy with gold coins or IOUs to gold coins has a veto over the easy money, big-spending, power-centralizing schemes of the government's central planners and their profit-seeking allies, the counterfeiters: fractional reserve banks.
CONCLUSION
There is chatter on the fringes of the Establishment about the reintroduction of a gold standard. The gold standard they promote is not the pre-World War I gold coin standard. That standard drastically reduced government power over money, but it was always a compromise with government power. The governments of Europe revoked that standard when the war began. They played around with a government-run, central bank-run version in 1922: the gold exchange standard. The final revocations of the gold coin standard took place in 1931, when England went off the gold coin standard, and 1933, when the United States did.
There are gold coins and counterfeit gold coins. Similarly, there are gold standards and counterfeit gold standards. When dealing with gold coins or theories of a gold standard, I suggest that you adopt a slogan from 1950s advertising: "Accept no substitutes!"
Here is the real thing: a free market standard without any government involvement – no mint, no central bank, no legal tender laws, no printing presses, no warehouse receipts, no "free" storage. Just this: laws against fraud and laws enforcing contracts. That system will produce a gold coin standard for large transactions and a silver coin standard for smaller ones. The users can decide what they want to use as money. The ruling elites will no longer be allowed to counterfeit, confiscate, or manipulate money.
When an economist who defends this system wins the Nobel Prize on the basis of his defense, we will know that our deliverance draweth nigh. If the prize is awarded in gold coins, we have entered the Golden Age.
No comments:
Post a Comment