'Good Lord! What a lot of trouble to prove in political economy

that two and two make four; and if you succeed in doing so, people cry, "It is so clear that it is boring." Then they vote as if you had never proved anything at all.'

~ Bastiat, 'That Which is Seen and That Which is Not Seen'

Many men, far abler than I and more learned in the subject, have written to great effect and with the certainty of conviction of the wrongness of State intervention in the free market. However, no man may call his philosophy well-rounded without treating, to some extent, the influence of economics on the course of events.

'What is this influence?' truly, is the first question one must ask, and in all honesty, the answer is: 'Virtually everything imaginable shines with the amber reflection of gold.' Money is, as Rand said, the best and most moral medium of exchange and communication in which men may indulge. No other system comes anywhere close to the absolute parity between men as money. When a satisfactory means of commerce and compensation has been agreed upon among people, it is a triumph of the human will and intellect, the archetype of reason and humanity.

The State, however, has not seen fit to recognize this gleam as gold, perhaps mistaking it for the searing brilliance of 'social reform,' and continues its depredations among the economic lives of its vassals. [1] The fiat dollar has, inevitably, nearly run its course as a viable means of exchange, and the end is coming for the United States entitlement economy as we know it. [2] Why does the State continue its myopic scramble to remain afloat on the backs of its citizens, when none can support its ponderous mass?

Unhappily, the answer is that, should the United States return to the gold standard now, the many billions of dollars in cash and United States securities and bonds which have been foolishly sold overseas to both putative 'allies' and avowed enemies would instantly be cashed in, and the quarter-billion or so ounces of gold held by the Federal Reserve bullion banks and the government would be whisked away, flowing out of the country like a river of brilliant blood. As it is, foreign investors are dropping United States bonds as fast as possible, with no end in sight. Without those investors buying up the future of the United States economy, the showers of entitlement money falling from Washington will slow to a trickle, and then dry up altogether. If one has ever seen a drug addict's syringe taken away, one can guess what will happen next.

Another problem lies in re-pegging the dollar to gold. In 1981, before becoming the (figure) head of a corrupt Keynesian [3] nightmare fondly known as the 'Fed,' Alan Greenspan wrote: 'The immediate problem of restoring a GOLD STANDARD is fixing a gold price that is consistent with market forces. Obviously if the offering price by the Treasury is too low, or subsequently proves to be too low, heavy demand at the offering price could quickly deplete the total U.S. government stock of gold, as well as any gold borrowed to thwart the assault. At that point, with no additional gold available, the U.S. would be off the GOLD STANDARD and likely to remain off for decades. Alternatively, if the gold price is initially set too high, or subsequently becomes too high, the Treasury would be inundated with gold offerings. The payments the gold drawn on the Treasury's account at the Federal Reserve would add substantially to commercial bank reserves and probably act, at least temporarily, to expand the money supply with all the inflationary implications thereof.' [4] The damage, one could very well say, has been done. And it was the State that did it.

Even Keynes himself, the architect of today's near-ruin of an economy, knew what the fiat dollar would do. [5] How could things have progressed so far? How could the State have been allowed to put its citizens in the extremely uncomfortable position they will soon be obliged to assume? And how much more uncomfortable will things become?

An answer may be found in the various schemes floating ethereally about various governments and central banks to dispose of their gold reserves, thereby flooding the market, depressing prices, and ensuring, coincidentally, that, even should the nation wish to return to the gold standard, there will be no basis for doing so, and gold itself will be rendered relatively worthless. [6] This would effectively devalue gold as currency and further entangle the citizenry in the leaden chains of fiat money.

Some claim that the sale of reserve gold should take place not only for reasons of economics but also for reasons of environment. The world's governments and central banks, they say, hold enough gold to satisfy the world's demand for the next 14 years or so, so why not stop the extremely damaging, cyanide-laden process of gold mining and supply some of the existing gold to stem new production and its associated costs? Well, I have to reply, what happens after the supplies dry up? Gold, it is true, is a 'renewable' resource, in the sense that the same gold may be reused time and again for various purposes without harm, one of gold's most attractive properties being its exceptional resistance to any form of corrosion and the relative ease of working with it. However, eventually, there will be no more, perhaps in a few decades, but the demand will still be there. Even after the collapse of the Bretton Woods system, gold is still the means of exchange of choice throughout much of the world, especially in India and other parts of Asia , where women, in particular, are forbidden by custom and law from owning any form of wealth other than jewelry.

I honestly believe that, even if gold mining were not such a pollutive and deadly process, other reasons would be found for selling reserves, because, as with most of the excuses given by statists in their quest for supremacy, this one is merely a red herring, designed to destroy gold as a means of exchange, and forever take the power of economic self-determination out of the hands of the individual. Why else did the State stop private minting after the California gold rush started it? Because the minters were crooked? Perhaps a few, but certainly not all. If that were the truth, why would the State eventually replace all gold, real money with money having, like Shakespeare's battlefield, 'no value in it but the name'?

The answer is, so that government had a monopoly on money. A monopoly they will keep any way they can, including destroying utterly the only truly independent medium of exchange left.

Once the State has achieved this goal, there will be nowhere left to run, and no shelter to be found, from the hardship, pain, and terror which will accompany the inevitable implosion of the world's currencies when people finally realize that the lie of the omnipotent, eternal State has left them destitute, holding only the Confederate dollars, which will be of more use to them in the outhouse than in the grocery store.

[1] "Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process."'Alan Greenspan

[2]'The USA gravy train gave its last gasp with the prescription drug bill just passed. The total defense budget of $400 billion and the $100 billion prescription drug plan do not exist in economic reality. Their entire amount equals this year's budget deficit. A nation that gets to the point when its defense budget is financed out of thin air is obviously in economic delusions.''Doug MacIntosh, The Tentacle's Caress

[3] Actually, 'Whitian,' after Keynes' Bretton Woods rival, Harry White, whose plan was actually adopted over Keynes'. The collapse of the 1944 Bretton Woods agreement has been argued to show the inherent flaws of a national currency directly convertible into gold, but the real flaw was in the meddling of the 45 nations at the conference in free exchange. Had the governments in question returned to the prewar system of independent, free-floating currencies backed by gold, much of intervening history would have been very different. Bretton Woods was the best example ever of the wisdom of Washington 's admonition against foreign alliances.

[4] Can the US Return to a Gold Standard?, 1981

[5] 'It is common to speak as though, when a Government pays its way by inflation, the people of the country avoid taxation. We have seen that this is not so. What is raised by printing notes is just as much taken from the public as is a beer-duty or an income-tax. What a Government spends the public pay for. There is no such thing as an uncovered deficit.'

[6] 'If governments, which largely have kept their gold out of the market, sell off much of what they hold, then the pool of gold in circulation might increase by a third, or even more. An increase in supply of this magnitude could drive down the price of gold to levels much lower than any seen since the end of the modern gold standard.''John E. Young, Gold: At What Price?, 2000

Your rating: None
Patrick B. Yancey's picture
Columns on STR: 14

Patrick B. Yancey  is not sure exactly what is going on most of the time, and is completely oblivious for the rest of it.