Zahir
Ebrahim | Project
Humanbeingsfirst.org
First
Written November 13, 2008
[
Author's Preface, March 26, 2013: I have a feeling that while
'war on terror' and other existential games are being played out in
the left-field to continually engage the public's attention, the
really significant issues are being decided in the right-field
(thanks to the rebel Walter J. Burien, Jr., cafr1.com/BIO.html, for
that apt baseball analogy from many years ago). There is very little
analytical deconstruction of the Gold Standard that has been advanced
over what has been known for ages. This is a seed to create a deeper
more scrutinizing debate based on the examination of the five points
mentioned towards the end of this article. These five points enable
separating the chaff from the wheat.
It has been my sad observation that virtually all monetary reform advocates choose to remain silent on these questions while they trumpet their solutions as the best invention since sliced bread. I am less than impressed. Unfortunately Ron Paul has now departed (or will soon depart as per his statement earlier this year) from Congress but has left the legacy of Gold Standard wannabes as the panacea to world's financial crisis, including my favorite scholar, G. Edward Griffin, from whose books and videos, I will admit with thanks right off the bat, I cut my baby teeth on this monetary knowledge. Now I dare to challenge him as he is the co-exponent of the Gold Standard with Ron Paul, and, no surprise, the World Bank! I hope you can print this on your blog, website, and/or debate it, to put some more meat on this skeleton article. If a non-expert can get this far, the experts can certainly go farther. But where do they go instead? See what MIT Sloan Professor Simon Johnson named 'public intellectual' of the year says at MIT. And Nobel Laureate economist James Tobin says at Princeton. Bunch of bullshit is where they collectively take the public mind from America's top Ivy Leagues while the world of elite establishmentarians applaud; precisely where their pious detractors and fabled dissent also invariably take the public mind while the goofy public also applauds. And that is the Ron Paul's legacy on Gold Standard scrutinized below. Please better this almost 5 year old analysis.
The drive towards some kind of Gold Standard is accelerating among establishmentarians in the first world nations, with the sheep among the third world nations also demanding their own slaughter, while none among those learned in economics and financial policy-making in both worlds dare to publicly address the issues highlighted below. I know precisely why. That reason was most ably captured by W. Cleon Skousen in his commentary to Carroll Quigley's momentous work Tragedy and Hope, in these perceptive words: 'The real value of Tragedy and Hope ... [is the] bold and boastful admission by Dr. Quigley that there actually exists a relatively small but powerful group which has succeeded in acquiring a choke-hold on the affairs of practically the entire human race. Of course we should be quick to recognize that no small group could wield such gigantic power unless millions of people in all walks of life were “in on the take” and were willing to knuckle down to the iron-clad regimentation of the ruthless bosses behind the scenes. As we shall see, the network has succeeded in building its power structure by using tremendous quantities of money (together with the vast influence it buys) to manipulate, intimidate, or corrupt millions of men and women and their institutions on a world-wide basis.' (W. Cleon Skousen, The Naked Capitalist, pg. 6) ]
It has been my sad observation that virtually all monetary reform advocates choose to remain silent on these questions while they trumpet their solutions as the best invention since sliced bread. I am less than impressed. Unfortunately Ron Paul has now departed (or will soon depart as per his statement earlier this year) from Congress but has left the legacy of Gold Standard wannabes as the panacea to world's financial crisis, including my favorite scholar, G. Edward Griffin, from whose books and videos, I will admit with thanks right off the bat, I cut my baby teeth on this monetary knowledge. Now I dare to challenge him as he is the co-exponent of the Gold Standard with Ron Paul, and, no surprise, the World Bank! I hope you can print this on your blog, website, and/or debate it, to put some more meat on this skeleton article. If a non-expert can get this far, the experts can certainly go farther. But where do they go instead? See what MIT Sloan Professor Simon Johnson named 'public intellectual' of the year says at MIT. And Nobel Laureate economist James Tobin says at Princeton. Bunch of bullshit is where they collectively take the public mind from America's top Ivy Leagues while the world of elite establishmentarians applaud; precisely where their pious detractors and fabled dissent also invariably take the public mind while the goofy public also applauds. And that is the Ron Paul's legacy on Gold Standard scrutinized below. Please better this almost 5 year old analysis.
The drive towards some kind of Gold Standard is accelerating among establishmentarians in the first world nations, with the sheep among the third world nations also demanding their own slaughter, while none among those learned in economics and financial policy-making in both worlds dare to publicly address the issues highlighted below. I know precisely why. That reason was most ably captured by W. Cleon Skousen in his commentary to Carroll Quigley's momentous work Tragedy and Hope, in these perceptive words: 'The real value of Tragedy and Hope ... [is the] bold and boastful admission by Dr. Quigley that there actually exists a relatively small but powerful group which has succeeded in acquiring a choke-hold on the affairs of practically the entire human race. Of course we should be quick to recognize that no small group could wield such gigantic power unless millions of people in all walks of life were “in on the take” and were willing to knuckle down to the iron-clad regimentation of the ruthless bosses behind the scenes. As we shall see, the network has succeeded in building its power structure by using tremendous quantities of money (together with the vast influence it buys) to manipulate, intimidate, or corrupt millions of men and women and their institutions on a world-wide basis.' (W. Cleon Skousen, The Naked Capitalist, pg. 6) ]
This
is Project Humanbeingsfirst's first look at the key issues inherent
in the Gold Standard as the backing commodity for national and
international currency. It is being advocated by Hon. Congressman Ron
Paul of Texas ('The Revolution – A Manifesto', Chapter-6 “Money
The Forbidden Issue in American Politics”). He is inspired by
the Ludwig von Mises Institute
(http://mises.org/) which represents the libertarian political and
economic thinking of the Austrian School of Economics. That in turn,
in this scribe's opinion, can be elegantly captured in a nutshell by
the British economist E. F. Schumacher's
Buddhist paradigm of “Man is small, and, therefore, small is
beautiful”. Mises Institute primarily features the work of
Ludwig von Mises ('Human Action – A
Treatise on Economics') where Mises notes: “Economics deals
with society's fundamental problems; it concerns everyone and belongs
to all. It is the main and proper study of every citizen”.
Mises Institute also features the work of his student, Murray N.
Rothbard ('What Has Government Done to Our
Money?'), who notes: “On the free market, everyone earns
according to his productive value in satisfying consumer desires.
Under statist distribution, everyone earns in proportion to the
amount he can plunder from the producers.”
Ron
Paul is evidently inspired by these 'Small Is Beautiful'
decentralization principles of sustainable economics,
sustainable government, sustainable development, and the importance
and responsibility of man for his own decision-making and welfare, as
opposed to centralized institutional planning and impersonal
decision-making [1]. Who would not like such 'manly' “Tim
the Toolman Taylor” empowerment?
As the iconic macho-man Governor of
California, Arnold Schwarzenegger, might
have said in some movie – only the “girlie man”!
However,
there surely must also be, somewhere in its verbiage, an implied
balance and harmony in this Buddhist doctrine of governmental
non-interventionism. The extreme at either end is of course, only
bounded by total anarchy on the one side, and total collectivism on
the other, as correctly observed by G. Edward Griffin
(http://realityzone.com). Both extremes can
have undesirable characteristics. The
communist style centralized planning and
control is a well known collectivist extreme – and apparently
the world today is indeed headed towards that characteristics with a
global police state in the offing and a global central banking under
construction which will usher in a global currency managed by private
International banksters.
Whereas,
complete deregulation and privatization (in for-profit hands) of
public commons which are held in trust for all peoples, is the other
extreme. As is blatantly apparent, the world today is also
simultaneously headed in that direction too with neo-liberalism. The
twain meet in the corporate boardrooms
controlled by the same gluttonous hands on Wall Street whose
principal share holders are usually the opaque “institutional
investors”. It would perhaps only shock the most naïve to
learn that the largest of these “institutional
investors” is the sole superpower on earth, the United States
of America Corporation, at all levels: local, state, and federal. See
the Comprehensive Annual Financial Report (CAFR) that is
produced by each of these governmental bodies and public agencies (a
public report which the public and its mainstream news media have
evidently never heard about, see http://CAFR1.com
).
And
it is noteworthy for privatization impetus that as a non-predatory
socio-economics system design principle,
when there is an infinite demand for something, and the very life of
every man and every woman may depend on its availability, holding it
as a social benefit, in public trust, is the mark of wisdom; whereas
privatizing it in unaccountable gluttonous
hands a mark of predatory social Darwinianism.
All reformers can surely agree that a nation's monetary system falls
into this category, of a public commons, to be managed in trust, by
their government, for the common good of all its peoples. This is all
the more true for a non-predatory international monetary system which
ought to sensibly be held in global trust as a global public commons.
That
is the one key central platform upon which all monetary reformers are
united, and have always remain united throughout history. It forms
one continuous resistance against aggregated wealth holders who have
hijacked control of any nation's money supply.
This
resistance is profoundly historical, and even today, brings to bear
its entire weight of all historical arguments made against private
monopolistic control of a nation's money – from Julius Caesar
to Cicero to Thomas Jefferson to Andrew Jackson to Abraham Lincoln to
William Jennings Bryan. The latter being the last of the great
challengers to private wealth holders perpetually seeking to make a
precious limited commodity like gold the standard currency, before
the devilish orchestration in 1913, of the present day private
banking cartel of the Federal Reserve System, did one better. Legally
acquired exclusive private monopoly rights over the most common
element, 'thin air'! [2]
Therefore,
in these times, we resume that same thread of resistance – with
a clearer understanding of the devil before us, and with an even
greater force of cumulative arguments – right from where
William Jennings Bryan left off, continuing with his own precise
principled words of 1896: [3]
“We
say in our platform that we believe that the right to coin money and
issue money is a function of government. We believe it. We believe it
is a part of sovereignty and can no more with safety be delegated to
private individuals than can the power to make penal statutes or levy
laws for taxation.”
And
of course, not neglecting to be inspired by America's famous “I
killed the bank” President, Andrew Jackson's own motivating
words: [4]
“You
are a den of vipers. I intend to rout you out, and by God, I will
rout you out.”
The
presumably earnest reformers who believe in the Gold Standard, like
Congressman Ron Paul and the Mises Institute, just as those who
believe in Lincoln's Greenbacks or the Colonial Scrip of the American
colonies, like the American Monetary Institute
(http://monetary.org), and just as those who believe in other
systems, like the 'tally sticks' of the English, or the 'Natural
Economic Order' of Silvio Gesell, all
equally share in this fantastically rich inheritance of principled
resistance against the handful of private aggregated wealth owners
squeezing the public in their beguiling lender's perpetual debt trap.
These
reformers evidently only disagree in the pragmatic matter of which
alternate monetary system to introduce against
their common mortal enemy! And while they disunite amongst themselves
as to “who's the fairest”, without a well-funded
foundation backing them, an influential think-tank writing their
policy papers, an effective political lobby-group
pushing it to the Congress, or even a press-corps
of editorial writers to their name to generate public opinion,
their antagonists delight in this incapability of their rag-tag
opposition to form effective coalitions on their own common grounds.
The well-intentioned moral activist of modernity surely must
intimately understand, beyond mindlessly parroting others, that the
banking parasites have, in every epoch, very powerfully, and with
much clever propaganda, attempted to gain control of this essential
government function that President Lincoln called
“the Government's greatest creative opportunity” [5]:
“The
Government should create, issue, and circulate all the currency and
credit needed to satisfy the spending power of the Government and the
buying power of the consumers. The privilege of creating and issuing
money is not only the supreme prerogative of Government, but it is
the Government's greatest creative opportunity. By the adoption of
these principles ... the taxpayers will be saved immense sums of
interest. Money will cease to be master and become the servant of
humanity.”
Therefore,
it is all the more perplexing – given such profound
intellectualism and advocacy for decentralized self-sufficiency on
the one hand in the Austrian School of Economics, and such a rich
historical legacy of resistance against private central banks
controlling a nation's money supply on the other – why the
return to Gold Standard is being so 'religiously' advocated by Ron
Paul and the Mises Institute which only helps fatten the same
“moneychangers”!
The
Gold Standard is being projected by the reformers as the sine qua non
of monetary reform to get the United States, and the world, out of
its misery of debt burden and the imminent danger of financial
collapse. It is surely well understood by Ron Paul, given that he
talks about it a lot, that the collapse would be the pretext to
create from its ashes, the pre-planned supra-national state of the
North American Union, and a new currency called Amero. He also well
understands the agenda for a centralized world government to be
controlled by a cartel of private international central banks as the
top of the ruling pyramid. Such an agenda is already being pursued at
an accelerated pace, and the import of
time-criticalness of any effective resistance to avert such an
outcome that ends the sovereignty of
nation-states is surely not lost on Ron Paul. Therefore, the
inability to quickly comprehend the incongruence of this path of the
Gold Standard with respect to their own aims seem rather Kafkaesque.
Is this really rocket science that an ordinary person cannot think it
through? Not according to Ludwig von Mises:
“Economics
deals with society's fundamental problems; it concerns everyone and
belongs to all. It is the main and proper study of every citizen.”
The
Gold Standard advocates seem to think that gold will magically
materialize, in great abundance, in the Fort Knox secure vaults of
the United States as a public property in trust. While a pocket full
of gold and silver coins can be made laudable work-horses for local
trade as local currency – with perhaps a defined
conversion-rate to national-currency – it does not work as a
national currency in modernity. This analysis explains why. Gold's
ability to insure against inflation, as well as against the
inflation-tax when it is a fully-backed reserve rather than a
fractional reserve, is a cleverly planted red herring. Or so it would
appear, given the impracticalities of creating fairness between the
wealthy asset holders who own a large stock
of hard assets, and real producers who are often without such hard
property assets, and mainly have the sweat of their brow, the
creativity of their intellect, or the courage of their arms, as their
main production asset and which remains unprotected by such
protection mechanisms of the wealthy. The unexamined axiom itself,
that guarding against inflation must be the paramount factor to
optimize, and all other factors need to be subservient to this one
dominant factor in the design of a rational and fair monetary system,
needs detailed scrutiny. That axiom is not scrutinized
here, but several preliminary arguments can be made to show that the
axiom itself may be mis-constructed based
on assumptions made, or imperatives defined, by powerful landed
wealth owners.
In
addition, as in any system design, whatever be its level of
abstraction, there are always pragmatic tradeoffs. When one balances
the entire system and looks at all the pros and cons of every aspect
of any precious limited commodity based standard for a monetary
system, the directions in which to make reasonable and rational
tradeoffs to construct a well balanced system in the best public
interest, with a rational operating envelop that is resilient
to economic upheavals, become all the more
clear. Only 'religion' may define absolutes without trade-off.
Mercifully, heaven did not stipulate a specific monetary system, but
only outlined its first-principle: don't transact in interest! A
hundred viable systems can be architected with that quality. Jesus
banished the “moneychangers” from the Temple in Jerusalem
due to their fleecing their flock. He did not stipulate which
exclusive money system to use, only what not to do. The needs of the
people, and the times, determine what system to use. And William
Jennings Bryan articulated that very need of the majority “man
is small, and, therefore, small is beautiful”
laboring man – which
remains the same today – when he passionately orated at the
1896 Democratic National Convention:
“Having
behind us the producing masses of this nation and the world,
supported by the commercial interests, the laboring interests and the
toilers everywhere, we will answer their demand for a gold standard
by saying to them: You shall not press down upon the brow of labor
this crown of thorns, you shall not crucify mankind upon a cross of
gold.”
The
preliminary analysis presented here is applicable, as
first-principles, for any precious limited commodity-backed monetary
standard. There is strong motivation brewing among many a
'malcontent' to take the power of coining money 'out of thin air'
away from the Federal Reserve System, and to move the United States
away from 'money as public debt' Hamiltonian principle. For
background reading, please see the bibliographic recommendation at
the end, and the afore-cited books.
And
it would be entirely appropriate to begin with these most eloquent
words, as they precisely capture the raison d'être
of Project Humanbeingsfirst's motto:
“The Plebeian Antidote To Hectoring Hegemons”:
“I
would be presumptuous, indeed, to present myself against the
distinguished gentlemen to whom you have listened if this were but a
measuring of ability; but this is not a contest among persons. The
humblest citizen in all the land when clad in the armor of a
righteous cause is stronger than all the whole hosts of error that
they can bring. ... I shall object to bringing this question down to
a level of persons. The individual is but an atom; he is born, he
acts, he dies; but principles are eternal; and this has been a
contest of principle.” (Ibid.)
The
first-principle concerns with any precious commodity based monetary
standard, are three:
1)
Gold is precious, therefore, by definition,
it is limited; hence again by definition, someone has a monopoly over
it. Acquiring it in sufficient quantity ab initio requires a priori
assets that must be exchanged that is valuable to those who have this
monopoly. For a State, this means hawking one's independence to the
precious commodity supplier in perpetuity
each time it wishes to expand its money supply beyond the reserves.
Unless of course, by fiat, the State is able to confiscate that
precious commodity in the name of national
security or national interest.
2)
Because the commodity is precious and limited – and even if
initially acquired by whatever bootstrapping means to launch the
standard, including hawking national sovereignty
to bankers and institutional investors who already own a lot of gold,
or confiscating gold from the public as was done by Roosevelt in 1934
– Gold cannot be used to arbitrarily expand the money
supply which it backs, in order to create extremely large infusions
of cash.
In
post-agrarian and fully industrialized
societies – such as the G-7 Western nations – setting up
capital intensive mega-industries and mega-factories, and undertaking
mega-infrastructure national projects, can take billions of dollars.
Even for developing nations where development cost is invariably of
the same order of magnitude as the West for similar projects, if a
nation does not have the equivalent amount of the precious
commodity fully backing its currency, she must either make recourse
to fractional-reserve banking away from the full-reserve banking just
by the practicalities of the matter, and therefore, incur its
concomitant baggage of inflationary-tax
once again. Or the poorer nations must put automatic and entirely
artificial breaks on their national growth and national wealth
creation, or otherwise become borrowers again to the same cartel of
banksters! Unless of course one discovers an endless monopolistic
benevolent supplier, like god planting it in one's backyard and
giving one enough smarts and courage to not lease it out to snake-oil
salesmen who will invariably come calling on F-16s spreading the
black-ops cheer blithely claiming “Hegemony is as old as
mankind”!
Both
factors 1) and 2) are a major problem for any nation adopting a
limited precious commodity as a standard. But it is an even greater
problem if it is forcibly created as an International standard. Then
it is especially an unfair standard imposed upon
disadvantaged nations who do not have that commodity in
abundance, just as it is an unfair advantage for those rich nations
who do have an abundance of such commodity, or can acquire it.
Based
on those two first-principles, I do not like any “precious
commodity” based standard that is by definition, limited.
3)
If it is not the limitedness of such a commodity, but its abundance,
and its equitable distribution among all nations can be ensured, then
I have no problem whatsoever with such a commodity backed national or
International monetary standard.
Since
fairness, and not 'might makes right', is the quintessential
first-principle touchstone axiom of any rational analysis,
Congressman Ron Paul's Gold penchant suffers from both factors 1) and
2). And it also does not have 3) as a mitigating characteristic. If a
touchstone other than fairness is employed, such as how to fatten the
gluttonous appetite
of banksters, then surely the Gold Standard is a great plan-B in case
the private central banks fiat money monopoly becomes too onerous for
the sensibilities of the debt-laden strangulated public.
Apart
from these three first-principle factors, the many theoretical
advantages of a commodity based standard, as noted by Ron Paul, seem
plausible. Specifically, a fully backed commodity based standard does
not create an inflationary-tax upon the public when money supply is
expanded within its fully-backed reserve limit. Beyond its reserve
limit, fractional reserve mechanics kick-in to artificially inflate
the money-supply which inherently creates
the inflationary-tax. If one does not exceed the backing limit, money
retains its value over long periods of time so long as the backing
commodity retains its value. However, this necessitates the commodity
be artificially protected from market capitalism, and its price not
allowed to be subjected to market forces in order to retain its
stability as a reliable and credible backing standard. The irony of
protectionism being made the foundation of 'free-market capitalism'
is surely lost to its enthusiastic advocates. But that's merely only
of theoretical interest to purists, and of no practical significance
to reality, since genuine free market capitalism also only exists in
text books. No nation can survive its implementation, least of all,
the developing and poor nations rich in natural resources surrounded
by global predators forcing 'free-trade' down their throats to create
banana republics for careful harvesting.
This
price-fixing of gold bullion was the protectionist outcome of the
Gold Equivalence Standard which President Roosevelt ushered into law
in 1934, and which remained in force until 1971 when President Nixon
abolished it. The Gold Equivalence Standard (GES) was not a fully
backed standard, but a fractional reserve standard, and when other
nations and institutional-agents demanded their gold in exchange for
the dollar bill, the United States risked failure to deliver as its
gold bullion reserves were not sufficient. It was
the same principle as any vanilla run on banks by consumers when the
banks' liquidity come into question. The GES was unilaterally
abolished by the United States for fear of default when the gold
reserves fell dangerously low when I believe France made its demand
for gold.
In
this GES, gold bullion that comprised it, was priced outside the pale
of market forces, at a fixed value of about $35 an ounce. But more
disturbingly, all gold from the American public was forcibly
confiscated in 1934. The public was given approx. $18 an ounce for
their life's savings, with the price being immediately revised
upwards to almost twice that as the stable value of the new backing
standard. This protectionist value of gold bullion was used in
International money-supply transactions of the dollar which was setup
as the default reserve currency of the world at Bretton Woods
Conference post World War II, based on the currency of the
unparalleled economic and military power of its main victor. Whereas
the price of actual gold continually fluctuated on the open market
across the world. Ownership of gold was also made illegal for
American citizens (except for numismatists and jewelers).
So large institutional multinational investors and banksters with
foreign affiliations could easily purchase the gold bullion from the
US Treasury in foreign names, but not United States citizens. All of
American public's gold was thus made out as a gratuitous
gift to the banksters by the fiat of a simple executive signature by
President Roosevelt. His New Deal ushered in massive deficit spending
of paper money. In his three terms in office he outspent all his
predecessors combined.
There
is no a priori reason to believe that the future of any new proposed
Gold Standard to orchestrate another 'New Deal' – as the remedy
for the next Great Depression which is already upon the world's
doorsteps – does not already have a precedent-setting paved
super highway to travel on. The banksters I am sure are massaging
both their gullet and their stomach with joyous glee as plan-B is
eagerly put before them as the public's own 'desired solution' for
the economic and financial crises of the banksters' own crafty
manufacturing!
Since
neither Congressman Ron Paul, nor does any other establishmentarian
or contrarian exponent of the Gold Standard, address either 1) or 2),
nor does anyone stipulate 3) as a mitigation, that is the Achilles
heal of the Gold Standard mantra. Mises Institute is victim of the
same considerations.
As
the banksters already have a monopoly on Gold – or can soon
monopolize it because they can create, by fiat, all the cash they
need simply out of thin air to purchase what they don't already own –
the Honorable Republican Congressman from Texas, in his well meaning
enthusiasm, but also his apparent profound inability to clearly think
matters through down to their core axioms (see “Open
Letter to Hon. Ron Paul Supporters October 29, 2008”),
makes a great patsy in their globalist
conniving hands as the plan-B enabler already in-place in Congress!
If
the above three factors can be satisfactorily addressed, along with
practicable implementation modalities which do not impose a draconian
burden upon the public as was imposed by President Roosevelt in 1934,
then there is nothing inherently wrong with
the Gold Standard. Clearly, that is merely a tautological
statement since those very innate characteristics of Gold as a
limited and precious commodity, and its hoarding in monopolistic
hands, is what's wrong with the Gold Standard.
The
5 initial touchstone questions laid out in “Towards
a Common Standard Benchmark for evaluating all Monetary Reform
Proposals”
[7] are reproduced below in context of Ron Paul's advocacy. All Gold
Standard exponents must reply to all of these questions
satisfactorily – before one can be sure of their proposals
which are almost always couched in propagandistic sloganeering,
syntactic sugaring over poison pills, prancing around with erudite
gibberish to skirt the core issues, and of course outright bs.
a:
Central Banking in private hands charges the public perpetual
compound-interest for the public's own money. Nationalizing the money
creation function solves this problem of 'money as public debt'.
Ron
Paul's Gold Standard proposal, as did President Lincoln’s
Greenback fiat money, evidently addresses this, by eliminating all
interest on the creation of money.
b:
Private Central Bank is a legalized monopoly behavior that permits
private banks to collude legally for 'price-fixing' the
interest-rate. Thus it helps create the business cycle of expanding
and contracting credit by modulating its availability in legal
collusion – what I call the 'business rape cycle'. Bankers
profit from this by buying up those businesses who can’t cut
it, pennies to the dollar during the bust periods which dutifully
follow upon the heals of boom financing periods.
Nationalizing
this function, by having the government manage the availability of
credit, what Thomas Edison called “the proper ratio” for
money supply – not too much to prevent wild speculation, and
not too little to prevent stagnation – goes to a large extent
in managing this 'price-fixing' of interest-rate and availability of
credit in the greater common good of the public, rather than the
banking cartel's now represented by the Federal Reserve System. But
government management does not entirely eliminate this aspect –
because the private banks can still secretly collude in managing
credit availability as they have always done, since they have the
same powerful handful of owners at the top!
How
does Ron Paul address “the proper ratio” [8] and its
implementation for managing the money supply?
c:
A Central Bank’s arbitrary money creation by fiat –
whether the CB is public or private doesn’t matter, and which
is what Greenbacks were – creates an inflationary tax. Nothing
new here.
There
is no inflationary-tax in a fully backed Gold Standard as proposed by
Ron Paul.
This
tax will inevitably exist however, by definition, if the GS mutates
into a fractional GES and the money supply exceeds the backing gold
reserves.
This
will happen by default as a matter of practicality, because supply of
gold will always be limited in relation to the demand for capital in
modern industrialized nations. Therefore, a full proposal needs to be
made by the Gold Standard advocates which can be scrutinized
in the light of these real-world constraints. Perhaps this is why not
a single advocate of the GS fully addresses this specific point. Nor
do they conveniently address where the Gold will come from to create
the International reserves for such a global world currency, and nor
do they ever focus their pious platitudes on the very real issues
outlined in 1), 2), and 3) in the analysis of the Gold Standard
above. At least, I have not encountered it as of this writing. I am
sure these must have been sorted out in some super-classified
documents at bis.org, or present in the underground vaults of their
execution arm at the World Bank and IMF who will arguably field such
global currency as the buck is passed, in the name of reform, from
the Federal Reserve Bank to their international global money lender
fraternity. See the next item.
d:
In modern industrialized societies where the demand for capital can
be enormous, far more than was prevalent in agrarian or
early-developing industrialized societies, as Richard Cook, the
former U.S. Treasury Department employee and now a monetary reformer,
argues, how can this natural inflationary tax be avoided in such a
fiat money system? In the time of the Greenbacks during the Civil
War, while Lincoln printed around 400 million dollars, or some say
500, that is nothing compared to what is needed today in the capital
intensive public and private mega-projects. For instance, simply to
set up a class-1 semiconductor fab takes a billion+ dollars.
How
does Ron Paul's Gold Standard address this large demand for
mega-capital that would not also pose an inflationary tax? Where does
Ron Paul propose to get all this gold from to fully back his
currency? As he has himself noted, he was the member of the Gold
Commission in the 1980s, and he could not even at that time say how
much of the American public's gold was left
in the secure vaults of Fort Knox – the speculation being that
whatever remained after Nixon abandoned the GES in 1971, was
subsequently sold off to private institutional investors by the
United States Treasury, and only empty vaults today are being guarded
in great pretense to hide the legal heist
of what most might believe was a national asset. So many questions –
and no answers by the Gold advocates. Who designs a system, or
advocates it, under such conditions of ambiguous and incomplete
comprehension? Perhaps there is indeed a secret plan to restock Fort
Knox to the ceiling with lead-gold? If that's the case, do make sure
there is a bathtub handy and every shiny
gold brick first takes a dip in it, with someone reliable present to
record each result!
e:
Banking itself, indeed, all of International banking, is based on
fractional reserve lending. This is the real source of any banker’s
continuous and perpetual wealth creation, and hence the source of
their unmatched and unrivaled power.
Ron
Paul's Gold Standard is fully backed at the time of money creation as
a national public commons.
However,
it is not clear how he addresses fractional lending at the
institutional banking level as individual loans and deposits are made
by borrowers.
Can
Ron Paul show a practicable method, and not merely in platitudes,
whereby the private capitalist banks of the
world – owned by powerful trillionaires who also own the
majority of lawmakers of the world not to mention in the United
States Congress as just witnessed by the passage of the trillion
dollar banksters bailout bill in October 2008 despite all the public
opposition – can be made to agree to have a fractional reserve
lending ratio of 1?
The
entrenched forces of private banking are pulling in the opposite
direction – towards global private central banking in a world
government. How does Congressman Ron Paul along with his Gold
Standard buddies plan to counter that powerful force in any
efficacious measure?
The
solution to the How Problem – for the rest is mere talk, mere
rehashing of knowledge that is as old as hegemony, as old as mankind.
[9]
There
is clearly something awry when the World Bank itself proposes the
Gold Standard as a barometer of the public mind through its official
mouthpiece in sympathy with Ron Paul. The
self-explanatory Reuter's headline of November 08, 2010 reads: World
Bank chief surprises with gold standard idea
(cached
PDF).
Footnotes
[1]
Ron Paul, The Revolution – A Manifesto, April 2008, First
Edition, Grand Central Publishing.
[2]
G. Edward Griffin, The Creature from Jekyll Island – A Second
Look at the Federal Reserve, June 2002, 4th edition, American Media,
book http://realityzone.com/crfrjeiss.html
Audio-only
of talk after the book's release, November 18, 1994 in Los Angeles
CA, 71 minutes:
http://video.google.com/videoplay?docid=-8484911570371055528
Video
interview which explains the Fed, 'What is the Federal Reserve
System', 42 minutes:
http://video.google.com/videoplay?docid=6507136891691870450
[3]
William Jennings Bryan, July 9, 1896, Speech at the Democratic
National Convention in Chicago.
http://historymatters.gmu.edu/d/5354/
[4]
Andrew Jackson, cited in The Money Masters – How International
Bankers Gained Control of America, 215 minutes:
http://video.google.com/videoplay?docid=-515319560256183936
[5]
Abraham Lincoln, Ibid.
[6]
The entrenched notion of Public Debt in America – will take a
gestalt shift to overcome! A seeding–prose for Collaboration
http://print-humanbeingsfirst.blogspot.com/2008/10/monetary-reform-seeding-prose.html
Also
see bibliography of this author's work on analyzing the monetary
reform agenda in Re-visiting Money as Debt and Monetary Reform: The
Secret of Oz,
http://humanbeingsfirst.wordpress.com/2010/10/05/re-visiting-money-as-debt-and-monetary-reform-the-secret-of-oz/
[7]
Towards a Common Standard Benchmark for evaluating all Monetary
Reform Proposals
http://print-humanbeingsfirst.blogspot.com/2008/11/common-monetary-reform-benchmark.html
Questions
initially framed to respond to Ellen Hodgson Brown, before having
acquired her thick book 'Web of Debt', Second Edition, February 2008,
for her monetary proposal: Return To The Greenback Dollar
http://webofdebt.wordpress.com/monetary-proposal/
Also
see inexplicable statements by Ellen Brown to this author: “Of
course the oligarchy is the problem, but that doesn't mean we can't
steer the Fed. Bernanke drives a Ford Falcon. I think he's one of
us!”, and “the U.S. is the last holdout, and the
Fed is what's holding us out. Bernanke is standing up to the Gnomes
of Zurich and Basel”, in: Does Ellen Brown secretly work
for the FED? January 10, 2011,
http://print-humanbeingsfirst.blogspot.com/2011/01/does-ellenbrown-secretly-work-for-feds.html
[8]
For Reference to Thomas Edison's wisdom on monetary system, see its
coverage in the NYT of December 6, 1921, Headlined: “FORD SEES
WEALTH IN MUSCLE SHOALS; Says Development Will Bring Great Prosperity
to That Section of the South. EDISON BACKS HIM UP He Will Urge
Congress to Lease It to Ford as the Logical Man to Carry Out Great
Project. SUPPORTS CURRENCY PLAN Old Way, He Asserts, Compels Us to
Add to the Public Debt to Increase the National Wealth.”
http://query.nytimes.com/gst/abstract.html?res=9C04E0D7103EEE3ABC4E53DFB467838A639EDE
[9]
The Missing Link of Monetary Reform: How?
http://print-humanbeingsfirst.blogspot.com/2009/09/response-ami-monetary-reform-conf.html
Read
a few more details in the original at:
http://humanbeingsfirst.blogspot.com/2008/11/monetary-reform-firstlook-gold-standard.html
Source
URL:
http://print-humanbeingsfirst.blogspot.com/2013/03/the-gold-standard-boondoggle-revisited.html
The Gold
Standard Boondoggle Revisited by Zahir Ebrahim March 26, 2013
15/15