Fools' Gold (Arguements Against Gold Standard and Bankers)

By monopolizing this commodity the moneyed classes have got Nature by the throat and the community under their heels... Compared with this process, usury is mere child's play. -Alexander Del Mar in The Science of Money.

Advocacy of gold or gold "backed" money rests on dubious foundations. The discussion that follows will reveal some of the semantic deception, half-truths, doublespeak, self-interest pleading, and historical errors employed in gold advocacy polemics.

The Pope admitted in 1992 that Galileo had been right. This has nothing to do with gold money, but it is offered to show that neither antiquity nor authority makes a phony idea anything but phony.

There is a strong belief among gold money advocates that little bits of gold, especially if they are stamped with the image of some authority and numbers make better price counters than numbered pieces of paper or computer bytes. The belief involves a perception of what money is. The person who holds that belief perceives money to be something real and apparently needs to see and hold in his hand a physical manifestation of it. Gold is heavy, and refined gold is bright and shiny. It satisfies an emotional need however meaningless it is to the function of money. Money is a product of human mental fabrication. It always has been; it always will be. It is a tool that facilitates exchange. Modern society could not run without it or some equivalent accounting system.

A rational business decision would require that monetary symbols cost the least possible to manufacture. Presently, (1998), it costs around $280 to mine and refine an ounce of gold. Mining decades of tons of ore per ounce of gold has left holes in the ground measured by cubic miles. The ore is leached by toxic chemicals that have produced environmental pollution. Banks create money in any amount with the touching of computer buttons.

Abstract numbers, meaningless in and of themselves, that count quantities of amperes, wheat, gasoline, volume, distance, area, force, or any measurable, quantifiable thing, suffice in commerce, science, and technics without the clumsy inconvenience of metal counters. Why should it be different with money?

A pseudo-legal argument is sometimes advanced by advocates of gold money that a debt cannot be paid with another debt. This is semantic deception. A debt can be paid with anything that is acceptable to the payee. In addition, as long as debt in the form of deposit entries in bank accounts or Federal Reserve Notes can be exchanged for real goods and services, the payee is just as well off as if he had received little lumps of metal. Further, the multi-trillion dollar world economy runs almost exclusively on exchange of debt-money which only consists of numbers in deposit accounts at banks.

A common argument for gold money that accompanies the pseudo-legal sophistry is that gold has "intrinsic value," another semantic deception. Gold has interesting intrinsic properties such as chemical stability and excellent electrical conductivity, but "intrinsic value" is a semantic error if not outright doublespeak. Value(1) is a subjective judgment and cannot be rationally thought of as intrinsic. Subjectivity is exclusively a product of human minds. "Intrinsic value" is a deceptive euphemism for price.

If people were stranded in some remote location without food, water, and shelter, a mountain of gold would serve no more purpose than so much sand. It would have no price. Gold has no intrinsic value. It merely has a price which is the result of complex factors associated with its subjective price value compared to other commodities. Industrial usefulness of gold as well as human subjectivity that desires gold for personal adornment, etc., does assure that gold will fetch a price in a modern market. But what price?

Gold pricing in the United States, today, 1998, is denominated in Federal Reserve Accounting Unit Dollars.(2) The commodity price of gold has fluctuated wildly in the last half of the 20th Century, mostly remaining in the $300 to $400 per ounce range in the last decade. Price fluctuation was not due to variations of the Federal Reserve Dollar. The U. S. monetary price of gold is $42.22 per ounce. Artifact (jewelry, etc.) and numismatic prices of gold are what the market will pay. The value of gold as denominated by price is highly variable.

Historically, the commodity price of gold has been subject to fluctuation caused by normal supply and demand influences. Supply and demand infuences are in turn affected by the vagaries of mining and shipping, speculation, hoarding, political action, industrial demand, wars, central bank manipulations, and fads.

When governments or private banks have attempted to use gold as money, or for the last yea many centuries the fraud perpetrated as gold "backing" or reserves, it has been necessary to establish a monetary price of gold by fiat in an attempt to isolate money from inevitable price fluctuations of commodity gold.

The U. S. Constitution writers anticipated the instability of commodity prices and included the phrase, regulate the value, in the coinage clause.(3) In 1792 after the ratification of the Constitution, the Congress, consistent with the Constitutional mandate, defined specific amounts of gold, silver, and copper as representing dollars. They regulated the value and established a monetary price by fiat.(4)

Historically, monetary prices have been set higher than market prices, the ludicrous present U. S. monetary price notwithstanding. It would make no sense to issue money that had an equal or lower monetary value than the price of acquiring the metal. This mark-up is known as seignorage. It is profit that accrued to goldsmiths, kings, banks, and governments that issued gold money. When the monetary price of gold was too low, coins were melted and turned into artifacts that could be sold for more money than the original coins. When the monetary price was too high, artifacts were melted and turned into counterfeit coins. This was another cause of monetary and price instability when gold was used as money.

The relative scarcity of gold and the demand for gold for other uses than money should raise questions about the efficacy of trying to use consumable and losable gold as money or as monetary reserves.

The inherent instability of a scarce commodity subject to all the influences enumerated above have inevitably led to financial instability which instigates human suffering, social unrest, political instability, totalitarianism, fraud, counterfeiting, theft, war, and abandonment of gold monetary policy.

A mantra of gold money advocates is that alternative money systems, particularly "paper money," always fail. Historically, it is true; but it is also a case of selective historical facts, half-truth, and errant semantics. There is archaeological evidence that accounting systems existed before paper was invented. For example, clay tablets written in cuneiform that show evidence of debt accounting. Paper, per se, merely represented another more economical way of accounting. What is never admitted is that all money systems including gold money systems have failed. Today, "paper money" as bank notes is substantially irrelevant. Overwhelmingly, transactions are carried on via computer accounting where money is nothing more than numbers transferred from account to account by computers.

Arguments about the substance of money will never address the problem of why all monetary systems have failed .

In fact, historically, not only has no money system survived indefinitely; but also, no civilization, empire, or political system has survived indefinitely. Systematic monetary manipulation has played a part in their demise. It is not a question of gold or paper; it is a question of human culture. Is it possible to maintain a political system or nation that is founded in myth, intellectual error, and financial fraud?

A sacrosanct dogma of modern economic superstition is that money derives its value from scarcity. It is nowhere scientifically proven or successfully argued. It is accepted dogma; and, once again, the semantic trick of substituting value for price is used.

Scarcity does play a role in prices of goods and services, but it is only one factor; there are many other factors in price.

What is provable is that the scarcity of gold provided an opportunity for fraud that has become modern banking custom and practice.

Exactly how the fraud started is not matters of facts, but that it started is not in question.

Legend with perhaps more than a little truth in it has been related many times, including Congressional testimony.(5)

In brief, goldsmiths built vaults to secure their gold which was used in artifact manufacture and lending. The security of the vault attracted others who deposited their gold with the goldsmith for safe keeping. The goldsmith noticed that depositors never claimed all their gold at once. This provided him the opportunity to lend their gold at interest for his profit.

The custom developed that depositors would write notes which could be redeemed by the goldsmith to pay their bills. Eventually, the security of the goldsmith s vault and convenience of the notes induced more and more people to leave gold with the goldsmith and pay their bills with notes.

The common use of notes provided the goldsmith with the opportunity to write notes for making loans. In fact, it enabled him to write notes for more gold than there was gold in his vault. He created money! Eventually, it was found that as much as ten times the value of gold in the vault could be circulated as notes. He only needed enough gold in "reserves" to redeem the few notes that were presented for redemption.

This fraudulent practice has become modern banking custom and practice. Today, it is called fractional reserve banking.(6) Of course, gold is not presently used as reserves; banks just create money out of nothing without any pretense of gold reserves.

Gold advocates lament that money is no longer "redeemable." This is doublespeak that is tantamount to a lie. Since the initiation of the goldsmith s trick in banking, bank notes or "paper money" have never been fully redeemable in gold money. It must also be remembered most money created by banks by checks and deposit entry was never printed as banknotes. While deposit money, Federal Reserve Bank Notes, and U. S. coins cannot be exchanged for any form of gold money at the U. S. Treasury or Federal Reserve Banks, anyone is free to spend as much current money purchasing gold as they please; and the gold can be sold for current money. Furthermore, current money is exchangeable, fully redeemable, for all necessary and desirable goods and services which is the only real purpose gold money could serve. Satisfaction of superstitious beliefs and greed of investors are not considered real purposes.

The growth of national and world economies has rendered even the gold "backing" pretense of using gold as money absurd, but the greedy wishful thinking is that gold will be re-monetized at some astronomical price that will provide a windfall to gold investors. It is more likely that gold will be confiscated, as happened in the United States in 1933, before central banks attempt to re-monetize gold.

Attempts to re-monetize gold in the early 20th Century were accompanied by disaster in national economies and were quickly abandoned.

"... the disastrous inefficiency which the international gold standard has worked since its restoration five years ago (fulfilling the worst fears and gloomiest prognostications of its opponents) and the economic losses, second only to those of a great war, which it has brought upon the world..."--J. M. Keynes(7)

What is generally referred to as "the gold standard" is a set of variable monetary and economic goals that involve manipulation of currency, balance of trade, internal commerce, and prices by use of variable gold policies. Different countries have tried different gold policies depending upon the desired goal. Whether it was to achieve balance of international trade, stable currency, stable internal commerce, or stable prices determined the policy. Balancing international trade may, and usually does, interfere with internal commerce. Stable prices may require juggling currency. Different countries with different goals pursuing different policies may conflict. What is called "the" gold standard is not a unique and well defined system.

There is a common conception of "the" gold standard that ties the value of the currency unit to a legally determined amount of gold. It is believed that such a policy would stabilize currency. It may be possible to stabilize currency using gold in monetary policy decisions but with disastrous other results.

For example, five methods used to manage a gold standard by the Bank of England from 1925 to 1931 follow:(8)

ii. Open market operations (that is purchase and sale of securities) undertaken to influence the amount of reserves of the commercial banks, and their power of creating bankers money.

iv. Gold exchange methods dealings in foreign exchanges and in forward exchange, and variations in the price of gold within the narrow limits permitted.

Anyone familiar with Federal Reserve operations will note amazing similarity. Just as the present Federal Reserve Open Market Committee engages in a variety of open market transactions to control the dollar, the Bank of England tried to manage the pound ostensibly based on gold. The results also have an amazing similarity to the Federal Reserve s policies, particularly the "soft landing" announced by Alan Greenspan that was the 1990 recession.

... the operations of currency management conferred upon the Bank of England the power to restrict credit, to postpone new enterprises, to lessen the demand for constructional materials, and other capital goods, to create unemployment, to diminish the demand for consumable goods, to cause difficulty in renewing loans, to confront manufacturers with the prospect of falling prices, to force dealers to press their goods on a weak market, and to cause a decline in general prices on the home market. In brief, the stability of the international exchanges was accomplished by a process which deliberately caused universal depression in industry, created unemployment, and forced manufacturers to produce, and merchants to sell, at a loss.(9)

The operations of the Bank of England under the administration of Montagu Norman critiqued above is a classical example of what happens when monetary policy is carried out in the abstract. Human needs and human suffering be damned, trade will be balanced to control the outflow of gold or silver or inflation will be controlled to maintain prices regardless of how it affects employment, hunger, or any other form of human stress.

The errant buzz-word of monetary policy administered by Federal Reserve gurus personified by Alan Greenspan is inflation. Low unemployment motivates the gurus to "slow down an overheating economy." In other words, needful humans must be made to suffer to accomplish abstract monetary goals.

The above critique of Bank of England policies exposes, more than anything else, the fallacious thinking that gold will automatically regulate currency and prices. Not only the above critiqued policies, but also, other history confirms the fallacies.

One extreme anecdote from Roman history is the case of a man who had his own image placed on a gold nugget which he presented to a lover. So extreme were Roman concerns with controlling money that it was a death penalty offense under Roman law at that time to affix any image on gold except for official purposes. The law-breaker was executed.

This Roman anecdote is an example of two things: 1. An absurd, extreme policy used in an attempt to make an inherently unstable commodity suitable for monetary use by legal means. 2. The arrogant stupidity of legal absolutism.

Some factions of gold advocates argue that attempted regulation is the problem and that "market forces" should be allowed to follow their course with gold. Aside from the obvious superstitious belief in a fiction in support of a belief, histories of fraud, manipulation, monopolization, gambling, and speculation of commodities(10) left to market forces should overcome the tunnel-vision and doublethink of such an argument as market forces should determine the value of common currency while believing the implausible, self-defeating belief that gold left to speculation and monopolization will, by magic, lend stability to currency in the same market.

One of the sophistries used by gold money advocates is the non sequitur. Byzantium has been offered as an example of how a culture or empire was stabilized by a stable gold currency.(11) In the first place, stable Byzantium can be dismissed with the question: Where is Byzantium now? In the second place, the longevity of Byzantium was not extraordinary for its day. Nor did Byzantium ever achieve extraordinary wealth. The Italian city states built on bankers credit lasted longer and achieved more wealth.(12) Byzantium existed during the "dark ages" of Europe as a near singularity in the Euro-Asian area. It was founded in autocratic theocracy. The annual trade of Byzantium was less than a week of world trade today, perhaps less than a day s trade. Byzantium s relatively stable coinage was a function of its relatively stable society maintained by a severe autocracy. Its relatively stable society was not a function of its coinage; its relatively stable coinage was a function of its relatively stable society.

After the ascendancy of the Italian city states, it could just as well be argued that Byzantium failed to achieve great wealth and eventually succumbed because of the superiority of credit money or Byzantium s stupid, limiting, and inflexible reliance on gold coinage, but that is not the argument presented here. The argument here is that money is a function of culture, not culture is a function of money although selective facts may make it appear so. Certainly, the pathological kleptomania and greed of Capitalism make it seem U. S. culture is a function of money.

The coup de grace of gold standard is that a gold standard applied in recent centuries has not altered the custom and practice of bank issued debt-money. Bankers, such as Alan Greenspan who has advocated a return to a gold standard, are well aware that gold standard is not only no threat to their power and ability to create money out of nothing; but also, it enhances their confiscatory power and control over both the public and private economy. It helps banks realize their superstitious mantra that money derives its value from scarcity. The more scarce the more value, i.e., the more interest banks can charge for the money they create out of nothing.

Ordinary gold standard advocates are either ignorant or disingenuous about bank created money. They usually blame government for the abuses of credit money, but it is banks that create money nearly exclusively. Paranoid, near hysterical arguments such as inflation is caused by "governments printing too much money" are absurd when it is banks that create money. What a silly argument it is to say governments print too much money when, for example, the U. S. government has borrowed more than $5 trillion from banks and other investors in government securities! Every cent of it originally issued by banks! But just as any paranoiac can have real enemies, there is plenty of blame to lay on government. It is government that has given the power to create money to banks(13) then relies on borrowing money from banks and private investors at the additional expense of interest when taxes are inadequate to meet expenses.

A Federal Reserve bankers dogma is that monetary policy must be separated from politics because politicians can t be trusted with it. This dogma has some truth in it; but like any half truth, it obscures a lie. Monetary policy can never be separated from politics, and bankers would loose their golden goose if the government excercised its Constitutional power to issue its own money.

Ostensibly, the people have the power to control politicians with the political process. People have no power to control bankers for whom they cannot vote and do not know.

Criticism of bank created money and how(14) it is done is left to other vehicles. This discussion is about the fallacies of gold money arguments.

What is usually referred to as "the" gold standard or gold backed money is an intellectual and financial fraud. Under gold standard policies, Central banks wrote checks creating money to buy gold to use as reserves, just as Federal Reserve Banks create deposits to buy U. S. Treasury securities, now. A gold standard does not prevent commercial banks from creating money on the basis of fictional reserves and lending it at interest. What has passed as a gold standard in the last few centuries is not theoretically or functionally different than the present bank created credit/debt money system. In both cases, banks create and issue money as debt. Both systems are often properly labeled debt-money systems. Money is nearly exclusively issued by banks as debt at interest in both systems.

A plausible argument can be made that if banks were required to maintain an invariable level of gold reserves, it would limit how much money they could create. It would, but it would also limit how an economy functions as in the disastrous British case cited above.

The Federal Reserve Act was passed in 1913 establishing the Federal Reserve System as the U. S. Central bank. It required 40% gold reserves behind issuance of Federal Reserve Notes. World War I soon followed. It would have been impossible for the United States to finance it s participation in that war with Federal Reserve Banks and commercial banks required to maintain 40% gold reserves. (The argument that it may have forced the U. S. to stay out of the war had the reserve requirement been maintained is irrelevant; the U. S. participated in the war.) Reserve requirements were lowered, and the war was financed with debt-money created by banks.

The first central bank of the U. S. was charted in 1791, and the Coinage Act of 1792 which limited coinage to the haphazard appearance of gold and silver owners at the mint forced seekers of money to use bank credit or debt financing. It is a speculation whether the two cited acts were intended to force money seekers into banks. The central bank has been attributed to the efforts of Alexander Hamilton. There is no doubt of Hamilton s banking connections.

The United States has become the most powerful nation ever in history. It did so mostly on bank credit; nearly exclusively so in the 20th Century.

Winning two world wars, once having the highest now reputed third or fourth average standard of living in the world, and development of spectacular technology including space exploration were all accomplished under bankers debt-money schemes, but this is not a defense of bankers debt-money. It must be repeated that criticism of bankers debt-money is found elsewhere. This is to suggest that the U. S. could not have developed as it did under the restrictions that a gold money system would have imposed.

A credit money system operated for the purpose of serving human needs instead of serving the profit interests of bankers could educate everyone to any desired level, provide medical care for all, end poverty, and finance any socially acceptable and physically possible activity.

The substance of money used for counters whether lumps of yellow metal or computer bytes is unimportant, per se. What is important is monetary policy. Good or bad policy can be made with credit money that makes good or bad results. It is hardly possible to have a good policy under the restrictions and inflexibility that a one hundred percent gold money system would impose. Gold "backing" known as fractional reserves has already been revealed as a banking fraud that differs from the present bankers debt-money system in cosmetics only.

If there is anything that can be classified as a public utility, it is money. Yet, the supposedly democratic U. S. Government has seen fit to endow a select group of greedy bankers with all the power of issuing and regulating the money supply for their own profit. The banking system that issues money as debt holds the government and people hostage to the system. Until the power to issue money is taken from the hands of greedy corporate profiteers, megalomaniac kings, and plundering politicians, there is little hope for a socially kind and peaceful society or a safe and sustainable environment.

They [bankers] viewed national interests from the windows of the bank parlour. From their point of view, industry, commerce, agriculture, wages, employment, were but counters in the skilled game of international finance. They must be regulated to fit in with the monetary scheme. The monetary scheme must not be regulated to fit in with the needs and necessities of the world.(15)

Until the "cart before the horse" philosophy of financiers revealed in the above quote is righted, no monetary system will serve public interests. A gold monetary system will be just

1. See Theoretical Essay on the Nature of Money for a fuller explication of value.return

2. Contrary to popular opinion, the "U.S." dollar in the form of bank notes and commercial bank credit is not issued by the United States Government. It is issued by Federal Reserve Banks and commercial banks mostly in the form of deposits or numbers in deposit accounts. return

4. An Act establishing a Mint and regulating the Coins of the United States, April 2, 1792, specified 24.75 grains of pure gold and 27 grains of standard alloy per dollar. return

5. Robert Hemphill, credit manager in the Federal Reserve Bank of Atlanta, before the Committee on Banking and Currency, House of Representatives, March 22, 1935, re Banking Act of 1935. return

6. See Modern Money Mechanics, published by the Federal Reserve Bank of Chicago for a detailed explanation of how the central bank creates reserves and regulates the money supply and commercial banks create money by fractional reserve lending. return

10. See "The Tulipomania" chapter of Extraordinary Popular Delusions and the Madness of Crowds for a charming example of kleptomania, gambling, and greed in an unregulated market. Of course, a free market in tulips is one thing; a free market in common currency is another. The whole book is an entertaining read of collective "delusions" and "madnesses." return

12. See An Inquiry into the Permanent Causes of the Decline and Fall of Powerful and Wealthy Nations by William Playfair. return

13. See The Federal Reserve Act in the United States Statutes at Large and Title 12 USC for complete texts of current banking law. return

14. For how, see Modern Money Mechanics published by Federal Reserve Bank of Chicago. return

Well, I still say it's naive to trust the government to manage the money supply honestly.

Under certain circumstances, it can be done. For instance, the HKSB managed Hong Kong's money for decades without scandal or inflation. Of course, the HKSB was a public/private sort of thing.

I think you're flirting with the 'ad hominem' argument when you mock monetary sceptics as believers in madcap conspiracies, or shameless snake-oil salesman of PM collectibles.

Read Franz Pick. The destruction of national curencies he writes about is all too real. The monetization of debt is the inevitable outcome of allowing socialistic deficit financing to dominate our financial markets, which has already happened. That's why government bonds are 'certificates of guaranteed confiscation'.

I don't know when the music(Greenspan's money pump) will stop. I am not a believer in predictive technical analysis, nor have I any inside knowledge as to the course of world political events.

Nevertheless, I do know this: Someday the music will stop; there will be insufficient chairs to sit in, and most of the people will be left with dud tickets.

That's the lesson of history. That, and the fact that governments will lie, and twist and spin until the very end. That's another lesson of history.

I expect NO improvement in the ethics of government; that's why I'm a conservative.

Peace. ;^)

"Well, I still say it's naive to trust the government to manage the money supply honestly."

Agreed. That's why, despite the anti-Fed misinformation that crosses the line into kook territory doesn't make any sense. Despite the hype to the contrary, banks are privately owned by normal everyday stockholders just like GM or Microsoft. The Fed is owned by these privately owned banks. The banks appoint the Fed's board of governors, the president appoints the chairman. Any scenario that involves dismantling the Fed also involves turning the money supply over to the elected legislative politicians in Washington. The cure to deficit spending in such a system becomes simply running the printing presses overtime. Back to square one.

You premise that someday "the music must stop" is based on the false assumption that inflation is a big bad bubble that has no choice but to burst. Inflation is a necessary negative feedback in the economic loop that keeps the amount of money slightly higher than the amount of goods. It's the reason that the gold standard won't work anymore... the gold supply is finite and mostly controlled from Moscow and Cape Town. The American economy isn't, and can never be. It's that simple.

I'm a conservative because I believe in personal responsibility and economic freedom. Tying my future to the spot gold market in Moscow would seem counterproductive to that end.

I'm getting in on this discusion really late, but some things need to cleared up:

You keep stating that gold is a medieval concept. Article I Section 10 of the Constitution declared it illegal to use anything but gold and silveras legal tender. There is ample evidence that the founders never intended the use of anything but gold and silver for money. They learned that hard lesson during the Revolutionary war (Continentals were worth nothing by the end of the war).

The reason we went off the gold standard was to satisfy the interests of the Fed (which are privately owned banks by the way). They wanted to be able to water down the value of the dollar (it's worth 5% of what was worth in 1913) and to create a system where the government would use borrowed money to create more and more debt every year (now at 6 Trillion and climbing). From there it was a simple step towards creating a larger and larger central government that would be funded by an Income tax and inflation. This would have been impossible to do without detaching the dollar from any meaningful peg.

Lastly, no fiat currency has ever in history succeeded...not ever! It has been tried over and over again in history never works. It never works because the people in control of the government (whether its a monarchy, representative democracy or a "socialist nirvana") will always strive to print more and more of it until it becomes worthless. Our experiment is about 30 years old, how much longer will it last?

I guess I'm done...and please don't throw personal insults at me like youy did with a couple other posters here...

"Name two"

Franz Pick
Peter Beter

The term "certificate of guaranteed confiscation" is rooted in the philosophy that it's somehow illegal or immoral for governments to use debt instruments for raising revenue - the reasoning goes "they take your money via taxation, then they sell you bonds to so you can get part of your own money back" or somesuch nonsense. The reasoning seems to be that all debt is evil, and it must be eliminated. So what's the alternative? More onerous taxation? "No, taxation is bad too." OK. Now what? Nothing left to do but dismantle the whole thing. The deeper you read into all this gold bug anti-fed stuff, the clearer that message becomes - it's about anarchy.

So you regard a little inflation as the necessary lubricant of the modern economy. I can understand that.

'Sticky' wages and other prices can simply be gradually eroded by inflating. So long as the PTB are disciplined, most economic players will simply make adjustments and move on.

If inflation could merely fluctuate around 3-5% per year, then overpaid civil servants would slowly be cut back to a reasonable income; malinvestments in housing, etc. could gradually be made good by depreciating the currency; and society's more productive members will keep their focus on the carrot of 'more money' instead of upon the stick of 'high taxes'.

Once folks in general cotton on to this fraudulent scheme, however, the 'jig is up'.

We, as a society, continue to live off the moral and political capital of our ancestors. Just like gold, that capital is replacable only by hard, persistent work. The substitution of 'politically correct' rhetoric for the hard truths of history is a perfect analogue of the replacement of gold by government-decreed currency. Just because lies are often more comforting than the truth is no reason to abandon truth; just because gold is more difficult to accumulate than paper and ink does not render it a 'relic' of antiquarian interest only, as we all surely discover sometime in the not-too-distant future.

P.S. Moscow has little influence on world gold prices; the great state of Nevada produces as much gold as Russia.(or near enough!) Besides which, nearly half of all the gold ever mined is in the possession of the U.S. Gov't.

The monetization of debt is just about the worst thing that can happen to an economy short of nuclear war, IMO.

And I rarely hear anyone advocate GOLD inless they have a vested interest.

That's a rather disingenuous assumption to make, given the many principled conservatives who've been arguing for its restoration ever since it was abolished. I suppose it would be one thing if the matter had been put to a vote of the people, or at least subjected to anything approaching a public debate; but we know that didn't happen. So I think we have a right to be a bit concerned about the "vested interests" of those who imposed this monetary order on society without its consent (using an emergency as a pretext for permanent change, no less).

If you take offense to the word PIMP...

Hardly. You're only degrading yourself by using it.

If each monetary unit is defined as, and redeemable for, an explicit quantity of a given substance (gold works), then, by definition, exchange rates are fixed.

No shuck, Sherlock. I'll bet you'd be among the first to say that you're against having a global one-size-fits-all economic policy. And yet here you are advocating for one.

You'll deny that, of course, and tell us that fixed exchange rates have nothing to do with economic policy, or the performance of economies (which you already said) but that's just because you don't understand this stuff well enough to understand the implications of your own proposals.

What you are essentially telling us is that we should abandon a free market in currencies, and instead fix the prices by fiat. And we can do that just this one time because we're using gold, which is special and magic and makes our price-by-edict system better than a market.

No it doesn't. It would just turn long-term control of the world's economies over to the gentle ministrations of the Russian and South African governments, who have enough gold in the ground to jack the price around all they want. You want Vladimir Putin setting the rate at which our economy can expand? (I know you don't believe you're doing that by pegging currencies to gold, but again, that's only because you don't understand how any of this really works).

You're so bent on removing "the current fiat providers" that you'd replace them with a worse bunch of fiat providers without even knowing you're doing it. You pretend that gold just "is," and there isn't anybody mucking around with its supply. Sure there is. It's not like The Lord releases so much every year from His secret stash in Heaven. Miners decide this, and some of them are governments that need not make economic sense in their production decisions. If there are military or other strategic objectives to be gained, they'll go ahead anyway. Meet your new "Fed" who decides your money supply: the Russian government. And you thought you were doing this to protect the Constitution.

Plus you'd take the currency-trading market out of the system, which is what keeps the current system honest.

That is not true. I saw a clip of Franklin Delano Roosevelt on the History channel a few months ago. He said we were going off the Gold Standard so an American dollar would continue to be worth a dollar.

:-)

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