Fools' Gold (Arguements Against Gold Standard and Bankers)

Independent Media Center ^ | 17 February 2002 | by Robert Carroll

[Junior]

Modern society could not run without it or some equivalent accounting system.

Now if we can just get those utopian-bastard Star Trek writers to understand this.

[inquest]

Gold is merely a commodity, and gold traders will alway be able to manipulate the value as they do with other privately-held commodities like oil, wheat and pork bellies. Governments will still have large stocks of gold, and they can likewise manupulate the markets by hoarding or dumping their gold reserves by simply controlling the moment they spend the vast amounts of money they spend to provide government services.

It sounds like all you're saying is that things wouldn't be perfect under Dave's system. No doubt they wouldn't be. But the real question is whether or not it would be better than the current system. If government can manipulate a gold market, what are they capable of doing to a paper market? As I see it, the only way you can be in favor of a fiat system is if you trust the government to do what's right. Gold-based systems (be they gold-backed currency or private gold money) either reduce or eliminate the government role. You haven't said why that would be a problem.

[Agamemnon]

Dittos to you, Tap.

How often it is the repeated truth: money = power.

When government defines money government is empowered. There is a zero-sum situation which positions individual power (liberty) against that of the Government. Runaway government spending-beyond-their-revenues disempowers the individual by competing with him for bank credit, and paying back that debt by debasing through inflation the purchasing power of the individual's labor. That economic fact won't change or be philosphised away.

Gold in combination with a basket of valued commodities (e.g., silver, platinum, oil, etc...all natural resources with intrinsic value, not the word of government whose good faith is regularly questioned) would be the check that government has lacked for 60 years when it first monetized debt by currency debasement, as it raised the value of an ounce of gold from $20.67 to $35.

In 1950 gold was $35/ounce. A Chevy cost $3000. In 2002 gold was $350/ounce. A Chevy costs $30,000. What's left behind is 50 years of inflation's winners (government power) and losers (individual power and with it, liberty). The intrinsic value of gold remains as precious and desired as ever.

[Deuce]

You could have saved yourself some commissions and market maker vig by merely buying the Jan03 90 put. It is the identical position.

[Dementon]

placemarker

[Deuce]

Expatriot, go back and REREAD the article by Hugo Salinas Price entitled What Really Killed Argentina? You characterize the article as well articulated and also conclude that Price:

...concedes that "gold is not the answer."

I went to the article at your suggestion. Price is UNABASHEDLY PRO-GOLD throughout the article.

[discostu]

Wow I'm finally not alone. The history of money clearly shows that gold backed currency is just as imaginary as anything else. Unfortunately it's a shared halucination that mankind has believed in for thousands of years and some people just don't want to shake it.

Thanks for this, I'll be bookmarking it for quick use in the regular "we love gold" discussions here.

[realpatriot71]

Some interesting points that I had not thought about before. However, the reason I still like gold is that it is substantive. Yes, you run into most of the exact same problem with or without gold, but at least in the end, you know that the note you have can be traded for gold. I guess that somehow makes me feel better.

[ghostrider]

I got to this part before I concluded that this was pure BS

I was sputtering and gagging right from the start, but I forced myself to read the article. "Pure BS" is giving it way too much credit.

[ghostrider]

Opps! That previous reply should have been to your post.

[Deuce]

The history of money clearly shows that gold backed currency is just as imaginary as anything else.

The issue is not how imaginery a monetary system is, but rather whether it maintains "scarcity integrity". So far, gold has maintained this essential requirement of good money better than anything else. Theoretically, we have the technology to do this with a highly auditable fiat system once a sufficient number of people realize that scarcity integrity is the crucial requirement. The current fiat system has zero scarcity integrity:

The Fed and banks create fiat at will while the rest of us are forced, through legal tender laws, to honor it. They continually abuse this special privilege (wouldn't you, if you had it?) and must be bailed out and otherwise granted still further special privileges to cover up the illogic, unfairness, and totalitarian aspects of the situation. Most people simply haven't thought about the issue deeply enough. It is really discouraging, however, when some people who have apparently thought about the issue, have no hidden agenda, and believe in democracy and free-enterprise still conclude that the current fiat system is, somehow, preferable to a system with scarcity integrity.

[tortoise]

.Second.. costs to mine gold in Nevada run around $125 per oz

Actually, Nevada gold averages about $200/oz, and when the price drops below the $275-300 range, they start shutting down mines. Still, Nevada has cheap ore and lots of it, which is why it is one of the leading gold producers in the world. Nevada's production reserves far outstrip their actual production, largely because the demand doesn't exist to support bringing more capacity on-line. There are a lot of relatively cheap deposits that haven't been tapped simply because doing so would only cannabalize the existing production sites. I own gold ore bodies in Nevada, and an extremely rich copper deposit as well, but there is simply too many good production sites sitting idle to waste my time and money capitalizing on them. The market has spoken. Incidentally, I think the gold standard is a useless idea as well; it doesn't fix the problem, just shifts it to a different place.

[Deuce]

...the gold standard... doesn't fix the problem, just shifts it to a different place.

You neglect to mention what you see as the problem that is shifted rather than fixed by a gold standard?

[headsonpikes]

If you think IBONDs eliminate monetary risk, you are just the kind of good citizen every fiat hustler loves.

Say, you know about diversification! How's about buying part ownership of this lovely bridge from me? It's safe, too!

[Harrison Bergeron]

Almost all the gold is mined in South Africa and Russia. Why would we want to give control of the world's economy to the Third World? And how do I carry it to the supermarket? Would I need little pieces of paper saying that I've got gold deposited somewhere? Now we're back to paper money.

The new arguments for the Gold Standard sound suspiciously like insidious transfer-of-wealth schemes that leave the United States with it's pockets turned inside out.

[Harrison Bergeron]

When's the last time a US Savings Bond defaulted? I mean... they ain't gonna create millionaires, but nobody's gonna lose a nickel on those things.

[headsonpikes]

"...nobody's going to lose a nickel..."

I agree; they will be fully paid off with government guaranteed colored paper.

Bonds are famously known by monetary historians as 'certificates of guaranteed confiscation'.

For excellent reasons!