Skip to comments.Getting back to the gold standard (Gold, not Paper Money, is the Future)
Posted on 02/02/2012 5:03:21 AM PST by SeekAndFind
Jim Grants rise to power may be delayed.
The legendary Wall Street writer, publisher of Grants Interest Rate Observer, has been mentioned by two of the rivals for the Republican presidential nomination. Newt Gingrich said if elected president, hed name Grant to help run a commission looking at a possible return to the gold standard. And Ron Paul said, if elected president, hed go all-in and name Grant one of Wall Streets best-known gold bugs as the new chairman of the Federal Reserve.
As Paul wants to abolish the Fed, it would doubtless be a temporary post. But Grant says he found the offer which came out of the blue very flattering.
Alas, both men are trailing in the race to front-runner Mitt Romney. Unfortunately, I havent heard from Mr. Romney yet, joked Grant when I called on him in his offices down on Wall Street. Im sitting by the phone, Im ready.
He may have to wait some time. Romney, a conventional Wall Street figure, is unlikely to tap him anytime soon.
Jim Grant is a paradox: A legendary, well-established figure on Wall Street who is not part of the Wall Street establishment. He is a raging contrarian. A writer from a more elegant age, Grant is also a scathing critic of too big to fail banks and the whole Wall Street racket with its privatized profits and socialized losses.
Many people will think of the gold standard as a relic of a bygone era, something as old-fashioned as bow-ties and stuffed animals. (My caveat: To me, thats not an insult.) Grant, when we met, argued the reverse. He says paper currencies and our current monetary system are the ones that are out of date.
(Excerpt) Read more at marketwatch.com ...
Grant calls the gold standard the least imperfect monetary system. He notes that our present regime of purely paper currency is new: It only dates back to Richard Nixon.
A dollar, he says, is supposed to be a fixed measure, like a foot, or a pound, not something that can be redefined every few weeks by the Fed.
In his ideal world, says Grant, he would lay out a three-year program to convert back to the gold standard, probably at around $2,500 per ounce of gold. He adds that he would take great care to avoid the notorious blunder made by Winston Churchill and the British back in 1925, when they went back on the gold standard at too high a price, and imposed brutal deflation on the economy. Alas, he admits, this would need an act of Congress.
He added that he would also wind down the Feds bloated balance sheet, selling assets for gold, and he would shut down the Feds open market activities completely, relying instead on the discount window alone. The Fed, he said, shouldnt be going out into the market to provide liquidity. It should simply be there to provide temporary liquidity to solvent banks when they ask, and on the basis of good collateral.
For good measure, hed also push for a repeal of a 1935 New Deal law that protected bank investors from runs on their financial institutions. Before the law, he notes, if a bank got into trouble, the investors were on the hook to bail it out: After all, it was their bank. The same was true of the partners in a Wall Street brokerage. The system of taxpayer bailouts, like that of paper money, is a modern innovation.
Gold will be at $2500 by December or so. It will be at $2,000 by Julu/August
Bert..... Free Republic February 2 2012
The interest for loans amounting to ten or more times the value of any supply of gold held in banks clearly could not come back in the form of gold which did not exist; it came back in the form of homes, capital assets, farms, and things of that nature in a 15 - 20 year cycle of expansion and collapse until the bankers finally (1913) implemented Alexander Hamilton's ideas about basing money on federal debt. GRANTED something in that picture has to change now, but we need to move into the future and not back into the past.
I have recently gotten into a discussion with a Paulite about currencies and history.
Wow. It is sure a different view (at times disturbing) of history. But he does mention this 1913 turning point. Can you elaborate on the dangers of the pre-1913 system and the cycles of boom and bust?
The real problem here, as Mr. Grant points out - what we are talking about, is the unit of account.
Maybe gold isn’t the answer, though it’s apparently part of the question - standardization means everyone agrees what a gallon or a meter or a minute indicates. The problem with modern currency units is they aren’t defined! So they all fluctuate in value, and against each other.
One of the key attributes of money is that it serves as a store of value. Paper currencies are convenient, but if they lose this attribute they tend to lose the rest. What do you suggest?
Here is a good link to a relatively short and informative article.
So using your logic, if we redefined a Gallon as 12 ounces overnight you would be ok with that?, after putting 20 gallons of gas in your car and running out after 4 miles driven, it would be OK right?? AFter all it was only done to make sure there was plenty of GALLONS in CIRCULATION and AVAILABLE FOR BORROWING. I guess you really cannot fix STUPID. Our entire MONETARY SYSTEM has been based on FRAUD and COUNTERFEITING for nearly 100 years. and what does the US Constitution have to say about COUNTERFEITING?? By the Way Federal Laws and Acts of Congress CANNOT SUPERSEDE the CONSTITUTION, for it is the SUPREME LAW.
Excellent. Thank you.
If Obama wins in November, gold will be worth $32 and will be illegal to own. If FDR did it, BHO wants to do it.
This is a very educational movie about our history of the bankers.
It also gives a good solution at the end of the movie.
The secret of OZ:
What you are in fact saying is that the value of Gold in today's dollars would have to rise by at least ten times from where it is now to meet the requirements of the more virtual forms of money supply.
In which case: that's what will happen. As fiat shrinks towards zero buying power there will be a rush towards real money. The system will fluidly recalibrate itself, and anyone holding real money - Gold and Silver - will vastly increase their buying power.
All the world's capital is going to rush towards precious metals. Gold will end up at between 10 to 20K per oz in today's dollars - and Silver at something like 1/10 of that.
Note: this will happen whether there is an official Gold standard or not. The free market is going to run, not walk, towards Gold and Silver.
Hope this is helpful.
This article is based on gold ONLY as money, and several of the problems arose because the bankers demonized silver.
Once they removed silver as being money, that created a shortage of available money to lend.
Gluts of silver devalued the currencies. They didn’t have much choice.
You have just as many problems with a bullion based currency as you do with fiat currency, but those problems are harder to deal with IMHO.
Changing our current system back to a gold standard is impossible anyway. You would have to increase the value of gold by 700 percent or devalue the dollar by 85% to accomplish it ( and that’s just for M1 money supply).
Ain’t never gonna happen.
No, that is not correct.
The price of gold is beyond the Messiah’s control.
The only way that could happen is to issue all new money that is devalued by a factor of 32/2500.
The current process of devaluation at ~ 22% per year will continue. The process is working well and there is no need to take such a drastic action
I think that will happen by about 2015 whether there's a Gold Standard or not.
For perspective, the total amount of gold ever mined in human history ($9T worth, almost all of which remains in usable existence) is only a little more than half the US national Debt ($15T+).
This seems to be an interesting video. I have started watching it, but it is almost 2 hours long.
The Paulbot with whom I was discussing monetary policies, touched on some of these issues, but then went into an anti-semitic rant.
Does this video also blame it on the Joos?
It does give some good history and it does offer a solution and probably not what you would think...
It’s well worth the 2 hours...
Okay! Thanks. I will watch it through.