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Posted on 06/08/2010 12:30:22 AM PDT by rabscuttle385
This past week several emerging and ongoing crises took attention away from the ongoing sovereign debt problems in Greece. The bailouts are merely kicking the can down the road and making things worse for taxpaying citizens, here and abroad. Greece is unfortunately not unique in its irresponsible spending habits. Greek-style debt explosions are quickly spreading to other nations one by one, and yes, the United States is one of the dominoes on down the line.
Time and again it has been proven that the Keynesian system of big government and fiat paper money are abject failures in the long run. However, the nature of government is to ignore reality when there is an avenue that allows growth in power and control. Thus, most politicians and economists will ignore the long-term damage of Keynesianism in the early stage of a bubble when there is the illusion of prosperity, suggesting that the basic laws of economics had been repealed. In fact, one way to tell if a bubble is about to burst is if economists start talking about how the government and the Central Bank have repealed the business cycle.
The truth is the laws of economics are constant and real, no matter how inconvenient they might be to politicians and bankers. This reality is setting in and the bills are coming due. In the mean time, countries that have no money have bailed out other countries that have no money, except for the phony money created by politicians, bureaucrats, and their partners-in-crime at the central banks. This may be preventing big well-connected banks from having to take on massive losses, but it is all at the expense of the taxpaying citizen.
As governments and central banks continue the cycle of spending and inflating, the purchasing power of their currencies is constantly being degraded. These currencies are what the people are working for and saving. This inflation guts the savings and earnings of the people, who have very limited options for protecting themselves against these ravages. One option is to convert their fiat currency into something out of reach of central banks and government spending, such as gold or silver.
It is fairly typical in the midst of economic crises like these for gold to come under attack from Keynesians economists and their amen corner in the media. The arguments against gold are usually straw men, based on a fundamental misunderstanding of the purpose of buying gold. Gold is not a typical investment. It is a defense against the predictable behavior of governments to debase a fiat currency under its absolute control. The people who run the printing presses have trouble shutting them off. In order to limit one’s exposure to this reckless behavior, it is wise to exchange unsound assets for sound ones.
As the foundation of their power, their fiat currency, is rejected or avoided, government power is compromised. Fiat currencies trade the people’s freedom and security for the government’s freedom to squander the wealth of the nation on wasteful pet programs, wars, and corruption. This is why the freedom of the people is so intertwined with a sound monetary unit. This is also why the founders liked gold and silver, and supporters of big government hate them.
fyi
Government operates in the same way, buying the votes of the parasite class NOW with money they expect to confiscate from working taxpayers LATER.
How could anybody think this scheme could be sustainable forever?
The time to pay the piper is closer than most people are willing to believe, and personally, I like my gold coins a lot right now.
The time to pay the piper is closer than most people are willing to believe, and personally, I like my gold coins a lot right now.
I agree, but, there is not enough gold or silver in the world to support currencies based purely on those standards. I’m curious what the standard could be much less what it should be. A standard would have to be based on fiscal discipline by any nation, or all nations choosing to participate in the “standard”. It seems to me, back in the carter days, that our standard led to the wholesale buying of our silver coinage for meltdown, Which helped reduce our standard and led to the use of sandwich coins.
There never really is a shortage of currency when it is backed by something “real”. Because economies are based upon production and “stuff” and “things” are the articles of intrinsic value, not the currency itself; the value of currency will always adjust in a true free market system to allow for the free trade of all commodities.
...and with what do you think the piper will get paid?
Those "sandwhich" coins were issued in 1965.
I’ve got enough silver coins, I should have remembered that fact. The point was, we had a standard, and it went away.
Yes, it did. But that's no reason not to reinstate it. Only we can hold a government's feet to the fire. It's obviously not an easy task, but the complete lack of standards we have now is proving very, very bad.
Thanks for the ping.
The perceived value of gold is related to psychology and psychiatry and not to economics or physics. The only two real uses for the stuff traditionally have been electrical connectors and jewelry and the quantity of the stuff stashed at Ft. Knox alone has to be billions of times what the human race will ever need for jewelry or connectors, and there aer other materials which work for jewelry and connectors.
If the human race ever wakes up to this one, gold will be worthless.
Actually no. All the gold mined by the end of the 2009 is around 165000 tonnes. That works out to only 0.0024 grams per one living person.
There actually is one other use for gold which nothing else can match: it would be the absolute ideal metal for waterfowl shot, half again denser than lead, soft, and totally inert. You'd have to alloy it with something to make it hard enough to not deform from acceleration, but you could kill geese all day long with 2.75" shells and #6 shot and probably #7.
Wouldn't that be cool?
I was replying to:
“The only two real uses for the stuff traditionally have been electrical connectors and jewelry and the quantity of the stuff stashed at Ft. Knox alone has to be billions of times what the human race will ever need for jewelry or connectors”
And I think I have proven that to be wrong. There is not nearly enough gold in the world to satisfy the need for jewelry, for example.
Scarcity and its physical characteristics make gold an ideal store of value, and that itself makes it valuable.
What are the practical uses of paper money?
Paper money pulled Germany out of the depression in about three years. In fact Germany was a total basket case in 32 and the first thing the Nazis did and one of the few things they did totally right was to take Germany straight out of the Enlish/worldwide banking system. By 37 or 38, Germany had the strongest economy in the world. Get yourself a copy of “Web of Debt” and read it.
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