Skip to comments.2011 – The year when money starts to die
Posted on 01/05/2011 9:54:25 PM PST by dollarbull
Between 1716 and 1720, John Law tried to rescue the French government from bankruptcy with a scheme that came to be called The Mississippi Bubble. His strategy was to set up two entities: a bank whose purpose was to issue paper money, and a company whose primary but undeclared function was to refinance government debt. Law realised that he had to confiscate all gold and silver other than smaller quantities, and force French citizens to pay their taxes and buy shares in the Mississippi Company, only with the banks newly issued notes. These were the three essential elements of his scheme.[i]
This is precisely what central banks in the US, Europe, Japan and the UK are doing today. They are rigging the markets by buying government debt at artificially high prices with freshly created paper money, having previously excluded gold and silver from any role as legal tender. The following quote from John Law, could equally be attributed to a central banker of today: An abundance of money which would lower the interest rate to two per cent would, in reducing the financing costs of the debts and public offices etc. relieve the King. This is quantitative easing, pure and simple, and John Law had fully anticipated modern central banking. Laws scheme ended in disaster and as a precedent for todays central banking this should worry us greatly.
(Excerpt) Read more at financeandeconomics.org ...
Paperbugs getting nervous?
The value of the fiat dollar is what is based on psychology.
Gold has a 5000+ year history of being valuable. You cannot reconcile that with your beliefs...cognitive dissonance if I’ve ever seen it.
There has never been a time when Gold was worth nothing.
Martin Armstrong has written some great things lately. He was held in prison on contempt of court in one of the weirdest cases in history.
He said govts have been defaulting on debt for over 2,000 years. The American public is so manipulated by the media especially TV - ALL of TV is garbage including Fox. CNBC is the worst. I am so glad I dumped TV over a year ago.
If you want to learn something more about this:
People will barter (trade). They will trade whatever they have for whatever they need.
Wendy is absolutely correct: “the value of gold is entirely based on psychology”.
Federal Reserve Notes are much, much more secure than gold because they are backed by US Treasury securities, which are in turn backed by the full faith and credit of the US government. Well, they used to be ... now there are bunch of junk mortgages backing US dollars, but there are still a whole lot of US Treasury securities on the Fed’s balance sheet.
So the question is, which do you put your faith in, gold or the US government?
Dream on. You can stick with Keynes and the Experts in Washington. A Psychological aberration that has persisted universally for in excess of 5 millennias is probably at least as reliable as the wonderfully rational fiat money of the government experts for so long as there have been governments and has been very reliably debased to the destruction of systems and empires over and over again for almost that same period of time.
Dream on. You can stick with Keynes and the Experts in Washington. A Psychological aberration that has persisted universally for in excess of 5 millennia is probably at least as reliable as the wonderfully rational fiat money of the government experts for so long as there have been governments and has been very reliably debased to the destruction of systems and empires over and over again for almost that same period of time.
Unless you think this "can never happen here" that is:
What happens if the person that has what you need doesn't need what you have?
Here is a fun animation of the housing crash mixed in with a very quick history of money.
It is pretty funny. Bit of Back to the Future, Twilight Zone, and ends with a nod to 300, only 29 minutes long.
The American Dream
Does that not then simply make gold and silver a symbolic measure of the total production of an economy? If that is the case and the total amount of precious metal reserves set aside for currency remains fixed, would a prosperous, growing economy strengthen or weaken the buying power of a gold-backed unit of money?
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