Friday, January 09, 2009

Gold and Government Fiat Token Turmoil

From The Privateer:

"Another Time - Same Place:

The place is, of course, the United States. The data is from the
Statistical History of the United States:

Real wages for the working man tripled in the years 1850-1913. US GDP
increased over 500 percent, averaging 4.3 percent annual growth from
1870-1913. This highly productive era was accompanied by steadily
FALLING consumer prices. From 1800 to 1913, there was an overall 30
percent reduction in the Consumer Price Index from 43 to 30.6.
"Modern" economists stand dumbfounded before these facts, but the
"Gilded Epoch" which lasted from about 1870 to 1910 has often been
called the second American industrial revolution. US wholesale
prices, for instance, increased by an annual average of only 0.1 per
cent from 1879 to 1913. The long-term stability of the late 19th
century was not, of course, due to US government measures. It was the
semi-automatic effect of the international Gold standard. There was
no Federal Reserve and the US income tax amendment to the
Constitution had not been enacted. Gold and Silver coinage was there
and Americans had the most productive period ever as living standards

Historical Statistics of the United States: Earliest Times to the Present
This 5 volume set provides a sweeping statistical history of the United States from colonial times to the present. Historical data series cover a wide range of subject areas including: population, work and welfare, economic structure and performance, economic sectors, governance and international relations.
- Available in print at Saint Mary's Library: SMREF HA 202 .H57 2006
The Library@Saint Mary's
Statistical History of U S (Hardcover) at Amazon

(open chart in new tab to enlarge, or click on chart to enlarge)

Chart produced by AIER (American Institute for Economic Research)
Can you imagine what this chart is going to look like after 2015, particularly since there is a good chance that the US dollar, as we know it now, will not exist?


“By a continuing process of inflation [remember, it is the increase of the "money" supply, not an increase in prices], governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. ” - John Maynard Keynes

Central banks are key to the process of theft / robbery by the process of inflation, which is why The Fed is illegal in the US, not that most Americans care now a days. President Andrew Jackson ended the Second Bank of the United States in 1832 by vetoing its re-charter by Congress.

“Unless you become more watchful in your States and check this spirit of monopoly and thirst for exclusive privileges, you will in the end find that the most important powers of Government have been given or bartered away, and the control of your dearest interests have been passed into the hands of these corporations.” – Andrew Jackson, 1837


China's First Experience with Paper Money

Till 1927, China had a free banking system through the interaction of private banks operating in various regions of the country. Privately held banks operated like any other Chinese business and competed with one another to obtain customers. Most banks issued their own notes which were redeemable in silver, the traditional medium of exchange in China. The notes from each bank circulated freely with the notes from other banks.

These Chinese banks operated largely without state regulation. A free banking system has inherent checks against inflation - primarily because customers will flee from depreciating currencies - and instances of banks' inflating their currencies were rare.

Of course government put an end to it. Guess what ultimately came with that? Not one, but **2** famines.


Laissez-Faire Banking by Kevin Dowd
Fractional reserve banking in the western hemisphere started in Scotland. It was in a real free market environment, and was coming along nicely till government got into the act and screwed things up big time. Read it for the story, and the reasons why banking works best with absolutely no government rules and regulations required.


In Vietnam, if you want to buy a house, you need gold. If you take a mortgage on your house, you borrow gold. That means you make mortgage payments in gold. Important business deals are conducted in gold.

For the forseeable future, after the US dollar ceases to be the world's reserve "currency", which hemisphere is going to do better?

The one with the most gold and silver.

"I need someone to protect me from all the measures they take in order to protect me" … Banksy, street artist (b. 1974)

"The most potent weapon of the oppressor is the mind of the oppressed."
- Steven Biko

"The abandonment of the gold standard made it possible for the welfare statists (government bureaucrats) to use the banking system as an unlimited expansion of credit. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation... Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. ... There is no safe store of value. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves." - Alan Greenspan

"Much of the social history of the Western world over the past three decades has been a history of replacing what worked with what sounded good." - Thomas Sowell

"I actually think money is maybe the most fundamental idea that humanity has come up with. It's a 'universal bartering tool' that allows a person to concentrate on saving up for the future. -- Linus Torvalds, who wrote the Linux OS kernal

"People say money doesn't buy you happiness, but those people are usually people who don't have enough of it," -- Linus Torvalds, who wrote the Linux OS kernal

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