News & Analysis
A Gold Standard Is Good?
Return of the Gold Standard Imminent ... The gold standard will precipitate a massive deflation. The ensuing chaos will help usher in their coveted New World Order and World Currency. What has been in the cards for decades is now fully on the agenda: the return of the Gold Standard. Gold as currency is a weapon. It is a wealth transfer to those holding Gold, which is not the 99%, and will precipitate a massive deflation. The ensuing chaos will help usher in their coveted New World Order and World Currency. – Anthony Migchels / HenryMakow.com
Dominant Social Theme: Gold is a barbaric metal.
Free-Market Analysis: Energetic social-credit entrepreneur Anthony Migchels is back with a spirited criticism of a "gold standard." His article appears – as have others by him – on Henry Makow's website and is focused on a few main points that have in part been made by other critics of a gold standard.
We are grateful to Mr. Migchels – and to neo-Greenbacker Ellen Brown – for continuing to advance a larger monetary debate over fiat versus money metals, even though we think to some degree it aids those who want even bigger government than we already have.
We won't however conflate Migchel's arguments with Brown's as he has disavowed some of them and has in certain instances seemingly agreed with arguments we've made about central banking and government bureaucracy. Nonetheless, we think we disagree with certain points in this article. Some more:
Numerous stories pertaining to Gold as currency have appeared recently. Last week alone, it was reported that India will pay Iran in gold for their oil imports. In another development, China, Japan, Russia, France and a number of Arab states will pay each other with a basket of currencies, including Gold.
Yet another story was about World Bank President Robert Zoellick, who has been promoting a Gold Standard for years, 'admitting' the demise of the dollar reflects 'a changing balance of power' in the world. Even Newt Gingrich has jumped aboard the gold train.
These stories are framed as resistance against the dollar hegemony and of course that is only a part of the story ... But the decline of the dollar is only part of the story. The dollar is only the current vehicle the Money Power uses to rule international finance. It doesn't care for the vehicle itself, as long as it has a suitable successor and that will be Gold.
And in the US itself there also is a strong drive towards Gold as currency. The onslaught by Austrian Economics in the Alternative Media comes to mind. And Ron Paul of course. He openly calls for Gold as currency. In this respect, he clearly is the ultimate internationalist candidate. This contrasts sharply with his patriotic 'constitutionalism'.
Some of this is good! Some of this, we've have pointed out in various articles ourselves. We think, possibly, that Money Power is deliberately breaking down the "old" economic order in order to create some sort of one-world currency. We think gold may be part of it – and we're surely not in favor of this sort of "directed history" when it comes to monetary schemes.
But we also believe that money, historically, has proven out to be gold and silver; though as hard-money economist Murray Rothbard pointed out, money has ALSO been virtually anything that people have decided it is.
However, Rothbard, from what we can tell, was mostly talking about commodity money – shells, salt, copper discs, etc., that are injected into economies via MARKET FORCES. The problem comes when certain monetary theorists want to use monopoly power (often of the state) to produce pure-paper money.
Once the state (or its adjuncts) decides to assume the power to "print" money, the marketplace monitor that works so well for private money is disassembled. Those who work (for the state, especially) do not know how much money is "enough" money – nor can they.
Migchels also states that libertarian-Republican presidential candidate and Congressman Ron Paul "lies" about the Constitution "saying the constitution says we should have Gold as currency ... but other units are allowed."
In fact, the US mints were clearly set up to stamp metals into coins and the intent of the founders regarding money metals seems fairly clear. In an educational article entitled "What Is a Dollar," well-known libertarian writer Edward Vieira, Jr. writes:
History shows that the real "dollar" is a coin containing 371.25 grains (troy) of fine silver.
a. The "dollar" in the Constitution. Both Article I, Section 9, Clause 1 of the Constitution and the Seventh Amendment use the noun "dollar." The Constitution does not define the "dollar," though, because in the late 1700s everyone knew that the word meant the silver Spanish milled dollar.
b. Adoption of the "dollar" as the "Money-Unit" prior to ratification of the Constitution. The Founding Fathers did not need explicitly to adopt the "dollar" as the national unit of money or to define the "dollar" in the Constitution, because the Continental Congress had already done so.
Migchels doesn't seem to fully define the difference between a state and a private gold or gold-and-silver standard. One standard is imposed by force and the other is not. What is the harm in having a standard that is voluntarily imposed and utilized?
The idea apparently is that even with a voluntary gold or gold and silver standard, the elites would continue to control the world's money system because they own most of the metal extant.
We're not sure this accurate to begin with, but even it is we're not sure it makes much difference. In a free money system, it would be difficult to control a money marketplace. If one wanted to try to manipulate markets, one would have to issue out money metals – or hoard them – at which point the price would go up ... or down.
The Anglosphere power elite, from what we can tell, is almost entirely allergic to using its own funds for purposes of realizing a New World Order. We find it highly doubtful that such a group would pour money into the marketplace to devalue gold or silver – especially since those holding most of the money metals would be the most affected.
If the elite tried to hoard metals, people likely would simply dig up more of it, devaluing what was already above-ground. In a free market, money manipulations are very difficult, if not impossible, especially over a long period of time.
Migchels makes the point that a Gold Standard would be "an unmitigated disaster" that would lead to excruciating deflation. But what is wrong with deflation? Murray Rothbard was fond of pointing out that in a full-gold-standard environment, goods and services would become more affordable as technology brought down their provision.
The point, apparently, according to Mr. Migchels, is that "Deflation is a horror for debtors, who see their debts and the interest they pay over them grow worse in real terms." But in a deflationary environment, those who held commodity money would see their assets appreciate, even if their debt did as well.
Mr. Migchels quotes the "Protocols" as saying: 'You are aware that the gold standard has been the ruin of the States which adopted it, for it has not been able to satisfy the demands for money, the more so that we have removed gold from circulation as far as possible."
The trouble with this quote is that it is difficult to establish definitively where the Protocols came from or whose views they represented. (We've actually written about this in the past.) But even assuming that the Protocols speak for "all Jews" – or even a Jewish "ruling class," the statement is seemingly vague. It makes no distinction between a free-market standard and a state-mandated one.
Mr. Migchels writes that, "Far from a 'solution', the coming Gold Standard is the logical next step in the Money Power plan of destabilization and order out of chaos. We will have a long and painful depression. Although it is not certain that Gold will completely replace paper, it is obvious that we will know scarce money and contraction for years to come."
This is only certain if the powers-that-be are able to mandate a state-run gold standard. State power is always to be feared, especially in the context of a new monetary system. But we would argue, on the other hand, that no one has to fear money that is created within the context of the market itself.
For some reason, part of the alternative media is consumed with fear when it comes to money metals. We think the real agenda may be that even critics of the current system that reside on the alternative media cannot entirely give up their yen to control society via the levers of state authoritarianism.
They want to have it both ways, in other words – criticizing the current system but making state power available for their various nostrums. Within this context, it is important to remember that every law and regulation is a price fix transferring wealth from those who earned it to those who did not and have little idea what to do with it.
Let the market itself decide on money. Don't fear money metals! Gold and silver have been the historical money of choice for thousands of years. A free-market gold and silver standard has apparently proven especially utile in the past.
Conclusion: If money competes – as we hope it will – we would be surprised if gold and silver don't eventually win out. Hopefully, one day, we'll be in a position to see if this is true ...
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Posted by dave jr on 02/01/12 04:11 PM
"So a depreciating unit is the better means of exchange, the appreciating unit is the better store of value."
I will agree with this. Do you believe both units can exist side by side? If not, which will win out?
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Posted by memehunter on 02/01/12 03:30 PM
"2) interest is NOT a problem in itself as long as people are free to negotiate questions of money, credit and interest as they see fit."
Unpayable interest remains a problem in any case, and compound interest will always lead to instability. I have explained this at length, using "logic, reason, and history", as well as facts, on the DB.
See:
Click to view link
Click to view link
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Posted by memehunter on 02/01/12 02:42 PM
You have a point,I agree that "opposite functions" is perhaps too strong, especially since gold is essentially a "store of exchange value". But they are definitely different functions.
As I have done a few times here on the DB (and I mentioned it to Mr. Migchels as well), I recommend reading FOFOA's blog for a detailed and often illuminating discussion of the important distinctions between the "means of exchange" function and the "store of value" function which, according to FOFOA, can never in the long run be totally satisfied by the same currency.
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Posted by flying_pig on 02/01/12 02:21 PM
"A store of value and a means of exchange are opposite functions"
Some goods derive almost all their value from their utility in exchange - e.g. gold. Such value is called exchange value, as contrasted with use value.
Now, if I modify your statement by adding one word, you will see that your claim contains the seeds of self-contradiction in it.
"A store of exchange value and a means of exchange are opposite functions"
You eschew logical reasoning at your own peril.
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Posted by Anthony Migchels on 02/01/12 01:51 PM
""For a stable Accounting Unit it would be best to create an index based on a basket of the 1000 or so most widely used commodities."
A basket of commodities won't work because it defeats the purpose of the currency being the unit of account. For example, lets say a dollar is set to equal 1 apple, 1 orange and 1 plum. Now, I have and apple. What is it worth? How can I trade it?
It seems to me you are fixated on interest, and so to get around it currency should carry no value. But then it isn't currency anymore. I don't know what it is, except that it will require fiat to support it."
Define money. My defenition is:
A means of exchanged by agreement.
Anything can be appointed as a means of exchange by two or more market players. At the basis of every currency there is at least the agreement it is the means of exchange.
It is this agreement that gives it value!
This is even the case with Gold.
Gold is not appreciating because it is a 'hedge against inflation'. The real driver behind rising Gold prices is the expectation of more and more people, including very powerful market players, that it will soon be widely accepted as money again.
It is not true that paper money has value because the state forces it. There are many examples of free market paper based currencies that are widely used, because the users have a clear incentive to accept the agreement that the unit is a means of exchange and thus money.
It is true, that the major paper standards of our time, the Central Banking units, have such universal acceptance to a large extent because of State coercion. But far from entirely, because history has shown time and again that marketplayers will not accept money that is losing value too quickly, no matter how severe the State threats were.
And make no mistake: your beloved Gold will only find wide acceptance or even domination in the marketplace, because the full force of the State, and more importantly, the Money Power will be behind it.
it is not because everybody is so enthralled by at is some people seem to be.
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Posted by Anthony Migchels on 02/01/12 01:41 PM
"How is this a mistake? Currency has to be both a means of exchange and a unit of account. Currency is the thing being exchanged and currency is the unit being added or subtracted from an account. How can they not be mixed?
I also do not agree with the statement that the means of exchange should not be stored. If I own it, then I'll decide WHEN to consume, trade or dispose of it. Should I assume that what you advocate, social credit, can not be owned by the individual?"
Not necessarily. In my system, for instance, I just say: 1 Gelre = 1 Euro. It works the same in all Regional Currencies, the WIR (a major Swisse complementary currency) and also the American Berkshare.
before the Euro, there was the ECU. This was an accounting unit, but not a means of exchange. Etc.
So it's quite normal to disconnect the two functions.
About the store of value: you of course have the right to hoard it, nobody will forbid you. But you cannot blame the system which is offering you a means of exchange it is not offering you a good store of value.
A store of value and a means of exchange are opposite functions. To store is not to circulate. Is not to exchange. These two functions cannot be optimally combined in one unit.
That's why you have Gresham's law: the unit depreciating fastest is being used to pay with, the appreciating unit is used to hoard. So a depreciating unit is the better means of exchange, the appreciating unit is the better store of value.
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Posted by flying_pig on 02/01/12 12:30 PM
"The problem is not Government per se, although it clearly is also quite a menace at the moment."
The problem is not Government per se, but as Bastiat said, the problem is that Government has now got the legal power to do what individuals cannot do.
"The problem is that the Money Power controls all money supplies, including Gold."
The problem is that Money Power is forcing you to use a specific type of money. But who's forcing you to use Gold?
"[Money Power] rapes us with interest and the boom/bust cycle.
The word rape is an interesting choice. It indicates non-voluntary actions. Were Mighels to force his interest-free Social Credit upon the rest of us, it would be like ...
The boom/bust cycle is not caused only by money printing. It can be created by government meddling in the economy. For example, the socialist calculation argument illustrates how government allocation of resources can create a temporary boom, followed by inevitable busts. Hayek clarified this further via his knowledge argument.
"The fundamental goal is to minimize cost for capital to society."
This is a laudable goal. Indeed it is fundamental. But remember, there is no free lunch. You cannot reduce the cost to 0 in the real world. The relevant enquiry then becomes who is to bear the cost for what. A free market produces a voluntary distribution of such costs and benefits.
"Capital takes almost half of our disposable income by interest passed on in prices."
The word capital has different meanings for different schools of thought. Merriam Webster lists one definition as being 'a store of useful assets or advantages'. How you can conclude that a store of useful assets of advantages takes half our disposable income (what's that?) by interest is beyond me.
"We are Interest Slaves. This must end. "
As I pointed out earlier, this makes no sense to me. If we are Slaves, who is the Master? And how does the Master force us Slaves to do his bidding? Loaning money out has risks, and it is a sacrifice because you cannot use resources you have loaned out. So, it is natural that there is a free market price for loans, i.e. interest. And when people voluntarily accept interest, where is the slavery?
"The Government created and then surrendered this monopoly to the Money Power"
Damn right. That is why one should not get the Government involved. And that is why one should not give the Govt the legal monopoly to do anything that private individuals cannot do.
"It would then produce interest free money, saving us all trillions in interest per year. It would prevent the wealth transfer through deflation. "
This is farcical. When govt has a monopoly money, it can counterfeit money, and can transfer wealth to itself via inflation. If you are so afraid of deflation that you are blind to the dangers of inflation, you are making a huge mistake.
" It would then produce interest free money, saving us all trillions in interest per year."
That abomination won't be money - money must be created by the free market. The Austrians in fact sometimes define money as the most widely traded commodity in the free market.
I really don't have any more time to waste on debating this. As I said earlier, make up your own mind.
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Posted by Abu Aardvark on 02/01/12 10:19 AM
"We need a little more than 'Hate the State' to solve interest and economic slavery. You know that too, that's why you circumvent the interest question with the 'logic' of 'faith in people'.
We need an analysis that addresses ALL the problems, not just the problem of the State."
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I don't suggest to "hate" the state, but to ABOLISH it altogether. Big difference. Besides, hate doesn't help. Minimizing the ramifications of corrupting power does.
Interest and economic slavery are ENFORCED BY THE STATE for some time now, no?
I didn't circumvent the "interest question", but rather stand by the fact that ...
1) there's no free lunch. People who lend/invest capital will want to see a return. Why would anyone take the risks implied (loss comes to mind) in the first place if not for a compensation, except when you FORCE them to?
2) interest is NOT a problem in itself as long as people are free to negotiate questions of money, credit and interest as they see fit.
I agree, there are more problems to address than the state. However, I prefer to address first things first:
"the belief in authority (i.e. the state/government, especially in the case of supposedly "benign" variants) has led to more death and destruction than anything else in history"
Larken Rose
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Posted by dave jr on 02/01/12 10:08 AM
"This alludes to a common mistake: mixing the means of exchange and Accounting Unit functions of money"
How is this a mistake? Currency has to be both a means of exchange and a unit of account. Currency is the thing being exchanged and currency is the unit being added or subtracted from an account. How can they not be mixed?
I also do not agree with the statement that the means of exchange should not be stored. If I own it, then I'll decide WHEN to consume, trade or dispose of it. Should I assume that what you advocate, social credit, can not be owned by the individual?
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"If you want a stable accounting unit, which is indeed necessary, Gold is a very bad bet: just look at the price development over the last 50 years. Up and down big time."
You miss the concept, gold is gold and its value measured against other mined or extracted commodities has been quite stable over time. The dollar and labor intensive goods has not been stable.
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"For a stable Accounting Unit it would be best to create an index based on a basket of the 1000 or so most widely used commodities."
A basket of commodities won't work because it defeats the purpose of the currency being the unit of account. For example, lets say a dollar is set to equal 1 apple, 1 orange and 1 plum. Now, I have and apple. What is it worth? How can I trade it?
It seems to me you are fixated on interest, and so to get around it currency should carry no value. But then it isn't currency anymore. I don't know what it is, except that it will require fiat to support it.
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Posted by Anthony Migchels on 02/01/12 08:14 AM
There we go again with 'logic' and Austrianism's favored deductionism.
Let's look at practical facts for a change, so that we can learn a little from history. I like the Afghan example in this case.
The CIA suckered the Russians into invade in the eighties. They broke the Soviet Army's back by years of guerilla warfare and eventually the Soviets left.
The country succumbed to anarchy. In this anarchy we saw rivaling warlords, and a years of civil war.
Eventually ISI (pakistani intelligence) invented the Taliban to restore order in their backyard. You know why the Taliban was successful?
because they were the biggest brutes on the block.
The morale?
Nobody likes the State. Neither do I. But thousands of years of human experience shows that power vacuums will be filled. And it is the most brutal that manage to stay on top.
That's why the Money Power rules today.
I have every faith in the power of human action. Some human's actions are quite successful. The Money Power is human.
But most people have lived in slavery for ever, including you.
That's why need a little more than your 'logic' to solve all this.
We need a little more than 'Hate the State' to solve interest and economic slavery. You know that too, that's why you circumvent the interest question with the 'logic' of 'faith in people'.
We need an analysis that addresses ALL the problems, not just the problem of the State.
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Posted by Abu Aardvark on 02/01/12 07:45 AM
"abadacadabra... ... ... ... ... ..ZAP!
It's gone! Government is gone! There is no state!
Now, abu, ponder the following questions: ... ."
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Your questions indicate that you don't have faith in people (i.e. human action) when left to themselves. You are more afraid of free people than of ruled people and, consequentially, RULING people. You want to have some, ANY, authority to "take care" for and/or to "keep an eye on" your fellow human beings. Apparently you think that as soon as you give some people power over others and pin a batch to their chest, people will be "better" and the world will be a "better place".
Logic, reason and history seem to contradict this believe system. Heck, it's self-contradictory in itself.
"The measure of the state's success is that the word anarchy frightens people, while the word State does not."
Joseph Sobran
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Posted by Anthony Migchels on 02/01/12 07:07 AM
ok.
abadacadabra... ... ... ... ... ..ZAP!
It's gone! Government is gone! There is no state!
Now, abu, ponder the following questions:
Are you paying less interest?
Is the Money Power gone also?
Is the threat of World Government gone?
Are you safe on the street?
Is there order in the street?
Is the threat of World Currency gone?
You think you may be macho enough to make it now, but are you sure your loved ones are also?
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Posted by Abu Aardvark on 02/01/12 06:05 AM
"The Government is not the Ruling Class.
The Trillionaires are.
Austrianism exists to obscure this simple and blatant fact."
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I wrote: "the STATE: the time-tested, most vital tool in the business of ruling others"
You want to "improve" the STATE, even strengthen it, thereby enhancing the elite's options of ruling others.
Which part of that simple fact you don't "understand"?
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Posted by Anthony Migchels on 02/01/12 05:45 AM
Ah, there's abu again.
No Abu, there is no legitimacy for any ruling class.
The Government is not the Ruling Class.
The Trillionaires are.
Austrianism exists to obscure this simple and blatant fact.
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Posted by Abu Aardvark on 02/01/12 05:39 AM
"Interesting you don't reject Greenbacks as a way of financing the Government, although that is not what Ellen is suggesting, as she is suggesting interest free credit, and not debt free money.
And if the Government can finance itself interest free, than we can too, of course. And since interest free credit is impossible with Gold, Gold is bad money."
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This, all your feedbacks and your blog give an "indication" of how the Mind Controllers operate when it comes to the STATE: the time-tested, most vital tool in the business of ruling others. Thank you very much.
In fact, just the other day Larken Rose generously and conclusively summed up the problems with your statist to the bone "solution(s)":
"... there's no such thing as a legitimate ruling class, even a limited, constitutional one, and that the initiation of violence, even when legal, is bad. That rules out all government ... We're all taught that obedience to authority and obeying the law is what makes civilization possible. We were all told that lie, but it's still a lie. The belief that some people have the right to forcibly dominate others, even in a limited way, is the opposite of being civilized. It's an attempt to legitimize theft, murder and other violent aggression, by way of pseudo-religious political rituals -
constitutions, elections, legislation, and so on. In short, the belief in authority has led to more death and destruction than anything else in history.
The very concept of government, which hinges on the concept of authority - the idea that some people can acquire the right to forcibly control everyone else - is provably self-contradictory and logically bogus. I don't just mean it's a bad idea on a practical level. I mean it's an insane idea.
(... )
Can someone delegate a right he doesn't have? No, of course not. If I don't have the right to steal, I can't give someone else the right to steal. It's so elementary it's ridiculous. The problem is that obvious truth completely rules out all government. If normal people don't have the right to tax, and forcibly interfere in the lives of non-violent people, then they can't possibly have given such a right to those in government - not by any election, or
constitution, or any other document or ritual - and that means that just about everything that government does is inherently illegitimate.
To call it government implies that it has authority, that it has the right to rule, that it has rights that us mere mortals don't have. Those in power claim they got these super-human rights from us, from the people, despite the fact that we never had such rights to begin with, and still have no such rights and couldn't possibly have given them to anyone else. That's just one example of how what we're taught as basic civics is absurd, insane and horribly dangerous garbage."
Click to view link
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Posted by Anthony Migchels on 02/01/12 05:01 AM
There is some merit to this. But a clearer way of saying it is that money has different functions. Means of Exchange and Accounting Unit.
I don't agree metal is a good accounting unit: the price swings over the ages have been massive.
It is better to use a basket of widely used commodities. Or the Protocol's suggestion: an working man's hourly wage.
Interesting you don't reject Greenbacks as a way of financing the Government, although that is not what Ellen is suggesting, as she is suggesting interest free credit, and not debt free money.
And if the Government can finance itself interest free, than we can too, of course. And since interest free credit is impossible with Gold, Gold is bad money.
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Posted by Anthony Migchels on 02/01/12 04:54 AM
Interesting handle, by the way. Have you read Griffin's book on the Federal Reserve? And Mullins' book on the same subject?
Have you noticed who differently they handle 1776?
Read this: who is Ed Griffin
Click to view link
And don't miss out on the comment made by 'Franz Seiler'
This will give you an indication of how the Mind Controllers operate when it comes to Gold.
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Posted by Anthony Migchels on 02/01/12 04:37 AM
Good link, great site.
In general it is of course clear the Protocols are not 'proof'.
There is a case to be made that the Czar's people were behind it: they knew a little about Authoritarianism and it's antics and the Protocols themselves admire the Czar's despotism.
However, it's value is not in proving a Jewish Conspiracy, real as Jewish Supremacism my be, but in its description of a conspirator's antics.
Protocol 20 is a Masterclass in Economics. Everybody here would gain tremendously from trying to understand what it says.
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Posted by Anthony Migchels on 02/01/12 04:34 AM
amen
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Posted by Anthony Migchels on 02/01/12 04:22 AM
This alludes to a common mistake: mixing the means of exchange and Accounting Unit functions of money.
If you want a stable accounting unit, which is indeed necessary, Gold is a very bad bet: just look at the price development over the last 50 years. Up and down big time.
For a stable Accounting Unit it would be best to create an index based on a basket of the 1000 or so most widely used commodities.
That would give a reasonably solid Accounting Unit.
We could then proceed to create currencies saying 1 interest free unit = 1 Accounting unit.
Just like nowadays 1 Gelre = 1 Euro.
The Gelre is the private currency that I float in the Netherlands.
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