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Old January 12th, 2012 #1
Alex Linder
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Default Money - How It Actually Works

[This thread is for pieces of writing that explain exactly how money works.]

The Banking Fraud

1. It is literally a fraud - a bunch of clever crooks figured this out some time in the past.
2. It’s a long-con not a smash and grab robbery. It has to be slow and subtle or people notice.

Part 1.

A cartel of private banks with the collusion of the local political authority create a central bank with a monopoly on creating base money.

(It’s not a complete monopoly as the government still creates notes and coins but that’s a small percentage of the total. The vast majority is electronic and simply created on ledgers.)

On its own this is exactly the same as legalized counterfeiting. All else being equal the value of everyone else’s money declines a little because there’s more of it in circulation (inflation) while the counterfeiters use the newly
created money to pay their living expenses and buy assets. 50 years of increasing the money supply by 2% a year would lead to a pretty substantial transfer of wealth to the banksters.

(It’s no different to the royal mint fraud of earlier times where the percentage of gold or silver in coins was gradually reduced.)

There’s no physical limit to how much base money they could create but there is a very strong practical limit if they don’t want people to notice the inflation.

(If the money supply needed to be increased in a treasury system they could do it by starting a major road repair program for example and paying for it in the new money or even just giving everyone $500 at Christmas.)

Part 2.

However the central bank doesn’t just create money and spend it because people would notice. Instead they create the new base money on the books of the commercial banks that make up the cartel. The commercial banks don’t spend it either they use the invented money as the basis for loans with interest. The payoff is in the interest paid on the loans of invented money.

(Fractional reserve banking can and did exist separately from the central bank fraud and has other independent aspects to it but in terms of the “royal mint” fraud it doesn’t matter if the central bank creates $100 million on the books of the commerical banks and only allows them to loan out that $100 million or the central bank creates $10 million and allows the commercial banks to loan out ten times the amount i.e. $100 million. It comes to the same thing. The root of the fraud is the base money created by the central bank.)

Part 3.

So the banking cartels could make money from

- monopoly on money creation aka legalized counterfeiting aka the royal mint fraud
- FRB
independently if they wanted. The current system combines the two because passing the created money as loans and only pocketing the interest disguises the process. The loans are the bait. The interest is the fish they catch with the bait.

On top of these two there’s the boom and bust fraud. Simply put they lure people into debt with cheap loans then tighten up suddenly, bankrupt people and buy their assets at firesale prices. It’s equivalent to pouring a load of fish food onto the surface of a lake and then when enough fish have gathered throwing a stick of dynamite into the centre and collecting all the dead fish.

Conclusion

- central bank creates base money out of thin air in the form of potential to create loans
- commercial banks create the loans as bait to fish for interest
- the interest is the payoff from the initial money creation
- the negative consequences of the fraud have to be slow and gradual so people don’t notice
- the boom and bust fraud can be used as a top-up but it can’t be too frequent or people will notice

In terms of persuading people then all you need is for them to get the legalized counterfeiting analogy first and once they have that show that the loan mechanism is simply a way of disguising the legalized counterfeiting.

[above is from a comment at Majority Rights]

Last edited by Alex Linder; January 12th, 2012 at 04:02 AM.
 
Old January 12th, 2012 #2
Rick Ronsavelle
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Monumental issues here. I'm thinking about 10/20 things and, well must start somewhere. Revisions to be placed as needed.

It is my understanding that Ron Paul is purist- he does not believe in fractional at all. A look at two videos shows he calls for outlawing fractional. So from the Daily Paul of 10/24/2009 we have a posting of Greenspan's Gold and Economic Freedom article from '65/'66. I am going to post the whole thing as it is very famous and needs to be circulated:

>>>An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term "luxury good" implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.

In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.

Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society's divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.

A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one – so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again.

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves,interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline – argued economic interventionists – why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely – it was claimed – there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks ("paper reserves") could serve as legal tender to pay depositors.

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form – from a growing number of welfare-state advocates – was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which – through a complex series of steps – the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.<<<

Analysis:

But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits

This is unvarnished fractional- loans made up from nothing- from nothing, NOT from gold. The interest is charged on these nothing loans And this view is endorsed by the Daily Paul. (The Daily Paul is a community website with no official affiliation with Ron Paul or his Presidential Committee).

Greenspan: since every credit instrument is ultimately a claim on some tangible asset. How can this be true? If a bank has 1000 units of gold, and 10,000 units of credit, what are the 9000 units of credit making claims on?

On a gold standard, the gold is the money. To borrow money would mean to borrow gold, NOT some imaginary "credit." The credit would be THE ACTUAL PHYSICAL GOLD.

We need to get away from the idea that only bankers can loan. Anyone has a right to loan and earn interest. A worker can loan a gold coin to a neighbor, without making up "credits" from nothing. A tractor dealer can make a loan of the physical tractor, and charge interest in the payments.

Comments:

Good find
Submitted by ubetcha on Mon, 10/26/2009 - 18:02.

So this is the article RP has mentioned!
Bump.

alan greenssan gold and economic freedom
Submitted by sdwolfe on Mon, 10/26/2009 - 11:06.

This article is total misinformation passed on to further enslave all societies of the world. It is this type of BS and misinformation that got us into this economic mess in the first place. Money is an institution of law, not a commodity or anything else. It is not tangible wealth in itself, but a power to obtain wealth. Money is an abstract social power based in law, and whatever government accepts in payment in taxes will be money. Gold is a commodity and investment medium. If it were the basis of money, whoever had the most, would control society. For all of those people who do not want government controlling our “money” system, you already have your wish. The Federal
Reserve is a vicious private group that issues interest-bearing debt that is passed onto us as substitute money. This is the reason of why our infrastructure is in ruins. Because the Federal Reserve System is a private company, they do not have to follow the laws that make-up a balanced society. So we now have a war based society because the government, that is to say, all people of the United States, do not have a say in how money should be used. We need government control so that, … we the people…are in charge. The seigniorage of a money system belongs to its owners. It is the fundamental right of a democracy. Without this right in place, you do not have a democracy. The seigniorage is the benefits that the owners of the money power are entitled. With this right, we may rebuild the infrastructure of our country without further expense to its owners, the people. This means that money would be spent directly into existence without any burden on its owners. This means that roads, bridges, dams, the Katrina mess, health-care, education would all be taken care of without further expense to the owners of a democracy. This is what true economic freedom looks like. It is not the twisted view that Alan Greenspan, Adam Smith or what anyone else is trying to pass along so that we may be kept as a society of legalized slaves.

Stephen Zarlenga’s book, “The Lost Science of Money” is the “gold standard” of the true nature of money. Check it out at www.monetary.org.

<<<<This ties in to something J. Richards wrote:, addressing L. Haller (Majority Rights):

The substance in your comment @8 is an excerpt that begins with the following fundamental premise of the Austrian School:

The reason is that a money under the control of the government and its banking system is subject to inexorable pressures toward continuing monetary inflation.

This is the key to understanding the Austrian School. When Rothbard wrote the article, the government only issued coins as money [as it still does], i.e., almost all money was created and controlled by bankers. The Austrian School starts from a big lie
.

Posted by danielj on January 04, 2012, 12:25 PM | #

Leon is opposed to fiat currency on principle. He doesn’t care if it is debt-free money created with the best interests of the race in mind.

Now comes the great untangling, I think. There seems to be an anti-Austrian movement, of unknown origin. It is more or less tied to the advocacy of a public interest, non-fractional fiat Keynesianism. Print and spend- no loans , no usury, no jew middlemen. The system is to be run by the State.

Here is where they get angry- they say that Austrians put the blame on government for creating money, when the blame should go to private, selfish bankers.

From above, Richards (quoting Rothbard, I think)-

The reason is that a money under the control of the government and its banking system is subject to inexorable pressures toward continuing monetary inflation

Richards see the word "government". He misses "its banking system". That means- the private system authorized by "it"- by the government. Austrians clearly know that banks make up the money. The inexorable pressure did come from the State- to finance a million things it should not be doing.

Anyhow, there is real pressure coming from advocates of what Dr. North calls Greenbacking. It is government (public spirited) inflation, without fractional, but not called inflation. There are two honchos now- Steven Zarlenga and Ellen Brown. Zarlenga is already working with Dennis Kucinich!


(Interview with Zarlenga) (part 1 of 6)

http://www.youtube.com/watch?feature...&v=TjyrAmiK1FI

from comments:

The fact is that Zarlengo does not want to abolish the Fed. His illogic is that an already corrupt government can do a better job running an already corrupt FR. In other words, replacing the devil you know for the devil you know even better. It's disgusting how the pretends to be this populist economist when he's in fact an apologist and a stooge for the FR System.

mariatechnosux 3 months ago

Gary North has been studying the Greenbacker movement for 45 years. Recently he debated Ellen Brown (Lawyer, not economist). She conceded and threw her support to Bernanke! The paper money brotherhood!

Those reading this far need to read Dr. North on this intriguing subject:

http://www.garynorth.com/public/department141.cfm

Last edited by Rick Ronsavelle; January 12th, 2012 at 05:28 PM.
 
Old January 12th, 2012 #3
Alex Linder
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I'm looking for people to explain money in their own words - as briefly and clearly as possible.

Rick - as for what you posted above, a few observations.

I don't trust Richards. I believe he has ulterior motivations. The fact that "GuessedWorker" lets him edit Majority Rights compromises that site. The reasons I don't trust Richards are many, but begin with him claiming Duke, Zundel and I are all controlled opposition. That makes him not wrong but a liar, a deliberate liar. The other folks who have made this bogus claim were associated with Eric Huffschmid (sp?), who made a graphic to that effect years ago. I belief the liar known as "The Skunk" may be associated with Huffschmid's crew. More recently, when I was commenting at MR (which was all erased, a thread of more than 1,000 responses - now gone, when I checked recently, unless I missed it), known liar Richards claimed VNN was obviously controlled because it made no mention of the Mossad being responsible for 9/11. I pointed out we have a sticky thread on that subject, making just that accusation, in one of our top two forums, and it has hundreds of thousands of views, probably more than any other single thread in this forum. So Richards is, as I say, a known liar, and should be ostracized by all honest men on our side.

Getting back to money...

Quote:
Now comes the great untangling, I think. There seems to be an anti-Austrian movement, of unknown origin. It is more or less tied to the advocacy of a public interest, non-fractional fiat Keynesianism. Print and spend- no loans , no usury, no jew middlemen. The system is to be run by the State.

Here is where they get angry- they say that Austrians put the blame on government for creating money, when the blame should go to private, selfish bankers.
Wasn't Banjo Billy pushing Zarlenga? I glanced at Z's book, it made no sense to me.

In my opinion, no one can be trusted with the counterfeiting machine. Just because someone says he's doing it for the good of the race is no guarantee of anything. It's like the argument over big government. Is it inherently bad for Whites, or is it just that the wrong people are running it? I say the former.

It seems to me, until I see it plausibly argued otherwise, that money must be tied to gold, and competing currencies allowed. That way we don't have to rely on fallible men because if they try to cheat, the market will reject their bogus currencies. The NS claims for government deficit spending come from two quarters - specifically, WN who are former ZOG employees (military or bureaucrats), and those who lack the intellectual ability to spot the problems in "best interests of the race."
 
Old January 12th, 2012 #4
Alex Linder
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In a White nation, every man with political power will claim he is operating in the 'best interests of the race.' No matter what he is doing. Can't you see someone like Gliebe using this term?

No one can be trusted with a counterfeiting machine. Therefore, the control must not be the goodness of the man or men in question, but neutral, outside forces - and these would be market competition. That's the only way to keep things honest.
 
Old January 13th, 2012 #5
Jimmy Marr
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The first problem I see with gold is that I don't have any. I imagine the same people, who have manipulated the current monetary supply, or ones equally inimical to me, already have a monopoly on gold, and I further imagine that any transition between the two currencies would be made murderously profitable to them.

My secondary thoughts go to the issue of societal trust, which is currently in insufficient supply to back a government controlled public central bank. My only rebuttal is that societal trust has been intentionally and artificially destroyed by multi-racialization, and if a race based government ever came to power, it would likely be indicative of a racial cohesion which had risen to heights never before seen in America, and in tandem with that increase would come a more mutually shared sense of social responsibility and societal trust, which might be capable of ensuring the solvency of race-bucks.

Free market libertarianism, on the other hand, would seem to have a tendency to encourage the same lack of trust by which it justifies its existence (can't trust anybody).
 
Old January 13th, 2012 #6
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Quote:
Originally Posted by Jimmy Marr View Post
The first problem I see with gold is that I don't have any. I imagine the same people, who have manipulated the current monetary supply, or ones equally inimical to me, already have a monopoly on gold, and I further imagine that any transition between the two currencies would be made murderously profitable to them.
You use monopoly like a leftist - unjustifiably loosely. I am sure in your area it's just like it is here - all kinds of places are trying to buy gold. But you can also find all kinds of placing selling. So obviously there's no monopoly anywhere. Here is a reputable dealer offering gold at a fair price. He will buy it back at a fair price too (unlike a pawn shop or we-buy-gold place you see):

http://coloradogold.com/

Gold is expensive right now. I wish I could buy some myself. But silver can still be had for a much lower price. Some people think silver will outperform gold over the medium term. I think gold is better, if it's a choice between them. I will proudly say again for about the twelth time, I repeatedly advised people here on this forum to buy gold when it was in the 500s. That was after it had already had a good run, but would still go up another 4x (at least). The fundamentals driving gold's high price remain in place - the government continues to spend, spend, spend and print, print, print. As long as that is the case, I would guess gold won't dip back down too far. But who knows for sure? Not me. What I do know is gold will never go to zero value, whereas, in time, all paper money will.

Quote:
My secondary thoughts go to the issue of societal trust, which is currently in insufficient supply to back a government controlled public central bank.
That's backward. The government cheats on money, and over time, people come to realize that. Even if they don't understand precisely what's going on, they know something is wrong. Then someone like Ron Paul comes along and explains precisely what the problem is, or at least gives his opinion.

Quote:
My only rebuttal is that societal trust has been intentionally and artificially destroyed by multi-racialization,
That's true, but the money debasement was already decades underway, with the fed created in 1912/3, and the income tax being started around then too.

Quote:
and if a race based government ever came to power, it would likely be indicative of a racial cohesion which had risen to heights never before seen in America, and in tandem with that increase would come a more mutually shared sense of social responsibility and societal trust, which might be capable of ensuring the solvency of race-bucks.
It's too tempting. That's the problem. If you can simply print money, the temptation to do it is too great to resist. There was cronyism in the original NS, and if any culture on earth can run even a bad system with probity, it's Germans. And as I said, there was crony capitalism under Hitler. The power to print money is the power to enslave people, and the hatred of being enslaved (Karen De Coster is a great libertarian example of this - read her responses to people commenting on her blog, she fairly froths with hatred) ought to be a great fire under our movement. There is simply no way anyone should be allowed to use the printing press to create inflation, and steal the purchasing power for his friends and political allies. The temptation is too great. It's just like what the Founders did with political - try to break it up into competing bodies and entities - the concept of checks and balances. If you can start up competition with government money, then there's a check on it. And you don't to rely on the honesty of an Al Gore or Bill Clinton or George Bush or his father or some nigger from Kenya or Erich Gliebe or anyone. The proof this position must be right is that ZOG goes out of its way to bust anyone who attempts to do anything they feel remotely threatens their 'legal tender' status.

Quote:
Free market libertarianism, on the other hand, would seem to have a tendency to encourage the same lack of trust by which it justifies its existence (can't trust anybody).
Um...I don't know how to explain this other than to say...people aren't trustworthy. Inherently. Call it original sin, or that's-just-how-it-is, if you're not religious, but that is how people are. Libertarianism takes the nature of the creature into account, it certainly didn't create him and doesn't try to change him. It works with what it has: it doesn't try to create a New Soviet Man or Aryan Superman - these don't work. Only a very few will legitimately work for 'a classless society,' or 'the White race.' By contrast, all people are selfish, and so that selfishness is what must be taken into account and harnessed. Businesses make money by serving people. To serve people, they must pay attention to what people want. By providing services people actually want, they get what they want. Thus, by foul motive, or mixed motive, we get the best for both parties. The other to get things is by force. Then you get your Great White Toilet Paper Famine of 2013. You get your committee of Soviet economic experts trying to figure out how many shoes need to be produced for Kyutworsk-Blatksy Oblast. It doesn't work.

Rely on people's honesty and incorruptibility? Are people who get control of political institutions more or less honest or corruptible than even average people? The answer is obvious. The honesty of politicians simply can't be trusted for anything. The best that can be done is build in incentives and make laws so that racial interests are aligned with white-human nature. And even then, the controls can be gotten around. But that's the best that can be done. It's up to every generation to protects its interests, racial and economic, and its freedoms. It's not a fight that can be permanently won or lost.

Last edited by Alex Linder; January 13th, 2012 at 08:46 AM.
 
Old January 13th, 2012 #7
Jimmy Marr
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You sure do type fast, Alex. I didn't even have time to round up this tune before you had refuted everything I said in mine. Kinda makes it all the more relevant by its alternate title E. Virginia Blues:

 
Old January 13th, 2012 #8
Jimmy Marr
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Some say that all the gold that is supposed to be in Ft. Knox is no longer there.
I don't know if that's true, but it also seems that the government has refused to make a physical inventory of the gold that is supposedly stored there, and that would seem to support the accusation. So, when I say "I don't have any gold", I think it may be true that the "we", as represented by the US government, don't have any.

I'm not sure about this. I learned about it through watching the MoneyMasters DVD available through the website by the same name.
 
Old January 13th, 2012 #9
Alex Linder
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Some say that all the gold that is supposed to be in Ft. Knox is no longer there.
I don't know if that's true, but it also seems that the government has refused to make a physical inventory of the gold that is supposedly stored there, and that would seem to support the accusation. So, when I say "I don't have any gold", I think it may be true that the "we", as represented by the US government, don't have any.

I'm not sure about this. I learned about it through watching the MoneyMasters DVD available through the website by the same name.
Yeah, I've heard that too. I don't what to make of it. It's like you hear that there was this huge amount of gold and money that went missing on 9/11. I think the gold was in the basement of building #7, and it was Rumsfeld who talked about this huge missing sum. What is an average person to make of this? People say things, there's no way of verifying them because there's no follow up or echo or real reporting.

Most of what I know is from reading The Creature from Jekyll Island, and from looking at what the government actually does, and reasoning backward from it. Take all the facts you know into account, a lot of times a pattern or outline seems pretty clear. If I see

- price of gold jump multiples over a few years
- government spending increase multiples over a few years
- general price rise
- mushrooming of places buying gold (even in small rural towns)
- government attacking the warehouse of the guy who deals 'Liberty Dollars'
- all libertarian analysis pointing the same way, giving me falsifiable information in even tones, and proving right repeatedly, almost all these analysts being much richer than i am...

At a certain point, it's pretty clear what's going on. The government is a giant, predatory, parasitic and prehensile beast. It is printing money to buy off the welfare leeches (niggers, military, bureaucratic and bankster) to stay in power, and this money-printing is nothing but a purchasing-power transfer from the white earning middle class to the jewish elite and its buddies and political pawns.

I guess the only thing that confuses me is stuff that probably doesn't matter: the details on how the money is created. The key is there's a government-empowered and -enchartered banking cartel has been given the right to counterfeit, which is the right to enslave the productive, which is the right to leech of the white race. Detaching the leech means

- dissolving the fed and the banking cartel
- getting rid of all regulations
- letting banks and speculators go bankrupt if they loan poorly
- allowing competing currencies.

I have nothing but contempt for anyone who believes in god or government. Verily do I assert there is no redemption through jebus or regulation.

But I'll listen to what people say on this point because I am unclear on precisely how money would work in a White Nation.
 
Old January 13th, 2012 #10
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So I'm in the market for explanations. Explain to me how money works in my prospective White nation. Where the federal government is nothing but Defenders. And the citizens live in microstates, allowing them to group per their proclivities.

How is money arranged in such a society?
 
Old January 13th, 2012 #11
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I'm unsure about these things myself, but I'll list a couple of thoughts.

1) When you say "counterfeit" I ask myself what underlying real currency is being falsified? In the case of America, I think this would be that currency which should be produced by the U.S. government, under the jurisdiction of congress, in accordance with the Constitution, which also seems to be what you are futuristically referring to as "counterfeit", which tells me that you are proceeding from an a priori perspective, that gold is the only legitimate currency, and that may be true, even though it is circular.

2) If we discard the possibility of continuing the Jew based private system, we are left with two alternatives, gold, or whitebacks. Since the Jews may already be in possession of most of the world's gold reserves, it doesn't seem like a good plan to start a fledgling White nation on a currency which is mostly in the hands of Jews. It also stands to reason that a fledgling nation will have growth needs that would best be served by an expandable money supply, but that same expandability could become a liability as the nation reaches maturity. So, maybe we need to think about a hybrid system?
 
Old January 13th, 2012 #12
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It seems to me, until I see it plausibly argued otherwise, that money must be tied to gold, and competing currencies allowed

Ouch, Alex. The idea of "tying" or "backing" money is a slippery slope error, leading directly to fractional loans-out-of-nothing.

Here is a scale of money, from good to evil (assuming gold for the moment).

Most good: gold alone is money. There may be (warehouse) receipts issued for gold- but these receipts ARE NOT CONSIDERED TO BE MONEY.

Middle: Fake gold standard, with fake receipts issued in excess of actual gold. Here is the crucial problem- these receipts are circulated and then generally called money. THEN THE GOLD IS MISUNDERSTOOD AS BEING A "BACKING" for the money. This is the error of "tying money to gold" as it implies that money and gold are two different things. What Greenspan advocated was one of these fake gold standards- loans from nothing with a little gold as "backing".

Evil: Pure paper/fiat, loanable or printable at will. Always evil- if done by the State "for the people", or privately for selfish gain.

We start with a free society- a free White society. People can live on a self-sustaining farm, or trade. They can barter, or use money. Money is whatever the buyer and seller agree it to be. It can vary within a community, or between communities. Gold or silver would be in the forms of coins, with a hard metal added. Recent "rounds" of 99.99% purity don't have the hard metal added and are not robust enough for day-to-day trade.

We start with coins. The physical coins can be exchanged. But what about partial amounts like .0146 ounces of gold? One cannot use a saw on a coin. . . We need checks for that. That requires banks. Electronic funds transfer is here to stay.

The funds at the bank must be considered the property of the account holder, not the bank!! The gold must not appear as an asset on a bank's balance sheet! In England, this was changed around 1848- deposits were henceforth considered to be bank property.

I just had a great idea, I think. Banks can loan- therefore there is the temptation to create loans from nothing- fractional reserve. What about a deposit bank, that kept money (PM coins) and allowed check writing, but did not loan? The depositor would have to pay for this. If such a bank did not loan, then it seems to me that would block fractional reserve!

100% GOLD IS TO THOUGHT AS 100% FIAT IS TO FANTASY.
 
Old January 13th, 2012 #13
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Originally Posted by Jimmy Marr View Post
I'm unsure about these things myself, but I'll list a couple of thoughts.

1) When you say "counterfeit" I ask myself what underlying real currency is being falsified? In the case of America, I think this would be that currency which should be produced by the U.S. government, under the jurisdiction of congress, in accordance with the Constitution, which also seems to be what you are futuristically referring to as "counterfeit", which tells me that you are proceeding from an a priori perspective, that gold is the only legitimate currency, and that may be true, even though it is circular.
Well...perhaps counterfeit is not the right term to use, but then again it's the main term associated with fraud related to money, so perhaps its use is defensible. I guess you could say that altho our money has long been decoupled from gold, and is backed by the full faith and credit of the (bankrupt) US, which is basically nothing, it still retains residual credibility and utility with everyday people. Even if harm has been done to the money supply, it's still the only one we have at the moment, and printing more notes, and using them to bail out ones friends is a form of stealing from people who have to earn those notes. Their purhasing power is reduced through no fault of their own, whereas the bankster buddies of the regulators have their increased through no effort or claim of their own. So I think it's fair to say those new printed bills are counterfeits. If there's a technically better way to put it, let me know.

Quote:
2) If we discard the possibility of continuing the Jew based private system, we are left with two alternatives, gold, or whitebacks. Since the Jews may already be in possession of most of the world's gold reserves, it doesn't seem like a good plan to start a fledgling White nation on a currency which is mostly in the hands of Jews. It also stands to reason that a fledgling nation will have growth needs that would best be served by an expandable money supply, but that same expandability could become a liability as the nation reaches maturity. So, maybe we need to think about a hybrid system?
Jews might find they have a different status under a White system, and that there might be certain costs to them as a result of their tribal historical behavior. And those costs could be exact in precious metal as well as blood. If competing currencies are allowed, then that should take care of whatever needs there are. If there's not enough gold, use silver, or conch shells or local scrip or...whatever people will accept.
 
Old January 13th, 2012 #14
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Quote:
printing more notes, and using them to bail out ones friends is a form of stealing from people who have to earn those notes.
That'd be bad enough, but if I understand the current system correctly, it is the lesser of two liabilities, with the greater one being the creation of money not through printing, but through lending it into circulation at interest, which creates a never-ending cycle whereby there can never be enough money in circulation at any given moment to satisfy the claims against it.

I'd settle for the lesser of two evils if it were within reach, and,in fact, would prefer it, until we can accurately assess the probabilities of possessing any precious metal, which is to serve as our currency.
 
Old January 13th, 2012 #15
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Originally Posted by Rick Ronsavelle View Post
It seems to me, until I see it plausibly argued otherwise, that money must be tied to gold, and competing currencies allowed

Ouch, Alex. The idea of "tying" or "backing" money is a slippery slope error, leading directly to fractional loans-out-of-nothing.

Here is a scale of money, from good to evil (assuming gold for the moment).

Most good: gold alone is money. There may be (warehouse) receipts issued for gold- but these receipts ARE NOT CONSIDERED TO BE MONEY.
1) Why can't silver be money too?

2) I understand the receipts aren't literally money, but if they're routinely exchanged and the gold is seldom seen, won't they become de facto money in the eyes of users, after a time?

Quote:
Middle: Fake gold standard, with fake receipts issued in excess of actual gold. Here is the crucial problem- these receipts are circulated and then generally called money.
How is that going to be avoided practically? Is there enough gold to circulate to make transactions simple and easy as using paper and electronics?

Quote:
THEN THE GOLD IS MISUNDERSTOOD AS BEING A "BACKING" for the money. This is the error of "tying money to gold" as it implies that money and gold are two different things. What Greenspan advocated was one of these fake gold standards- loans from nothing with a little gold as "backing".

Evil: Pure paper/fiat, loanable or printable at will. Always evil- if done by the State "for the people", or privately for selfish gain.

We start with a free society- a free White society. People can live on a self-sustaining farm, or trade. They can barter, or use money. Money is whatever the buyer and seller agree it to be. It can vary within a community, or between communities. Gold or silver would be in the forms of coins, with a hard metal added. Recent "rounds" of 99.99% purity don't have the hard metal added and are not robust enough for day-to-day trade.

We start with coins. The physical coins can be exchanged. But what about partial amounts like .0146 ounces of gold? One cannot use a saw on a coin. . . We need checks for that. That requires banks. Electronic funds transfer is here to stay.

The funds at the bank must be considered the property of the account holder, not the bank!! The gold must not appear as an asset on a bank's balance sheet! In England, this was changed around 1848- deposits were henceforth considered to be bank property.

I just had a great idea, I think. Banks can loan- therefore there is the temptation to create loans from nothing- fractional reserve. What about a deposit bank, that kept money (PM coins) and allowed check writing, but did not loan? The depositor would have to pay for this. If such a bank did not loan, then it seems to me that would block fractional reserve!
But what incentive would the bank have to exist in the first place? Sounds like about the same as a self-storage unit business?

Quote:
100% GOLD IS TO THOUGHT AS 100% FIAT IS TO FANTASY.
I'll remember that.
 
Old January 13th, 2012 #16
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Originally Posted by Jimmy Marr View Post
That'd be bad enough, but if I understand the current system correctly, it is the lesser of two liabilities, with the greater one being the creation of money not through printing, but through lending it into circulation at interest, which creates a never-ending cycle whereby there can never be enough money in circulation at any given moment to satisfy the claims against it.
Well, yes. To me all that is details and the same thing. The technical process by which they increase the money supply does not seem essential to me, although it seems to occupy a great deal of debate space. The point is, they are diluting the pool of money. And the usual point analysts make is they and their buddies get the first shot at using the new money - to buy assets before the inflationary waves move through the rest of the economy and raise prices. Then again, that would be pretty blatant, so what analysts usually say is that instead of simply running off a few trillion dollar notes and buying the country, which would be apparent to everyone, they increase the money supply slowly and subtly, through the lending you're talking about.

Quote:
I'd settle for the lesser of two evils if it were within reach, and,in fact, would prefer it, until we can accurately assess the probabilities of possessing any precious metal, which is to serve as our currency.
Anything can serve as money, it's just that gold and silver have been found excellent through all time, for certain reasons. The key is that the money can't be falsified to enrich some and impoverish the others by money-fraud.
 
Old January 13th, 2012 #17
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Now, Rick (or anyone), what did Hitler do and how does it pertain to the White-nation scenario you depict? We know Hitler's Germany was struggling under reparations burden imposed by the Allies after WWI, and we know that the Allies wanted these debts paid back in gold. A new White nation would not be under such burdens. What is good or bad about Hitler's taking Germany off the gold standard and backing his money with the slave labor of the German people?
 
Old January 13th, 2012 #18
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In thinking about switching to a hard currency, the timing of the switch is critical. That's win it's possible to make a "killing", and right now the Jews are poised to do just that. They've been creating money out of nothing and buying precious metals for a good long while and would profit immensely from any conversion at this point.

Let's start by printing whitebacks and using them to drive down the value of jewbucks until we can starve them out of their precious metals at no cost to ourselves and THEN switch to gold.

How about that?
 
Old January 13th, 2012 #19
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Originally Posted by Jimmy Marr View Post
In thinking about switching to a hard currency, the timing of the switch is critical. That's win it's possible to make a "killing", and right now the Jews are poised to do just that. They've been creating money out of nothing and buying precious metals for a good long while and would profit immensely from any conversion at this point.

Let's start by printing whitebacks and using them to drive down the value of jewbucks until we can starve them out of their precious metals at no cost to ourselves and THEN switch to gold.

How about that?
We're talking about a White country. There won't be any jews in it.
 
Old January 13th, 2012 #20
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Carl Menger


The Origins of Money.

Principles of Economics (Chapter 8, The Theory of Money and Appendices)

“Money is not an invention of the state. It is not the product of a legislative act. The sanction of political authority is not necessary for its existence.” --Carl Menger

Menger extended his analysis to other institutions. He argued that language, for example, developed for the same reason money developed—to facilitate interactions between people. He called such developments “organic.” Neither language nor money was developed by government.

"Although gold and silver are not by nature money,
money is by nature - gold and silver."

Abstract


In the recent series of papers on Honest Money - What It Is & What It Isn't - we have covered much ground. The last two articles were a synopsis of the first eight articles.

In this paper, we are going to discuss why gold and silver are the best mediums of exchange commonly known as money.

Money has four (4) basic economic functions:
Medium of exchange
Measure of value
Standard of value
Store of value


Besides the above four economic functions of money, money also has a legal or juristic function:

Legally accepted means for the payment of debt (especially to the State as taxes)

The earlier papers discussed all of these functions in detail; consequently, no further elucidation is required at this time. Refer to earlier papers for a complete explanation if needed. See Honest Money: What It Is and What It Isn't - Part 1 Money

Besides, the five (5) basic functions listed above, to be honest and sound money, the money-unit most also perform the following two additional functions:

Unit-of weight
Unit-of-Account


Weaknesses of Barter


Barter or direct exchange has three (3) basic weaknesses:
Mutual coincidence of wants between traders is necessary
Differences between various goods complicates direct exchange
Properly dividing and distributing different goods between parties is problematic

Indirect exchange and the use of money overcomes the above three (3) defects of barter, which is why it is used - it is a more efficient means of exchange. A sound monetary system is one in which the money-unit performs all of the above seven (7) functions.

Value and Price


In any exchange a definite quantity of one commodity or service exchanges for a definite quantity of another. Thus in every exchange there is a ratio of two numbers or quantities. This ratio represents, and is: what some call value, and others call price.

Utility and value are not intrinsic qualities within any specific commodity. If such were the case, we would always want more of that particular commodity, regardless of what supply of it we already had in our possession. Utility and value are extrinsic qualities.

The usefulness of a good is not the same thing as the physical qualities upon which one derives the usefulness accorded. All acts of exchange involve the ratio of the two items exchanged. A number of units of one item are exchanged for a specific number of units of another item.

To determine the value and utility of any given good, man uses subjective valuation comparisons of one commodity to another. Man desires certain goods, and he compares those that he wants to those that he has, to determine which afford the most utility.

Marginal Utility


The degree of utility that a good has is an expression of the value of the good desired by any individual consumer. Utility varies in constantly changing degrees. Man exchanges those goods that he possesses that are of lesser utility, for other goods, he believes to be of greater utility. Some refer to this as the theory of marginal utility.

Accordingly, within all exchanges there has been a valuation of the utility of the goods under consideration for exchange. The valuation is a number - a number of units of one good for another - a ratio of two numbers.

For example - say that one ounce of gold exchanges for fifty ounces of silver. As measured by honest weights and measures, gold is valued fifty times more than the equivalent weight of silver. Gold is by comparison of more value (according to measure by weight) than silver.

Properties of Money

We have seen that sound money must perform several different functions. This gives occasion to different properties that money must have in order to fulfill the many different functions at any given time - especially at the same time.

The consensus of all market participants determines what is to be money. We have seen the several different functions it must be able to fulfill. According to subjective value theory, as well as that of marginal utility, we see that money will be that commodity that has the least declining marginal utility or the most constant utility.

In other words, money must be the most marketable or saleable commodity. It must be readily acceptable in exchange for ALL goods in the market.
Throughout history, gold and silver are the two commodities that man has most often used and designated as money. If gold and silver only exchange by weight - and weight alone - they can and do perform all seven basic functions of money.

This multi-faceted utility is one of the main reasons gold and silver are money. However, there are also some physical qualities or attributes as well.
No other commodity can fulfill all these multi-complex functions, and possess the requisite physical attributes, which collectively determine that which is best qualified - as money.


Physical Attributes


Portable
Divisible
Indestructible
Fungible
Recognizable


Portable


If money is to be a measure of value over and through time, it must be portable or transferable through time and space, from one place to another. Nevertheless, there is an even a more important consideration regarding “portability".

Money must be a commodity that has a high value according to its weight and or bulk. In other words, money must represent value in a concentrated form or weight.

For instance - copper has value, but one would require tons of copper (quantity/supply) to conduct business (fulfill demand) - even on a private and personal level.

Many purposefully misuse and mistate this attribute of portability, trying in vain to tarnish gold by using the inconvenience of portability, as a reason that gold should not, or cannot be, the circulating currency. They say that it will be inconvenient to carry around on one's person the weight of gold necessary to use as the circulating currency. Hogwash.

Convenience


How much money, as expressed in dollar bills, does the average person carry around with them daily? One hundred or two hundred dollars - or could it be perhaps five hundred dollars?

We do not agree that gold should be valued in dollar bills: see Gold's Hidden Secret: The Moral Hazard of Fiat Money for details; however, for the sake of the discussion under review we will go along with the present state of pricing everything in dollar bills.

We will pick $200 dollars as the average amount of money that one carries about with them daily (and this is being quite generous). If gold and silver coin were the currency, how much weight would be required to carry on one's person to equal the $200 of purchasing power?

One ounce of gold is presently valued at over $500. A tenth ounce coin is worth $50 dollars - it is almost the same size and weight as the current penny. Silver is worth about $9.00 an ounce.

Just a couple of tenth ounce gold coins and a few silver ounces is all one would need upon their person. Furthermore, to carry a couple one-ounce coins of gold is of no effort, yet they would have the purchasing power of $1000.00 dollar bills.

Don't Buck The System

The excuse that gold and silver would be too heavy or bulky is just that - an excuse to circumvent the use of Honest Money.

Daily children go to school carrying backpacks that weigh 20 lbs. or more - enough weight to do damage to a young and developing body, yet no one seems concerned or cares.

Why is that? Perhaps it is because it is all part of the training: the indoctrination to grow up and become good little workers that borrow money and pay taxes. Tow that line comes to mind: but for who sir - why who else but me child - all good collectivists reply.

Larger Purchases

What of larger purchases such as cars or houses? How can one pay for those in gold and silver coin? Further to the point - what about foreign exchange and international trade, how can that be done with gold and silver coin?

Good questions - I am glad you asked. These issues are just more propaganda for the elite collectivists to meet their agenda, which is to collect more and more stuff - your stuff.

Back to the topic in question. Say you are going to buy a house. The house costs $500,000.00 dollar bills. The bank wants you to put down $50,000.00 as a deposit.

That would be about 100 one-ounce coins of gold at the present market price. A briefcase would suffice - and it would still weigh less than what our kids haul to school every day.

However, in today's modern world one would not have to transact business as outlined above. I believe that physical accounts of gold can be on deposit at the proper institutions (note I'm not saying banks) of one's choosing; and be accessible as a debit account presently is at the banks.

Physical gold can be electronically moved from one account to another, if done properly. Moreover, this can take place internationally, and in whatever sums are required to conduct international business and foreign trade. Businesses and nations would have bars of bullion on deposit to transact their dealings. The common man would have ounces on deposit.

Heck - that is even easier than carrying around paper money - and it is a lot more honest and sound.


Divisible

Divisibility was one of the main problems that direct exchange or barter could not overcome. It was very difficult to trade one half a cow, or one half of a new roof, or one half of a new handmade dress. This was especially true for goods that were alive or perishable.

Money should be easily divisible to facilitate the differences of values being traded. Gold and silver fit the bill to a tee. For gold, there are one-ounce coins, ounce coins, ounce coins, and 1/10th ounce coins.

Further division is unnecessary, as silver coins will provide for smaller sums. Larger amounts will be provided by bars of bullion and or electronically traded gold that are on account.

Silver can be coined to be available in one-ounce coins, ounce coins, ounce coins, and 1/10th ounce coins. For the smallest of sums copper pennies will suffice. If a demand for further divisions arose - a forthcoming supply would fill the demand.

Fungible

By fungible, what is meant is that an ounce of gold in England is the same as an ounce of gold in Australia, which is the same as an ounce of gold in Japan. In other words, gold is homogeneous - an ounce of gold is the same as any other ounce of gold.

This attribute fits perfectly with the above attribute of divisibility. It would be quite difficult to try to divide a commodity that was not homogeneous or fungible. Because gold and silver have this attribute, they are perfect choices for money.

Indestructible

If gold and silver are to be money, it is necessary for them to be reasonably indestructible. Money must not be subject to decay or rot. It must not tarnish and be impervious to the elements. Gold and silver once again fit the bill par excellence.

You can bury a one ounce gold coin, and dig it up 100 years later, and with a bit of a polish it would shine as it did the day it was buried.

Recognizable

If a good is to be money, it must be easily recognized wherever it is employed. Because of all the above attributes, gold and silver are easily distinguishable around the world.

The shine and luster of gold and silver has been recognized since the days of the ancients. Once again, this is another testament to its use as money - since the dawn of man.

We know of no other commodity that can simultaneously fulfill the seven (7) basic functions of sound money, as well as possess the above physical attributes. Gold and silver are two amazingly unique and sought after a commodity, which is why they are: precious metals.

La Piece de Resistance

Lastly, we have gold's most unique quality: its stocks to flow ratio. Most think that the reason gold is valued so dearly is because it is rare or hard to find.

This involves a bit of a misunderstanding. We will try to explain.

All commodities have a stocks to flow ratio. What this means is that there is a certain amount (quantity) of any given commodity above ground or available for consumption at any given point in time. This is its stocks or supply - a measurable quantity (amount).

Goods also have a flow ratio, which is the amount of the commodity that is produced each year - its yearly production or supply number. For items such as vegetables, it is usually one (1) year or less, for other commodities, it can be a couple to a few years.

Gold's stocks to flow ratio is approximately 75 to 1. This means that at the present yearly rate of production of gold, it would take 75 years to produce the presently existing above ground supply of gold. No other commodity even comes close to this ratio.

This is what makes gold so valuable. This is what gives gold its near constant state of marginal utility.

Man throughout the ages has given his support and acceptance to gold as money, which has cumulatively taken thousands of years of subjective valuation and processed it into an objective exchange value for the commodity most often used as money - gold. As the great, Carl Menger put it:

“Under such circumstances it became the leading idea in the minds of the more intelligent bargainers, and then, as the situation came to be more generally understood, in the mind of every one, that the stock of goods destined to be exchanged for other goods must in the first instance be laid out in precious metals, or must be converted into them, or had already supplied his wants in that direction.

But in and by this function, the precious metals are already constituted generally current media of exchange. In other words, they hereby function as commodities for which every one seeks to exchange his market-goods, not, as a rule, in order to consumption but entirely because of their special saleableness, in the intention of exchanging them subsequently for other goods directly profitable to him.

No accident, nor the consequence of state compulsion, nor voluntary convention of traders affected this. It was the just apprehending of their individual self-interest, which brought it to pass, that all the more economically advanced nations accepted the precious metals as money as soon as a sufficient supply of them had been collected and introduced into commerce. The advance from less to more costly money-stuffs depends upon analogous causes."

This is how a truly free market works - by the free choice of all market participants, as they collectively are the market. The State has no business in intervening within the markets, as the State is not in business - it does not produce goods for consumption.

The State should not be in control of the money power - the market should be in control of the money power. It is the sum total of all participants in the market that produces, brings to market, exchanges, and supplies, and thus fulfills, the varied wants of consumption.

Perhaps the question that should be asked is not why gold and silver, but why not gold and silver. Perhaps it is true that:

"Although gold and silver are not by nature money,
money is by nature - gold and silver."
 
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