Why not gold?

I’ve received many comments on returning to gold as the national medium of exchange.  Here’s my short answer on why I think it’s an insufficient solution:

A dollar lent at 10 percent interest compounded annually becomes 10 dollars in under 25 years.  That means that if the money supply were 100 percent gold, and if bankers lent out 10 percent of it at 10 percent interest compounded annually, in 25 years the bankers would own all the gold.  To avoid that, either the money supply has to be expandable — which means allowing fiat money — or the taking of interest has to be outlawed, as it was in the Middle Ages.

45 Responses

  1. On Wednesday 19th September 2007, President George Bush of the USA and Prime Minister Gordon Brown of the UK were very careful to keep something out of the mainstream media. On the quiet, and very much against their wishes, a new Global gold-backed banking system had been established. Both the USA Treasury and the Bank of England are now parts of that system. On the afternoon of that day, Henry Paulson, the USA Treasury Secretary, held secret behind-closed-doors talks with the USA Congress. He advised them that the USA had quietly joined this new Global Banking System, but they were not at liberty to talk about it openly. There was a complete media blackout on both sides of the Atlantic.

    The USA and the UK are in difficulties here. Quite apart from their public accountability and disclosure responsibilities, they have not got the volume of deliverable gold they need to survive the changes. Much of the gold held at the American Fort Knox Bullion Depository in Kentucky is not gold at all; it consists of facsimile lead bars painted a gold colour for presentation purposes. This is becoming noticeable as the gold paint fades. Where the original gold went, and who took it, is not yet clear. An additional point is that much of the USA’s gold reserves are listed as being Mint-Held Gold in Deep Storage. Dealers have always assumed that this means finished gold bars stored in deep underground vaults beneath places such as Fort Knox, Denver and West Point. The indications are emerging, however, that the term “Deep Storage Gold” is a euphemism for “yet to be mined gold”. It doesn’t exist in deliverable form; it is merely a paperwork forecast about future gold mining potentialities.

    In the UK there are problems too. Not all the gold held by the Bank of England is fit for delivery. The gold stored in the BoE vaults began to be accumulated in the early nineteenth century. It takes the form of gold bars, ingots and coins. Current methods of assessing quality have indicated flaws in the purity. Many of the gold bars contain cracks and fissures. The coins contain appreciable quantities of base metals. And much of the British gold lacks up-to-date assay certificates.

    With gold being central to the NESARA reforms, these problems are not inconsiderable.

  2. Is very interesting that the one book that I have wanted to read “The Web of Debt” is the one book that seems to have got lost from amazon.com. Ive never ever had a book go missing , but this is a first.hmmmmmm

  3. The founding fathers hated paper money. Madison called it ‘that wicked scheme.’ Jefferson was of the same mind. Anybody who thinks there is a debate about what the constitution meant in that area is either a moron or has an agenda.

  4. Jefferson changed his mind on that later. This is from my book:

    It would be several decades before Jefferson realized the villain was not paper money itself but was private debt masquerading as paper money, a private debt owed to bankers who were merely “pretending to have money.” He wrote to Treasury Secretary Gallatin in 1815:
    The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers and bankers pretending to have money, whom it could have crushed at any moment.
    Jefferson wrote to John Eppes in 1813, “Although we have so foolishly allowed the field of circulating medium to be filched from us by private individuals, I think we may recover it . . . . The states should be asked to transfer the right of issuing paper money to Congress, in perpetuity.” He told Eppes, “the nation may continue to issue its bills [paper notes] as far as its needs require and the limits of circulation allow. Those limits are understood at present to be 200 millions of dollars.”
    Jefferson wrote to Gallatin in 1803, “This institution [a private national bank] is one of the most deadly hostility against the principles of our Constitution . . . . [S]uppose a series of emergencies should occur . . . . [A]n institution like this . . . in a critical moment might overthrow the government.” He asked Gallatin, “Could we start toward independently using our own money to form our own bank?”
    The Constitution gave Congress the power only to “coin money,” but Jefferson argued that Constitutions could be amended. [etc.]

  5. Hi Ellen:

    I have yet to read your book as I just found your website so please forgive me if this is covered elsewhere. I am curious to know if in your book you review the legal meaning of words used in the constitution, the bill of rights, declaration of independence,etc. and compared the legal meaning to the meaning as commonly understood.

    For example, the Constitution may give Congress the right to “coin money” but the fiat currency we use is technically “legal tender” not “money” in the legal sense of the word.

    I started my blog [http://homepage.mac.com/drewterry/blog/DrewWerds.html] to record entries using Black’s Deluxe Law Dictionary legal definitions of words used in official documents, and how it differs from what we assume the words to mean. If you would like more information, please email me and I would be happy to help in any way that I can.

    And I will be reading your book. Thanks.

  6. Hi Drew, interesting blog! I think the Founding Fathers were intentionally vague about money in the Constitution. They argued about whether to allow Congress to issue paper money and they couldn’t agree on it, and they needed a document, so they just left it out.

  7. Hi Ellen,

    I am planning to read your book!

    In reference to the Founding Fathers on vagueness regarding paper money, isn’t Judge Roger Sherman’s insertion of the salient part of Article I, Section 10 a guide to their intent? “No state shall … make anything but gold and silver coin a tender in payment of debts.” This seems to tie in with the intent that Congress has the power to coin money rather than borrow fiat paper from a private banking cartel authorized to create it and loan it into existence at interest. Judge Sherman’s words seem to be very specific.

    Thanks in advance for an answer.

  8. Hi Carter, I agree, that’s what the Founding Fathers intended. But they immediately got in trouble because there wasn’t enough gold to go around. The farmers were protesting in the streets and the Founding Fathers were worried for their safety, and there were huge war debts to be paid and nothing to pay them with. So they resorted to letting Hamilton open a private bank that would issue paper money and lend it to the government. It was all done by sleight of hand, so it looked as if their paper notes were “backed” by gold. Thomas Jefferson said later they had been tricked. He thought Congress should take the power to create paper money back from the bank and do it as a public function. I’ve gone into quite a bit more detail in “Web of Debt.”

  9. I would suggest that a search of articles by or a discussion with Antal Fekete may provide some surprising information with regard to this subject.

    He advises that “letters of credit” are the short term financial instrument that allows a gold standard to be implemented without the problems you have alluded to. Also, a bi-metallic system of gold and silver can be an addtional complement.

    I urge you to review his articles or just contact him . This information is not commonly known.

  10. Thanks Newexpat, I was just reading that very article, and incorporated it into the revisions to my book. (Actually I was reading the article by Hultberg quoting Fekete.) Ellen

  11. Ellen:

    Am one-third through your book now. Of the hundreds of non-fiction books I’ve read, yours easily deserves a place in the top ten. Astonishingly well done and important.

    As for this Fekete/Hultberg stuff, I don’t understand a word of it. Will you please post your understanding of it on your site?

    I confess I’m pretty skeptical of gold/silver standards; what’s to stop foreign creditors from simply sucking out all the specie? If the Saudis, Chinese, and Japanese could exchange their declining US dollars for gold and silver bullion, wouldn’t they do that in an instant?

    –Syzygy

  12. I’m a bit late answering this! But yes I agree, if we switch to gold it will end just as it did in 1933 and 1971 — dollars will be swapped for gold till the gold runs out. The Fekete/Hultberg thesis is about “real bills.” The argument is that the gold standard only worked in the 19th century because it was supplemented with paper money in the form of invoices for goods (goods took a long time coming from Europe then). These invoices traded among merchants as if they were money, since they were “backed” by goods and could be redeemed in them. In other words, it wasn’t really a gold system but was an expandable paper money system.

  13. OR, you take away the right from the banks to loan electronic digits at interest and restore Congress’s ability to coin money and spend it, not lend it, into circulation, interest free. How about that?

    Besides, there is not enough gold to use it as a general medium of exchange.

    Learn more here: moneyaswealth.blogspot.com

  14. One more thing:

    It does NOT matter what you use for money, if you allow the banks (or any group) to loan it to you at interest, they will eventually own it all.

    The problem is not what you use for money – it’s HOW it gets into circulation.

    Loan it = BAD
    Spend it = GOOD

    • That’s true for private lenders, but if the government were the lender, the bank could be set up so they wouldn’t wind up owning it all. This is how it was done in the colony of Pennsylvania: the government bank prints $105, lends $100 at 5% interest, and spends the other $5 on things people need — roads, bridges, etc. $105 is now circulating in the economy. This money all comes back to the government as principal and interest. The government then lends the SAME $100 and spends the SAME $5, which all comes back again as principal and interest — no inflation, no government debt, and no parasitical syphoning off of profits to the lender.

  15. “A dollar lent at 10 percent interest compounded annually becomes 10 dollars in under 25 years. That means that if the money supply were 100 percent gold, and if bankers lent out 10 percent of it at 10 percent interest compounded annually, in 25 years the bankers would own all the gold.”

    Such a stupidity. With a gold standard fractional reserve banking wouldn’t be possible. So, the bankers wouldn’t own all of the gold. It may also be that fixed interest rates wouldn’t be possible as fixed interest rates is a consequence of fiat money and perpetual inflation.

    In short, with a gold standard there wouldn’t be easy money. Every investments have risk, so the bad investors will pay the good investors’ “intrests”.

    • “With a gold standard fractional reserve banking wouldn’t be possible. So the bankers wouldn’t own all of the gold.” The moneylenders were banned from England in the Middle Ages long before fiat money was invented, because they were lending gold at interest and were winding up with all the gold. The people were rioting in the streets so the king sent the moneylenders back to Europe. If you lend money at interest and the money supply can’t expand, the lenders quickly end up with all the money. That’s the nature of compound interest.

  16. “If you lend money at interest and the money supply can’t expand, the lenders quickly end up with all the money.”

    Only if the moneylenders always get back their money plus interest which is not the case. Even if they threaten, torture or kill their not-paying “customers” they won’t get all their money back. This means some moneylenders will go bankrupt, some not. Business as usual. Lending money has risks, too, as any other business. Otherwise you could claim that producing some goods and making profit on them is impossible as you will end up owning all the gold as people buy your products.

    Your reference about banning the money lenders in England has more to do with the Catholic doctrine that held that money lending for interest was a sin and Jews dominated this activity.

  17. Eve if you are right that there is defaults that does not solve the underlying problem. If a group worked in concert to get the gold and they had a higher percentage of gold than any other group they would eventually succeed. If the group had %10 at the beginning the default would be lower but as they gained control of higher and higher percentages defaults would rise. The 25 years is an example but if any group was actively trying to gain all the gold and started with a high percentage a 100 years would be an easy goal. So the idea that there would higher defaults can be used to question the 25 year time frame but not the fact that eventually a group could gain all the gold through interest alone.

  18. There is too much “ifs” in your theory. “If a group” you say. What about competition? Also, the 10% interest rate is way too much in case of gold. Do not project today’s interest rates, which is based on fiat money, to a system which uses hard money. Even in the fiat money era there was a time when negative interest was used in Japan. This will be more common with gold as goods production will most certainly outpace gold production (the same ammount of gold will value more in the future, while the fiat money values less and less).

  19. I’ve commented on this idea that Gold can’t work in the “questions and answers”, where the first 2 questions I think deal with this issue. The answers pretty much used the same claim, which I think are quite absurd. Since the issue came up again, here it is again:

    The answers to the first 2 questions are simply false. Regarding a fixed money supply (such as in a %100 Gold standard), the answers couldn’t have used a worst eocnomic fallacy to justify an expanding money supply. The issue is just too important to ignore and I believe it is important to provide an alternative response:

    The fallacy stems from the confusion between money and wealth. Wealth is measured in terms of production of real goods and services. Money is just used as a medium of exchange of such goods. There is no optimal amount of money to meet a given supply of goods. Unlike consumer goods, money only performs an exchange function, therefore “any supply of money will be equally optimal with any other” (see The Theory of Money and Credit, by Ludwig von Mises).
    Although more consumer goods or capital goods will increase the general standard of living, all that an increase in the money supply accompoishes is to dilute the purchasing power of each dollar. So the real measure of wealth is the purchasing power of the money and not its quantity. The purchasing power will always change so that a new equilibrium is reached between the money supply and total supply of goods. (See “The Mystery of Banking” by Murray N. Rothbard for more detailed explanation).
    So a growing economy with a fixed money supply is perfectly fine. An increase in purchasing power expressed in falling prices will accomadate the growing economy.

    The fallacy in the lender example with the lender owning all the Gold after 33 years is obvious for 2 reasons:

    1. It assumes the lender will hoard. It is an unrealistic assumption that you can make about any business (nothing special about lenders). The lender has to pay out salaries to his employees, pay the bills, consume goods and services for himself and his family, save in order to expand and grow, and continue to lend out any remaining profits. Remember that the Gold money’s only value is from its exchange function. It is worthless in a stored safe if it is never put back in circulation.
    2. For the sake of argument, even if one lender hoards his profits from the interest, so what? Remember from the above explanation: There is no optimal amount of money for a given supply of goods. All that will happend is for the money supply to shrink (monetary deflation), causing the purchasing power to increase (expressed in further falling prices in addition to falling prices as a result of economic growth). Of course this is assuming a more realistc initial numbers for the money supply then the stated example of one lender having 20% of the money supply.

    A true 100% Gold standard (we never had such a standard) would be a great protector of our freedom.

  20. There is no assumption individual lenders will hoard only that a concerted effort by a group of people or a country could come to control a majority of the gold supply. If this happened the same inflation deflation cycles we are currently subject to could happen due to the loosening or tightening of gold lending. Even though in the past the system was a gold FRB there is no reason not to believe the same imposition of panics and depressions could have been created on a %100 gold reserve through nothing more than a change in lending practices which contract or expand the amount of gold in the system.
    A completely transparent system under control of the government would not have these drawbacks that could potentially happen on a Gold standard. Now their is no way to say a gold monopoly would definitely happen but there is a possibility. Under a transparent national monetary system there is at least the ability to have oversight of the monetary system and therefore more control. This equates to taking back control of the country in not leaving it in the hands of hopefully benevolent masters of commerce. The biggest problem with the current system is that it has no oversight and basically operates for the benefit of the few at the expense of the many. With oversight and transparency to the public it would be much harder to defraud the public as this would cost the representative his reelection or worse.

  21. “group of people or a country could come to control a majority of the gold supply” – that is simply impossible! I have explained why it is impossible.

    I think your whole concept of money and credit is problematic. In fact, that is the major problem.
    A bank is suppose to be an institution that takes someone else’s money (savings), and lends it out for a fixed period of time in return for interest. The original loan does not belong to the bank, but to some individual who has decided to earn some interest on his savings. The interest is the revenue of the bank. The original sum of the loan does not belong to the bank. The loan belongs to someone like you. The interest is like any other revenue of every other business in the market. It’s used to cover the costs, i.e., wages, bills, profits, etc. There is nothing special about the services of a bank. A bank is not suppose to create money, but only lend it out. Even when it creates money out of “thin air”, it doesn’t own the money it creates, but only the interest it will “earn”. The money it creates eventually becomes a “liability” to some individual.

    Under a 100% Gold, there are no expansion and contraction anymore! You can’t expand Gold! The expansion is the fraud! If a bank expands on top of 100% Gold, it is essentially printing “fake” receipts for Gold. It is then counterfeiting. The only way it can do this is by:
    1. legalizing the practice (needs Government)
    2. evade free market competition that would put a serious hamper on the expansion process. (needs Government- create Fed, reserves requirement law, FDIC, regulations, etc….)

    You want to socialize a system that is already socialized! (or at least half way) What you fail to realize is that “Socialism” has many flavors. Government can retain the illusion of “private” ownership, but actually, it can still fully control the “means of production”, as it alredy does today to a large extent in the banking system. This was the German “Socialism” model in the 30’s. We’re not there yet, but we’re getting closer and closer.

    Gold doesn’t work for the Government and Banks! This is why they advocate against it. if it were good for the banks, they would welcome the idea.

    for fun, google:
    “Gold and Economic Freedom” by Alan Greenspan.

    An essay by Alan Greenspan from the 60’s before he became a big banker.

  22. “a concerted effort by a group of people or a country could come to control a majority of the gold supply.”

    This is possible as there is not much gold mines on Earth. However, you have to know that the output of all the gold mines is miniscule compared to the gold in circulation. Also, gold actually has to be mined not printed. Mining uses much more resources than printing, so the more you mine the more you pay for it which is not true for fiat money.

    Furthermore, even if a group controlls all the gold mines, it cannot dictate interest rates. I metioned earlier that a fixed interest rate is a creation of fiat money. You cannot promise a %10 interest to your clients if you does not have the mean to filfull your promise. Banks can promise it to you now, because they can go to the central bank for more money.

    You do not suggest that lending gold is also monopolized somehow and the people needs the gold of this monopoly so much that they agree to pay high interest for it, do you?

  23. I assume you are asking me.

    In a free unhampered market, interest rates are determined just like any other “prices” on the market, by the law of supply and demand. The lower the “time preference” of individuals, the more they will save, thus the more supply of credit, and the lower the interest rate. The goal of the interest rate will always such that demand and supply are in equilibrium, thus generating the maximum revenue for a given supply of credit.

    People acquire Gold as they do for any other commodity. Exchange! Using an “indirect exchange system” (money), you exchange your goods or services for that medium, i.e. Gold, Silver, what ever. You only need to pay interest if you desire a loan.

    As for a “monopoly on gold”, there really isn’t any justification to monopolize Gold, or any “money”. Although, I believe that under a true Gold standard, even if the Government retains a monopoly on minting, or charters a “private” mint to do the job, our situation would be greatly improved. But Governments have systematically broken their trust when it comes to money. It is better to leave the “money” issue to the market, and leave Government with its only desirable task of enforcing anti-theft and anti-fraud laws, that is prosecute any “counterfeiters” for example.

    If you are concerned about monopolies forming on the free market, then I challenge you or anyone here to point to any monopoly or even a cartel, which has successfully formed on the free market. That is without Government help.

    “output of all the gold mines is miniscule ” is exactly what makes Gold an excellent medium of exchange. It is why the free market chose Gold for this purpose over the course of history. And the fact that mining requires work is another desirable quality of such a medium. You make it sound as though you think it is a disadvantage, but in fact it is a big advantage.

  24. No, Dan. I was asking John.

  25. My position is that gold would be better than the current system but that a transparent national money supply could be even better. I think there are pitfalls with gold that could happen. First %20 of gold is owned by the current monopoly owners of money namely central banks and private banks. That still leaves alot of gold in the hands of individuals around the world but the transition to a gold standard would most likely put more gold into the hands of the central banks. The reason is that the transition to a gold standard would happen over time with much debate and this would signal to many people (especially in the know banks) to begin buying gold with what would soon be worthless paper. So we could then guess they would end up with more than %20 of the gold supply. Now to say that cartels or monopolies would not happen is naive as there are examples of loosely affiliated corporations banding together to fix prices through control of supply such as O.P.E.C. and it would not stretch the imagination that the same thing could happen with the loosely affiliated banks of today who are already working in tandem. If we had been under a true free market then there might of been competition between banks but our current system has mostly consolidated them turning them into what is basically a cartel. I think that such a cartel with a high percentage of above ground gold could loosely band together and gradually acquire more and more gold through interest which as Ellen stated could happen in a short time period (50 -100 years) also through the tightening or loosening of loan qualifications markets could be subtly manipulated to their advantage. Now it is impossible to say that this would happen but as I said before I believe it would be better to have transparency so that someone would actually be accountable which would put pressure in the right direction unlike the behind closed doors decisions of today.
    I do not believe inflation and wasteful government spending would have to be a problem under the system Ellen proposes. She proposes that the principal is loaned to someone such as a businessman or entrepreneur etc then the interest is spent as a tax revenue. As long as taxes were tied to production through loans as proposed there would be a limit on Government spending and if this rate was %5 or less that would equate to a drastic cut in taxes and would no longer require confiscation which should be completely illegal. It would be a mutually beneficial transaction and that would align with the spirit of the constitution to me anyway. Also as long as responsible loans were given where the loan approximately equaled out to the goods it was used to produce there would be no inflation. This would naturally be the case since if it wasn’t the borrower would not be able to pay back the loan since he did not produce enough goods to get enough money to equal what he borrowed. In this case either collateral would be acquired by the government bank and sold therefore balancing the loan or the person would lose his credit rating due to bankruptcy. If there was no collateral then the excess money would cause minor inflation just like what happens today.

    To me under this type of system Governments role should be minimal namely it should defend the borders, manage credit, law and order, basic infrastructure, education (with a drastic overhaul) possibly food and drug oversight and nothing else.

  26. I don’t want to comment right now on your proposal (or Ellen’s) per se because it generally amounts to “socialism”, which is an economic disaster, and I don’t agree with it, although we are already half way there anyway, but as for the Gold:

    1. Nobody is going to change the current system unfortunately until the fiat system collapses anyway. You are delusional if you think somebody will even bother. So your concern about people loosing faith in the dollar because of talks is not relevant in my opinion.

    2. The Gold in the Fed’s custody belongs, by law, to the Treasury of the United States. This is Gold that FDR confiscated from the people. If you were to go to a Gold standard, that Gold would be turned over back to you. You are getting into the transition detail, but I am mainly focusing on the “steady state” or long term, neglecting transition.

    3. We definitely don’t want a Central Bank anymore. The best thing would be to abolish the Fed and replace it with nothing! A Central Bank is already a tool of “central planning”, Remember, I am advocating for a free market.

    4. Once again, the concern about the bankers owning all the gold, or monopolizing the money supply, is brought up. I had addressed this issue in the previous post, it’s simply false. If you’re not sure about the arguments, I will be happy to elaborate. Also, your concern about interest rates manipulations are only valid for a NON free market system. Are you worried about the food chains manipulating prices?

    5. OPEC is hardly an example of free market cooperations forming a Cartel. It is indeed a Cartel, but not a result of free market. If it were, you wouldn’t be talking to Government ministers when asking them to increase production. Banking in a “free market” is not some special and mysterious type of business. It is no different to any other business. Therefore, the case for Cartels or monopolies forming is weak, there are just too many incentives working against it. Theoretically, it is possible that some group of firms may attempt to form one, but if it works against the consumer’s interest, it’s life span will be extremely short. One reason (among many) is that a new competitor will quickly enter the market to break the Cartel. If a Cartel of shoes keeps prices artificially higher then the free market “clearance”, a new shoe store will take advantage and offer the shoes at a lower price taking away all of the Cartel’s customers. you would need Government to enforce the Cartel with special privilege legislation to keep competitors out.

    I’ll say it again, the current system IS already the result of Government.

  27. It is worth reading EC Riegel on the money power and its flawed conception in the US Constitution. Riegel was of the opinion that the money power, ie., the power to create money inhered in each private purchaser. Private Enterprise Money, ch 2

  28. Warren,

    The final paragraph of the reading:

    “Since to create or issue money is to buy, and there is no other way money can spring into existence, the government spending program leads inevitably to government ownership and dictatorship and citizen disposession and subjection. The challenge is clear. Either we shall assert, through our money creating and buying power, mastery over our economic and political affairs, or the money creating and buying power will continue to be asserted by government to our utter degradation. ”

    I may have to read this more throughly, because I kind of skipped around. The writing style was a little too indirect and complex in my opinion. However , would you agree that the following is compatible with what he says?

    1.Money is a commodity that can only develop from a barter system. No government can initially issue “money” by decree, or by any other form of collective agreement. Money has to develop in a free market. (conclusively shown by Ludwigh Von Mises)

    2.The only realization of “mastery over our economic and political affairs” and to avoid “government ownership and dictatorship and citizen disposession and subjection” is an unhampered free market. In a free society, “Money” and Government should be separated just as “religion” and government.

  29. I believe the socialism argument is a straw-man. It is an oversimplification that does not reflect reality. The basic tenets of socialism is a lack of property rights and Government control over distribution, prices, and wages. In other words a complete control of the means of production. Socialism is a problematic system because it removes competition and therefore much of the motivation to increase efficiencies. Socialism also removes the efficiencies created by supply and demand forces by centrally deciding the best allocation of resources. A small group of people trying to centrally decide how to use resources cannot compete with a large amount of competitors methodically searching for the best solution. As long as competition, private property and supply and demand forces remain in an economy it is very hard to call it socialism. Now as long as a nationalized bank gave loans to businesses and people who could repay them using objective rules there would be no problems that could be related to the problems of socialism since supply and demand and competition would be unaffected in the general economy.

    I also agree that no new system will be implemented until the current system collapses but I do not presume to know what new system would be chosen by a democratic society it may end up being a restart of the current one or something completely new. My opinion about gold and banks is based on the fact that the last 90 years have severely distorted the banking sector into a monopoly. Just because a gold standard came into being would not mean a reversal or disappearance of the last 90 years of bank consolidations and that is the reason I was comparing it to O.P.E.C. You said ” If a Cartel of shoes keeps prices artificially higher then the free market “clearance”, a new shoe store will take advantage and offer shoes at a lower price” I am saying the existing banking conglomeration would not have to keep prices artificially high but just work together to acquire more and more gold until they are essentially a monopoly. As for the Gold reserves being in the possession of the treasury I have looked and can find no audit of the physical gold reserves so unless you can point to some proof (as in an audit) of where it is and who owns it I would say that point is suspect.

    As I said I believe a gold standard is better than our current system but the risks of manipulations by a closed door private sector with a gold standard is more dangerous than the risks of manipulations by a transparent national banking system controlled by government (or we the people) in my opinion. This system which was implemented by Benjamin Franklin in Pennsylvania created prosperity without inflation and to me seems like a very solid economic system which would not need to be centralized.

  30. Sorry, NHA above was me.

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