The After-the-Fed Solutions Debate Begins: Greenbackers Vs Goldbugs

Eric Blair just framed the debate in this very interesting way, posted on the Republic Broadcasting website today —

The After-the-Fed Solutions Debate Begins: Greenbackers Vs Goldbugs

. . . With all the recent mainstream talk and speculation about the end of the Fed, it is time to debate solutions for the future of America’s currency. This may indeed be the most important discussion of our lifetime.

. . . The debate between the two most popular proposed solutions of adopting the Greenback or the Gold Standard has just officially begun. Last week, Gary North, a Goldbug and author of Honest Money, wrote a scathing attack of Web of Debt author Ellen Brown, a Greenbacker. . . .

Passions already seem to be running high in the opening round of this most critical debate that will surely shape the future of our economy and society. Notably, both sides of this argument are in agreement that the Fed is a corrupt organization that must be ended. North acknowledged that Ron Paul and Ellen Brown share this common ground, but says the Tea Party movement (liberty movement) has “no economic understanding” and “They cannot distinguish Ron Paul’s opposition to the FED, based on the gold coin standard, from Ellen Brown’s opposition, based on a fiat money standard. They are intellectually defenseless.”

It seems a bit arrogant of North to suggest the liberty movement is confused about why Ron Paul and Ellen Brown support ending the Fed, and it’s also disingenuous to say that one side of the growing movement is “intellectually defenseless” because of disagreements about the solution. Especially when Brown’s public banking movement appears to be immediately workable and is gaining ground with the first pragmatic step being establishing state banks — as proven in North Dakota — which has a state-owned bank and boasts the lowest unemployment and the only budget surplus of the United States. . . .

Read the entire post here.

 

64 Responses

  1. Eric Blair has posed an interesting question and I hope that as monetary reformists, “gold bugs” and “greenbackers” can unite under a common purpose. Even united, our numbers are small and time is running out.

    Respectfully, I think Eric has missed the bigger issue that must be addressed as the specie of money is a secondary or tertiary concern.

    Henry C.K. Liu frames the issue as sovereign debt versus sovereign credit and Byron Dale suggests it is between debt money and wealth money. Either terminology contrasts the fundamental choice.

    Simply put, our sovereign nation may issue bonds (instrument of debt) or equally dollars (instrument of credit/wealth). In either case, we as a nation solely back up every dollar or bond. Thomas Edison explains the difference much better than I ever could:

    “If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also…Both are promises to pay, but one fattens the usurers and the other helps the people. If the currency issued by the Government was no good, then the bonds would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges…”

    http://www.michaeljournal.org/appenD.htm

    Why should we borrow, solely with our credit and collateral, from banks that have no money – instead they hold a monopoly given by us to monetize debt – for virtually free.

    If we can agree on this important fundamental, then the specie of money and implementation become the next issues to be discussed.

    The specie of money really doesn’t matter if we choose to continue with the privately owned debt based system (Federal Reserve). Essentially, we rent our money and do not own it. This becomes more clear when we recognize that all money is temporary, it is created as debt and destroyed upon principal debt repayment.

    If we create our own money as a nation, then the specie of currency may matter. But, I suggest that the United States does not have near enough gold to back a national currency so the point is mute.

    At best, the United States may hold 8,100 metric tonnes of gold which is woefully inadequate – see my post linked below for more concise numbers:

    https://webofdebt.wordpress.com/2010/10/08/response-to-gary-north/#comment-9678

    Why do I suspect that the U.S. doesn’t have even 8,100 metric tonnes of gold? Three reasons:

    1) Did the U.S. “sell” 5,000 tonnes of gold between 2007 and 2008?

    “The United States Geological Survey [USGS] publishes monthly Mineral Industry Surveys designed to provide a macro-import/export-overview of the U.S. precious metals [gold] industry. The data in these surveys is supplied to the USGS principally by industry trade groups such as the World Gold Council as well as official sources like the U.S. Census Bureau.”

    3,000 tonnes sold in 2008
    http://minerals.usgs.gov/minerals/pubs/commodity/gold/mis-200902-gold.pdf

    2,000 tonnes sold in 2007
    http://minerals.usgs.gov/minerals/pubs/commodity/gold/mis-200802-gold.pdf

    2) Evidence that the gold disappeared during the 1960s

    “While the US pretends to own some gold, the question is have we been lied to about US gold holdings? In other words, are the gold reports from the US all paper stories which lack any presence in actual physical gold?

    Starting in the late 1960s and continuing on until the 1980s, a number of prominent Americans began to question the official US government and Fed news releases about the status of the US gold supply–most of which was allegedly secured in vaults at Fort Knox, KY.

    In his book on “Critical Path,” the well known and respected Buckminister Fuller argued that most or all of the gold allegedly stored at Fort Knox had been whisked out of the US by the late 1960s. Journalist Tom Valentine picked up on the story in the 1970s and said that all of the world-trade gold had been removed from Fort Knox in 1968, leaving behind only some poor quality, orangish-looking, melted down, gold coin metal from the government seizure of 1934.

    Also, in the 1970s, a vey intelligent and perceptive man named Edward Durrell began looking at the official US and Fed statistics and data on gold. He did some simple arithmetic of starting with the alleged balances and adding and subtracting additions and removals. Inevitably, he kept coming up with ending balance numbers which did not equal the alleged balances per the US authorities.

    However the most prominent person to speak out on the missing gold was Dr Peter Beter (1921-1987), who was an official with the US government during the rule of JFK in the early 1960s. As was true with others, Beter claimed that most of the Fort Knox gold had been removed and was no longer stored there.”

    http://news.goldseek.com/GoldSeek/1222841340.php

    3) Has the private Federal Reserve actually owned all U.S. gold since or before our bankruptcy of 1933?

    http://jessescrossroadscafe.blogspot.com/2009/10/how-much-gold-does-us-have-in-its.html

    One thing that troubles me is that some gold bugs would prefer an international currency partially backed by gold rather than the U.S. reasserting its sovereignty and financial independence by issuing its own national currency.

    For example, at the “Single Global Currency Association” website, a Ron Paul quote appears on the same page as quotes from the BIS, Alan Greenspan, Paul Volcker and the Federal Reserve. Ron Paul is quoted from the Congressional Record…

    “There’s nothing to fear from globalism, free trade and a single worldwide currency…. The effort in recent decades to unify government surveillance over all world trade and international financial transactions through the UN, IMF, World Bank, WTO, ICC, the OECD, and the Bank of International Settlements can never substitute for a peaceful world based on true free trade, freedom of movement, a single but sound market currency, and voluntary contracts with private property rights…. The ultimate solution will only come with the rejection of fiat money worldwide, and a restoration of commodity money. Commodity money if voluntarily and universally accepted could give us a single world currency requiring no money managers, no manipulators orchestrating a man-made business cycle with rampant price inflation.”

    http://www.singleglobalcurrency.org/governments.html

    If we want to take back our republic, we must be first be financially independent and free from the debt slavery of the international banking cartel.

    Larry

    • Thanks for the RP quote. I fear that good man fails to realise that government money should pure fiat and good for only government debt and that private monies should only be good for private debt.

      We need separate money supplies, one for each sovereign government and any number of private money supplies good only for private debt.

      That should satisfy everyone worth satisfying.

  2. It seems to me the two functions of money are: one to facilitate trade and two as a store of wealth. Fiat money is ideal for the first function while gold is perfect for the second. As concluded in the article a combination of both money systems should be able to be accomplished.

  3. It’s a no brainer really.

    Gold is to cumbersome and has always been corruptible.

    Fiat (provided not easily counterfeit and interest free) is simply (in some form) a ‘certificate’ which ‘says’ you have done “this much work”, or that “I own this”, or that “I am old, done my bit and now need some money”.

    Tally stick, piece of paper, whatever.

  4. BTW Helen you were right about the original Commonwealth Bank, though it’s all a bit muddied now.

    And, for instance, there was the Rural and Industries Bank of Western Australia.

    Plus (not just in Australia) there were “cooperative societies”.

    • Sorry about the name stuff-up earlier Ellen … I have been kinda busy and distracted

  5. The question is not fundamentally what we use for money, but whether the money system is publicly or privately managed. Who controls the money?

    Money is power. Is the money power a private prerogative or a public one? Another way to frame the question: are we democratic or not? In a democratic system, the money power belongs to the people. In non-democratic systems, the money power is exercised by unelected sovereigns and oligarchs.

    All money is fiat money because its use as a representation of value is enshrined in law or custom, which is common law. Gold or any other commodity used as money has no magical self-regulating virtue. Gold advocates believe that the scarcity of gold is a virtue that prevents inflation, which is like praising a lack of food because it prevents obesity.

    A publicly owned monetary system is democratic; a private monetary system is not. We are nominally a democratic country, but in reality we are an oligarchy.

    The question is power. The only power available to the vast majority of individuals called “the people” is government operated by and for the same. Wealthy minorities organize and create influence far beyond their numbers by virtue of their control of the monetary system.

    Without government, there is no democracy, no free market, no economic justice. The anti-government rhetoric most commonly associated with hard money advocates, is anti-democratic.

    The money question is a question of whether or not we will become a democracy after these 234 years. At present we are a democracy in name only.

    • Agreed 100%.

      • hey I did not know that you were here too.

  6. […] can view commentary on the debt here and […]

  7. As I feared, Gary North wants government privilege for gold based money:

    “The government does have the right to establish the form of money that citizens must use to pay their taxes. The government should limit itself to a statement regarding the weight and fineness of the tax coins. If private enterprise produces coins that meet these standards, the government must accept such coins as valid for the payment of taxes. The government lawfully controls the form of taxation; but it should not have any power to monopolize the production of coins. Governments have always asserted this authority, and they have always done so to the detriment of liberty.” Gary North from http://www.lewrockwell.com/north/north895.html

    So holders of alternative private currencies, such a common stock, would have to buy gold from the gold-bugs in order to pay their taxes. That make Gary North a gold-bug not a libertarian, imo.

    • Hey libertarian Gary North defenders,

      What do you say now?

      • I say the basic ignorance of what money is or why it has value, and a complete misunderstanding of what a free market is abounds at this site.

        This site has no value. Good riddance.

        • Dimoose,

          I am sorry you feel that way but I can honestly say I am more libertarian than Gary North. It should pain me to say that since his book “Honest Money” sparked my interest in ethical money creation. As for Ellen’s ideas, they are partially correct. No one should create government money but the government. However, it should only be legal tender for government debts, not private ones.

          But I have hope that Gary will see the error of his way. Money is a mind-boggling topic and no mere human understands it completely is my bet. Thus we need the maximum possible liberty to experiment. That does not include any private money or class of monies such as gold being privileged by government. Liberty is liberty and gold is gold. They are not necessarily synonymous.

    • You here too mate!

      • Yep. I am a libertarian and it is now apparent that Gary North isn’t. I can’t let him give the true libertarians a bad name.

  8. I thought it was fairly clear that the next world reserve currency will be backed by CARBON CREDITS, which are in infinite supply and easily manipulated, with the ability to control entire populations and everything they do.

    I also thought it was clear that the IMF and World Bank were planning to create a new world treasury out of the IMF. So, you can end the Fed, but all that’s happening is you are playing into the Hegelian Dialectic and in return you end up with something far worse than the Federal Reserve.

    Be careful what you hope for. Address the planned alternatives in your argument.

  9. Gottfried Feder understood money and what it should be backed by. This is very good although you must read German.

    The Manifesto for breaking the Chains of Gold

    http://www.archive.org/details/DasManifestzurBrechungderZinsknechtschaftdesGeldes

    Worgl experiment is worth looking into.

    http://alt-money.tribe.net/thread/70e5eb29-853d-44ca-9faa-b789d1757037

    http://pediaview.com/openpedia/W%C3%B6rgl

  10. F.Beard:

    “Liberty is liberty and gold is gold” I’d like to use it in a sentence.

    Since gold coins were confiscated by the government under Executive Order 6102 we no longer had the liberty to use them as money. That left bank notes and Federal Reserve notes to circulate as money.

    Who benefited?

    • Fine. Let’s get back the gold from the Fed but not as legal tender coins. Nor should gold or silver or any commodity be accepted for government debt.

  11. Precious metals are and have always been the most manipulated markets in the history of our species.

    If they were really so magically reliable and self-regulating, the Roman Republic would not have had to mint cheap copper money in order to become the envy of the ancient world; King Henry I would have seen no need to institute the Tally Stick system of money so that England would grow into the mightiest power on Earth over the next seven centuries; and the American Revolution would’ve been entirely unnecessary for the People of the colonies to preserve their economic sovereignty and pursue prosperity.

    Contrary to libertarian propaganda, Lincoln’s greenbacks never suffered any severe devaluation, which is amazingly impressive given the strenuous circumstances under which they were issued. Another lie is that the hyperinflation of the Continental was due primarily to overprinting, when in fact it was British counterfeiting during the war that did most of the damage.

    There are also historical facts the libertarians simply ignore altogether, like the successful experiments in government-issued “fiat” currencies throughout the American colonies before the Revolution.

    Gold has never succeeded in keeping the total volume of circulating medium balanced. Never. Not ONCE. Physical coinage was chronically plagued by hoarding, resulting in devastating deflation. As for bank notes, fractional reserve lending has repeatedly inflated gold-based monetary systems into oblivion. Both situations occurred due to the same reason: Productive economies will always grow to the point that gold money becomes insufficient and unworkable. The response to this problem by financial oligarchs has always been to either make physical gold scarce or to destroy the purchasing power of bank credit. Either way, you, the citizen, gets screwed.

    Then you have the even more ridiculous monetary solution promoted by the Austrian School to have a “free market” of competing currencies. According to them, voluntary choices by free individuals in a market place will produce effective and stable money; they also claim this to have been more or less the manner in which gold came into historical prominence. This thesis has absolutely no basis in fact and is simply another dogma in the anarcho-capitalist religion of the Austrian School.

    First of all, gold did not achieve widespread use as money through any sort of market process within general populations. Gold was eventually sought after because GOVERNMENTS coveted it. Monarchs and upper social classes loved to adorn themselves with it as a display of status. Ruling political bodies had ornamentation built from it. Sovereigns then declared gold valid for the payment of taxes, which led to gold being circulated as a medium of exchange.

    By its very origin, gold, like every other major form of money throughout time, is fiat money.

    As for the concept of a market featuring competing currencies, the actual existence of it is extremely rare in organized civilization. You need a universal monetary standard for an economy to function properly. Whenever so-called free markets for money did arise, they were always done away with because they were too chaotic and subject to a greater degree of fraud. During the period in America immediately following the Revolutionary War, we had a market of competing currencies. As Wikipedia points out:

    “In the last decade of the eighteenth century the United States had just three banks but more than fifty different currencies in circulation: English, Spanish, French, Portuguese coinage, scrip issued by states, cities, backwood stores, and big city enterprises. The values of these currencies were wildly unstable, thereby making it a paradise for politically indifferent currency speculators thriving on uncertainty. In addition, the value and exchange rate was almost always outdated or unknown by the party agreeing to receive it, especially the farther it moved away from the coast; and because of distances, primitive roads, and absence of communications technology, values were not only unknown but unknowable as well.”

    There you have it. Austrians might claim that the various currencies were not all allowed to trade freely or that modern information technology would preclude valuation problems today, but those two points are moot. The fact of the matter is that this period in American history is the closet example we’ve had to what the Austrian School advocates and it was a miserable failure.

    In the context of this debate, Americans need to recognize Austrian Libertarianism for what it is: A movement originally funded and promoted by the eugenicist Rockefellers and other criminal elites. A movement that wraps itself in Old Glory while espousing principles in opposition to what the Founding Fathers actually stood for. A movement that thought decimated homeowners should’ve been foreclosed on when it was the banks that deliberately issued unpayable loans as an asset-stripping operation.

    Remember all that whenever you’re presented with one of their “ideas” in the monetary debate.

    The Constitutional question, I think, is hardly a question at all. Congressional issuance and tenderization of nonmetallic money is perfectly in line with the original understanding of the coinage clause. Rob Natelson, a prominent 10th Amendment advocate, did brilliant research on this for a 2008 volume of the Harvard Journal of Law and Public Policy:

    http://www.harvard-jlpp.com/wp-content/uploads/2009/02/31-3/Natelson%20Online%20-%20Paper%20Money.pdf

    And even if I was wrong and the Constitution did specifically mandate that precious metals be the national money, the Constitution was not ratified by God. It was ratified by imperfect humans, and if necessary, we can amend it.

    • Very good.

      OK I am in Australia and so have nothing to say about the Constitution … except for the possibly inflammatory comment that it has failed.

      Common Law has obviously failed too … so I do not want to get into debate of one against the other. BTW I am apolitical and what most people would call ‘an atheist’.

  12. cross-posted from “Response to Gary North”
    North is definitely wrong … but Brown is not entirely correct either.

    Those who control large quantities of gold can, under the gold standard, manipulate the money supply, causing expansions and contractions, and can rip everybody else off by timing the market.

    Market-determined interest rates are a legitimate way to help ensure that resources are allocated efficiently.
    There is nothing wrong with the Central Bank loaning out money … the principal and interest paid back to the Central Bank can be retired from circulation, and new loans can be made so as to keep the money supply expanding at a rate which ensures zero inflation.

    reply posted by Zarepheth:

    The problem with a central bank – or any institution – creating our money supply by lending it at interest, is that it quickly makes the lenders “winners” in the market while everyone else becomes “losers”. The mechanism of interest ensures that ownship of all the wealth is transferred from the producers of wealth to the producers of money. Although money is necessary for large, complex societies, there is no valid reason to give those who produce money a significant economic advantage over the rest of society.

    And that is what Ellen’s book is all about. In the current system, the banking and finance industry has an unwarranted economic advantage over everyone else and rather than using that advantage to serve all of society, they use it to serve themselves at society’s expense. This power is left in the hands of a privileged few who can use their money to manipulate our political, legal, and economic systems for their own benefit. The consequence is that most people, even in the wealthiest nations, feel like they are spending their lives running a rat race and getting nowhere.

    Ellen’s proposal is to move the money creation power into public hands, keep its operation open, honest, and accountable to the people. Hopefully, this will level the playing field between individuals and the banking industry. It should also cause the flow of wealth to shift from going into private hands and instead go to the public. So long as the public at large has ready access to how the government spends that wealth, they can quickly demand it be spent to benefit everyone – perhaps by improving public infrastructure, public services, lowering taxes and interest rates, and if there is still wealth left over – handing out national dividends to each citizen.

    • “There is nothing wrong with the Central Bank loaning out money … the principal and interest paid back to the Central Bank can be retired from circulation, and new loans can be made so as to keep the money supply expanding at a rate which ensures zero inflation.” PBRF?

      Please use quotes or italics so people can tell what you are saying and what over people have said.

      But to the point.

      1) There should be no central bank. The government should never borrow money from anyone. It has a sovereign right to issue money. However, that money should ONLY be legal tender for government debts (taxes and fees) not private ones.
      PBRF

      2) No one should be able to borrow money from the government since the government is in effect a source of new money. So the purchasing power for that new money is in effect taken from all money holders. So a loan from the government to a private individual or corporation would in effect be a government transfer of wealth from one group of citizens to another and typically from the poor to the rich.

      • F. Beard said:

        >> [i]”1) There should be no central bank. The government should never borrow money from anyone. It has a sovereign right to issue money.”[/i]

        The Central Bank should be a part of the government. I think we agree here.

        >> [i]”However, that money should ONLY be legal tender for government debts (taxes and fees) not private ones.”[/i]

        No comment on this …

        >>[i] “2) No one should be able to borrow money from the government since the government is in effect a source of new money. So the purchasing power for that new money is in effect taken from all money holders.”[/i]

        It’s true that the purchasing power comes from all money holders. But new money has to be created otherwise you will suffer deflation.

        Once new money is created, there has to be a market determined way of using it most efficiently. You do not want to rely on a committee to decide how to use the money.

        >> “So a loan from the government to a private individual or corporation would in effect be a government transfer of wealth from one group of citizens to another and typically from the poor to the rich.”

        Efficient deployment of resources is achieved by loans from the Central Bank (which is a department of the government) at market determined interest rates. The borrowers benefit by getting access to capital, and the lenders (who are the people as a whole) benefit by earning interest.

        • “It’s true that the purchasing power comes from all money holders. But new money has to be created otherwise you will suffer deflation. ” PBRF

          The government should merely spend new money into circulation and tax it out of circulation while maintaining a slowly growing money supply at less than the average economic growth rate of the economy. That way, no one is cheated by price inflation nor does the money supply ever shrink. To provide the initial pool of money the government could and should bailout the victims of the current system (the general population) by sending every American adult a big fat check of new debt and interest free full legal tender fiat (United States Notes). Later those notes should be withdrawn from circulation and replaced with limited legal tender (only good for government debt).

          Once new money is created, there has to be a market determined way of using it most efficiently. You do not want to rely on a committee to decide how to use the money.

          I agree with the market approach but the solution is private monies so there would be no need for a committee to pick winners and losers since the government would never loan its money.

          We desperately need to have separate government and private money supplies. Government is force and the private sector is voluntary. They CANNOT logically share a money supply. Let’s agree to disagree by having separate money supplies.

          • Dang it! Ignore my previous comment, the italics are wrong.

            “It’s true that the purchasing power comes from all money holders. But new money has to be created otherwise you will suffer deflation. ” PBRF

            The government should merely spend new money into circulation and tax it out of circulation while maintaining a slowly growing money supply at less than the average economic growth rate of the economy. That way, no one is cheated by price inflation nor does the money supply ever shrink. To provide the initial pool of money the government could and should bailout the victims of the current system (the general population) by sending every American adult a big fat check of new debt and interest free full legal tender fiat (United States Notes). Later those notes should be withdrawn from circulation and replaced with limited legal tender (only good for government debt).

            Once new money is created, there has to be a market determined way of using it most efficiently. You do not want to rely on a committee to decide how to use the money.

            I agree with the market approach but the solution is private monies so there would be no need for a committee to pick winners and losers since the government would never loan its money.

            We desperately need to have separate government and private money supplies. Government is force and the private sector is voluntary. They CANNOT logically share a money supply. Let’s agree to disagree by having separate money supplies.

            • F. Beard said:

              >> “I agree with the market approach but the solution is private monies so there would be no need for a committee to pick winners and losers since the government would never loan its money.”

              In that case the committee would have to decide what projects to spend the money on. Pork barrel hazard. [Also, you would have cronies being chosen as contractors, but that’s not really a monetary issue.]

              There are costs associated with printing and spending, which, as we agree, are borne by all money holders. IMHO, it would be better to make the costs more transparent by having executive branch issue bonds at market rates, which could be purchased by the central bank (which itself would be a separate government department).

              • “In that case the committee would have to decide what projects to spend the money on. Pork barrel hazard. [Also, you would have cronies being chosen as contractors, but that’s not really a monetary issue.]”

                Yep, but we live in a republic and the people’s representatives can haggle over the pork. But because the government money would only be legal tender for government debt, the government would have to spend carefully because the demand for its money would be limited UNLESS it raised taxes to keep pace with spending. The public would object to excessive taxation. It could (i) vote out the bums or/and (ii) use one of the various private monies for income tax avoidance if the government attempted some sort of income tax on the government money. Income tax on private monies would be impractical in practice.

                There are costs associated with printing and spending, which, as we agree, are borne by all money holders. IMHO, it would be better to make the costs more transparent by having executive branch issue bonds at market rates, which could be purchased by the central bank (which itself would be a separate government department). PBRF

                There should be no government bonds since the government should NEVER borrow money not even from its own central bank. What would be the purpose? So those bonds could be resold to private individuals so they could live off the interest paid by taxpayers? Un, uh. No way. Let the usury class practice its craft in the private sector if they can get away with it but not with government debt which should always be non-existent.

                • F Beard: “There should be no government bonds since the government should NEVER borrow money not even from its own central bank. What would be the purpose? So those bonds could be resold to private individuals so they could live off the interest paid by taxpayers? Un, uh. No way. Let the usury class practice its craft in the private sector if they can get away with it but not with government debt which should always be non-existent.”

                  3 points:

                  (1) If you are going to print and spend, then you need to make sure that nobody has any arbitrary powers to mis-allocate resources and distort the economy.

                  (2) Since the costs of printing and spending are borne by all money-holders, these costs need to be made transparent … and market-determined interest rates are a way of doing it.

                  (3) The so called “usury class” may well be widows and orphans saving for a rainy day.

                  • (1) If you are going to print and spend, then you need to make sure that nobody has any arbitrary powers to mis-allocate resources and distort the economy. PBRF

                    As if that doesn’t happen today (see our useless wars which drives up debt to the usury class). And the power is not arbitrary, the voters can vote out politicians who cause price inflation.

                    (2) Since the costs of printing and spending are borne by all money-holders, these costs need to be made transparent … and market-determined interest rates are a way of doing it. PBRF

                    The costs are transparent. It is called price inflation. And the government should not rent its money supply. Government is force, that is a given. I object to private individuals using that force for their own profit by collecting interest from the taxpayers for what could be issued debt and interest free.

                    (3) The so called “usury class” may well be widows and orphans saving for a rainy day. PBRF

                    I also advocate private money supplies such as common stock. Currently there is a capital gains tax on common stock which precludes its use as money. Common stock in sound companies would be an excellent store of value once the underlying unstable money supply is reformed.

                    And if one wants to save using the government’s money, then one could deposit it in a non-fractional reserve bank and draw market interest rates.

                    As for widows and orphans, let the government tax as necessary to support them. And once government and private money supplies are separated then the free market should be free from the boom-bust cycle and we should have steady prosperity.

                    I advocate for separate government and private money supplies. Let the government simply spend and tax (yes, in that order, it is a logical necessity) its own money and let the private sector create it own tax free monies. Government is force and the private sector is voluntary; it is morally impossible,imo, for them to use a single money supply together.

  13. Good grief!

    I find myself here already!

    Anyhow I’ll add to what I’ve been quoted as saying – which I verify.

    Anything can be ‘money’, provided it cannot easily be counterfeited.

    A noncorrupt government could issue, under it’s own control, pieces of paper (Greenbacks, whatever) which are basically certificates that you did this amount of work, or whatever.

    Then fiscal – not monetary – policy would step in and tax those certificates for the necessary costs of, for instance, building a new road to a factory site, covering health care of workers, etc..

    OK this presupposes getting rid of the current, totally corrupt (to the banks) regime of Repocrats, but it is doable.

    If I go any further then I will get attacked as a ‘socialist’, or worse.

  14. What appealed to me many years ago, before the LSE got corrupted, went something like this:

    Imagine that any particular economy is like a plumbing system.

    I am a practical man and understand (and have done plumbing and a wide variety of other practical things, e.g. house building, road construction, farming and I was once a fitter and turner).

    OK then:

    Imagine an economy as a plumbing system in a house.

    There is a header-tank full of water (dollars, whatever, and preferably in paper which cannot easily be counterfeited).

    So the money flows through the ‘system of pipes’.

    It gets spent and taxed, so that at least most gets returned to the ‘header tank’, then recycles.

    If you want to get technical, then I am utterly opposed to monetarist (interest) policies and more or less in favour of fiscal policies.

    I am for the real Keynes – not the distortion – and for what J K Galbraith embodied.

    If you have not read either – nor Adam Smith, nor Karl Marx, etc. – then you are not really qualified to comment in these neo-classicist times since Ayn Rand/the Chicago School started destroying ALL rationality.

    • Take the trouble to actually look up the connection between Greenspan/Bernanke and the ‘objectivism’ of Ayn Rand.

      It is easy. Just Google the terms and then explore.

      OK I have lived through stuff since 1943, so maybe it is easier for me … but it is not that hard, provided you put aside your own agenda (I was once a Marxist 50 years ago) and start looking.

    • Hey Gerry,

      As a practical man you might be interested in “The Truth in Money Book” by Theodore R Thoren and Richard F. Warner. He makes the same water tank analogy you do. The book is out of print but you can get it from Amazon used.

      cheers.

      • Thanks mate.

        I am not being arrogant, but at 67 I have done almost all of the exploring I could possibly do,

        I have explored Socrates/Plato, Rene Descartes, Newton. Kant and Carl Jung, for instance.

        But I always come back to Socrates:

        “Know thyself.”

        “The unexamined life is not worth living.”

        I have committed my life to that.

        • I have explored Socrates/Plato, Rene Descartes, Newton. Kant and Carl Jung, for instance.

          But I always come back to Socrates:

          “Know thyself.” Gerry

          It sound like you checked out a lot of other people besides your self. 🙂

          • I certainly did.

            • I still do.

  15. The Achilles heel of Gary North on the money issue is hypocrisy. He claims to not be for a government gold or silver standard and then says that taxes should be paid in precious metals! That is a de facto government backed precious metals standard.

    To a true libertarian, that is an outrageous position and North should be pilloried for it until he repents.

    Here is the solution that all libertarians should agree to:

    1) Let government money be legal tender for government debt (taxes and fees) ONLY. Private citizens should be free to reject it for private debts.

    2) Let private monies be good ONLY for private debts. The government should absolutely refuse any private money so as not to show any favouritism.

    3) Let government money be pure fiat, that is, not based on any commodity that is in short supply. The cheapest form that gets the job done should be used.

    As for whether gold or silver would prosper as purely private money, I doubt it. However, unlike North, I believe in true liberty in money creation so let the private sector use any form of money including of course silver and gold subject to the usual laws against fraud and insolvency.

    Money is a mind-boggling and contentious topic so we should agree to disagree as much as possible. The private sector should not try to force its pet monies or class of monies such as commodities on the government and the government should not force its money on the private sector.

    So in summary, Greenbacks should be used for government debt and the private sector (including perhaps local governments) should be free to develop its own tax free private monies.

  16. This is not a simplistic “Douglas Solution” of ‘social credit’.

    Don’t know what I am refering to?

    Go find out.

  17. The Gold Fog

    Government borrows to spend. They’ll just spend the $13 Trillion “debt ceiling” and fund some $59 Triliion in unfunded liabilities. What’s to stop them? As for the banks, any fiat money will do. they’ll just pyramid loans off whatever currency of the day may be. Fractional reserve banking will only stop once the government stops bailing overextended banks. We’re a long way from this.
    Did fractional reserve banking occur during Lincoln’s greenback money era? My guess is yes.

    Interest and principal payments on US government debt are payable in US dollars and were in turn redeemable in gold. This put a brake on government spending. Run on banks were also common for the same reason. Gold circulating as money gets in the their way, and something had to be done. But the timing had to be good to invoke Presidential powers under an emergency or overcome the citing of Trading With the Enemy Act as legal justification.

    In 1933, Executive Order 6102 had all privately held gold surrendered to the Federal Reserve. The following year, the Gold Reserve Act of 1934 decreed that all the gold and gold certificates held by the FR be surrendered and vested in the sole title of the US Treasury.

    Along with the public, banks protested this confiscation of property by the government.
    This is for show of course, because switching from gold to paper money is precisely what they worked for all along. It didn’t hurt that the deception was given an intellectual patina by the British economist Keynes. Gold got in the way so it had to be confiscated and demonized. Come to think of it the only group who wanted keep using gold coins as money were the people. But we were no match for the twin titans of banking industry and the US Federal government. The deception is so thorough that todays proponents of fiat monies are unwittingly batting for the banking system they openly despise.

    • Gold got in the way so it had to be confiscated and demonized Carl Veritas,

      More gold worship? I am a libertarian so let’s let the free market decide:

      1) Let government money be pure fiat and only good for government debts.

      2) Let private monies be made from whatever (including gold or silver or paper or electronic bits) and backed by whatever ((including gold or silver or productive assets) but only good for private debts not government ones.

      I guarantee then that the free market would soon crush gold or gold backed money because gold is a non-performing asset.

      Friend, I suspect you are a libertarian. Then be for liberty not for a government backed or privileged gold or silver standard.

  18. F.Beard,

    I’ll take that bet if free market means lifting legal tender law along with the punitive tax on gold.

    • I’ll take that bet if free market means lifting legal tender law along with the punitive tax on gold carl veritas

      Of course. Government money should be legal tender for government debts ONLY and there should be no tax on potential money alternatives such as gold, silver, common stock, futures contracts, etc*. As for the income tax, if one is necessary, it should only be levied on users of government money not private money.

      Conversely, taxes should ONLY be collected in government money so as not to require you to buy my money to pay your taxes or vice versa.

      *I suppose in principle, that gasoline, for instance, could be used as a money alternative such as whiskey once was. That raises the question of what the government could ever tax.

  19. Greenbackers Vs Goldbugs?

    An interesting title.

    Lincoln needed to enact legal tender law to force acceptance of his greenback dollar. Apparently the merchants insisted on being paid with Gold coins for their goods. (Why those unpatriotic goldbugs).

    Makes one wonder, if the money is good why is force necessary?

    • Makes one wonder, if the money is good why is force necessary? carl veritas

      Indeed. So why does Gary North propose that taxes only be collected in precious metals? Why would he FORCE us to use precious metals to pay our taxes when government money is the obvious money to pay taxes in?

      BTW, government is force so it is not odd that the government forces us directly or indirectly. But what I fear and loathe are hypocrites who pretend to be against government force and then propose to use it to further their schemes.

    • So you see, it is not just legal tender laws that need to be restricted (to government debt only) but also that the important question of taxation be addressed.

  20. Sir:

    The government does not produce any goods. Absent legal tender laws and the punitive tax on gold, producers and merchants would want to be paid with money they can trust, most likely gold backed money. As this becomes widespread, the entire government and military would also demand they be paid in such money (never mind the theories, the kids are hungry).

    Gold was such a scourge to Americans it had to be confiscated and suppressed with a punitive tax. Or is it because Americans just might get the bright idea to use it as money, again? Nah, that would be too obvious.

    • Or is it because Americans just might get the bright idea to use it as money, again? Carl V

      Let them do so, by all means. However, attempts such as Gary North’s to require the government to accept precious metals as taxes should be resisted strenuously.

  21. The value of gold will fluctuate just like the value of paper money because the same people control it. The gold vs fiat is a false dichotomy. You can use anything for a medium of exchange as long as its value is tied to productivity.

    The free market is an ideal. In reality the powerful will always manipulate the market all the while preaching the value of free trade. Steinhart was succeful because he was an insider.

    • “You can use anything for a medium of exchange …..”

      Is this before gold coins were confiscated by the US Treasury (who now owns it) then taxed at a punitive rate by the IRS?

      Fiat money is more easily manipulated by bankers and politicians. The former for the profits and the latter for its vote buying power. And most money system “failed” for a simpler reason than you could imagine: overspending. From ancient Kings who shaved off the realms coins to todays governments and their central banks.

  22. A bank fiat dollar or a fiat greenback backed by armies may buy what you want in life now – but without armies it can only serve as a internal currency.
    If another country (If Independent) wants to sell you its depleting assets (oil) it will need more then the good word of the US goverment.

  23. Um!

    Seems I stumbled into an old debate.

    Nay mind, I’ll go with Ellen any day on economics.

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