As the swarm of centrally-planned fiat currencies continue their relentless and accelerative march towards worthlessness, another major number was taken out this morning when that inert ounce of gold which has sat in your Uncle Harold’s desk drawer for 65 years gathering dust, found itself being measured at $1,500 U.S. dollars, £918 U.K. pounds, €1,042 Euroland euros, or ¥124,442 Japanese yen.
As Hannibal Lecter might have put it, I myself would certainly like to be a fly on the wall inside any of the major central banks right now, as the carnage and the panicked phone calls from one to another over the last two weeks, as their precious metal price manipulation schemes have all collapsed, will have led to copious amounts of blood up the walls.
Eventually, perhaps, a few of our more daring central planning bureaucrats might whisper, ‘let the market decide’ or ‘gold, silver, and copper are money’, but I doubt it. Expect more Bilderbergian clandestine meetings in expensive hotels to ‘plan’ our way out of this self-induced monetary implosion, which was caused by the inability of Bilderbergian politicians and their minion bureaucrats within their central banks to keep their hands off the ‘more’ button on their basement printing presses; these machines will continue to spew out increasingly worthless paper to prop up the trillions and trillions they have already printed, in what history will rightly regard as the greatest Ponzi scheme of all time.
We’ll all soon be floating in a sea of paper firelighters, all of them covered in fancy ink patterns to help them combust. Which is handy, because lighting barbecues will be all they’re going to be good for.
And all of this massive monetary madness was undertaken to enable a few miserable lying politicians to get themselves back into office at election time, by promising to spend money they didn’t have, couldn’t borrow, and were unable to tax, so they could prop up all of the useless utopian pet schemes of their subsidised intelligentsias or pet wars for their corporate sponsors, to keep both groups onside with the message that the rest of us need to be ruled over by politicians.
You might ask, for instance, where the British state is getting all of this money to start a third concurrent ground war in Libya? Or all of this money to hand over to Portugal? Or all of this money to pay for a grandiose royal wedding? If the printing press in the heart of the Bank of England were to be switched off, all of our troops would be coming home, Portugal would be sinking or swimming, and Kate and Will would be at the Town Hall in Windsor, like Will’s dad.
The intelligentsia ‘brainwave’ solution will no doubt be a ‘global’ paper currency, managed by the Olympians at the IMF and the World Bank, themselves useless and dangerous excrescences from the failed Bretton Woods era. Alas, this new currency, which I would like to christen ‘The Soviet’, will fail even quicker than the current slew of paper monies we currently enjoy.
I don’t know if any of these colossally intelligent mandarins have noticed the pattern, but as they have reduced the numbers of paper currencies, especially when they invented Euroland to take out the despised Deutschmark, the collapse of paper money has merely proceeded all the quicker. At least when there were lots of paper monies, a modicum of competition slowed down their disintegration.
I think the analogy is, if you must live under a criminal corrupt Mafia, it’s better that there are lots of Mafia bosses running around promising you ‘protection’, because the competition between them for your business will ensure that their rapaciousness will be limited. However, when there is just one Mafia boss, just as with all government monopolies imposed at the end of a gun barrel, the price will be terrible and the service will be shocking.
Fortunately, in a strange way, the introduction of The Soviet, will lead even quicker to a return of honest voluntary monies. At first, enormous black markets will form, where people will barter their goods and services for ‘illegal’ lumps of gold, silver, and copper, and then a point will be reached, as in Zimbabwe and the Soviet Union, where most people will simply ignore the IMF world government police trying to stop these markets, and the whole edifice of paper money will finally come crumbling down.
But let us hope we see sense before such dark days ensue. Why go through a couple of decades of worldwide misery, when we could bypass all of that horror by going directly to honest voluntary money right now? We should throw off the IMF and the World Bank; we should throw off government control of money; and we should demand that free people be allowed use whatever monetary mechanisms that they want.
We should end money socialism, now.
We don’t even need clever schemes worked out by the intelligentsia to do it. We simply have to take all taxes off any desired monetary medium of exchange. Removing all capital gains and value added taxes off copper, silver, and gold, would be a start. As would allowing freely-entered contracts to stipulate these monies as a medium of exchange.
The free market will take care of the rest. That is, if you trust the free market to function better than socialism.
We’re going to reach honest monies anyway, unless we end up in a true Orwellian dystopia. Route one involves war, lies, chaos, poverty, and tyranny. Route two involves peace, truth, order, prosperity, and freedom.
No doubt politicians, in their short-sightedness and in their selfish interest, will try to take us down route one.
Personally, I prefer route two.
Just,thank you for this article. It helps anger managment. And in case there are those out there that don’t believe the Fed Chairman’s middle name is Capone:
http://www.youtube.com/watch?v=ZnZnkaq8Nf8&feature=youtube_gdata_player
I had thought it was ‘Shalom’, but perhaps the Chairsatan ought to do the decent thing and rename himself? :-)
Is the author insinsuating that this whole episode has been a conspiracy? It’s certainly unpleasant, but I don’t believe it’s been engineered so the mandarins can beat us down with the printing press.
If he belives his ‘fiat’ is worthless he transfer some into my bank account if he wants, I won’t mind holding onto those fire lighters.
As long as I can still buy gold and silver with pound notes, then they’ll still have some value to me. Alas, it now takes 918 of them to buy one ounce, but at least I can still get that ounce. With annualised 6% inflation since about 1931, when the British state left its own gold standard and started printing in a serious fashion, you used to get about one ounce of gold for 4 British state monetary units, so even until Christmas next year, you’ll still be able to get a Troy ounce of gold for around 1,000 British state paper units (though I suspect it may be sooner than that). When I can’t any gold at all, you can have all the British state paper units I’ve got.
I’ll buy barbecue firelighters instead with my gold and silver.
As to conspiracy, I think it’s far more cock-up than conspiracy. Individuals always work to their own account, but as even Adam Smith realised when he knocked off the works of Richard Cantillon and claimed them as his own, whenever you get corrupt people together, they start conspiring to rip off others, often through the use of paper law manipulation via corrupt government.
Are glazing firms conspiring towards world government when they lobby for the UK government to bring in laws banning non-licensed firms from installing windows, who fail to follow ‘standards’ brought in by the larger glazing companies? Hardly, they’re just working for their own self-interest in a corrupt selfish manner.
And so it is the same with politicians and their bureaucrats, each working individually to their own personal enrichment and enjoyment of power and privilege, at the corrupt expense of the rest of us.
There is no ‘Mr Big’ pulling any strings at the Council of Foreign Relations, even if some say this might be David Rockefeller. There are just tens of thousands of corrupt individuals, all over the world, lining their own pockets through the misuse of power, in a contractual web known as ‘government service’. You scratch my back, and I’ll scratch yours. You pass me a law banning small competitive glazing firms, and I’ll send you a few thousand pounds towards your next re-election expenses, so you can win that election and not have to work for a living like the rest of us.
I don’t think such corruption ever rises above the level of the individual. However, it does have a macro effect which results in the gigantic financial mess we can see around us, where a large inert coin of gold metal lying in a drawer for 80 years can defeat thousands of minds of the most educated economists in the world, as it just sits there, scuppering all of their mighty grandiose plans.
They hate that gold coin, and when they’re done with taxing it to death in transactions, or ‘banning’ it entirely (as if you can ban nature’s elements), they’ll still hate it, for pointing out so clearly their own corruption and failure.
In the meantime, you might want to read some or all of the following articles about the mess these corrupt men have made of our world:
=> http://www.lewrockwell.com/rothbard/rothbard66.html
=> http://www.thedailybell.com/1936/Anthony-Wile-with-Dr-Hans-Hermann-Hoppe-on-the-Impracticality-of-One-World-Government-and-Western-style-Democracy.html
I honestly don’t understand your gripe. Anyone can print their own currency in the UK, you’re just not allowed to print up £’s for obvious reasons; it’s fraud. Private banks create bank credit, but the profits from this are returned to the Treasury through taxation and the general population via bank share ownership. Now all the banks have been nationalised the “super-profit” argument is even less relevent.
Ok, there are a few bankers making absolute fortunes at taxpayers’ expense, but even if we confiscated 100% of their income the benefits to “society” would be negligeable.
A myriad of private currencies would create chaos, it would be like jettisoning the English language and replacing it with several “private” regional languages that bore no relation to each other. How does this help the wealth creation process? The only people that would really benefit would be the money men and currency speculators, it’d create plenty of new non-jobs for those guys to fill.
A myriad of private currencies would create chaos, it would be like jettisoning the English language and replacing it with several “private” regional languages that bore no relation to each other.
Chef
– firstly, it is unlikely that it would “create chaos”. Money is a good like any other. Does it cause chaos that we have multiple brands of hoovers to choose from? When have you ever seen anything that the government mandates the public use that results in a better outcome than that which is provided as a result of the interplay of free markets? If mutliple currencies does turn out to be inconvenient, then the market will eventually settle on the best one or two to serve its purpose. If the government currency really is that good, why not let it compete freely against gold, silver, euros, dollars etc?
– Secondly, it is nothing like jettisoning the English language. The English language has not been chosen for us by a central government. Rather – it has evolved over many years to suit the users. This is why it is so good. If it were the case that the government had strict controls on language and its use, then your comparison would be appropriate.
“How does this help the wealth creation process? The only people that would really benefit would be the money men and currency speculators, it’d create plenty of new non-jobs for those guys to fill.”
The government control of money has been an enormous boon to the moneymen. In the 1970s, the last link to gold was broken as the gold-exchange system under Bretton Woods was broken. At this point, the GDP attributable to financial service companie was around 12% in each of the UK, Germany and Japan. Today it is 30% (US data shows the same trends although the series does not go back to the 1970s). There is no obvious additional service that is provided by finance firms compared to before. I would therefore suggest that the last 30 years have been about the government and banks taking advantage of the “flexible” monetary system for their own ends at the expense of everyone else. Austrian theory predicts this and the evidence in the National Statistics supports this. The graphs are here
https://www.cobdencentre.org/2010/09/im-sure-i-had-another-tenner-here-somewhere/. Far from benefiting the moneymen, Andy Duncan’s proposals take money away from them and give it back to the people.
By the way Andy, I enjoyed reading your very well-written article. Thank you for this.
My pleasure.
Tim, your likening of money to vacuum cleaners is a bit of a non sequitur. Money is an accounting standard, it’s our means of financial communication, so if we all start speaking different languages life would soon become very difficult. It’s more like weights and measures, would your freedom increase considerably for example if we abandoned state sanctioned kilos/stones and all adopted our own private measuring systems? It would give us more personal control sure, but the social effect would be disasterous due to our inability to decipher all this new (and unnecessary) price signals.
If people want to introduce their own currency then should be free to do this, as long as they paid their taxes in state monetary units. One state, one currency. Sometimes living in a community means you have to sacrifice a little bit for the greater good, adopting offical languages, currencies and other standards isn’t really that much to ask!
Hi Chef.
You’ll note that prior to the State sanctioning various weights and measures, the scientific community had moved that way anyway. The point I’m trying to make is that it isn’t necessary enforce a standard if the standard is any good. It will be adopted by a free market in any case. If there were no advantage in using multiple currencies, the market would tend towards a single one.
However, you hit upon the reason why of course the state likes to control the currency: to keep control of the tax system. Most of the taxes (and none of the inflation) would be possible if it weren’t for the state’s ability to ensure that you exchange using its preferred and mandated currency. Without this tool, the state would be unable to support itself at its current bloated size. This rather illustrates the reason why the removal of legal tender laws would be a good thing: it would take control of money out of the hands of the government.
The phrase “the greater good” is almost always a justification for an unecessary restriction of individual freedom.
Tim,
I understand why reformers want to remove certain monetary powers from the state but believe that your approach entails consequences that you havn’t considered, and is a bit of a red herring.
As soon as the state then demands X in taxation to fill the void that X then becomes our new state currency, and (after a lot of faffing around) we’re back to square one, except this time we’re using currency printed up by Tescos instead of De La Rue.
If you dislike the tax system or you resent the state and want to undermine the state with myraid of currencies why not just say so directly? At least that way we can address the underlying issues instead of using sterling as a proxy for all social problems.
Btw, I’m well aware of the connotations associated with the term “the greater good”, but felt it accurately summed up my views on the matter so dared to use it on an Austrian website. Equally, the term ‘profit’ has been demonised for decades by those of a socialised persuasion, but their interpretations won’t stop me from either using the term or celebrating those that “chase” profit, as ironically these people also work for the greater good. A point didn’t that go unnoticed by philosophers such as Smith or Rand.
> There is no obvious additional service that is provided by finance firms compared to before.
Are you serious Tim? Do you know what banking was like in the 1970s?
Or share dealing or pensions for that matter?
Current – there have been technological changes that have made banking better – sure. However, I doubt very much whether the additional service provided now accounts for financial services being 30% of GDP in the UK vs 12% 30 years ago. You will have course noticed that service EVERYWHERE has improved as a result of the internet etc. without this sort of expansion in its cost base.
Just to clarify my position, the state provides citizens with certain services; protection both internally and externally, schools, hospitals, courts and so on, and im return the state gets to determine the method of payment. This is a principle that applies equally to the free market, if I’m selling something the buying doesn’t get to choose my method of payment, I do!
Why should the state have it’s hand forced into accepting payment that may not be of any value?
I don’t entirely agree with Tim Lucas or Andy Duncan. But I do support their calls for free-banking.
Something to consider is that free banking doesn’t mean “incompatible banking”. A common episode of free banking used for historical study is 18th and 19th century Scotland. In that case banks all chose to tie the value of their banknotes to gold. That is, a note was redeemable for a quantity of gold (normally British treasury coins).
Free banking doesn’t mean that each bank must use a money that fluctuates in exchange rate compared to other monies. They can but in practice they haven’t. What it means is that the money supply and the banking service industry are in entirely private hands.