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Gold Money Is the Root of All Good; Paper Money Is the Root of All
Evil
- A Blueprint for a New Gold Coin Standard -
Millions of people who have read Ayn Rand's 1957
monumental work "Atlas Shrugged" must have been impressed by an
insert that could be entitled "Hymn to Money". This insert is
buried in the 1600 pages of the novel and is difficult to find. However, it
is a self-contained literary masterpiece in its own right. For these reasons it
may be a good idea to publish it separately.
Some remarks may be in order. Ayn Rand uses the word
"money" in the sense of gold money. This may not be in line
with current usage, but it is certainly correct etymologically. The English
word "money" is derived from the Latin moneta, meaning
"forewarner", epithet of the goddess Juno. Her temple on the Roman
Capitolium doubled as the Mint where the gold and silver coins of Rome were struck.
According to legend, during the siege of Rome by the Gauls, the
sacred geese of Juno that lived around the temple forewarned the Romans with
their loud cackling of the surprise attack the enemy has mounted. Under the
cover of the night, the Gauls tried to scale the cliffs just below, thought
to be an unassailable point of the Capitolium. The Romans, forewarned, could
successfully repel the attack. In gratitude, they honored the goddess calling
her Juno Moneta, or "Juno the Forewarner". And Rome went on to great things.
Irredeemable currency, in Ayn Rand's words "a
counterfeit pile of paper", the output of the paper mill in Manhattan, does not
deserve to be called "money". At any rate, you have been
forewarned, and should be prepared for the attack of looters on your
Capitol, already in progress.
We still don't know whether the 911 forewarning of
Juno Moneta about the approaching collapse of society has been in vain or,
perhaps, there is enough moral rectitude left in America's political and economic
leadership to denounce globalization, and open the Mint to gold, in order to
avert the coming tragedy.
Hymn
to Money
Ayn Rand
Must Give Value
for Value
So you think that money is the root of all
evil. Have you ever asked what is the root of money?
Money is a tool of exchange, which can't exist unless there are goods
produced, and there are men able to produce them. Money is the material shape
of the principle that men who wish to deal with one another must do so by
trade, and give value for value. Money is not the tool of the moochers, who
claim your product by tears, or of the looters, who take it from you by
force. Money is made possible only by men who produce. Is this what you
consider evil?
When you accept money in payment for your
effort, you do so on the conviction that you will be
able to exchange it for the products of the effort of others. It is neither
the moochers nor the looters who give value to money. Neither an ocean of
tears nor all the guns in the world can transform those pieces of paper in
your wallet into bread you will need to survive tomorrow. Those pieces of
paper, which should really be gold, are a token of honor - your claim upon
the energy of the men who produce. Your wallet is your statement of hope that
somewhere in the world around you there are men who will not default on the
moral principle that is the root of money. Is this what you consider evil?
Wealth Is the
Product of Man's Capacity to Think
Have you ever looked for the root of production? Take
a look at an electric motor and dare tell yourself
that it was created by the muscular effort of unthinking brutes. Try to grow
a seed of wheat without the knowledge left to you by men who had to discover
how to do it for the first time. Try to grow food by means of nothing but
physical motions - and you'll learn that it is man's mind that is the root of
all the goods produced and of all the wealth that has ever existed on earth.
But you say that money is made by the strong at the
expense of the weak. What strength do you mean? It is not the strength of
guns or muscles. Wealth is the product of man's capacity to think. Does it
follow, then, that money made by the inventor of the motor is at the expense
of others who invented nothing? Is money made by the intelligent at the
expense of the fools? Or by the able, at the expense of the lazy? Money is
made - before it can be looted or mooched - by the effort of every honest
man, each to the extent of his ability. An honest man is one who knows that
he can't consume more than he has produced.
Every Man is the Owner of
His Mind and His Efforts
To trade by means of money is the code of men of
good will. Money rests on the axiom that every man is the owner of his mind
and his efforts. Money allows no power to prescribe the value of your effort,
except by the voluntary choice of the man who is willing to exchange the
fruits of his effort with you. Money permits you to obtain for your goods and
labor what they are worth to men who buy them, but no more. Money permits no
deals except those to mutual benefit by the free judgment of traders. Money demands
of you the recognition that men must work for their own benefit, not their
injury; for their gain, not their loss - the recognition that they are not
beasts of burden born to carry the weight of your misery - that you must
offer them value, not wounds - that the common bond among men is not the
exchange of suffering, but the exchange of goods. Money demands that you
sell, not your weakness to men's stupidity, but your talent to their reason;
it demands that you buy, not the shoddiest they have to offer, but the best
money can find. And when men live by trade - with reason, not force, as their
final arbiter - it is the best product that wins, and the best performance. It
is the man of best judgment and highest ability that wins, and his reward is
commensurate with his productivity. This is the code of coexistence whose
tool and symbol is money. Is this what you consider evil?
The Scourge of
Men Who Attempt to Reverse the Law of Causality
But money is only a tool. It will take you wherever
you wish, but will not replace you as the driver. It will give you the means
for the satisfaction of your desires, but will not provide you with desires. Money
is the scourge of men who attempt to reverse the law of causality - men who
seek to replace the mind by seizing the products of the mind.
Money will not purchase happiness for the man who
has no concept of what he wants. Money will not give him a code of values if
he's evaded the knowledge of what to value. It will not provide him with a
purpose if he's evaded the choice of what to seek. Money will not buy
intelligence for the fool, admiration for the coward, or respect for the
incompetent. The man who attempts to purchase the brains of his superiors to
serve him, thus trying to replace judgment with money, ends up by becoming
the victim of his inferiors. The men of intelligence desert him, but the
cheats and frauds come flocking to him, drawn by a law which he has not
discovered, that no man may be smaller than his money. Is this the reason why
you call it evil?
Money Will Not
Serve the Mind That Cannot Match It
Only the man who does not
need it, is fit to inherit wealth - the man who would make his own fortune no
matter where he started. If an heir is equal to his money, it serves him; if
not, it destroys him. But you look on and cry that money has corrupted him. Has
it? Or has he corrupted money? Do not envy a worthless heir: his wealth is
not yours and you would have done no better with it. Do not think that it
should have been distributed among your cronies: loading the world with fifty
parasites instead of one would not bring back the dead virtue embodied by the
fortune. Money is a living power that dies without its root. Money will not
serve the mind that cannot match it. Is this the reason why you call it evil?
Money As a Means
of Survival
Money is your means of survival. The verdict you
pronounce upon the source of your livelihood is the verdict you pronounce
upon your life. If the source is corrupt, you have damned your own existence.
Did you get your money by fraud? By pandering to men's vices or their
stupidity? By catering to fools, in the hope of getting more than you
deserve? By lowering your standards? By doing work you despise, for others
you scorn? If so, then your money will not give you a moment's joy or a
penny's worth of happiness. Then all the things you buy will become, not a
tribute to you but a reproach; not an achievement but a reminder of shame. Then
you'll scream that money is evil. Evil, because it will not pander to your
self-respect? Evil, because it would not let you enjoy your depravity? Is
this the root of your hatred of money?
Money Is Always
an Effect with You As the Caus
Money will always remain an effect and refuse to
replace you as the cause. Money is the product of virtue, but it will not
give you virtue and will not redeem your vices. Money will not give you the
unearned, whether in matter or in spirit. Is this the root of your hatred of
money?
Or do you mean that it's the love of money that's
the root of all evil? To love a thing is to know and love its nature. To love
money is to know and love the fact that money is the product of the best
powers within you, and your pass-key to trade your
effort for the efforts of the very best among men. It's the person who would
sell his soul for a nickel, who is the loudest in proclaiming his hatred of
money - and he has good reason to hate it, too. The lovers of money are
willing to work for it. They know that they deserve it. Let me give you this
rule of thumb: the man who damns money has obtained it dishonorably; the man
who respects it has earned it.
The Only
Substitute for Gold Money is the Muzzle of the Gun
Run for your life from anyone who tells you that
money is evil. That sentence is the leper's bell of an approaching looter. So
long as men live together on earth and need means to deal with one another -
their only substitute, if they abandon money, is the muzzle of the gun.
When Coercion Is
the Standard, Murderers Win over Pickpockets
But money demands of you the highest virtue, if you
wish to make it or keep it. Men who have no courage, pride, or self-esteem,
men who have no moral sense of their right to their money, and are not
willing to defend it as they would defend their life, men who apologize for
being rich - will not remain rich for long. They are the natural bait for
swarms of looters that stay under the rocks for centuries, but come crawling
out at the first smell of a man who begs to be forgiven for the guilt of
owning wealth. They will hasten to relieve him of his guilt, and of his life
- just as he deserves.
Then you see the rise of men of a double standard -
men who live by force yet count on those who live by trade to create value to
back their looted money - hitch-hikers of virtue. In a moral society these
are criminals, and statues are written to protect you against them. But when
a society establishes criminals-by-right and looters-by-law - men who use
force to seize the wealth of disarmed victims - then money becomes its
creator's avenger. Such looters believe it safe to rob defenseless men, once
they've passed a law to disarm them. But their loot becomes the magnet for
other looters who get it from them the way they've got it from you. Then the
race gets under way, and the prize goes, not to the ablest at production, but
to the most ruthless at brutality. When coercion is the standard, the
murderer wins over the pickpocket. And then society vanishes in a spread of
ruin and slaughter.
Money Is the
Barometer of Society's Virtue
Do you want to know whether that day is coming? Watch
money. Money is the barometer of society's virtue. When you see that trading
is done not by consent but by compulsion - when you see that in order to
produce you need to obtain permission from men who produce nothing - when you
see that money is flowing to those who deal not in goods but in favors - when
you see that men get rich more easily by graft than by work, and your laws no
longer protect you against them, but protect them against you - when you see
corruption being rewarded and honesty becoming a self-sacrifice - then you
will know that your society is doomed. Gold is so noble a medium that it does
not compete with guns and does not make terms with brutality. It will not
permit a country to survive as half property, half loot.
Paper Money Is
Mortgage on Wealth That Doesn't Exist
Whenever destroyers appear among men, they start by
destroying gold money, for it is man's protection, and the base of a moral
existence. Destroyers seize gold and leave to its owners a counterfeit pile
of paper. This kills all objective standards and delivers men into the
arbitrary power of an arbitrary setter of values. Gold is an objective value,
an equivalent of wealth produced. Paper money is mortgage on wealth that does
not exist, backed by guns aimed at those who are expected to produce. Paper
money is a check drawn by legal looters upon an account which is not theirs:
upon the virtue of the victims. Watch for the day when it bounces, marked:
"account overdrawn".
When you have made evil the means of survival, do
not expect men to remain good. Do not expect them to stay moral and to become
fodder for the immoral. Do not expect them to produce when production is
punished and looting rewarded. Do not ask who is destroying the world. You
are.
Where Wealth Is
Obtained by Conquest There Is Little to Conquer
You stand in the midst of the greatest achievements
of the greatest productive civilization and you wonder why it's crumbling
around you while you are damning its life-blood - money. Throughout man's
history money was always seized by looters of one brand or another, whose
names changed, but whose methods remained the same: to seize wealth by force
and to keep the producers bound, demeaned, defamed, deprived of honor. That
phrase about the evil of money which you mouth with such righteous
recklessness, comes from a time when wealth was produced by the labor of
slaves - slaves who repeated motions discovered long before by someone's mind
and left unimproved for centuries. So long as production is ruled by force
and wealth is obtained by conquest, there is little to conquer. Yet through
all the centuries of stagnation and starvation, men exalted the looters as
aristocrats of the sword, as aristocrats of birth, as aristocrats of the
bureau, and despised producers as slaves, as traders, as shopkeepers - as
industrialists.
The Country of
Money
To the glory of mankind there was, for the first and
only time in history, a country of money - and I have no higher, more
reverent tribute to pay to America, for this means: a country of reason,
justice, freedom, production, achievement. For the first time man's mind and
money were set free, and there were no fortunes-by-conquest but only
fortunes-by-work, and instead of swordsmen and slaves there appeared the real
maker of wealth, the greatest worker, the highest type of human being - the
self-made man - the American industrialist.
The Essence of Morality
If you ask me to name the proudest distinction of
Americans, I would choose - because it contains all the others - the fact
that they were the people who created the phrase "to make
money". No other language or nation has ever used this combination of
words before; men have always thought of wealth as a static quantity - to be
seized, begged, inherited, shared, looted, or obtained as a favor. Americans
were the first to understand that wealth must be created. The phrase "to
make money" holds the essence of morality.
Yet these were words for which the Americans were
denounced by the rotten cultures of the looters' continents. Now the looters'
credo has brought you to regard your proudest achievements as a hallmark of
shame, your prosperity as guilt, your greatest men, the industrialists, as
blackguards, and your magnificent factories as the product and property of
muscular labor, the labor of whip-driven slaves, no better than the pyramids
of Egypt. The rotter who simpers that he sees no difference between the power
of gold and the power of the whip, ought to learn the difference on his own
hide - as I think he will.
Blood, Whips,
and Guns - or Gold
Until and unless you
discover that money is the root of all good, you ask for your own
destruction. When money ceases to be the tool by which men deal with one
another, men become the tools of men. Blood, whips, and guns - or gold. Take
your choice - there is no other - and your time is running out.
Corruption of
the Meaning of "Making Money"
Ayn Rand did not live to see the appalling
corruption of the meaning of the phrase "making money" to include
parasitic activities such as foreign exchange and bond speculation, trading
options on futures, interest-rate swaps, repos, knock-in calls, knock-out puts,
and so on, ad libitum. As long as gold was an active part of the monetary
system, there was little opportunity for looters to fleece the public using
exotic trading vehicles making up the $100 trillion derivative monster. But
soon after gold was out of the way, white-collar looters could get the upper
hand and lay the foundations of the Tower of Babel
of derivatives. Watch for the day when it crashes and buries the production
facilities of society underneath.
Shame on those who have polluted the English
language by applying honest words to dishonest activities, in order to cover
up their immoral nature. Shame on those who write scholarly books glorifying
the globalized paper money system, the exotic trading vehicles, and the
trading of hot air in the name of progress, but for no other purpose than to
fleece the savers and the producers.
The brightest mathematicians have not been able to
plug morality into their equations, and never will. You have to make money
completely amoral before you can put it into your equations. And this is
exactly what they have done.
Differential equations are the physicists' most
powerful tool to predict with precision the outcome when force is applied to
a collection of lifeless particles. But they are wholly inapplicable to
predict, even in approximation, the outcome when the particles have free
will. You have to deprive men of their free will, by depriving gold of all of
its monetary qualities, before you can apply the method of differential
equations to a society of human individuals. And this is exactly what they
have done.
Blueprint for a
New Gold Coin Standard
Making money was the highest activity of men before
looters invaded the nerve-center of capitalism and abolished the gold-reserve
requirement for the issuance of Federal Reserve notes in 1968. Ever since
"making money" has been the lowest activity of men whereby the
savers and producers are fleeced of their substance. Watch for the day when
the last meaningful productive job in America
is exported to China.
On that day American society will become a zoo, and American citizens will be
reduced to the station of animals in the cage, totally dependent on the
zoo-keeper for food and shelter.
Is it still possible that Americans will find their
virtue, reinvent their Country of Money, and restart their essential activity
of "making money" in the sense of Ayn Rand? Yes, provided that they
open the Mint to gold, as ordained by the Constitution. In what follows we
present a blueprint for the new gold coin standard for America.
Open the Mint to
Gold!
Fixing the price of gold in terms of the dollar is a
non-starter. It would lead to endless bickering between creditors who want a
low, and debtors who want a high fixed price of gold, guaranteeing failure. Luckily,
there is no compelling reason to fix the price of gold in dollars. On
the contrary, the dollar had better be left to fend for itself. The one-ounce
Gold Eagle coin, already in existence, could serve as the new monetary unit. Let
it soar, free of the heavy baggage of dollar-denominated debt! Let the banks,
first and foremost the Federal Reserve banks among them, try to save the
dollar from the ignominy of ending up in the garbage heap of history! They
have totally discredited themselves as guardians of the value of the money of
the people, allowing the dollar to lose 99 percent of its purchasing power
during the 88 years of operations of the Federal Reserve System. Member banks
should not be allowed to carry deposit accounts denominated in gold coins,
lest they repeat the feat and make the value of these deposits disappear,
too.
An Act of Congress on Opening the Mint to Gold
will reestablish the constitutional right of the people to convert gold in
their possession into coins of the realm. On M-Day, the Mint will be declared
open to gold, and those who prefer to trade and save in terms of gold coins
will, once more, be free to do so.
You may object saying that the Mint is already open
to gold as shown by its production of Gold Eagle coinage, and laws are in
place to allow you to make contracts in terms of gold. People have been given
the choice, but they are not interested. Not so! The Gold Eagle coin program,
as it exists, has been designed to throw dust into the eyes of the public. The
fact is that the coins' denomination fails to be proportional to their gold
content. To be sure, this idiotic provision is not the result of an
oversight. It is the result of deliberate sabotage on the part of the
Treasury, its own version of the "poison pill", to make these coins
unfit for the purposes of a gold standard. More importantly, these coins are
struck exclusively for the account of the Treasury, then
promoted not as money but souvenirs. Opening the Mint to gold would mandate
that the one ounce Gold Eagle coin, the monetary unit, be struck for the account
of anyone tendering the correct amount and fineness of gold bullion free
of charge. Once this is done, then - after a 70-year hiatus - the
Constitutional right of the citizen to free coinage will be re-established. The
assertion that the public has been offered gold coins to trade and to make
contracts in, but declined the offer, is a lie.
Credit Unions:
New Guardian of the Value of Money
The banks must not be given a federal charter to
carry deposit accounts denominated in Gold Eagles for reasons spelled out
above. A better guardian for the value of money will be the labor
organizations of the country, including organizations of the pensioners and
retired people. Each of these will be invited to apply for a federal charter
to establish its own Credit Union that would carry deposit accounts in Gold
Eagles. An Act of Congress on Credit Unions will authorize the
mobilization of the gold reserves owned by the Treasury for the purpose of
capitalizing Credit Unions, old and new. In order to be eligible for a
federal charter, the Credit Union must eschew the practice of borrowing short
and lending long.
Bill Market and
the Discount Rate
This grass-root movement to gold coin circulation is
essential to ensure that laborers be able to make their purchases with gold
coins so that, in turn, they be able to get paid in gold coins. There will be
no banks to extend Eagle-currency credits to productive enterprise. Such
credit will, nevertheless, still be available through the bill market. An Act
of Congress on the Circulation of Bills of Exchange will provide for the
limited monetization of self-liquidating bills of exchange, drawn by the
producer on his distributor, representing merchandise shipped by the former
to the latter that is moving sufficiently fast to the ultimate cash-paying
consumer, so that the liability will be discharged in no more than 91 days
(or 13 weeks, or 3 months) out of the gold coins released by the consumer. The
number 13 is not arbitrary. Thirteen weeks is the length of the seasons,
marking the change in the stock of merchandise in the temperate climates such
as food, fuel, clothing, recreational equipment, etc.
The Act will give the needed buoyancy to the bill of
exchange so as to enable it to circulate by endorsement almost as easily as
cash. The producer who gets paid for his merchandise, not in the form of gold
coins but of bills accepted by distributors, will be able to use it to pay
his own suppliers by endorsing the bill once more. Thus each subsequent
recipient will be able to use the same bill in payment for his own
supplies by further endorsement. Alternatively, any one of the recipients
could discount the bill of exchange at the discount window of his Credit
Union. Discounting means selling the bill for gold coins at a discount. The
amount of discount applied to the face value is determined by the discount
rate and the number of days the bill has to run to maturity. Credit Unions
make a market in bills. They trade them. They will sell them to you if you
want to have them as an earning asset. They will buy them back from you, and
will be happy to carry them to maturity, as these instruments are their most
liquid earning assets. At maturity the Credit Union collects the face value
of the bill from the distributor on whom the bill was originally drawn. The
point is that, by that time, the distributor will have the gold coins from
the sale of merchandise to the ultimate, cash-paying consumer. In this way
the source of gold coins with which to pay labor along the production
channels of the merchandise, and with which to liquidate the liability upon
maturity of the bill, is secure. It is for this reason that bills of exchange
are called self-liquidating.
The Act provides that non-self-liquidating bills
such as anticipation bills, accommodation bills, etc., drawn on imaginary
merchandise sent on world-wide trips in imaginary bottoms, will be denied
monetary privileges. Treasury bills are self-liquidating only to the extent
that the Treasury has tax revenues coming to it, during the next 91-day
period, in the form of gold coins. If it has cash needs in excess of these
receivables, the Treasury has no authority to issue bills but must ask
Congress for fresh appropriations. A bill drawn with maturity exceeding 91
days, or one that has been rolled over for a further period, is not
self-liquidating and will be denied monetary privileges, too.
Bond Market and
the Interest Rate
An Act of Congress on Gold Life Insurance
will authorize the federal government to charter financial institutions for
the purposes of underwriting gold life policies and gold annuities. They
would be holders of gold bonds issued by the government and by companies
wanting to re-capitalize in Gold Eagles. The Act will specify that these
institutions may only invest in gold bonds with sinking fund protection.
The Act will authorize custom duties and excise
taxes to be levied in Gold Eagles, in order to capitalize the sinking fund
the government will need to stabilize the value of its gold bonds. The total
outstanding gold-bonded debt of the federal government must not exceed the
level that can be serviced by the sinking fund.
The interest rate on the gold-bonded debt of the
government will be the lowest possible, indicating that gold is the best
money available to man. The depreciation premium on gold-bonded debt is zero.
Lenders know exactly what will be returned to them at the end of the loan
period. By contrast, in case of debt denominated in the irredeemable dollar
there is a depreciation premium incorporated in the rate of interest,
representing compensation lenders demand, and receive, for the expected
depreciation in the value of the monetary unit.
The Question of
Legal Tender
It is understood that the paper dollar will circulate
side-by-side with Gold Eagle coins, at a floating exchange rate. People can
discharge their debt contracted before M-Day in either paper dollars or gold
coins, at the option of the debtor. As concerning debt contracted after
M-Day, provisions in the contract will apply.
Certified labor organizations will be free to
bargain with the employers and sign labor contracts calling for wages to be
paid either in paper dollars, or in gold coins, as decided by the membership.
If the decision calls for wages to be paid in gold coins, the management of
the company will immediately start drawing bills of exchange on the
distributors of the products of its factories, and after a 91-day
transitional period the gold coins will be available from the proceeds of
bills with which wages can be paid.
Gold coin circulation is not compulsory. No legal
tender laws force anyone to accept payment in the form of Gold Eagle coins. People
will have the choice to demand irredeemable paper dollars in exchange for
their goods and services, or in which to carry their savings, if this is what
they want. But they shall not be coerced to do so: there will be no legal
tender laws to force the circulation of the irredeemable dollar. The
legal tender status of the Federal Reserve notes is withdrawn forthwith,
effective on M-Day.
New Charter for
the Federal Reserve
The Federal Reserve banks would be given a new
Charter which would automatically expire should the demand for irredeemable
dollars fall below 10 percent of the total demand for money, as measured in
terms of gold.
It is understood that, under the new monetary
regime, there would be no central bank to regulate the stock of
gold-denominated money, the discount rate, or the rate of interest. These
would be regulated by unfettered markets such as the gold market, the bill
market, and the bond market.
Not Enough Gold
in the World?
Gold is the best foundation for credit. The present
monetary system has immobilized gold. In this way the world economy has been
deprived of its most potent and most wholesome source of credit, gold, forced
to replace it with the most unsound and most depraved kind, the irredeemable
promises of devaluation-happy governments.
One often hears the argument that there is not
enough gold to cement the basis of the credit structure for a dynamic world
economy. This argument is not grounded in fact. There is no identifiable
limit on the amount of credit that can be built on the monetary unit defined
as a certain weight and fineness of gold. Another way of expressing this is that
it is the flows of gold, as opposed to stocks, that matters. It
is not a question how much gold a government (or, for that matter, any entity
or individual) possesses, but how much it can attract. While
there is a limit on the former, there is no limit on the latter, provided
that gold flows fast enough.
Presently there appears to be a scarcity of gold in
the world economy. However, this is merely an optical illusion. All it shows
is that monetary policy lacks credibility as governments are unable to attract
gold to their coffers. Worse yet, they are forced to let large chunks of
their gold reserves go for a pittance as they are engaged in a desperate
effort to prop up the world's shaky payments system. The anti-gold propaganda
campaign has driven an increasing part of monetary gold underground. Governments
have, rather unwisely, used the remaining monetary gold in their possession
for backing the issuance of paper gold, that is, gold futures, options on
gold futures, and other forms of forward commitments to pay gold. The
outstanding commitments are in fact so huge, and they are growing so fast
that, in the opinion of the private holders of monetary gold, there is no way
to make good on them in an orderly way within the time period specified. The
only way to keep the trading of paper gold going is through ever larger
injections of central bank gold. But it is questionable that official gold
will be available indefinitely for the purpose of propping up the trade in
paper gold. They won't tell you this, but central banks are conscious of the
fact that their bank notes may lose purchasing power precipitously if gold
reserves fall below the comfort-level of the people.
A New Golden Age
The problem therefore is to mobilize the world stock
of monetary gold. This is what opening the Mint to gold is all about. Private
holders of monetary gold have to be convinced that governments and central
banks are ready to own up to the chicanery they have been practicing for a
hundred years, and are finally ready to return to the international gold
standard they abandoned in 1914.
In that year they stopped using bills of exchange to
finance world trade; since that time imports and exports have been the
business of governments subject to quotas and official credits. In that same year
the Federal Reserve System was established as the engine to monetize the debt
of the U.S.
government. With this kind of backing the U.S. government went ahead to
finance a number of world wars in the twentieth century, bankrupting the
international monetary system in the process. It is time, in the interest of
the savers and producers of the world, to abandon that dysfunctional and
exploitative monetary regime threatening to collapse and bury the productive
facilities of the world economy under the debris.
Once a credible international gold standard is in
place, private holders of monetary gold will be happy to release their
holdings to the bill or bond market. The world's gold stocks will be
mobilized, and the world economy will be refinanced in terms of wholesome
gold-based credit. The crisis-prone financial system will be gone, replaced
by the free flow of goods and capital represented by gold movements. A new
Golden Age will have dawned.
America of Ayn Rand's vision, a country of reason,
justice, freedom, production, achievement - a country of money - will
emerge once more, and the regime of the irredeemable dollar will appear as a
brief reactionary episode in the history of money.
Reference
Atlas
Shrugged, by Ayn Rand, New York (Random House) 1957, pp 410-415
(slightly edited, title and captions added).
July 1, 2002
Antal
E. Fekete
Professor Emeritus
Memorial University
of Newfoundland
St.John's, CANADA
A1C5S7
e-mail: aefekete@hotmail.com
GOLD UNIVERSITY
SUMMER SEMESTER, 2002
Monetary
Economics 101: The Real Bills Doctrine of Adam Smith
Lecture
1: Ayn Rand's Hymn to Money
Lecture 2: Don't Fix the Dollar Price of Gold
Lecture 3: Credit Unions
Lecture 4: The Two Sources of Credit
Lecture 5: The Second Greatest Story Ever
Told (Chapters 1 - 3)
Lecture 6: The Invention of
Discounting (Chapters 4 - 6)
Lecture 7: The Mystery of the Discount
Rate (Chapters 7 - 8)
Lecture 8: Bills Drawn on the
Goldsmith (Chapter 9)
Lecture 9: Legal Tender. Bank Notes of Small Denomination
Lecture 10: Revolution of
Quality (Chapter 10)
Lecture 11: Acceptance House (Chapter
11)
Lecture 12: Borrowing Short to Lend
Long (Chapter 12)
Lecture 13: Illicit Interest Arbitrage
FALL SEMESTER, 2002
Monetary
Economics 201: Gold and Interest
Lecture
1: The Nature and Sources of Interest
Lecture 2: The Dichotomy of Income versus Wealth
Lecture 3: The Janus-Face of Marketability
Lecture 4: The Principle of Capitalizing Incomes
Lecture 5: The Pentagonal Structure of the Capital Market
Lecture 6: The Definition of the Rate of Interest
Lecture 7: The Gold Bond
Lecture 8: The Bond Equation
Lecture 9: The Hexagonal Structure of the Capital Market
Lecture 10: Lessons of Bimetallism
Lecture 11: Aristotle and Check-Kiting
Lecture 12: Bond Speculation
Lecture 13: The Blackhole of Zero Interest
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