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In his 1982 article, “Monetary Policy: Theory and
Practice,” Nobel laureate Milton Friedman said that "if a domestic
money consists of a commodity, a pure gold standard or cowrie bead standard,
the principles of monetary policy are very simple. There aren’t any.
The commodity money takes care of itself." [emphasis added]
It takes care of itself. Consider that thought for a moment, then ask yourself why we've had politically-appointed bureaucrats
running the money and banking system since 1913. The "official"
reason was to maintain the stability of the dollar and avoid the kind of
panics that plagued the 19th century economy. But the dollar has all but
dried up in value, and the crises today are threatening to bring the whole
planet to its knees.
Does this mean Friedman was right, even if he was never gold's champion? Did
commodity money keep economies in balance, both within and between nations?
Clearly, the views not only of central bankers but of their
Keynesian supporters in the economics profession is, No, it didn't.
Precious metal coins can't be printed, and accelerated printing - make that wildly
accelerated printing - is needed at times to get banks and governments out of
trouble.
Trying to run a fractional reserve banking system with gold as the medium is
a real pain for politicians and bankers because of the handcuffs it imposes.
To those at the top, gold's great flaw is its scarcity and lack of a
"high elasticity of production," as Keynes informed us, meaning it can't be wished into existence. Since bankers fund
governments in times of war, clearly gold is more than a mere inhibitor of
profits; it represents a potential threat to national security. Anything that
limits government action is regarded as a threat to its existence, and
anything that threatens the existence of our masters threatens us, the
argument goes.
Historically, of course, no government has allowed itself to be at the mercy
of metal when it comes to waging war, at least not since paper IOUs began
circulating for gold and silver. Belligerent governments in 1914 had little
trouble going to war, putting gold on the sidelines as the slaughter mounted
to settle the disagreements. But after the war there was still the lingering
thought that gold somehow should still be money, and so the house of cards
was restructured into something called the gold-exchange standard from 1926-1931. It took an ordinary recession amplified into a deep
depression by government tampering to convince people that gold was unfit for
societies run by a government - central bank alliance.
The hijacking of gold to serve special interests is one of the most
consistent facts of human history. It's also one of the most difficult to
believe because of what it implies about the leaders we've been trained to
respect. Did Lincoln, Wilson, Roosevelt, Johnson, Bush, etc..
really lie us into war, then fund it with banker
voodoo? We certainly won't learn that in government schools.
Sixty-three years ago Garet Garret told his readers:
There is a long history of monetary experience. It tells us that
government is at heart a counterfeiter and therefore cannot be trusted to
control money, and that this is true of both autocratic and popular
government. The record has been cumulative since the invention of money. Nevertheless it
is not believed. [emphasis
added]
After the election of Ronald Reagan in
late 1980 a joke circulated that went like this: "What's flat, black,
and smokes?" Answer: Iran on Inauguration Day. Given the rhetoric in the
air and the belligerent history of the past decade, the joke could be
tomorrow's headline.
But not if politicians were handcuffed monetarily. Not if they couldn't get
the Aladdin in charge of the Fed to fund their ambitions. Not if people start
to believe that government counterfeiting is real and a threat to their
lives.
My new Kindle ebook, The Jolly Roger Dollar: An
Introduction to Monetary Piracy, addresses in detail the relationship
between central banking and war, as well as many other issues, providing
numerous hyperlinks to web resources as references for further reading.
George
F. Smith
Read
his book : The Flight of the Barbarous Relic
Visit his website
Read
his blog
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