 Mr. Kim begins by asking the question "What is money and what is not?" His reply was that gold is money and paper is not. He called paper fiat and counterfeit. Wrong answer! For Mr. Kim's information, fiat means by decree. That means that no matter what is used as money, it has always been used by decree. And that most assuredly includes gold, when it was our legal tender. As money is a mental construct, that is to say something not found in nature, it is utter nonsense to say that only gold and silver are money. Money is that which our national governments choose to use. Those governments may well issue far too much of it for our liking, but that does not make it counterfeit. That just devalues the purchasing power of those paper thingamajigs we already own. When gold has been used to represent money, it too was abused by the powers of those times. History is chock-a-block full of such examples. That no nation today uses a gold standard should cause even the intellectually challenged to wonder why it should be that every country would abandon a system that works as well as Mr. Kim would have us believe.
Mr. Kim did unwittingly point out one of the reasons that a gold standard can fail. If you missed it, that was likely because he did not want you to pick up on it. He mentioned that America used to be on a gold and silver standard, but dropped silver, never bothering to explain why that was. Silver was dropped because a lot of silver was discovered, bringing the value of all the already mined silver down considerably. The Spanish ran into a similar problem with gold when they brought it back from the new world by the boat load. Instant inflation! And lest you believe that could not happen again, think about all the new asteroid mining companies that are just starting up. And think about the new technology being worked on by a Canadian inventor that seeks to generate power from the movement of the oceans. A by-product of this technology is the capture of the gold contained in the water. The oceans collectively contain some 300,000,000 cubic miles of water and each of those cubic miles contain some 10 tons of gold. That is 3 billion tons of gold just waiting to come into the market. Do you not suppose that will have quite a negative effect on the purchasing power of the 170,000 or so tons of gold already mined?
You should also be aware that the examples that Mr. Kim provided us with to demonstrate that gold maintains its purchasing power over time were very carefully chosen by him to support his claim. Had Mr. Kim chosen 1980 as his start point for an example, we would have seen that it would have taken gold almost 30 years to get back to that same level and even with gold now being almost twice the price, an ounce of gold will not buy now what it did then. And 33 years is no small chunk from a person's life to be underwater!
Mr. Kim further errs by claiming that only gold keeps prices constant over time. Total hogwash! The only thing that keeps prices stable over time is fiscal discipline by those entrusted with its management. When fiscal mismanagement occurs, regardless of what is being used to represent money at the time, its purchasing power decreases. That has a perfect 1:1 relationship coefficient that only the ideologically inclined disregard. Also ignored are the very real examples from history where abundant new supplies of a precious metal sent the value into a nose dive. Can we be so smug as to assume that a large new supply of gold will not become available in the next 10 to 20 years?
Mr. Kim's solution for waging war against the bankers is to buy gold. That might be a wonderful way at this juncture of history to protect yourself against the non-stop debasement of our money, but it is not the only way and it certainly will not win the war he speaks of. Most people today are having a hard enough time putting food on their table. Buying gold is beyond their means. Even buying a silver round is beyond their ability. Heck, a full 25% of Americans do not have so much as a single penny put away for their retirement, so how are they to wage war against the banks?
Allow me to offer a far more practical answer on how to wage war than that offered by Mr. Kim (or any other talking head). What must be realized is that it is not so much the banks that we are going after as it is the government that has gotten us into the mess we find ourselves. Yes, it is true that the banks and big government are more or less a tag team, with the banks lending far more than is prudent to governments and governments making certain that bankers never go to jail for the crimes they commit. But that is somewhat beyond the point. The point is to win and to win we must target government; the enemy that can be defeated. (In so doing, the other half of the tag team, the banks, will also fall.) After all, if the very governments that grant banks their charters have become pawns in the bankers' game, what chance would an army of comparative paupers have against bankers, employing money as our weapon?
What is firstly required to wage this war is a change of perspective. We cannot continue to view ourselves as helpless victims, for that only allows the game being run on us to continue until it all comes crashing down. We are not victims unless we accept that as our fate. But we need not in that we have a weapon at our disposal which if properly deployed, will destroy them, for they are powerless against it. The weapon i speak of is democracy. What is required is a third American political party. But i speak not of just any third party. What is required is a third party that is committed to ending the republic and forming a more perfect union immediately thereafter. This has been done countless times in the past, once even by America in 1789. The beauty of doing so is that the new nation can refuse to honour the debts of the previous one. (As an added bonus, all the old laws get tossed, allowing for a much simplified legal code.) i believe that should support for such a party reach 10%, the bond market would start to pay attention. That would drive up the borrowing costs of government and as we all know, without being able to borrow at ridiculously low rates, government would be in even deeper trouble than currently. Get public support up to 25% and i am confident that the only purchaser of government debt would be the Fed. Problem is, when the Fed becomes the only bidder at the debt auctions, all confidence will be lost in the American dollar; the reserve currency of the world. The war will be over and we will have won without firing a single shot. A new monetary system will have to be implemented. And given what we are going through, fiscal discipline will be well defined in the new system to give people confidence that it will also not come crashing down, regardless of what we opt to have represent money.
It will be during this transition period from what is currently being used as money to what we will wind up using when precious metal ownership will be at its most advantageous. When the transition period is over, should we not go back to the gold standard, that will be the time to divest all but 10% of whatever gold and silver you may still possess, for the bull will have shot its wad. And if it happens to be a return to the gold standard, put a bounty out on that Canadian fellow.
"Abandon the creeping meatball." - Jerry Rubin
 Commented 4266 days ago |
