The Gold Corner
Read Previous Gold Corner Posts Below
 Until early in the 20th century, gold played a central role in the world of money. Gold had an incredible run – almost three thousand years. And why not? After all, Professor Roy Jastram convincingly documents in The Golden Constant just how gold maintains its purchasing power over long periods of time. But, since President Richard Nixon closed the gold window in August 1971, gold has not played a formal role in the international monetary regime. Today, the “regime” is a chaotic non-system. It is time to reconnect the world's money to gold. Read More...
 Contrary to Fed Chairman Ben Bernanke, a gold standard that is not abused by the central bank generates stability. Boom-bust cycles are the outcome of central-bank policies that are aimed at stabilizing the economy. The alleged instability of economies during so-called gold standards in the past took place because the authorities were issuing paper money unbacked by gold, thereby undermining the gold standard. Read More...
 The government should let citizens experiment, as the great economist F.A. Hayek advocated, with developing their own monies, whether it be gold, silver, a commodity basket or whatever without imposing a tax on transactions involving these monies. Americans now do have the legal right to make contracts in gold, as long as both buyer and seller agree but onerous taxation of them make them impracticable as a means of creating alternative monies. Read More...
 There are a lot of different options as to how to set up and operate a gold standard but they all have the same goal: Maintain the value of the currency at a certain gold-price parity. Read More...
Economic sanctions and the EU's oil embargo against Iran may backfire and decrease the value of or even destroy the U.S. dollar as the global reserve currency. Efforts by India and China to circumvent the EU's oil embrago against Iran by trading oil in U.S. dollars appear to be spreading. Read More...
 "Economists everywhere agree" gold standard is bad idea. Fiat currency can be inflated at whim - such as the greenback during the “Civil War” or the Federal Reserve note when losing its silver/gold backing in the late 60’s. Meanwhile, the value of gold is incredibly stable relative to other commodities. Which one is the bad idea again? Read More...
 Inflation is indistinguishable in its effects from counterfeiting, therefore the central-bank bureaucrats are simply counterfeiters with grandiose titles; their sacred monetary policy is nothing more than “legalized counterfeiting.” Inflation is “new money issued by the banking system, under the aegis of government.” Read More...
 This is the beginning of the end. Both the EU and US are politically paralyzed, seeming only to be able to make compromises that involve more spending, more debt, and more central planning. The results are all too predictable to free-market thinkers: bailouts leading to moral hazard, low interest rates leading to ballooning debt, and eventually a cascade of systemic failures - leading to more bailouts. This was confirmed yet again on Wednesday when central bankers on both sides of the Atlantic announced a coordinated tidal wave of new money to bailout the Western banking system yet again. Now, we're left with a world where the only thing you can trust is the gold and silver in your pocket. Read More...
 The amount of gold and silver in existence is irrelevant to the ability to use gold or silver as money. The fallacy of quantity is the number one way apologists for fiat currency (money not redeemable in silver or gold) attempt to invalidate the Gold Standard. It's the number one way they attempt to brainwash you into using paper currency, i.e., fiat currency. The reason is simple. These people (elite bankers and corrupt congressmen) want us all using paper money becasue they can endlessly print paper money − but they can't print up gold or silver. Read More...
 The major world governments are in the process of destroying the value of the money their citizens hold. The world monetary system is in deep trouble. The United States has more than 8,000 tons of gold, with a current market value of almost a half-trillion dollars, which would be enough to move to some form of a gold standard. A gold standard for money is not a panacea, but it is far better than an undisciplined fiat standard. Read More...
 One thing is becoming clear as our lame crisis persists. The monetary system has got to be reformed. Given the paucity of ideas circulating today about how really to get out of the Great Recession, we owe it to ourselves to absorb, and implement, the wisdom inherent in Lew Lehrman's book The True Gold Standard. Read More...
 Watch the interview with Lew Lehrman on why the monetary gods of the 20th century have failed us, and why a return to the gold standard is the only way to bring monetary policy back into the free market’s hands. Read More...
 The money supply increases naturally by exactly the amount of increases in productivity in a healthy economy. It doesn't require belaboring that the economy isn’t healthy, nor that the money supply expands every time the printing presses run to bail out a failing business and bring on a new iteration of quantitative easing. The solution is a simple (albeit not necessarily easy) one, says Porter Stansberry: Return to the gold standard. That will happen, he says, when the people say, “Enough!” Read More...
 There has never been a successful paper currency in history; the longest-standing currencies, the British pound and the US dollar, have both lost 99.5% of their purchasing power. Currency completely fails as a store of value. Anyone watching from Mars would be scratching their head at this, as well. Read More...
 "Capitalism" is to "free markets" as "awful" is to "wonderful." The current system of "capitalism" is nothing but an aggressive form of mercantilism that uses the power of the state to prop up the privileges of a few. Everything about this system is established by government monopoly power, from the corporation itself (a judicial entity) to the paper money monopoly itself (implemented by government force). There is almost nothing about the system at a fundamental level that partakes of the free market. Read More...
Gold provides monetary discipline. If individuals suspect that money is being issued in excess of levels warranted by legitimate economic needs and growth prospects, they can exchange their currency holdings for gold at a pre-established, fixed rate. Gold convertibility ensures that the money supply expands or contracts based on the collective assessment of market participants—as opposed to the less-than-omniscient hunches of central bankers. Gold provides a self-correcting mechanism for irrational exuberance; as credit begins to flow too freely, as equity values or commodity prices appear frothy, the astute observer at the margin cashes out in gold. Monetary central planning gives way to the aggregate wisdom of the free market.
Read More...
 It amuses me today when people invent this, that or another reason why a gold standard system is "impossible." What they usually mean by that is: they don’t know how to do it. You can’t be in a worse position than Germany on Nov. 15, 1923 when it returned to the gold standard and eliminated hyper-inflation overnight. If it was possible then, it is possible at any time.
Read More...
 As the twin pillars of international monetary system threaten to come tumbling down in unison, gold has reclaimed its ancient status as the anchor of stability. The spot price surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train.
Read More...
If it was immoral and illegal for the government to confiscate the gold at $20 an ounce in 1933, why is it a bad idea for the government to sell back the gold to the public at a market price today? It is not, unless that is one adopts Franklin Roosevelt's idea of a gold standard: a system in which the government has the right to steal property at one price, hike the price later, and sit on the wealth.
Read More...
The tax-exempt seniors group that pushed hard to get ObamaCare passed stands to reap a billion-dollar reward over the next decade as ObamaCare destroys the competition to the products it endorses. During what passed for a debate on ObamaCare, the Centers for Medicare and Medicaid Services (CMS)...
Read More...
Remember how the hotshot Wall-Street bankers packaged all those subprime mortgages together and miraculously produced Triple-A rated securities? Well, the hotshot politicians who just met at the G-20... Read More...
Posted July 29, 2011
Making Change: The Simplest Practical Gold Standard System
Originally Posted At Forbes.com
By Nathan Lewis
Something that appears complex is actually very easy.
Before you get into the complex, it is good to start with the simple. What would be the simplest possible gold standard system for practical use today?
"Just use gold coins!" comes the immediate reply. Ummmm ... nope. The smallest practical gold coin is about a tenth of an ounce. That would be worth $160 today. Look at how many $100 bills you use in day-to-day transactions. Not many, right? This is not because you are not allowed to use $100 bills. You can go to any bank and get as many as you want. But nobody uses them, because they are inconvenient.
Even if you did use such a coin, what would you use for smaller denominations? Grains of gold dust?
Historically, this problem was overcome with the use of silver coins. The silver to gold ratio was reliably stable for decades at a stretch, even though it did tend to drift over longer periods. You could use a coin down to about 0.07 oz., the U.S. silver dime. For most of the 19th century, silver had a value of about 16 to 1 compared to gold. So, an ounce of silver would be worth about $100 today, with a 16 to 1 ratio. A dime would be worth 0.07x$100 or $7. Even this is still a rather large figure, which is why nickel and copper coins were then used.
Using metal coins was never as simple as people would like to believe today. The coins would naturally wear down, or could be purposefully clipped. Often, they traded below their face value due to this lightening. How would you like it if every coin had a different value? The Chinese put holes in their coins so they could be sorted according to their wear and grouped on strings. A string of a hundred coins that were somewhat worn might be worth 95 cash.
These problems were resolved through the use of paper money. No longer was it necessary to use silver coins, whose value drifted slightly compared to gold. No longer did you have coins with uneven wear and clipping. Each paper bill was worth exactly the same as the others. Each was redeemable for gold coins on demand.
Read the rest of the column here. . .
Posted July 25, 2011
Gold Standard Or Bust
Originally Posted At The Weekly Standard
By Judy Shelton
August 1, 2011 Issue
Fixing the dollar before it’s too late
Gold provides monetary discipline. If individuals suspect that money is being issued in excess of levels warranted by legitimate economic needs and growth prospects, they can exchange their currency holdings for gold at a pre-established, fixed rate. Gold convertibility ensures that the money supply expands or contracts based on the collective assessment of market participants—as opposed to the less-than-omniscient hunches of central bankers. Gold provides a self-correcting mechanism for irrational exuberance; as credit begins to flow too freely, as equity values or commodity prices appear frothy, the astute observer at the margin cashes out in gold. Monetary central planning gives way to the aggregate wisdom of the free market.
Read the rest of the article here. . .
Posted July 17, 2011
Return Of The Gold Standard As World Order Unravels
Originally Posted At The Telegraph
By Ambrose Evans-Pritchard
July 14, 2011
As the twin pillars of international monetary system threaten to come tumbling down in unison, gold has reclaimed its ancient status as the anchor of stability. The spot price surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train.
Gold surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train.
Read the rest of the story here. . .
Posted July 14, 2011
Bernanke Fights Ron Paul In Congress: Gold Isn’t Money
Originally Posted At Forbes.com
By Agustino Fontevecchia
July 13, 2011
Fed Chairman Ben Bernanke faced-off with Fed-hating Representative Ron Paul during his monetary policy report to Congress on Wednesday, July 13. The head of the Fed was forced to respond to accusations of enriching already rich corporations while failing to help Main Street, while he was pushed on his views on gold. When asked whether gold is money, Bernanke flatly responded “No.” Read the entire story here. . .
Posted July 11, 2011
Press Release Announcing Appointment of Dr. Lawrence A. Hunter to the Advisory Board of Gold Standard 2012
For Immediate Release
Contact: Lawrence A. Hunter
202.460.9007
Notable Economist Lawrence A. Hunter
Joins Gold Standard 2012 Project
Washington, DC (July 10, 2011) -- Lawrence Hunter, Ph.D., an economist and president of the Social Security Institute, has joined the Advisory Board of Gold Standard 2012, the monetary reform initiative of American Principles in Action (APIA). Dr. Hunter previously served as vice president and chief economist of the U.S. Chamber of Commerce, Empower America and FreedomWorks. He also served in several high-level economic policymaking roles in the White House and Congress, including staff director of the Joint Economic Committee, and was the longtime chief economic adviser to Jack Kemp. He writes weekly for Forbes and often for other publications, appears frequently on television and radio, and has a doctorate in public-choice economics from the University of Minnesota.
Accepting the invitation to join the Advisory Board, Hunter praised the effort and said, “The 40-year experiment with a fiat global monetary system unanchored to gold has failed. The fiat dollar’s days as reserve currency of the world are limited, and we can either re-anchor the dollar to gold and lead the world toward monetary stability and prosperity or we can struggle and flail about in vain trying to paper over the problem as the dollar collapses and our standard of living deteriorates. I accepted APIA’s invitation to join the Advisory Board of Gold Standard 2012 because I welcome the opportunity to work with a panel of such wise people of clear vision to make the dollar as good as gold once again. I do not intend to stand by idly and watch the United States slip inevitably into monetary chaos.”
Jeffery Bell, head of Gold Standard 2012 and Policy Director for APIA had this to say about Hunter’s appointment: “Larry Hunter was a key figure in the supply-side economic revolution and today he is one of his profession’s most distinguished advocates of the gold standard. We look forward to working with him in our effort to make the dollar as good as gold.”
Among those serving on the Gold Standard 2012 Advisory Board are Lewis E. Lehrman, chairman of the Lehrman Institute and former member of the U.S. Gold Commission, Dr. Manuel Hinds, the former finance minister of El Salvador and recipient of the Manhattan Institute's 2010 Hayek Prize for his co-authorship of the acclaimed workMoney, Markets, and Sovereignty; Arthur Laffer, chief executive of Laffer Associates and member of President Ronald Reagan’s Economic Advisory Board; John Mueller, director of the Economics and Ethics Program at the Ethics and Public Policy Center; Brian Domitrovic, Harvard P.h.D. historian, assistant professor at Sam Houston State, and author of Econoclasts: the Rebels Who Sparked the Supply-Side Revolution, Marc Miles, CEO of Global Economic Solutions; Charles Kadlec, author and longtime adviser to Jack Kemp; and John Tamny, editor of RealClearMarkets.com and Forbes Opinions.
###
Originally Posted At The Hill
Competing Currencies: A Defense Against Profligate Spending
By Rep. Ron Paul (R-Texas)
July 11, 2011
The end of June marked what is hopefully the end of the Federal Reserve's policy of quantitative easing. For months the Fed has purchased hundreds of billions of dollars of Treasury debt, enabling the government to fund its profligate deficit spending, push the national debt to its limit, and further devalue the dollar. Confidence in the dollar is plummeting, confidence in the euro has been shattered by the European bond crisis, and beleaguered consumers and investors are slowly but surely awakening to the fact that government-issued currencies do not hold their value.
Currency is sound only when it is recognized and accepted as such by individuals, through the actions of the market, without coercion. Throughout history, gold and silver have been the two commodities that have most fully satisfied the requirements of sound money. This is why people around the world are flocking once again to gold and silver as a store of value to replace their rapidly depreciating paper currencies. Even central banks have come to their senses and have begun to stock up on gold once again.
But in our country today, attempting to use gold and silver as money is severely punished, regardless of the fact that it is the only constitutionally-allowed legal tender! In one recent instance, entrepreneurs who attempted to create their own gold and silver currency were convicted by the federal government of "counterfeiting".
Also, consider another case of an individual who was convicted of tax evasion for paying his employees with silver and gold coins rather than fiat paper dollars. The federal government acknowledges that such coins are legal tender at their face value, as they were issued by the U.S. government. But when it comes to income taxes owed by the employees who received them, the IRS suddenly deems the coins to be worth their full market value as precious metals.
These cases highlight the fact that a government monopoly on the issuance of money is purely a method of central control over the economy. If you can be forced to accept the government's increasingly devalued dollar, there is no limit to how far the government will go to debauch the currency. Anyone who attempts to create a market based currency-- meaning a currency with real value as determined by markets-- threatens to embarrass the federal government and expose the folly of our fiat monetary system. So the government destroys competition through its usual tools of arrest, confiscation, and incarceration.
This is why I have taken steps to restore the constitutional monetary system envisioned and practiced by our Founding Fathers. I recently introduced HR 1098, the Free Competition in Currency Act. This bill eliminates three of the major obstacles to the circulation of sound money: federal legal tender laws that force acceptance of Federal Reserve Notes; "counterfeiting" laws that serve no purpose other than to ban the creation of private commodity currencies; and tax laws that penalize the use of gold and silver coins as money. During this Congress I hope to hold hearings on this bill in order to highlight the importance of returning to a sound monetary system.
Allowing market participants to choose a sound currency will ensure that individuals' needs are met, rather than the needs of the government. Restoring sound money will restrict the ability of the government to reduce the citizenry's purchasing power and burden future generations with debt. Unlike the current system which benefits the Fed and its banking cartel, all Americans are better off with a sound currency.
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