What the Freight!?! Gold Not Money?
Blog by Dave Stover
July 13 Ben Bernanke told us several things:
1. If we (the U.S.) don’t raise the debt ceiling there will be dire economic consequences.
2. Gold is NOT money but an asset.
On the first count: your accountant comes to you and says, “If we don’t raise our credit limit with our vendors, we can’t cover all of our obligations this month.”
Your response would be, or should be, “WHAT?” So, this month’s income will not sustain the operation? How long has this been going on?
So the limit we set years ago we’re about to surpass and now we are handcuffed to habitual borrowing just to pay minimal obligations: interest only on the debt?
Doesn’t that sound a lot like the Mortgage Crisis Calamity where people paid only interest on their home debt, then when the interest rates went up only slightly simultaneous with a dip in the economy, they lost their homes and had to file bankruptcy?
Does that mean our nation qualifies to be turned over to receivership?
Then your accountant wouldn’t have much to say. But would you consent and let him ask the permission of your suppliers to let you go deeper in debt just to make payroll?
Incurring “bad debt” to fuel growth is controversial and risky enough, but to take on “bad debt” to cover reckless spending sprees, basic interest only payments on already existing debt, and simply to meet payroll defies every longstanding, proven economic basic that families, companies, and countries have lived by since the beginning of time.
[Theory that makes principles of economy simple]
How long will it be before these schemes run the natural course of one being overly indebted—receivership?
The second count is baffling. Gold not money? Again, “What?”
Perhaps in the narrowest definition in an economist’s parlance this might be an acceptable explanation, but nowhere else—certainly not the real world.
Bernanke went on further to say that the reason banks hold gold is that it is “an asset” much like bonds, etc. that international banks hold, which too are not considered money.
Yet when pressed on the point of why banks are still using gold instead of say, diamonds as an asset or hedge, his answer was, “tradition.”
Currency came about as a means of trading so one could trade another for goods or resources by a unified standard. The sheep herder could trade fairly with the farmer, merchants could buy and sell from region to region or country to country, etc. This commodity allowed one to “store” their energy, wealth or resource in a way that could be generally accepted and easily traded.
Money–our money–used to be gold certificates, bills that could be used for all debts public and private, and could be redeemed for the commensurate amount of Gold. Once our money was fully removed from “the gold standard” politicians could set the value of the dollar through “monetary policy”.
This allows those who are appointed, by those you elect, to deflate the value of the mode of the economy’s exchange.
This means, the legal tender that you use as a place to store your life’s energy can be manipulated. Yes, your life’s energy can be manipulated. Since the dollar is a standard unto itself, by increasing the number of dollars, someone can artificially devalue each dollar’s worth.
Please understand, if and when that happens, the place where you store your life’s energy has lost value. Your life effort has lost value.
This we could understand if economic events turn in the wrong direction, but what do you say about those who intentionally devalue that instrument you use to rate and store the value of your time and effort?
You work to save and store and at the same time others are working to destroy the value of what you are saving and storing.
How long should this go on before you call it theft?
This entire scenario is only made possible by those who believe the commodity on which our money was until recently based and has been the standard of exchange for more than 5,000 years, gold, is now not money.
NO? Why not?
Is that because gold can’t be so easily manipulated so as to steal the value of someone’s blood, sweat, and tears–their life’s work? That’s right, steal your life’s work.