AB wrote:From the point of view of the FR banks, the more money they spend on subsidizing economic research the less tax they pay. So funds are gushing forth abundantly, and are granted generously to subsidize research in dismal monetary science, taking good care to shut out any dissonant noise about the gold standard."
I'm not a big fan of the fiat money system, however for the purposes of debate, I'm not clear that a return to the gold standard is the best solution to the problem.
Gold has always been tied to nobility, and a big part of the story of the United States is gaining freedom from control from the oligarchy. To be certain, we have ended up substituting one group of elitists for another.
A little known fact which relates here is the original Thirteenth Amendment to the Constitution, which, according to some sources, was ratified by the states in the early 1800's. This Amendment prohibited people with titles of nobility from holding public office in the U.S. Now you don't hear much of Dukes and Princes running for office, but government offices are chock full of lawyers (e.g. John C. Smith, Esquire), who do in fact hold titles of nobility.
Glossed over in U.S. history books is the War of 1812, which was a war of the British Crown and the Federal Government of the United States, NOT the States themselves. That's why only Washington, D.C., and various federal military establishments were attackes. It is speculated that part of the reason for the torching of D.C. was to remove evidence of the existence of this Amendment.
During the next 50 years following, the stage was set for the Civil War, and again the controversy over central banking was a primary theme. Interestingly, both the North and South were funded by different branches of the same bank (Rothschild). Following the secession of the Southern states from Congress, much new legislation was railroaded through Congress, including the new Thirteenth Amendment prohibiting slavery.
Having U.S. currency tied to gold was a big problem because it allowed a major avenue for the Crown, and the bankers supporting the Crown, to maintain a hold on U.S. economy.
A little known fact is that, while individuals in Bankruptcy have their slate wiped clean after 7 years, for nations that time period is 70 years.
The first major loan taken out by the Federal Government was in 1789, just after the election of George Washington and the foundation of the U.S. Dept. of Treasury.
1789 + 70 = 1859. The following year saw the beginning of the secession of the Southern States. I would suggest researching Abraham Lincoln's views on central banking, rather than slavery, for some interesting related facts. Point being, the U.S. now needed to borrow more money, which of course would only be allowed through reaffirmation of the original unpaid debt.
1859 + 70 = 1929. Heavy manipulation of the U.S. stock market causes it to crash. Was the crash engineered by U.S. creditors to get another reaffirmation of the debt?
Shortly after in 1933, Congress passed HJR 192 which forbade anybody from demanding gold as payment for debt. Hence "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE". That same year, the international gold standard was dissolved as a result of the London Conference.
1929 + 70 = 1999. Another crash, but this time limited to the tech stock sector.
Coincidence?
The main problem with having a gold standard is that it severly limits the issuance of credit, which under a fiat system, is essentially infinite.
My feeling is that U.S. policy makers have been pretty much gambling that if they allow U.S. businesses and individuals to borrow enough money, our natural creativity will enable us to capitalize on the debt. To this end, I think having faith in the American people is a noble endeavor, though whether or not it wise remains to be seen.
There is no denying that we are at a critical junction here. The question is whether enough people will make a return to a sustainable value system, which is of course the true backing for any monetary system.
If we brought back the gold standard tomorrow, there would be massive deflation of our currency which would result in the default on billions of dollars of borrowed money. I don't think there are too many people that would welcome that change, however it may be prudent to prepare for such an occurrence.
I'm not an economist, but IMO a better solution would be to back worldwide currencies by an index of several different commodities that are of differing value to society.
Why did we choose gold in the first place? That is the subject of a whole other inquiry. But what I've always found strange is that, generally speaking, gold is rather useless. Why would anybody base their economy on something that has such little practical purpose?
It is not for us to understand love, but simply to make space for it.
