Category Archives: Money

Fools’ Gold, by Robert Gore

When the slaves revolt, they will seek the blood of their masters.

In 2013, a century after the establishment of the Federal Reserve, I published The Golden Pinnacle. The novel’s hero is Daniel Durand, a Wall Street banker. Chapter 27, “Fools’ Gold,” features Daniel’s testimony in 1913 before a House of Representatives subcommittee against legislation under consideration that would establish the Federal Reserve. Eleanor is Daniel’s wife and Tom and Alexander are two of his four sons. As the current banking crisis unfolds, I won’t have much to say that will add in any meaningful way to what I said in “Fools’ Gold”. Why repeat myself? Perhaps I’ll just keep linking back to this post. Please share in whole or in part with attribution and a link back to this post.

From “Fools’ Gold”

Daniel sat at a table in a committee hearing room of the House of Representatives. The drafts crisscrossing the room carried the winter cold of February. There were few spectators in the gallery. Daniel glanced at Eleanor, who sat with Tom and Alexander, but she was staring in a different direction. Although she had wished him well, she had seemed preoccupied when they met briefly in the hall outside the hearing room.

Members of the subcommittee of the House Committee on Banking and Currency strolled to their seats, signs denoting the representative, at an elevated, semicircular panel at the front of the room. They chatted with each other. Nine representatives sat down. The chair for Representative Bulkley of Ohio remained empty. The chairman of the subcommittee, Representative Carter Glass, from Virginia, banged his gavel.

“The hearing in consideration of House Bill 7837, for the establishment of a federal reserve bank and the furnishing of an elastic currency, shall now come to order. The subcommittee will hear the testimony of Mr. Daniel Durand, from the firm of Durand & Woodbury, of New York.” Chairman Glass’s accent had an unmistakable Virginia lilt that reminded Daniel of Aldus Kincaid, his attorney for the court of inquiry. A dapper gentleman in his mid-fifties, Glass had prominent ears and a nose that filled a larger proportion of his face than the average nose filled of the average face.

“Thank you, Mr. Chairman, and thank you, members of the committee,” Daniel said. “This legislation is still in its early stages and the details of the reserve system are the subjects of dispute. However, before everyone is enmeshed in them, it’s time to consider not just the purported benefits but also the real dangers of central banking and government-created money, or an elastic currency, if you will, and to ask if this supposed innovation is in the best interests of our country.” He glanced at his notes.

“A persistent misnomer is the term ‘bank deposit,’ which is not a deposit at all. If I take an item to a warehouse and pay a fee to deposit it for safekeeping, when I exercise my contractual rights and claim it, the owner of the warehouse must give it back to me. The owner can’t lend it out, use it to secure a loan, or give it to another depositor to satisfy his claim. On the other hand, when I put my money in a bank, the banker can lend or invest it, use those loans and investments as collateral to borrow money, or use my funds to pay creditors or other depositors. I haven’t deposited my money in the same sense that I deposited the item at the warehouse.

“My deposit is actually a loan and I’m an unsecured creditor of the bank. Much of the instability of the present system stems from a fiction. The respectable bank is housed in a neoclassical fortress and prominently displays a sturdy vault, to convince the depositor his money is safe. In fact, almost all his money leaves the bank in search of a return higher than the interest the bank pays him. Only a small portion is held in reserve to meet depositor withdrawals, although all depositors are told they can withdraw their money on demand.

“The bank has made a promise that it can’t always keep. Business and financial cycles are as immutable as human nature. When famine follows feast and fear replaces greed, the demand for money inevitably increases. The banker faces his worst nightmare—a run on the bank. Banks with sufficient reserves or borrowing power survive. Those without them go bankrupt.”

Daniel looked up at the representatives. Only a couple appeared interested.

Continue reading

Separate Money and the State, by Jacob G. Hornberger

Why should the state control money? It’s a license to steal, and states invariably exercise it. From Jacob G. Hornberger at fff.org:

The United States once had the finest monetary system in history. It was a system that the U.S. Constitution established. It was a system in which the official money of the United States consisted of gold coins and silver coins.

We often hear that the “gold standard” was a system in which paper money was “backed by gold.” Nothing could be further from the truth. There was no paper money in the United States. That’s because the Constitution did not empower the federal government to issue paper money. It also expressly prohibited the states from issuing paper money.

The Constitution used the term “bills of credit.” That was the term people at that time used for paper money. The Constitution expressly forbade the states from issuing “bills of credit” or paper money. It also did not delegate the power to issue “bills of credit” or paper money to the federal government.

Instead, the Constitution empowered the federal government to “coin” money. At the risk of belaboring the obvious, one does not “coin” money out of paper. One “coins” money out of such metallic commodities as gold and silver.

The Constitution also expressly forbade the states from making anything but gold and silver coins “legal tender,” or official money, which further established the intent of the Framers.

Continue reading

Immunizing Ourselves, by Eric Peters

Gold is the best antidote to central bank digital currencies. From Eric Peters at ericpetersautos.com:

A reader mentioned the way chicken and egg prices have been manipulated – upward – by culling flocks, ostensibly on account of some avian virus, probably as dubious as the ‘Rona but just as useful. Now comes word that the flocks are to be “vaccinated,” just as we were all supposed to have been – with the grift going straight into the pockets of the drug cartels who, conveniently, have “vaccines” at the ready.

Meanwhile, we’re paying $7 for a dozen eggs – probably soon $12.

But there is a way to immunize ourselves against this – and not just with regard to eggs and chickens – although that’s as good a place as any to start, if you’re able.

We got our own chickens – and so have our own eggs. We are immune from the grift – and our birds don’t have whatever’s-in-those-drugs coursing through their bodies and so, inevitably, ours.

We have unvaccinated chickens – and eggs.

Just as important, we are not dependent on the rent-seekers’ supply of chicken and eggs. We pay what it actually costs us to raise our birds – and get their eggs – which is less than what the corporate-owned stores charge for theirs. Over which we have no meaningful control, precisely because they are corporations – and so own practically all the stores (most of the small, independent ones having been “locked-down” out of business during the “pandemic,” which strangely was held in abeyance at those big corporate stores, which were curiously allowed to remain open).

Continue reading

Why credit needs a golden anchor, by Alasdair Macleod

Credit needs an anchor or you get what you have today: an enormously over-indebted global economy and financial system. From Alasdair Macleod at goldmoney.com:

This article examines the relationship between credit and its anchor in value. Today, that anchor is fiat currency, which is both parochial and unstable. Historically, and in law it has always been gold.

It is a common error to think of credit in a narrow sense, without realising that officially recorded credit in the form of banknotes and deposit accounts with the commercial banks are only a minor part of the total credit in an economy. This article takes a holistic view of credit.

The relationship between credit and whatever provides an anchor to its value is a far larger topic from that commonly discussed in economic journals. It involves an understanding of the relationships between currency credit and commercial bank credit, the consequences of which rarely occur to economic commentators.

There is evidence that changes in central bank credit have a greater impact on prices than an equivalent change in commercial bank credit ­— a new and important topic for our consideration.

This article draws on the history of law as it applies to banking, money, and credit. For both contemporary economists and the layman, it involves some concepts that may be novel to them. But given that they concern the very survival of contemporary currencies, they are worth making the effort to understand.

Continue reading

The Brain Standard, Part Two, by Robert Gore

Three steps forward, two steps back; so humanity advances.

Part One

Ideas are the foundation of the brain standard, one of which is that only individuals have rights. This cuts through the collectivist dreck that passes for thought among most of the world’s so-called intellectuals. The variations of collectivism all disguise nothing more than brute force hiding behind propaganda. Their inevitable failures stem from their essential flaw: those that control the collective claim rights that negate those of the individual.

There are grounds for hope. From the ruins of impending collapse there will be some who reject collectivism and are committed to rebuilding on a foundation of individual rights. How they will protect those rights and whatever territories they stake out are what theoretical physicists sometimes call “engineering problems.” One advantage they’ll have, though, as the brain standard constituency—they’ll be smarter than their adversaries. Attention, imagination, and intelligence will be keenly focused on building from the ruins and protecting what they’ve built.

Here’s a thought experiment. Imagine someone invents a cheap, portable device that defends its bearer and his or her property from all violence from all sources, but has no offensive capability. The device is so cheap that virtually everyone can buy it, and charities are set up to donate it to those who can’t. The device is universally available and creates a world without violence.

How would such a world function? People would have to produce to survive, but absent mutual agreement no one would have an enforceable claim on anyone else’s production. There would be no coercive transfers of money or property. Disputes would be settled by negotiation and mediation. A body of civil law similar to English common law would develop. Surely such a society would figure out a way to deal with nonviolent crime.

The negation of violence would eliminate government’s nominal rationale: protecting citizens from violence. In the absence of government (and its violence), individuals and society as a whole would be free to advance as far as their capabilities will take them.

This extreme hypothetical offers a stark contrast with the absence of anything resembling freedom anywhere in the world today. Government and collectivism are top-down codependents based on violence and coercion. Their current manifestations are replaying the dreary and what should be the common knowledge lesson of history: they inevitably fail, often after a great deal of bloodshed.

******

SLL has a unique take on the world. Some like its perspective, some don’t. If you like it, or if you don’t but take a perverse joy in funding your intellectual adversaries, please consider offering compensation for the time and effort put into SLL. Most of our readers are value-for-value people. If that describes you, please recognize SLL’s value. The payment links are on the right or click the button below. Thank you.

******

In the current jockeying among collectivist governments for the things over which they jockey, Russia’s and China’s are doing a better job than the U.S.’s. The former are the co-leaders of the Eurasian alliance and represent substantial politic and economic power. The latter is bankrupt, embroiled in yet another war it won’t win, and stands accused of sabotaging its most important European ally’s oil pipelines. At home, the U.S. government and its fellow travelers are in thrall to brain-dead ideologies that hasten the country’s disintegration.

Continue reading

Prepare For 10 Years of Global Destruction, by Egon von Greyerz

Popping a bubble that’s been going for as long as the present one has inevitably entails tragic consequences. From Egon von Greyerz at goldswitzerland.com:

<a href="mailto:?subject=PREPARE FOR 10 YEARS OF GLOBAL DESTRUCTION  &body=https://goldswitzerland.com/prepare-for-10-years-of-global-destruction/”>

The final stages of major economic cycles are always accompanied by the maximum amount of bad news as well as heinous events. This time is no different as the West is in the process of committing Harakiri (Seppuku). 

As Elon Musk said: 

“My mentality is that of a Samurai. I would rather commit Seppuku than fail.”

Sadly, the problem for the West is that it is both committing Harakiri and failing.

For at least half a century, the world has been in a process of self-destruction. 

As the decline accelerates, the next phase of 5-10 years will include major political, social, economic as well as wealth – destruction.

What can be more heinous than a total economic and financial collapse accompanied by a potential World War III that at worst could destroy the world totally. 

A recent article of mine discussed global fragility due to War, Debt and Energy Depletion.

In this article I outline the major risks today, financial and geopolitical and also discuss the best way to protect against these risks. Physical Gold is of course the ultimate wealth preservation investment. The next major move up in gold is not far away. See further on.

Biden’s recent visit to Ukraine and whistle stop tour of Europe confirmed that there is no desire to make peace but only war. More support of weapons and money from the US is forthcoming. And whatever the US dictates, Europe follows without considering the consequences. 

Continue reading

Will Nuclear War, Debt Collapse or Energy Depletion Finish the World?

Place your bets. From Egon von Greyerz at goldswitzerland.com:

Fragility has probably never been greater in history. Just three words encapsulate the destiny of the world.

The THREE words are: WAR, DEBT, ENERGY

A FOURTH word will financially save the ones who understand its significance. It will also play a major role in the world’s future monetary system. The word is obviously GOLD. As the world moves from a fragile debt based Western system to a commodity and energy based system in the East and South, gold will assume a strategic role in the monetary system.

WAR – WWIII

War is obviously a potentially catastrophic threat since the sheer existence of the world and mankind is now at maximum risk. Wars are horrible whoever starts them. Since the beginning of mankind there have probably been over 100,000 important wars and conflicts.

Wars are horrible whoever starts them. Most wars end in major fatalities and injuries and a massive human and financial cost. And at the end of the war, the situation is often worse than when it started, like in for example Afghanistan, Vietnam, Iraq and Libya which countries the US invaded unprovoked. The same will most probably be the case in Ukraine.

There are always two sides to a war. I learnt many years ago that before we judge someone, we must walk three moon laps in his moccasins.

So let us first walk in Putin’s moccasins.

Continue reading

Gold’s return as money, by Alasdair Macleod

Tired of fiat currencies and ceaseless debasement, much of the world may adopt a currency or currencies tied to gold. From Alasdair Macleod at goldmoney.com:

The consequences of Russia and her Asian allies embracing gold backing for their currencies are poorly understood in western capital markets. This move could lead to the destruction of the global fiat currency system.

According to evidence which is widely ignored in western capital markets, a move by Russia to put a new trade settlement currency and possibly the rouble as well onto a new gold standard is becoming a certainty. As a weapon of mass fiat currency destruction, the timing is probably bound up in on-the-ground military considerations, which are already showing signs of escalating in Eastern Ukraine.

As well as using gold to undermine the western currency system, a return to a credible gold standard has significant advantages for Russia and for her allies in the Shanghai Cooperation Organisation, the Eurasian Economic Union, BRICS+, and all their commodity suppliers beyond Asia. At the same time, it would destroy the west’s fiat currencies and financial system.

This article explains how one part of the global economy can thrive while the other collapses.

Introduction

Recently, I have written about the signals emanating from Russia that President Putin is minded to re-adopt sound money by returning to some sort of gold standard. We do not yet know the details, but consider what he said at the St Petersburg International Economic Forum in June last year:

“Caught in the inflationary storm, many nations are asking, why bother exchanging goods for dollars and euros when they are losing value right before our eyes? Indeed, the economy of imaginary wealth is being inevitably replaced by the economy of real valuables and hard assets.

“According to the IMF, today’s global foreign currency reserves contain 7.1 trillion dollars and 2.5 trillion euros. And this money is depreciating at an annual rate of about 8%. Moreover, it can be confiscated or stolen at the whim of the US if it disapproves of something in a country’s policy.

I think this has become a very real threat for many countries that keep their gold and foreign exchange reserves in these currencies. According to objective expert analysis, in the coming years a conversion process of global reserves will get under way. Reserves will be converted from weakening currencies into tangible resources like food, energy, commodities, and other raw materials. Clearly, this process will further fuel global dollar inflation.”

Continue reading

Guaidó is Gone But London Keeps the Gold, by John McEvoy

Somehow a disproportionate share of global gold ends up in London. From John McEvoy at consortiumnews.com:

The U.K. stripped the assets of a foreign state and transferred them to political actors engaged in regime change, John McEvoy reports. The result has been a form of collective punishment for people in Venezuela.

Bank of England in London, 2020. (It’s No Game. Flickr, CC BY 2.0)

In late December, Venezuela’s leading opposition parties voted to oust Juan Guaidó as “interim president” and dissolve his parallel government.

This was clearly not the ending the U.K. government had in mind.

Four years ago, the British government made the bold decision to recognise Guaidó as Venezuelan president and proceeded to facilitate his legal battle to seize roughly $2 billion of gold held in the Bank of England.

Indeed, the U.K. government insisted at every turn that it recognised Guaidó — and not Nicolás Maduro — as Venezuelan president. In turn, Guaidó’s lawyers argued that he was authorised to represent and control the assets of the Central Bank of Venezuela held in London.

Throughout this time, Guaidó paid his U.K. legal costs by drawing on millions of dollars of his country’s assets originally seized by the U.S. government. In other words, Guaidó tried to seize Venezuelan state assets with looted Venezuelan state assets.

Meanwhile, it seems certain that the Foreign Office also used a significant amount of public funds to sustain its backing of Guaidó.

Now that Guaidó has been ousted, the legal argument for transferring the gold to the Venezuelan opposition has effectively disintegrated. Despite this, the gold remains frozen in the Bank of England, with no clear resolution in sight.

Whatever happens next, this case sets a precedent which could have far-reaching consequences: the U.K.’s coup weapons now include asset stripping a foreign state, and transferring those assets to political actors engaged in regime change.

This will surely serve as a warning to any state which plans to store its gold in the Bank of England.

Feb. 25, 2019: Juan Guaidó with Brazil’s Vice President Hamilton Mourão in Bogotá, Colombia. (Gabriel Cruz, CC BY 2.0, Wikimedia Commons)

The recognition of Guaidó was a key prerequisite for the Bank of England’s refusal to release Venezuela’s gold.

Guaidó had never run for presidential office. Yet on Jan. 23, 2019, he swore himself in as Venezuelan “interim president,” using Article 233 of the Venezuelan constitution to declare that Maduro had abandoned his post and thereby left an “absolute vacuum of power.”

This vacuum, claimed Guaidó, would have to be filled by the president of Venezuela’s National Assembly — a post he occupied.

Without the support of the U.S. government, Guaidó’s legal gymnastics would probably not have gotten him very far. However, the Donald Trump administration moved quickly to recognise Guaidó and began pressuring the so-called international community to follow suit.

The day after Guaidó’s self-swearing in, then U.K. Foreign Secretary Jeremy Hunt visited Washington and met key members of the Trump administration including Secretary of State Mike Pompeo, Vice President Mike Pence and National Security Advisor John Bolton.

[Related: Pompeo — A Monster Slaying Monsters Abroad]

The political crisis in Venezuela was high on the agenda. Before meeting with Pompeo, Hunt told the press that “the United Kingdom believes Juan Guaidó is the right person to take Venezuela forward. We are supporting the U.S., Canada, Brazil and Argentina to make that happen.” This was a strong statement – but not yet recognition.

Documents obtained by Declassified show that Hunt was privately thanked by Pompeo and Bolton for this. However, Britain’s contribution to toppling Maduro would go further.

Continue reading→

Bonds Die, CPI’s Lie, & Gold Flies, by Matthew Piepenburg

Even bonds have declined in price somewhat, they’re still a terrible investment. From Matthew Piepenburg at goldswitzerland.com:

Below we look at Gold’s rise in a backdrop of more bond destruction in the public markets and more truth destruction in the war on inflation.

No Recession Yet?

As I argued in 2022, the much-debated and pending recession was in many ways already here, despite official attempts to re-define the same.

The thousands being laid off at Google, Amazon and even Goldman Sachs in 2023, for example, can likely attest to that.

Speaking of recession, last week’s embarrassing Empire Manufacturing report of -32.9 adds more confirmation that productivity and growth are not going to save our increasingly knee-capped economy.

In fact, the manufacturing figures have not been this bad since 2008 and 2020, which, if I recall, were pretty bad vintage years for markets—”saved” only by money printing at warp speed.

This, of course, raises the ever-charged question of whether Powell will be forced to return to more desperate mouse-click money creation—i.e., “quantitative easing.”

For now, of course, the current Fed is going the other direction, “tightening” rather than “easing” reserve assets to the tune of -$95B per month into a perfect debt storm.

As we’ll see below, this lose-lose option is just one of many hidden mines lying just beneath the surface of an already limping US Treasury market.

In the meantime, the dumb just keeps getting dumber.

Continue reading→