Gary North on current economic affairs and investment marketsGary North -- Specific Answers
HomeContact MeTell a FriendText SizeSearchMember Area
Gain immediate access to all of our current articles, the question-and-answer forums, dozens of free books, and article archives. Click here for details on how to join.

About This Site
Academic Gaps
Articles
Capitalism and the Bible
Clichés of Protectionism
College Finances
Debt Management
Ellen Brown: Critique
Federal Reserve Charts
Gary North's Free Books
Get Published Here!
Gold Price & My Report
Keynes Project
Price Index (U.S.A.)
Questions for Jim Wallis
Remnant Review
Social Security/Medicare
Sustained Revival
Tea Party Economist
U.S. Debt Clock
Yield Curve
Your YouTube Channel
Gary North's Miscellany
Advertising
Blogging
Budgeting for Wealth
Business Start-Up
Career Advancement
Digital Tools
Education That Works
Evernote: Free Notes
Federal Reserve Policy
Fireproof Your Job
Goal-Setting for Success
Great Default
Inheritance Strategies
Insurance
International Investing
Investment Basics
Job and Calling
Keynesian Economics
Leadership
Marketing Case Studies
Obamanomics
Precious Metals
Real Estate
Retirement
Safe Places
State of the Economy
Stocks and Bonds
Video Channel Profits
War With Iran
Members' Free Manuals
Our Products
Contact Me
Help
Tell a Friend
Text Size
Your Account
My 100% Guarantee
Privacy Policy
Terms of Use


This site powered by MemberGate

Deadly Assumption #6: Gold Is a Barbarous Relic

Gary North
Printer-Friendly Format

This assessment of gold's monetary role was made by the British economist, John Maynard Keynes ("canes"). He was referring to the gold standard. He was not referring to Rolex watches or jewelry.

Because a gold standard was always a government promise to pay gold on demand, there has been no gold standard. There has only been a government-guaranteed gold-plated standard. In every major war, banks have suspended gold redemption, meaning they broke contract with their depositors. Then the central bank stiffed the commercial banks by collecting all of "their" gold. The central banks wind up with the people's gold. All governments always allow this.

The barbarous relic died because of barbarous policies by commercial bankers, central bankers, politicians, and judges. The right of contract was abrogated retroactively.

Why? Because the gold standard restricted governments from borrowing bank money and spending it on war or anti-depression spending measures. Governments and bankers did not want the restriction imposed on them by the legal right of depositors to demand gold in exchange for deposits -- the promise that had persuaded them to turn in their gold in exchange for bank deposits.

What we need is a true gold standard that is the product of voluntary transactions. We need courts to enforce contracts. We need the predictability that contracts and courts provide.

We do not have such a system today. People trust fractional reserve banking. They trust it with their lives. The division of labor keeps most of us alive, and it rests on fractional reserve banking. If the banks ever ceased to function overnight, most urban dwellers would die. We don't like to think about the degree of our dependence on banking.

Will we ever get back to a gold standard? Probably not in my day. But as fiat money erodes in purchasing power, gold will become accepted as an inflation hedge.

Would gold do well in a deflationary environment? That would depend on people's confidence in the banks. If they truly distrust the banks, they would demand currency. There isn't enough currency to meet the needs of trade. Prices would fall, increasing the value of currency. I would rather have paper money than gold in a deflationary environment.

But will we get a deflationary environment? We have not seen this since 1933. That is a long time for one policy to dominate: inflation. Yet it has dominated.

The case for gold is mainly the case for inflation. I have read many deflationary cases for gold since 1974. Not one of them made much sense, and all of them were wrong in forecasting deflation.

The average person does not recognize gold coins. Gold therefore cannot function as money, except among central bankers. But the free market case for the gold standard is the case against central banking. It is the case for a system of currency based on individual decisions. Men have been outside of a gold- based monetary system for so long that it is difficult to imagine a scenario in which it would become the currency of choice.

The gold standard was a relic for sure because it was a government-guaranteed, government-enforced restriction on government. The traditional gold standard worked in peacetime. It never worked in wartime.

When a bank or a government agency promises to do something, no matter what, it is lying. Thus, the traditional gold standard was always fraudulent -- as fraudulent as fractional reserve banking.

This is not a case against gold. It is a case against trusting government and bankers.

For my free, 15-lesson, daily course on gold, click on this link, and then click the Send button:

goldwars@kbot.com

There are good ways and not so good ways to invest in gold. These are covered on this Website. You may want to join at some point if you are seeking guidance. You should visit the Precious Metals department.

Meanwhile, don't forget to subscribe to my free Tip of the Week report, which is sent every Saturday morning. The sign-up box is on the Home page.




Printer-Friendly Format

 Tip of the Week
Sign up for my free
Tip of the Week
Verification Characters:    Type     E  K  A  V  C     here   


Tip of the week archives
On what this icon
means, and how it
can help you,
click here
 Q & A Forums
General Q&A Forum
Advertising and Resumés
Affiliates
American History Topics
Backyard Food Gardening
Banking and Politics
Blog Sites and Web Sites
Books Worth Reading
Bumper Sticker Slogans
Business Forum
Buying Smart
Christian Service Forum
College -- The Cheap Way
Copywriting
Education Alternatives
Food Storage
For Women Only
Fukushima
GNC Benefits
GNC Testimonials
Gold and Silver
Great Default Forum
Health and Diet
Health Insurance
Homeschooling
Investments Forum
Iran War
Job, Calling, and Career
Leadership Development
Legacy Building
Less Dependent Living
Local Political Action
Non-Retirement Forum
One Good Idea
Police State
Privacy
Public Speaking
Real Estate Forum
Remnant Review Forum
Safe Places Forum
Taxation Policy
Typographical Errors
Video Production Basics

 Archives
Reality Check
 Discussion Forum
Search Discussion


Recent Forum Posts
• Investing in Christian Businesses
• Asset seizure risk
• 403B Sidelines
• Ammo hoarding
• Abandon Ship?
• The "Ultimate" Simple Portfolio?
• Where and how to go from IRA?
• Shorting Bonds
• The Whole Life of An Economic Ignoramus
• Suggstions for path to Financial Independance
• What currency is the best place to keep savings
• Angel investing via Angel List
• Super Bowl 50 - San Francisco Bay Area
• Inferior products good idea inferior company
• Anyone familiar w/Primerica company
• How would you chose a real estate appraiser?
• Best way to get out of a house
• Buy investment property now or wait for recession?
• Where will the prisoners live / go?
• Paterson, NJ
• cash out refinance appraisal
• A home in Brooklyn?
• owner finance
• The Best and Worst Places to Become a Landlord
• Price for 2 lots as opposed to one.
• Multi-Family Property?
• Seeking Rental Housing in Dallas-Fort Worth
• Any RE investors in the Birmingham AL area?
• Elderlly landlord having problems
• Foreclosures
• Switzerland and Firearms
• On "Zip Code Searching On The Web"
• Crash Course in becoming an Expat
• Anyone tried Puerto Rico?
• Chattanooga, Tennessee
• Middle Class squeezed out of Chicago
• An Article on Chile
• 5 Amazing, Cheap Places to Live as an Expat
• Oil Field Job Security
• Moving to TriCities Area
• PJ ORourke on the Baby Boom
• Is Vegas DOOMED?
• Mint.com
• Second Passport- Mexico?
• Radiation dangers to US,World Confirmed
• Do You Sincerely Want to Be Rich? Why?
• Req. For No 401(k)/Other Pensions via Relocatio
• Cashing out 401K to pay student debt?
• SS @ 62 and still working
• Desolation or Prosperity?
• I take it Retirement Armageddon is not available
• Post Retirement Career
• Social Security - when to start collecting
• 401K Risk
• Detroit Retirees Fight 83% Health Care Cut
• Lump Sum Early DROP
• Underfunded pensions
• 401k strategy
• Can I Avoid Medicare Entirely?
• Looking for a Financial Planner/CPA
• Breaking buck on momey market funds to be OK
• SCOTUS Decisions on Police "Protection"
• Fed Slams Deutsche Banks 55Trillion in Derivatives
• Social Security
• Losing job in next recession
• Margaret Sanger article
• Obamacare
• Call 911 for Medical Help or Risk……?
• hymns
• How batteries will ... democratize energy
• E-Mail from JP Morgan Chase
• Forgetting passwords, form filling online etc...
• Police NOT Legally Required to Protect
• Food prices...
• The minimum wage and jobs for young blacks
• Wife's small business - Spanish Immersion 4 chldr
• Alternative to Quicken 2014 needed
• wds2014 in Portland, Oregon
• Max cash flow ideas with a spare $100k
• Getting Your First Client
• Starting Nature Trail business
• Book or Resource on Writing Business Plan
• start-up biz for kids...
• Fiji experts?
• When does a business NEED to be registered?
• How to beat inflation
• Should I hold’em, fold ’em or run.
• selling on Amazon?
• How to cope with rising minimum wage
• Does Cliff Notes have to get permission?