The Gold Standard Journal 29

The Gold Standard The Gold Standard Institute
Issue #29 ● 15 May 2013 1

The Gold Standard
The journal of The Gold Standard Institute

Editor Philip Barton
Regular contributors Rudy Fritsch
Keith Weiner
Occasional contributors Ronald Stoeferle
Sebastian Younan
Publius

The Gold Standard Institute

The purpose of the Institute is to promote an
unadulterated Gold Standard

www.goldstandardinstitute.net

President Philip Barton
President – Europe Thomas Bachheimer
President – USA Keith Weiner
President – Australia Sebastian Younan
Editor-in-Chief Rudy Fritsch
Webmaster Jason Keys

Membership Levels

Annual Member US$100 per year
Lifetime Member US$3,500
Gold Member US$15,000
Gold Knight US$350,000
Annual Corporate Member US$2,000
Contents
Editorial ........................................................................... 1
News ................................................................................. 2
Goldbugs* In Agony ..................................................... 2
Monetary policy disasters and “the new honesty” .... 4
Theory of Interest and Prices in Paper Currency Part
II (Mechanics) ................................................................. 5
Gold Standard, ‘ey? So, what’s in it for ME? ............. 8
The American Corner: Arizona Governor Vetoes
Gold and Silver Bill ........................................................ 9
Nibbling at the Edges .................................................. 10

Editorial
In April came news that Rep. Kevin Brady (R-TX),
the Chairman of Congress’ Joint Economic
Committee had established a committee…
"to examine the United States monetary policy, evaluate
alternative monetary regimes, and recommend a course for
monetary policy going forward."
In May the committee was named the ‘Centennial
Monetary Commission’. This is its chairman’s first
public pronouncement:
“This isn’t an ‘End the Fed’ gambit – just the opposite. We
want a very thoughtful, very constructive analysis of the last
100 years. When the house isn’t on fire we want a discussion
of what role the fire department should play.”
If Congressman Brady cannot see that the house is
already on fire, then it becomes unrealistic to expect
that his Commission will be anything other than the
normal talkfest. The disconnect between Wall Street
and the real economy may go some way to
explaining the gap in reality between Congress and
the hardships of real people.
Politicians (and their advisors) in Europe and the US
(and elsewhere) are still clutching at straws. They are
fervently hoping that the existing modus operandi
can continue; that with a bit of tinkering here and
there it can be fixed. It cannot. The economy is
contracting and will continue to do so.
How bad do things have to become until reality is
faced? Sadly, it seems as though anger will have to
manifest at the street level before politicians take
note. For as long as the streets are quiet then, for
that same period, our politicians will continue to
dither and potter around the legislative edges of the
current malformed MacMoney system.
The Fed, along with every other central bank, will
end. The Fed’s continued pronouncements that the
economy is recovering will be one day used against
them like a sledgehammer.
Memo to the Centennial Monetary Commission: the
whole world is burning and it is the Fed that started
and maintains the blaze.
Philip Barton
The Gold Standard The Gold Standard Institute
Issue #29 ● 15 May 2013 2
News
Schiff Radio: Peter Schiff interviews Keith Weiner
on Arizona law to make gold and silver legal tender
≈≈≈
Hartgeld.at: Speech by the President in Vienna
≈≈≈
Reuters: The governor buckles:
“…with the backing of groups including the Tea Party
movement, American Principles Project and the Gold
Standard Institute.”
≈≈≈
BBC: 12 x 10 kilo bars of gold confiscated at
Italy/Swiss border
≈≈≈
BBC: German national caught smuggling gold out of
Greece
≈≈≈
France 24: Gold rush in Turkey’s Grand Bazaar
≈≈≈
Daily News Egypt: Dollar speculation creates market
for gold in Egypt
≈≈≈
Zerohedge: China, Japan and Australia Scramble for
Physical
≈≈≈
Mineweb: Booming gold sales in China and India
≈≈≈
NY Times: A grim portrait of Italy today. 1000
businesses a week going bankrupt.
≈≈≈
Youtube: A bit different
≈≈≈
24hGold: A proposal for Italy to waste its gold in
order to keep the paper chain intact a little while
longer.
≈≈≈
Goldchat: Bringing forward demand
≈≈≈
Business Standard: $70 billion of bullion traded
through Dubai in 2012. That is over 1200 tonnes,
which puts the Cypriot 10 tonnes in perspective.
Goldbugs* In Agony
Goldbug – An individual obsessed with the fiat price
of gold; one who views gold as an investment.
For those Goldbugs out there preoccupied with the
price of gold, the price consolidation over the last 18
months must have left many feeling isolated, alone,
desperate and one may even suggest on the cusp of
insanity. Over this period of time gold has
underperformed the Dow, the SP500, the Nasdaq as
well as most of the European markets. Even the
recent bastard child of investments, the US real
estate market, has left gold red in the face. The
euphoria which had dominated the Goldbug’s
mindset has now dissipated. Many now find
themselves in the wilderness of lost economic
dreams. “How did it ever end up like this?” they
question. After all this is supposed to be one of the
most gold-friendly environments in decades.
Since the nominal high was established in US dollars
in August 2011, governments around the world have
dived head first into an ocean of stimulus packages.
Sovereign deficits have ballooned making the pre-
GFC environment appear fiscally responsible. Even
Australia which is regarded as the Western world’s
model economy, with a Government high praised
for its successful economic “management”, is not
immune to the seduction of increasing deficits.
Throughout Europe, Asia and the United States,
central banks have ramped up the printing presses.
The markets have been flooded with a tidal wave of
counterfeit credit, borrowed into existence, so much
that most no longer keep track of the monetary
expansion. All this fiscal and monetary insanity have
left Goldbugs dumbfounded as the gold price has
The Gold Standard The Gold Standard Institute
Issue #29 ● 15 May 2013 3
crashed – when using the dollar as the yardstick. And
that is where the problem rests.
The current crisis plaguing the world economy is
chiefly centred on the concept and definition of
money, being gold, and its various derivatives;
currencies. The irredeemable currencies vibrate
hysterically relative to one another since the ultimate
extinguisher of debt, being gold, has been banished
from the system, though its absence is tragically felt.
The average Goldbug does not understand the
nature of this crisis. They find themselves troubled
by the lacklustre “performance” of gold. To the
extent that one is disappointed by gold’s dollar
decline (or equally enthused by any dollar gain)
illustrates the extent to which one understands what
gold is, the nature of this crisis and what the price
volatility means for society as a whole.
To be fair, the description “Goldbug” isn’t
particularly telling since most are really Dollarbugs.
Their interest in gold extends as far as the dollar
price which entirely misses the philosophical,
practical and moral case for gold which many readers
of this publication are all too aware of.
Besides misunderstanding what gold is, the Goldbug
has fallen victim to the Linear Quantity Theory of
Money (LQTM) which explains the root cause of
their despair and disappointment. That is where the
heartbreak begins. The LQTM is an economic
theory of money based upon four false economic
premises which distort ones understanding of
causality. The first premise utilised in the LQTM is
the embrace of linear relationships as the foundation
of the theory. Utilising a linear relationship is
problematic when introduced into a social science
such as economics. The study of economics is
ultimately a study of mankind and his nature. It is the
study of interaction and the psychology associated
with it. A linear theory cannot be applied to man
since he is not a linear entity. In fact the economy as
a whole is highly non-linear.
For the Goldbug examining the expansion of
counterfeit credit, the assumption that “more
printing means higher gold prices” reflects ones
linear understanding of relationships. It is a false
assumption which the Goldbug clings to. Contrary
to the assumption and even the irrational wishes of
the Goldbug, price inflation is not currently being
witnessed but rather deflation is occurring. The
counterfeit credit is flowing to the bond market
despite the intent and wishes of the central planners.
To the dismay of the Goldbug hyperinflation has not
eventuated, yet.
The second premise undermining the LQTM is its
static assumption of the economy as a whole. The
assumption views the relationships within the
economy as static and unchanging. The LQTM
ignores the ever changing and dynamic nature of the
economic environment. As time progresses the
psychology of the actors change as well. This means
that previous assumptions become as relevant as the
previous days weather. This false premise gives rise
to the third premise which views the economy as a
stateless entity.
The assumption that the economic actors behave in
a stateless manner defies human nature. Man is a
stateful entity. Specific interferences made in the
economy, whether it is fiscal or monetary in nature,
alter the manner in which the economic actors
behave. It is an economic impossibility for an
economy to remain stateless. Previous interferences
into the economy by governments are remembered.
Information is assiduously addressed and considered
with each activity one embarks upon. Too often the
Goldbug becomes a victim here as he or she no
longer assimilates the ever changing environment
which the LQTM ignores.
The final premise which the theory rests upon is a
scaler understanding of information. The perception
that a particular piece of economic data, such as
GDP or unemployment or CPI et cetera has
supreme importance is misleading. Too often
Goldbugs and economic academia become
infatuated with particular economic indicators (such
as GDP figures which cannot possibly measure the
size of an economy) whilst ignoring the multivariable
nature of the economic environment. Quantitative
measurements should not be regarded with the
saintly reverence overwhelmingly directed towards
them. One should note their significance yet
contextualise them in the context of a multivariable
environment.
By utilising the LQTM to analyse markets and to try
to predict the fiat price of gold, Goldbugs employ an
antiquated and failing theory which explains their
The Gold Standard The Gold Standard Institute
Issue #29 ● 15 May 2013 4
heartbreak and euphoria accompanying the gold
price fluctuation. The professional, the one who
recognises gold as the ultimate asset, as money,
generally approaches the fluctuations with caution.
The extreme volatility in gold only illuminates the
extreme volatility of the dollar. Like the tail wagging
the dog, the dollar price is indicative of the
destabilisation and destruction of the irredeemable
fiat monetary system.
As the disintegration of the system accelerates and
intensifies, the volatility will no doubt worsen. Most
Goldbugs will not survive the extreme movements
as they bail out of gold for a fiat master.
Sebastian Arthur Younan
President – Australia
Monetary policy disasters and “the
new honesty”
Once again, one monetary event is chasing the other
in Europe – accompanied by a marked change in the
political players‘ language and deeds. EU
representatives as well as national politicians have
switched to a form of new honesty. People are gently
being prepared for the day when their savings will be
slowly but steadily taken away from them – for the
sake of Europe. The onslaught on the private
property of the citizenry has begun in Cyprus where
the savings customers of several banks have been
asked to chip in – practically overnight. Contrary to
such events in the past though, politicians have not
minced their words about what happened: daylight
robbery perpetrated by Europe’s elites on their
people.
Certainly the honesty (not the misappropriation) is
to be welcomed, but it still sends shivers down the
spine of the seasoned observer. This honesty was
definitely not for the benefit of the people, there
must be much more to it.
I believe that this honesty is supposed to win back
some part of the trust that has been squandered over
the last few years. One should not forget that
European politicians have forfeited national interests
and changed national laws for the greater European
good without once asking or informing their
electorate. They even went so far as to change the
constitution as if it were mere house rules – again
without asking the sovereign – at one fell swoop.
One prominent example of these forced
antidemocratic measures is the ESM (European
Stability Mechanism). And what is the purpose of all
this? To prop up the vision of a centrally managed
currency that for the first time in human history has
been forced upon half a continent comprising
countries with different cultures and on different
levels of economic development.
Politicians are fighting to regain their credibility
Naturally these deflecting measures could not hold
back the powerful forces of nature and the entire
artificial currency system seems close to collapse.
Therefore, the elites are preparing not only
themselves but also the people for something new.
After the total breakdown of the euro complete with
rescue actions that were doomed to failure from the
onset, the credibility necessary for a fresh start will
have been lost.
That is the reason why politicians employ the new
honesty to try and win back the trust of the people in
order to be able to convince them of the monetary
system to be. Naturally, this will be another artificial
system that is to serve exclusively the political elites
and their allies – the banks. The population is being
and will go on being exploited. The only purpose of
the surprisingly honest new tone is therefore to
prepare the people for “more of the same”.
Against the backdrop of a Europe where
supranational agencies attempt to totally usurp the
power via monetary mechanisms, a rapid advance of
the gold standard is desperately needed – before it is
too late. As mentioned earlier, the experiment has
failed already, Europeans have paid for this with
substantial parts of their savings and our children
will still be paying off the debts caused by this bogus
peace idea. On time before the complete collapse the
elites are getting ready to install the next pseudo
currency. At this stage, the TGSI must take
responsibility and resist this development with all
vehemence.
Thomas Bachheimer
President – The Gold Standard Institute Europe.
The Gold Standard The Gold Standard Institute
Issue #29 ● 15 May 2013 5
Theory of Interest and Prices in Paper
Currency Part II (Mechanics)
In Part I, we looked at the concepts of nonlinearity,
dynamics, multivariate, state, and contiguity. We
showed that whatever the relationship may be
between prices and the money supply in
irredeemable paper currency, it is not a simple matter
of rising money supply  rising prices.
Here is a fitting footnote for Part I. I just bought a
pair of Levis jeans at Macy’s for $45. I remember
buying a pair of Levis Jeans in Macy’s in 1983 for
$50. In 30 years, the price of Levis Jeans has fallen
by 10%. By any conventional theory based on the
money supply, the price should have risen by several
hundreds of dollars.
In this part, we look at some mechanics, the
understanding of which is a prerequisite to the
theory of interest and prices. To truly understand
anything, you have to know what happens in reality
step by step. This is even more important in an
abstract field like monetary science. We discuss
stocks vs. flows, how prices are formed in a market,
a broad concept of arbitrage, spreads, and how
money comes into and goes out of existence.
Let’s drill down into a point I made in passing in
Part I.
It is worth noting that money does not go out of
existence when one person pays another. The recipient
of money in one trade could use it to pay someone else
in another. Proponents of the linear QTM
1
would
have to explain why prices would rise only if the money
supply increases. This is not a trivial question. Prices
rise whenever a buyer takes the offer, so no particular
quantity of money is necessary for a given price (or all
prices) to rise to any particular level.
It is seductive to respond by way of the common
analogy of “too much money, chasing too few
goods”. But, is that an accurate picture of how
markets work?
Money supply is a quantity of stocks. One could
theoretically add up all of the gold in human
inventories, or all of the dollars in the financial

1
Quantity Theory of Money
system, and come up with a scalar number of ounces
or dollars.
How about goods supply? This is a different
meaning of the word supply. Unlike in money, the
supply of goods means the flows of goods. To discuss
copper or wheat, one must measure how much is
mined or grown every year. This would be pounds or
bushels per year.
Flows of goods cannot be compared in any
meaningful way to the stocks of money; pounds per
year cannot be compared to ounces. Just like in
physics, length cannot be compared to velocity; one
cannot compare meters to meters per second. That is
not a proper approach to science—physical or
monetary.
This brings us to an important fact. The stock of
money is not consumed after a transaction.
However, in the normal case, goods are. Other than
the monetary commodities of gold and silver, only
small inventories are normally kept as a buffer in all
other goods. To state this in everyday terms, if Joe
buys a loaf of bread from Sally for $1, he will eat the
bread (or it will go bad) but Sally has the money until
she spends it. If Acme Pipe buys 1000 pounds of
copper, it will manufacture it into plumbing and sell
the plumbing.
Now let’s move on to the mechanism of price
discovery. In Part I, I stated:
In any market, buyers and sellers meet, and the end
result is the formation of the bid price and ask price.
There is not just one monolithic price, but two
prices: the bid, and the ask (also called the “offer”).
If you come to market and you must buy, then you
have to pay the offer. For example, you own an
apartment building and your lease obligates you to
provide heat for your tenants. So you go to the
heating oil market. If heating oil is bid $99 and
offered $101, you must pay $101. Note what
happens next. The seller of that oil - assuming you
just bought all of his oil - leaves. He has exchanged
his oil for your dollars and he goes home. The next
seller may ask $102. Now the market is bid $99 and
offered $102.
The Gold Standard The Gold Standard Institute
Issue #29 ● 15 May 2013 6
Next, a heating oil distributor comes to market with
the day’s production. He must sell, because
tomorrow he will produce more. What price does he
get? Did your purchase push up the price? You did
not push up the bid price, and so the new heating oil
vendor must take the bid of $99. Now this consumer
is sated, he has the oil he wants. The next best bid
could be $97.
There is a counterintuitive process here. The bid is
formed by the competition of producers who keep
selling until the marginal seller does not accept the
bid. The ask is formed by the competition of
consumers who keep buying until the marginal
buyer does not accept the ask. This is a critical idea
in Austrian School analysis, so I encourage readers to
stop and think this through.
Buyers keep coming to market and taking the offer
(thus lifting it) until a point is reached where the next
would-be buyer balks. This buyer, the marginal buyer,
may make his own bid, above the best bid but below
the best offer. At the same time, sellers keep coming
to market and taking the bid, until the marginal seller
balks. This seller may set his own offer, below the
best offer but above the best bid.
There is one other actor, the market maker. The
market maker will act to keep a consistent bid-ask
spread. If the ask is pushed up, then the market
maker will raise his bid. If the bid is pressed down,
then he will lower his ask. The market maker is the
only one who can buy at the bid and sell at the offer.
His profits come from the bid-ask spread, the wider
the spread the more his profits. Of course, the next
market maker will enter and force the spread to
narrow, and so on until the margin al market maker
balks and the spread does not narrow any further.
From the mechanics described here, we begin to
build a picture of how prices are set where the
“rubber meets the road” in the market. If there are
more market participants who buy at the offer then
the end result is that prices move upwards. If there
are more who sell at the bid, then prices move
downwards.
This may seem tautological. It is prerequisite
material.
We return to my rhetorical question. Why would
prices not keep rising in the case of a fixed quantity
of money? After all, when Joe buys the loaf of bread
from Sally for $1 there is no reason why Sue could
not buy it from him for $2 and John couldn’t buy it
from Sue for $3 and so on.
The observant reader may object on grounds that
prices can only go up until people cannot afford the
good. Bread cannot be $300 per loaf if no one has
$300. This is comparing stocks to flows once again.
What matters is not whether the consumer has $300
in stocks, but whether the consumer has $300 in
flows. If the velocity of money (flows) rises, then the
consumer could have $300 of daily income with
which to pay the price of his daily bread.
As we see from the above discussion of price
formation, neither the buyer nor the seller has an
intrinsic advantage. Both come to market and must
accept the market price (ask or bid, respectively).
Size does not add any power to the seller. If
anything, the seller has a disadvantage in trying to get
a price he prefers, compared to the buyer. He has
capital tied up in his productive enterprise, and
certain fixed costs like payroll that must go on
whether he sells or does not sell. Holding inventory
does not normally do him any good. With the
exceptions of food and energy, buyers can afford to
be pickier. They do not face the same problem as
sellers; if they go home at the end of the day with
money as opposed to goods, this is not always a
problem.
Without delving too deeply into this topic, I want to
paint with a broad brush stroke. There is no force
that guarantees a constant price even if the money
supply is fixed. There are many reasons why buyers
could lift the offer or sellers could press down the
bid. Not only can prices rise with the same stocks of
money, but they could also rise with the same flows
of goods.
Next, let’s introduce the concept of arbitrage. People
often use this term in a very narrow sense, to mean
buying and selling the same good in different
markets to shave off a small spread. For example,
IBM stock is offered at $99.99 in London and bid at
$100.00 in New York, so the arbitrager could
simultaneously buy and sell to pocket a penny. Or, in
the gold market, which I write about frequently, one
The Gold Standard The Gold Standard Institute
Issue #29 ● 15 May 2013 7
could buy spot gold and sell December gold for a
0.3% annualized spread.
In this paper, I use the word arbitrage to refer to a
much broader concept. I won’t fully explore it
herein, but we need to discuss one relevant aspect.
2

Let’s go back to our example of the landlord. What
is he doing? He is seeking to make a profit by renting
out apartments to tenants. The rent is his gross
revenue. How is the rent set? If he needs to rent a
unit, he must take the bid.
What are his costs? Broadly, he must buy land,
construction materials, construction labor,
maintenance labor, heating oil, etc. We will address
later that he must pay the rate of interest on the
capital.
The landlord must buy these things at the offer. We
can look at him as doing an arbitrage between his
inputs—bought at the offer—and his output
product—sold on the bid. The landlord’s spread is
Rent(bid) – Inputs(ask).
In this light, what should he be the limit of what he
is willing to pay for his inputs? A bit less than the
rent he receives, at most.
I give this example to make it clear why we should
not think the primary driver of markets is the
consumer with a bank account balance as his budget.
One might think of a consumer who has a total of
$10. Let’s suppose he would want to pay $0.01 for a
loaf of bread. But if he had $100 total, he would pay
$0.10, and so on. This is the siren song of QTM
luring one to think that increased stocks of money
must lead to higher prices. It is often stated, “if
everyone’s bank account grew by 10X, then prices
will be 10X higher.”
Will a middle class consumer buy more food if he
has more money?
At any rate, instead of the consumer, we should
think of the entrepreneur. He is an arbitrager who
will not normally buy inputs unless the bid on his
output affords him an acceptable margin above the
offer on his inputs. What will cause consumers to

2
Those interested can read more about arbitrage in
Disequilibrium Analysis of Price Formation by Antal Fekete,
January 1, 1999
raise their bid on his outputs? This is a non-trivial
question that will be addressed in a later part of this
paper.
Up until now, we have been using the term “money”
without regard to the distinction between gold and
promises to pay, i.e. between money and credit. It is
now necessary to make this distinction to continue
the discussion. In the current monetary regime,
money (gold) has no official role to play at all,
though it assuredly plays a role. My permanent gold
backwardation thesis
3
can be summarized as follows:
the withdrawal of the gold bid on the dollar will
bring about the collapse of the dollar because dollar
holders will drive prices up exponentially by using
commodities to get gold.
Money (gold), of course, can only come into
existence via a slow and inelastic process of mining.
Money does not go out of existence (though gold
coins can be melted down to produce non-monetary
objects). Both of these processes are themselves
driven by arbitrage. When the inputs required to
mine one ounce of gold cost less than one ounce,
the gold miners spring into operation. When the
inputs rise above one ounce, they shut down. When
jewelry sells for more than the cost of its inputs
(principally gold, labor, and perhaps gem stones)
then jewelers spring into action. When monetary
gold is worth more than jewelry, then it is melted
down and returned to monetary form by arbitragers
known as “Cash For Gold”.
Credit is an entirely different animal.
In Part III, we will discuss credit including an examination of
the borrower, the borrower’s opportunities, and the borrower’s
considerations.
Dr. Keith Weiner
Dr. Keith Weiner is the president of the Gold Standard Institute USA,
and CEO of Monetary Metals where he write on the basis and related
topics. Keith is a leading authority in the areas of gold, money, and credit
and has made important contributions to the development of trading
techniques founded upon the analysis of bid-ask spreads. Keith is a sought
after speaker and regularly writes on economics. He is an Objectivist, and
has his PhD from the New Austrian School of Economics. He lives with
his wife near Phoenix, Arizona.


3
http://keithweinereconomics.com/2012/03/15/when-gold-
backwardation-becomes-permanent/
The Gold Standard The Gold Standard Institute
Issue #29 ● 15 May 2013 8
Gold Standard, ‘ey? So, what’s in it for
ME?
Really, I’m serious. TGSI has published a lot of
heavy articles dealing with important issues regarding
Gold and the Unadulterated Gold Standard; articles
about the big picture, about the mechanisms of the
Gold Standard, about the history of Gold, about the
economic impact of Gold circulation, etc. etc… but
no articles about the effects of an actual Gold
Standard on an actual, average person.
Well, this series of articles tackles this very issue.
Why indeed should the average Joe or Jane, someone
in the middle of the earnings range; the wage earner,
the retiree, the new graduate starting their economic
life… why should they be interested in Gold or a
Gold Standard?
After all, Gold is for the rich, right? And isn’t Gold
in the Central Banker’s vaults just a ‘tradition’? Isn’t
Gold a ‘Barbarous Relic’? And surely, there is not
nearly enough Gold in the world to replace the
trillions of Fiat paper currency in circulation? And, if
there was a Gold Standard, how would that affect
‘ME’…? The average ‘ME’ in the world has very
little if any Gold… so introducing a Gold standard
would not be fair to ‘ME’… would it?
Any time I start musing about the Gold Standard, I
see a powerful, emotionally charged (for me) image.
It is an image of my long departed father. Whenever
my father recalled his youth, telling me about his
adventures, and misadventures, as a young man in
Hungary, he would inevitably end up reminiscing
about the ‘peaceable days’ and every time he did, his
eyes would take on a soft, far away glow; his features
would become gentle, relaxed, indeed he looked like
he was reminiscing about the Garden of Eden.
Well, as a young boy I was not sure what he meant,
but the emotional impact stayed with me…
understand that my father was not generally ‘soft’ or
‘relaxed’. Even so, I eventually came to understand
that by ‘peaceable times’ he meant the times before
the madness of ‘The Great War’, WWI.
Much later, after I studied Austrian economics and
met Professor Fekete and attended his Gold
Standard University Live, I came to understand even
more; namely WHY pre WWI days were of such a
magical quality, a magical quality never to be seen
again… I learned that it was because before WWI
the world economy ran on the Classical Gold
Standard.
Imagine a world where your wages are paid in real,
actual Gold and Silver coins… not scraps of paper
subject to bankster and G’man whims ( G’man is
American slang for all government… including
corrupt, power seeking politicos, entrenched,
uncaring bureaucrats, torturing secret service
apparatchik…all of them ); but solid, real stuff that
cannot be ‘printed’ at some crooked politician’s
whim, real stuff that actually gains purchasing power
over the years. Imagine that if you simply stash some
of your wages in a pillow, and do nothing else… you
will become richer every year.
Because that is what happens under a system of
honest money; as the economy grows, as more
productive technologies are created, the cost of
producing, transporting, and retailing falls… so the
price of everything slowly, gradually falls as well…
and your wages and savings are worth more every
year… without the need for a raise or a
promotion… and without the need for some risky
‘investment’.
Imagine a world where you get to actually keep your
hard earned money… instead of having it
confiscated by G’man, by bankster interest charges,
and most insidiously by so called ‘inflation’… more
precisely, by ‘monetary debasement’.
Because that is our world under Fiat paper; prices of
everything rise instead of falling, wages never keep
up with price increases, and any savings you may be
able to scrape up will be destroyed by the evil of
‘inflation’… but Mr. Bankster says ‘some inflation is
good for us’… yeah, good for him and his bankster
buddies… certainly not for the rest of us. He has a
printing press… we don’t.
Imagine a world where war is very rare, because no
G’man can afford a major war under Gold. Indeed,
as the war clouds gathered before WWI, the pundits
predicted that no major war could last more than a
few months, because the combatants would run out
of money… run out of Gold, that is. War is
extremely expensive, both in wealth and in blood.
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Issue #29 ● 15 May 2013 9
The Gold Standard was sabotaged so the G’man
could print endless paper currency to pay for the evil
slaughter of WWI.
Because that is our world under Fiat paper; the
G’man can afford war… so he thinks… because
their bedfellows the banksters will simply ‘print up’
some more paper currency and lend it to the
G’man… and of course hit ‘ME’ and you for the
interest payments.
Indeed, if you look around, you see insane spending
on the military, and wars on everything, everywhere.
Our world is about as far from ‘peaceable times’ as
you can possibly get. Destruction of humanity is but
a button push away… and a psychopath has his
finger on the button.
So, dear ‘ME’… would you prefer a world where you
can accumulate real wealth just by earning regular
wages, and saving some… or this Fiat world where
you must run ever faster, work ever harder, ever
longer just to ‘keep up’? Would you prefer a world
where one wage earner can keep his family well fed,
housed, clothed… or this Fiat world, where both
man and wife must work ever harder just to ‘keep
up’… while the children get indoctrinated in G’man
youth gulag… er public school?
Would you prefer to live at peace with your
neighbors, ‘live and let live’, while trading with them
for mutual benefit; ‘let’s make a deal’… or would
you prefer to keep our Fiat world, a world full of
war, terrorism, tyranny, neighbor killing neighbor…
a world where you should ‘kill your neighbor
because if you don’t they may kill you first’? And
vice versa?
If any of this gets your attention, I am glad. People
must wake up, must see the truth instead of believing
all the Big Lies they are told… and bring change to
the world by living the change themselves.
In the next few articles, we will look more closely at
some of the Big Lies that have been spread about
Gold. We will address the concerns you may have
about how a Gold Standard would affect you… and
‘ME’.
Rudy J. Fritsch
Editor in Chief
The American Corner: Arizona
Governor Vetoes Gold and Silver Bill
For the past two months, I have written about a bill
in the Arizona legislature that exempted gold and
silver from taxes (e.g. capital gains). It also said that
if one makes a profit in ounces, one pays the tax in
ounces, which enables businesses to keep their
books in gold or silver. Tax is an obstacle to using
gold as money, so repealing all taxes on gold and
silver is very important.
One adversary struck just as the bill went before
entire House. He amended it to remove the payment
of taxes in specie.
Nevertheless, the House voted to pass the amended
bill. So did the Senate, which sent it to the governor,
who should have quickly signed it into law. Arizona
is majority Republican, with Democrats a minority.
The bill was passed in both Houses of the legislature
along strict party lines. All Republicans voted aye
and all Democrats voted nay (except a few
abstentions). Governor Brewer, a Republican, vetoed
the bill.
She wrote a letter explaining her veto, “While I
believe the concern over a devalued dollar as a result
of an unsustainable federal deficit is justified…” She
worries the bill might exempt collectible coins from
tax, and “result in lost revenue to the State…”
She says the concern of dollar devaluation is
justified, and yet does not seem to share it or know
about the collapsing financial system. She stresses
the problem of the federal deficit, and yet she is
happy for Arizona to run the same kinds of
programs that bankrupted Uncle Sam.
Indeed, in a press release for her Medicaid program,
Governor Brewer touches on all the socialist clichés,
like “help provide critical-necessary mental health
services to tens of thousands…” She goes on, “For
many Arizonans in need…” Nowhere does she
acknowledge the cost of her largesse. No amount of
spending is ever enough. People always need,
therefore taxpayers must pay. If the taxpayers cannot
pay enough, then the government borrows—it runs
a deficit.
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Issue #29 ● 15 May 2013 10
Her concern about losing the tax revenue on old
coins is disingenuous. Her Medicaid program alone
puts 1% of the state population onto the dole.
Whatever it is that Governor Brewer cares about, it
is not cost.
The take-away is much bigger than simply Politician
X in state Y vetoed a gold bill. It is not just that
Governor Brewer is an unprincipled and
economically ignorant welfare-statist who blocked a
historic opportunity to move forward to honest
money. We cannot count on politicians like her, not
even if they position themselves as fiscal
conservatives.
Governor Brewer knows that many voters want the
Medicaid program, and assumes that few want the
gold standard. This may be a mistake in the state that
once elected Barry Goldwater to the US senate for
five terms. In any case, the key point to take home
from the battle over this bill is that we must
understand the goals of our adversaries. They don’t
care about economics. They want a free lunch and
they think paper money will enable them to take it.
Let’s step back from this bill and look at the full
context of which the gold movement is part. We are
in a clash of two diametric worldviews. In one, each
individual has a right to his own life, mind, property,
and liberty. In the other, everyone is just a part of
the collective, a cog who exists to serve the machine.
Gold has no part in the latter, and the collectivists
know it. Gold’s supporters had better know it too.
Gold is the money of a free society. The free man is
a trader who says, “give me something of value and I
will offer something in return.” A trader does not
deal in needs, whims, or demands. He does not beg,
nor does he rob his customers at gunpoint. He does
not give away his shirt nor tolerate robbery.
Gold will not fix all of our problems, but the gold
standard limits the power of the government to get
away with chronic deficits. A welfare state
impoverishes any country that imposes it. So
governments have responded by inducing capital
consumption, via falling interest rates. Like
methamphetamine, it gives the body economic a
temporary shot of energy but at a terrible cost to
one’s health. This trick is not possible under gold,
which demands honesty in accounting.
These are precisely the reasons why the Brewers of
the world oppose gold. What they are really against is
rugged individualism: the proud, stubborn
selfishness of the free man who says, “I earned it, it’s
mine.”
The GSI must focus on gold and economics; it is not
our mission to directly try to change the culture of
collectivism and its demand to sacrifice the
successful individual to the needs of the ever-
expanding welfare dole. Our mission is focused on
monetary policy. However, I must vehemently state
that we are right morally as well as economically. To
succeed, we need to know it.
Dr. Keith Weiner
President of the Gold Standard Institute USA
Nibbling at the Edges
The best gold advocates (better than “goldbugs”,
which implies emotional irrationality) have a moral
element to their work, specifically that there is
something wrong with the way society works, and a
focus on making it better. It takes the form of a
belief that fiat currencies, which lack any limits, are
detrimental to society.
A key feature of a gold standard is the power that
physical gold money gives the consumer, the average
person, over the monetary system. Without the
ability to redeem gold, without the ability to hoard
gold, there can be no control on power. As
Professor Antal Fekete says, “when a currency is
redeemable in standard gold coins, any individual disturbed by
the behaviour of the government or banks can attempt to
protect himself by presenting for redemption such paper
currency as he may command. It is this power of individuals
that holds, or tends to hold, banks and government in check.”
Lewis Mumford’s The Myth of the Machine: The Pentagon
of Power (1970) deals with the dehumanisation of
modern technological society and the aggregation of
power. In it he has some interesting observations
about the dehumanising aspects of modern money
and control over the exercise of power.
Mumford notes “... the increasing translation of both
political and economic power into purely abstract quantitative
terms: mainly, terms of money. Physical power, applied to
coerce other human beings, reaches natural limits at an early
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Issue #29 ● 15 May 2013 11
stage: if one applies too much, the victim dies. ... But when
human functions are converted into abstract, uniform units,
ultimately units of energy or money, there are no limits to the
amount of power that can be seized, converted, and stored. The
peculiarity of money is that it knows no biological limits or
ecological restrictions.”
In this analysis, then, if there is no control over
abstract money, then there is no control over power
accumulation. Mumford goes on to conclude that
the power complex’s “... final goal is quantitative
abstraction – money or its etherialized and potentially limitless
equivalent, credit. The latter, like the ‘faith’ of the Musical
Banks in Erewhon, is at bottom only a pious belief that the
system will continue indefinitely to work.”
Professor Fekete’s insistence on the use
of physical gold in the monetary system removes the
abstraction and provides the quantitative limit. But
how to turn the theory into practice? The problem is
more than one of mechanics, is it one of politics, of
public perception. Also, considering the entrenched
position of those who benefit from the existing
system, how does one effect change in the face of
inevitable resistance? Mumford has something
interesting to say on this:
“... there is so little prospect of overcoming the defects of the
power system by any attack that employs mass
organization and mass efforts at persuasion; for these mass
methods support the very system they attack. The changes
that have so far been effective, and that give promise of
further success, are those that have been initiated by
animated individual minds, small groups, and local
communities nibbling at the edges of the power structure by
breaking routines and defying regulations. Such an attack
seeks, not to capture the citadel of power, but to withdraw
from it and quietly paralyse it. Once such initiatives
become widespread, as they at last show signs of becoming,
it will restore power and confident authority to its proper
source: the human personality and the small face-to-face
community.”
I cannot think of a better description than “animated
individual minds ... nibbling at the edges of the power
structure” for what gold advocates are all about.
Bron Suchecki
The work above reflects Bron’s personal views and not those of his employer.
Bron’s personal blog is http://www.goldchat.blogspot.com/