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The Gold Standard

The Gold Standard

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Published by: richardck61 on Feb 22, 2012
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03/27/2012

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The Gold Standard
 
The Gold Standard Institute
 
Issue #14
15 February 2012 1
 
The Gold Standard
The journal of The Gold Standard Institute
Edito
Philip Barton
 Regular contributors 
Louis BoulangerRudy FritschMichael MooreKeith Weiner
Occasional contributors 
PubliusThomas Allen
The Gold Standard Institute
The purpose of the Institute is to promote anunadulterated Gold Standardwww.goldstandardinstitute.net
Patron 
Professor Antal E. Fekete
President 
Philip Barton
President – Europe 
Thomas Bachheimer
Editor-in-Chie
Rudy Fritsch
Senior Research Fellow 
Sandeep Jaitly
Membership Levels
Annual Member €75 per yearLifetime Member €2,500Gold Member €25,000Gold Knight €250,000
Contents
 Editorial ........................................................................... 1
 
News ................................................................................. 3
 
The Rise of the Gold Bugs ........................................... 3
 
Book Review:
Gold Warriors 
.......................................... 4
 
Bullion vs. Bullshit ......................................................... 5
 
Currency Wars 
– A Bridge Between Worlds? ............... 8
 
An Economic Superstructure Built on a GoldenFoundation ...................................................................... 9
 
Stocks vs. Flows............................................................ 11
 
Is the RBD Another John Law Scheme ................... 12
 
New Austrian School of Economics ......................... 13
 
Editorial
The Next Balloon to BurstIt is ironic how things work in this world. If you readmy bio on the about people page on the GSI website, you know that I am of Hungarian descentmyparents left as refugees when the Hungarian borderwas open for a few days during the HungarianRevolution of 1956.And the latest hot news is from Hungary; Hungary isin big financial trouble. Perhaps it is the nextGreece… or maybe it will beat Greece to default. Ina nutshell, the Hungarians are in the same type oftrouble as the Greeks; way too much debt, inabilityto pay, imposed austerity, IMF pressure, EUpressure, the whole enchilada.The most sensible thing I have heard regarding allthis was a statement by a wise Hungarian; ‘TheHungarian Revolution is not over yet…. It’s merelyon hold’. How true! Hungarians have not yetmanaged to shake off the statist, bankster yoke…but perhaps they are as close to doing this as anyother nation in the world.Remember that back in the 1980’s Hungary prickedthe USSR’s balloon; before the fall of the Berlin wall,the Hungarians decided to allow East Germans toescape to the West through Hungary. Mr.Gorbachev chose not to risk starting WWIII bysending in the Red Army tanks to stop this; unlike in1956, when the Russian tanks indeed rolled, andoverran newly liberated Hungary… while the rest ofthe world including the UN and the USA watched.If Hungary chooses to default rather than cave to theonerous austerity and surrender of sovereigntydemanded by the EU and the IMF, they will be wellon the way to not only liberating Hungary fromoppression, but to pricking the bankster balloon…mainly by setting an example for Greece andPortugal and Ireland (Portugal is probably next tocollapse)… and all the other debt enslaved peoplesof the world.Of course, Iceland already did this… defaultandnotice that news of Iceland is not on the agenda;Iceland may as well have sunk into the NorthAtlantic. The mistake made in Iceland by TPTB was
 
The Gold Standard
 
The Gold Standard Institute
 
Issue #14
15 February 2012 2
 
allowing a referendum to be held regarding payingback debts; Icelanders wisely said no way Joseandthe banksters had to swallow the losses.This mistake was not repeated. When the Greekstried to hold a referendum, a new prime minister wasinstalled post haste… can’t have the people vote ontheir own enslavement, now can we? Why, they may just wake up in time to say NO!If the Hungarians work up the courage to break out,others will follow… and the whole house of cardswill collapse… or as they say, Hungary will becomethe first domino to fall… to be followed by manymore falling dominoes in quick succession.So, what does all this have to do with Gold or theGold Standard? Simply everything.First, under Gold, things could never have gottenthis far out of whack. The huge debts and massiveimbalances are a direct result of debt backed insteadof Gold backed ‘money’. To create ‘money’ underthis system requires ever more debt and repayingdebt destroys ‘money’. Not a sustainable situation byany means.Second, the solution to the problem of too muchdebt cannot be more debt; this is simply insane.Instead of ever more debt, needed to create moredebt backed money, the world must resume usingreal money, money of positive value. The worldmust separate credit and money. In other words,there must be put back into use an ultimateextinguisher of debt.Debt money has the exact opposite effect; instead ofextinguishing debt, more money means more debt.The world needs real money and LESS debt! Thiscan only happen if money of positive value isrestored and the destructive burden of excess debt islifted.And what is the best money of positive value? Whatis the ‘ultimate extinguisher of debt? Certainly notcrude oil or platinum, or a so called ‘basket’ ofcommodities. These things are not and cannot everbe money nor be used to back money. The ultimateextinguisher of debt is… hold your breath… Gold.Not to say that Silver cannot play an important role,but Gold is money. Silver may again be money onlyif the market so chooses.In addition to thousands of years of history asmoney, Gold has by far the largest stock to flowratio of any substance on the planet (only Silvercomes close). A high stock to flow ratio is the sinequa non of money. Gold has a large stock to flowratio because it is money… and it is money becauseit has large stock to flow. History will not be denied.No more can debt get away with pretending to bemoney than the US can get away with pretending tobe the richest country in the world.Ironically, Greece has a pretty nice stash of Gold; byputting their Gold to use, (but not by any meanstrading it for paper ‘money’) instead of letting isgather dust in the vault, they could start resolvingtheir financial crisis. They certainly will not resolvetheir crisis by borrowing more Euros… or bystarting to print un-backed Drachmas again.As an old Hungarian, I am rooting for Hungary; goHunkies, prick the balloon! Someone has to… it mayas well be Hungarians. Hungary has a petty wildhistory, starting with Attila the Hun, throughTurkish invasions, through the Austro-Hungarianempire and WWI, through Hitler and WWII,through Stalin, Khrushchev… and it managed tosurvive in spite of all this. It will surely survive thedestruction of the Euro as well.More rationally, it is clear that the current systemmust collapse; all we can do is hurry the process, andmake sure the result is the establishment of anUnadulterated Gold Standard as the foundation ofthe world economy. If this does not happen, historywill eventually repeat, and all the chaos and pain weare now going through will have been in vain.Onward to the Unadulterated Gold Standard.Onward to a Golden future.
Rudy J. Fritsch-Editor in Chief
Keith Weiner has provided an ingenious roadmapfor how we transition from here to ‘there’. Forthose who still have not read the fulldocumentIstrongly urge you to do so.If you have not already booked there are still somespaces for the Munich seminar. See details within.
 
The Gold Standard
 
The Gold Standard Institute
 
Issue #14
15 February 2012 3
 
News
YouTube: Professor Antal E. Fekete – interviewedin Paris (thanks Jarrod).
≈≈≈
 
Business Week: Ron Paul building a strongnegotiating hand.
≈≈≈
 
CNN: Richard Fisher, president of the Dallas Fed,owns more than $1 million in SPDR's Gold Trust(GLD).
≈≈≈
 
Bloomberg: Venezuela Receives Last Shipment ofRepatriated Gold Bars.
≈≈≈
 
GoldChat: An excellent commentary on themovement to gold.
≈≈≈
 
Henry Makow: Nutty website of the month. Goodfor a laugh, but you have to wonder who is reallybehind such nonsense.
≈≈≈
 
24hGold: Spring festival sparks a gold rush in China.
≈≈≈
 
Bloomberg: Sovereign gold reserves continue toincrease.
≈≈≈
 
NY Sun: Gingrich calls for a commission to discussa return to the gold standard.
≈≈≈
 
ZeroHedge: F.B.I. profiling: "The extremists mayrefuse to pay taxes, defy government environmentalregulations and believe the United States wentbankrupt by going off the gold standard."
≈≈≈
 
Bloomberg: The new member of the Reserve Bankof Australia airs her thoughts and provides goodreasons for Australians to continue swapping theirpaper for gold (thanks Justin D.)
The Rise of the Gold Bugs
The gold bugs are rising. Even US states, nervousabout the failing economy and heavily laden withdebt, are jumping on the band wagon.More and more states are looking at the Utah modelof allowing citizens to pay their debts and trade usinggold as an alternative to fiat money.When Governor Gary Herbert signed a bill into lawin March 2010, Utah became the first state to stickits neck out and introduce its own alternativecurrency recognizing gold and silver coins issued bythe U.S. Mint as a legal form of payment. Under thelaw, gold and silver coins, including American Goldand Silver Eagles, are now treated the same was asU.S. dollars for tax purposes, eliminating capitalgains taxes.However, as the face value of some U.S.-minted goldand silver coins is less than the metal value (oneounce of gold is now worth more than $1,700), thenew law allows the coins to be exchanged at theirmarket value, based on weight and fineness.13 states lawmakers including Minnesota, Tennessee,Iowa, South Carolina and Georgia, are looking tofollow suit by currently seeking approval from theirstate governments to issue their own gold basedcurrency."In the event of hyperinflation, depression, or othereconomic calamity related to the breakdown of theFederal Reserve System ... the State's governmentalfinances and private economy will be thrown intochaos," said North Carolina RepublicanRepresentative Glen Bradley in a currency bill heintroduced last year.The US Constitution bans the states from printingtheir own paper money or issuing their owncurrency, but does allow states to make "gold andsilver Coin a Tender in Payment of Debts."To the state legislators who are proposing state-issued currencies, that means gold and silver are fairgame, said Edwin Vieira, an alternative currencyproponent and attorney specializing in Constitutionallaw.

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