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http://www.lewrockwell.com/paul/paul319.html
Much can be learned by understanding what the rising dollar price of gold means.
Indeed.
Ron Paul is, in my estimate, the least evil. It has been said, often enough, that the choice between two evils is still evil.
If the evil one removes choice, then, in my opinion, that one is the greater evil compared to the ‘opposition’ who does not remove choice.
From another angle:
I met, rather attended a lecture by, Ron Paul. Based upon that lecture my estimate is that Ron Paul would make a fine baby sitter for my kids. I trust him enough to put him on the short list. In fact, I’d rather send my kids to him for instruction rather than to the Christian School Teachers where my daughter is now sitting and certainly choose Ron Paul over the High School Teachers baby sitting my 17 year old son. Unfortunately Ron Paul doesn’t offer his services as Baby Sitter. If he did I’d probably be priced out of that market.
I remember this about Ron Paul’s lecture:
On the subject of supporting the Troops:
Bring them home.
I do have a problem with Ron Paul’s perspective on gold. The problem is not a deal breaker. It is a simple matter of principle. A matter that can be negotiated privately on a case by case basis and ‘in practice’ my estimate is that Ron Paul would probably give no more than he takes. Furthermore it is my opinion that ‘somehow’ I would come out ahead in the game.
I call that respect.
I’m not always the stupid one.
After all, gold earns no interest and its quality never changes. It’s static, and does not grow as sound investments should.
I read the above as:
Gold does not produce more gold - which it does so long as the gold is used to finance productive gold mining i.e. Gold mining that actually does produce more gold.
A minor point to be sure - on the surface.
What is under the surface?
I have an interest in mining under the surface to look for more gold.
Buying gold and holding it is somewhat analogous to converting one’s savings into one hundred dollar bills and hiding them under the mattress – yet not exactly the same. Both gold and dollars are considered money, and holding money does not qualify as an investment. There’s a big difference between the two however, since by holding paper money one loses purchasing power. The purchasing power of commodity money, e.g., gold, however, goes up if the government devalues the circulating fiat currency.
Money is a generic term, it seems to me, and practically useless, because there are two separate and distinct forms of money. One is one thing. The other is another thing and the two are so vastly different that one cannot be the other ever. One works well as one thing because of what it is and the other works well, doing what it does, because it is the other thing.
I’ve already read through Ron Paul’s address to Congress and the distinction becomes very clear.
Digging deeper:
Holding gold is protection or insurance against government’s proclivity to debase its currency. The purchasing power of gold goes up not because it’s a so-called good investment; it goes up in value only because the paper currency goes down in value. In our current situation, that means the dollar.
Notice the words “Currency” and “current situation”.
That is one form of money.
Notice the words “protection or insurance”.
That is the other form of money.
In physical terms:
One form is Energy.
The other form is Power.
One form is ‘static’.
The other form is ‘dynamic’.
My earlier claim concerning money as two separate and distinct forms can be seen like this:
An electric battery is static. It stores energy. A light bulb cannot be charged with the battery. Place the light bulb on the floor and drop the battery on the light bulb. Place the battery on the floor and hold the light bulb near the battery. Try as you might the battery will not charge the light bulb. The energy or insurance contained in the battery is static. The power required to light the bulb is stuck in the battery. A good battery will save the energy for a long time. A poor battery will waste the energy quickly. The power saved in a poor battery will evaporate, so to speak, and the insurance policy will be canceled.
Note: The energy or charge in the battery will go somewhere. It will be power that is lost or even power that destroys. A very poor battery may end up electrocuting the hapless owner of the poor battery.
One of the characteristics of commodity money – one that originated naturally in the marketplace – is that it must serve as a store of value. Gold and silver meet that test – paper does not. Because of this profound difference, the incentive and wisdom of holding emergency funds in the form of gold becomes attractive when the official currency is being devalued. It’s more attractive than trying to save wealth in the form of a fiat currency, even when earning some nominal interest. The lack of earned interest on gold is not a problem once people realize the purchasing power of their currency is declining faster than the interest rates they might earn. The purchasing power of gold can rise even faster than increases in the cost of living.
Commodity money is like trying to make a battery light up a light bulb. To see this clearly it is important to understand both forms of money. My efforts so far have ignored the dynamic form of money. I’ll get to that presently.
The battery trying to light the bulb is much like a person trying to pay for a news paper with a bar of gold. One might say: It could happen. I might say: Like getting electrocuted.
The battery trying to light the bulb is like trying to buy a house with a box full of gold. Again it can happen but don’t drop the box on your foot.
The battery trying to light the bulb is like trying to buy a Senator’s vote for your corporation. It can happen, again, but the Senator may just take the gold and vote his conscience. How are you going to explain all that gold? Besides the current situation concerning Senator’s votes is driven by oil; there is a lot of energy in oil. Gold has none.
The belief that money created out of thin air can work economic miracles, if only properly “managed,” is pervasive in D.C.
Currently; the current situation is that a miracle is an individual concept. One could say: “It is a miracle to note just how stupid the average American citizen has become.”
I would say: “It is miraculous just how unconscionably low a human being can stoop”
So low that he, or she, can crawl under a snake while wearing a top hat.
Make no mistake. I admire Ron Paul. He is a principled man, a giant, among unprincipled midgets, a stand up guy in a fallen down place, and a shining example of human excellence mired in a false world. Empathy is my message here and now. Not pity. Some day I may reach a point where I will see the minor contentions of principles, that we do not share, resolved.
Not only that, paper money has worked surprisingly well in the past 35 years – the years the world has accepted pure paper money as currency.
Currently; the current situation is such that paper money continues to work surprisingly well. The reason for this is that currency is not money. Currency is currency. Currency is not the battery. Currency is the current. Currency is power. Currency is the dynamic. Currency lights the bulb. If it is not currency, then, the bulb does not light.
There is nothing surprising, despite what the professor may say, that currency lights the bulb. It does so because it is power. Currency is power. The form, the label, the nomenclature, and the ‘idea’ is the energy, the static, the battery, and the insurance policy; it is not the power. Change the name, change the idea, change the label, and change the form of the battery and that ‘theory’ remains a static entity doing nothing. However, and this is important, once the currency moves from the “theory” and the “Battery”, the insurance policy, once that starts happening, then, the power flows and things get done. The important thing to be illuminated is, in a term, ‘the paper trail”.
Be it a battery powering a light bulb and the trail will be wires. That is a circuit. That is the ‘society’ evolving from the idea. Be it a pile of gold powering an economy and that trail will be, as it was, a circuit of dirt roads in a primitive society. Robbers hid and pounced at every turn in that circuit where no ‘insurance policy’ could protect the flow of trade i.e. the current flow of commerce. Such is one problem associated with the primitive practice of using a store of value as a form of currency. One is a battery. The other is a currency.
This removes the problem of obtaining gold to back currency, and hence frees politicians from the rigid discipline a gold standard imposes.
It is difficult to charge a light bulb with a battery. It is also very difficult to store a charge in a light bulb with a battery. As soon as the battery is disconnected the charge is no longer in the light bulb. As soon as the energy is gone; everyone dies.
That is important. That is so important that every living organism must understand exactly what that means or that living will cease to live.
The financial crisis, looming on the horizon, is a crisis concerning currency not energy. Energy is abundant. The Sun is not going to fall from the sky; unless ‘The decider” decides to unleash the energy contained in those ‘bunker buster’ energy storage units. If he does decide to do that, then, the “Peak Oil” problem will become a current form of currency, a missile traveling a path, currently heading to a place where a huge transfer of energy will occur that could start a chain reaction, where China retaliates, and enough conversion of energy occurs to blot out the sun.
That is important. Everyone dies. Except ‘the decider’ perhaps as much of ‘our’ currency has been used to transform oil energy into bunkers that can’t be busted by the current, made for T.V., ‘terrorists’.
The point is that ‘the problem’ is not energy so much as it is ‘currency’. If the problem is ‘paper currency’, then, taking it away would solve the problem. What differences does it make to have a Sun currently supplying us with the energy needed to survive while we utilize that energy in whatever form we find useful and then having no means to utilize that energy because someone finds our particular currency to be ‘the problem’ and how is that any different than the Sun being blotted out by “Nukular” radiation? We all die anyway. People need currency. Currency is the means by which unusable energy is converted into usable energy. Currency is power. Each individual entity, or living organism, must have the power to convert unusable energy into usable energy. We must have currency.
By ‘someone’ I mean anyone. Anyone ‘deciding’ not to use currency in any form whatsoever will still need to eat. Such a person, anyone, can decide not to use any currency and soon enough that person can decide to find food, eat food, and survive without currency. Even still; that person uses currency. The food travels, currently, from the source and turns into shit; eventually. If it does not, then, the currency stops flowing. The organism dies. Life ceases.
Since gold has proven to be the real money of the ages, we see once again a shift in wealth from the West to the East, just as we saw a loss of our industrial base in the same direction. Though Treasury officials deny any U.S. sales or loans of our official gold holdings, no audits are permitted so no one can be certain.
Money?
My contention is this:
Money is storage of value, an insurance policy, storage of energy, a static savings or it is currency. It is not both at the same time. If the form of money tries to accomplish both jobs as commodity money, then, it cannot do both jobs well. Commodity money will store well or it will flow well. It will be either a good battery or a good currency. If a problem does exist concerning money, then, one needs to look no further than the people who are empowered with the enforcement of money. The paper trail leads to them. If ‘they’ are the problem, then, ignore them and use better money. That is simple.
Use e-gold. Use the Yaun. Use the euro. Use a personal check. Use a credit card. Use a debit card. Use a stack of frequent flier miles. Use Whiskey. Use corn. Use gold. Use Paypal. Use a Swiss Bank account. Use whatever still works but do not frame the problem contained within the enforced demand of one certain money by a certain person or group of people who just happen to have power over oil and your mind. Use your own mind; it is your bank. Use your own currency, whatever you find that works, and don’t worry one bit about the Sun falling from the sky.
The paper trail leads to the exact source of the problem. Look at your pay stub. Where are you sending all your earnings? The flow of currency keeps flowing. Stop it, reduce it, whatever, but don’t give up on everyone else who still wants to trade. You, we, will still need some form of currency and we do not necessarily need to store anything for very long. Fruit rots. Vegetables rot. And when Gold can’t manage to compete with better forms of currency, then, gold rots too.
But the fact that gold has gone from $252 per ounce to over $600 means there is concern about the future of the dollar.
Compare that to this:
After all, gold earns no interest and its quality never changes. It’s static, and does not grow as sound investments should.
That is important. A jump in ‘value’ from 252 to 600 is NOT interest. The ‘value’ is in knowing why the jump occurred. Knowing why will lead to knowing how and then one can understand who. If none of that understanding is processed in the mind, then, one might begin to fear rather than prepare or even better; insure against future loss.
A battery is needed. Storing is needed. Future loss is inevitable.
The question is:
What is the best battery? How can I store best?
That is a battery problem. That is not a currency problem.
Gold is a very good battery if you get in when the ‘value’ is lowest. Gold is not a good battery if you ‘buy in’ when the value is highest. The Gold Standard is not so great when that ‘value’ is subjected to the whims of certain people doing certain things; inevitably.
That is a battery problem. The Gold Standard is another subject. A standardized measure of value is very important. A standard measure of value is extremely important.
On that briefly:
If you have no standard measure of value, then, every measurement is a new measurement; like a yard stick that erases. The inch is a standard measure of value. The meter is even better.
I’m running short on time now. This post is important to me for many reasons not the least of which concerns the respectable source of the interest.
Last edited on Sat Apr 29th, 2006 10:07 am by Joe Kelley