bobbyw24
07-23-2010, 05:23 AM
by Thomas Luongo
Since being "converted" to both libertarianism and, by extension, Austrian economics I have developed a passion for money. The monetary regime lies at the heart of so many symptoms of societal conflict that studying the nature of money seems axiomatic to me. In our current mixed economy of Keynesian Shamanism and Monetarist Voodoo reading through even poor synopses of the Austrian business cycle was like finding the Rosetta stone. The money promulgated by the Federal Reserve and backed the full force and aggression of the U.S. Government could easily be seen as the motive force for all manner of secondary and tertiary effects, especially after a reading of Hayek’s The Road to Serfdom. There is nothing in the FED’s arsenal of monetary tools to combat this problem; the rejection of their basis for existence.
Since those moments of awakening I’ve spent much of my time thinking about how to inject a new currency into an existing regime without using force like with the Euro. I was an adopter of The Liberty Dollar, which was an interesting idea until the raid by the FBI in 2007. It highlighted the growing concern with the US Dollar; giving people the illusion of a silver-backed currency while hedging against its own success or failure by buying their coins and storing them away.
E-Gold’s troubles with The Man were equally predictable; thieves hate competition. The Liberty Dollar was being persecuted over a broad interpretation of counterfeiting laws (irony duly noted) while E-Gold was harassed over their customer’s actions, not any actions of their own. The Federal Government is allowed to run the twin Ponzi Schemes of Social Security and Medicare but U.S. citizens are not allowed to engage in commerce with those engaging in similar activities while not actively engaging in those activities themselves.
In other news, water is wet.
E-Gold is still in business, as are others like GoldMoney. They are all solutions for overcoming one of the real problems with hard currencies; the physical movement of metal from point A to point B in a speed of light economy. Unfortunately, they are all built on the same poor foundation, which the modern banking system exploits ruthlessly; trusting a third party to manage your property from a remote, central location. For GoldMoney, this is a feature not a bug, having vaults located outside the U.S.; a hedge against potential flight-of-capital diktats issued from Mordor-on-the-Potomac.
I have been tempted by these systems, but I have not placed funds with them. I’m willing to believe that many of them are legitimate in both their intentions and business practices, but I can’t afford to take that risk.
I prefer the promise of my dogs to someone I’ve never met.
It’s funny that I have no issue with using PayPal linked to my checking account but am unwilling to fund a GoldMoney account for the same purpose. Of course, I can hear Gary North on my shoulder whispering in my ear like a fiscally savvy Iago saying, "Obviously, you have a problem with that. Gold isn’t money." He is right. Because of Gresham’s law I value it more highly than its notional value. Why would I transact in it, when people will take these stoopid federal reserve notes? Gold is insurance against the depredations of the central bank upon the dollar. It may trade on the COMEX like a currency, but a medium of exchange it is not. As this hilarious video shows, the people of Harvard Square do not even know what to do with silver being offered to them for practically nothing; no less conceive of a use for it as a monetary instrument.
This is a warning to the hard money crowd that a return to commodity money will happen organically or not at all; an outgrowth of a loss of confidence in the dollar and the institutions that circumscribe our daily reality. Without any kind of fundamental shift in mass perspective, I see no future for a commodity exchange standard that bears any resemblance to the International Gold Standard.
People are more trusting of digits than physical gold.
More
http://www.lewrockwell.com/orig6/luongo7.1.1.html
Since being "converted" to both libertarianism and, by extension, Austrian economics I have developed a passion for money. The monetary regime lies at the heart of so many symptoms of societal conflict that studying the nature of money seems axiomatic to me. In our current mixed economy of Keynesian Shamanism and Monetarist Voodoo reading through even poor synopses of the Austrian business cycle was like finding the Rosetta stone. The money promulgated by the Federal Reserve and backed the full force and aggression of the U.S. Government could easily be seen as the motive force for all manner of secondary and tertiary effects, especially after a reading of Hayek’s The Road to Serfdom. There is nothing in the FED’s arsenal of monetary tools to combat this problem; the rejection of their basis for existence.
Since those moments of awakening I’ve spent much of my time thinking about how to inject a new currency into an existing regime without using force like with the Euro. I was an adopter of The Liberty Dollar, which was an interesting idea until the raid by the FBI in 2007. It highlighted the growing concern with the US Dollar; giving people the illusion of a silver-backed currency while hedging against its own success or failure by buying their coins and storing them away.
E-Gold’s troubles with The Man were equally predictable; thieves hate competition. The Liberty Dollar was being persecuted over a broad interpretation of counterfeiting laws (irony duly noted) while E-Gold was harassed over their customer’s actions, not any actions of their own. The Federal Government is allowed to run the twin Ponzi Schemes of Social Security and Medicare but U.S. citizens are not allowed to engage in commerce with those engaging in similar activities while not actively engaging in those activities themselves.
In other news, water is wet.
E-Gold is still in business, as are others like GoldMoney. They are all solutions for overcoming one of the real problems with hard currencies; the physical movement of metal from point A to point B in a speed of light economy. Unfortunately, they are all built on the same poor foundation, which the modern banking system exploits ruthlessly; trusting a third party to manage your property from a remote, central location. For GoldMoney, this is a feature not a bug, having vaults located outside the U.S.; a hedge against potential flight-of-capital diktats issued from Mordor-on-the-Potomac.
I have been tempted by these systems, but I have not placed funds with them. I’m willing to believe that many of them are legitimate in both their intentions and business practices, but I can’t afford to take that risk.
I prefer the promise of my dogs to someone I’ve never met.
It’s funny that I have no issue with using PayPal linked to my checking account but am unwilling to fund a GoldMoney account for the same purpose. Of course, I can hear Gary North on my shoulder whispering in my ear like a fiscally savvy Iago saying, "Obviously, you have a problem with that. Gold isn’t money." He is right. Because of Gresham’s law I value it more highly than its notional value. Why would I transact in it, when people will take these stoopid federal reserve notes? Gold is insurance against the depredations of the central bank upon the dollar. It may trade on the COMEX like a currency, but a medium of exchange it is not. As this hilarious video shows, the people of Harvard Square do not even know what to do with silver being offered to them for practically nothing; no less conceive of a use for it as a monetary instrument.
This is a warning to the hard money crowd that a return to commodity money will happen organically or not at all; an outgrowth of a loss of confidence in the dollar and the institutions that circumscribe our daily reality. Without any kind of fundamental shift in mass perspective, I see no future for a commodity exchange standard that bears any resemblance to the International Gold Standard.
People are more trusting of digits than physical gold.
More
http://www.lewrockwell.com/orig6/luongo7.1.1.html