Was a caller on Schiff's radio show today, but he couldn't quite answer my question..

[emazur]

I was the last caller and asking about gold manipulation on Black Friday in 1869.

According to my history book, 2 speculators named Gould & Fisk were buying up as much gold & gold futures as they could in order to create a bubble, and they planned to dump the gold for a huge profit before the bubble popped. They cut a deal with President Grant's brother-in-law who assured the men that he would convince Grant not to dump the government's supply of gold onto the market in order to keep the price of gold stable. Gold soared to $162/oz but when Grant learned of the plan, he did dump $4 million of gold onto the market and the price collapsed, and as a result businessmen who needed gold to pay debts and wages were ruined by the 100's, and thousands of workingmen lost their jobs.

I'm a hard money advocate but I was playing devil's advocate by asking Schiff whether he thought this would be an argument against the gold standard, but he surprisingly said he wasn't familiar with Black Friday and merely said that overall the gold standard has proved to be the most reliable form of money. Since he wasn't familiar with what happened, I'm not quite satisfied w/ his answer - scientifically created gold and unemployment tsunamis that benefited profiteers are not something most people would just be willing to live with (BTW, the book mentions that even though that Gould and Fisk suffered very little from this failed adventure - "Jim Fisk simply refused to honor his commitments to buy at higher than the market price and hired thugs to threaten those who insisted". I also wanted to ask him whether or not a similar scheme could be hatched by manipulating the price of the dollar or other fiat currencies, but he didn't have time to answer.

[knarfxii]

I was the last caller and asking about gold manipulation on Black Friday in 1869.

According to my history book, 2 speculators named Gould & Fisk were buying up as much gold & gold futures as they could in order to create a bubble, and they planned to dump the gold for a huge profit before the bubble popped. They cut a deal with President Grant's brother-in-law who assured the men that he would convince Grant not to dump the government's supply of gold onto the market in order to keep the price of gold stable. Gold soared to $162/oz but when Grant learned of the plan, he did dump $4 million of gold onto the market and the price collapsed, and as a result businessmen who needed gold to pay debts and wages were ruined by the 100's, and thousands of workingmen lost their jobs.

I'm a hard money advocate but I was playing devil's advocate by asking Schiff whether he thought this would be an argument against the gold standard, but he surprisingly said he wasn't familiar with Black Friday and merely said that overall the gold standard has proved to be the most reliable form of money. Since he wasn't familiar with what happened, I'm not quite satisfied w/ his answer - scientifically created gold and unemployment tsunamis that benefited profiteers are not something most people would just be willing to live with (BTW, the book mentions that even though that Gould and Fisk suffered very little from this failed adventure - "Jim Fisk simply refused to honor his commitments to buy at higher than the market price and hired thugs to threaten those who insisted". I also wanted to ask him whether or not a similar scheme could be hatched by manipulating the price of the dollar or other fiat currencies, but he didn't have time to answer.

thanks, I learned something

[cooker263]

I think it was just the timing of the call. I was listening but I think Schiff was expecting a simple question to close out the show and didn't really think through your question.

Interesting points, though.

[HOLLYWOOD]

If you you are caught manipulating the monetary standard of the United States, the sentence should be Death by Meat Hook Piano Wire.

No get out of jail free via crone politicians or buying your way off of death row like... (Goldman Sachs, Morgan Stanley, JP Morgan, BofA,... etc).

Time to clean up the fraud, counterfeiting, conspiring, and racketeering... that also goes for politicians that intentionally participate in money manipulation with the Central Bankers.

[Travlyr]

If you you are caught manipulating the monetary standard of the United States, the sentence should be Death by Meat Hook Piano Wire.

No get out of jail free via crone politicians or buying your way off of death row like... (Goldman Sachs, Morgan Stanley, JP Morgan, BofA,... etc).

Time to clean up the fraud, counterfeiting, conspiring, and racketeering... that also goes for politicians that intentionally participate in money manipulation with the Central Bankers.
This is exactly right! The founders also found money manipulation one of the most offensive actions and called for the death penalty for fraud, embezzlement or debasement of coins.


MONEY LAW

The Coinage Act of April 2, 1792

(1 Stat. 246)

"Penalty on debasing the coins.

Section 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death."

[emazur]

I think it was just the timing of the call. I was listening but I think Schiff was expecting a simple question to close out the show and didn't really think through your question.


Well I called about 30 mins before the show ended (called a couple times earlier but line was busy) and thought I'd get on earlier so we could flesh this out a bit, but even so he said he wasn't familiar with this event, so I couldn't really expect a good answer.


If you you are caught manipulating the monetary standard of the United States, the sentence should be Death by Meat Hook Piano Wire.

No get out of jail free via crone politicians or buying your way off of death row like... (Goldman Sachs, Morgan Stanley, JP Morgan, BofA,... etc).

Time to clean up the fraud, counterfeiting, conspiring, and racketeering... that also goes for politicians that intentionally participate in money manipulation with the Central Bankers.

I think the punishment for inflating the currency should be death (I think I've heard Judge Nap say that the Coinage Act does have that as a penalty), but when it comes to private investors manipulating currency things get alot murky. For one, government will be the ones to define "manipulation" and selectively choose who is guilty of it. And I don't think it would be so abnormal for the gold market to hit ups and downs (this is natural for the stock market and is tolerated, as it should be), but I also don't think it would be abnormal for government or "the people" to find scapegoats for this rising and falling, and their answer would be that they need a central bank in order to maintain a "stable" currency. But would I advocate sending an "investor" to the gallows if they attempted to manipulate the currency in cooperation with the government? Yes. Based on what I know of Black Friday (which isn't that much, that's why I was calling Peter), Fisk and Gould should have been executed. But apparently their private "armies" were able to allow injustice to go unpunished.

[low preference guy]

I think the punishment for inflating the currency should be death (I think I've heard Judge Nap say that the Coinage Act does have that as a penalty), but when it comes to private investors manipulating currency things get alot murky.

I don't think things get murky at all. They deserve no penalty whatsoever as they committed no crime.

[Travlyr]

I don't think things get murky at all. They deserve no penalty whatsoever as they committed no crime.
Do you approve of their inflation techniques?

[low preference guy]

Do you approve of their inflation techniques?

Of course not. I also don't approve of people spitting in their own faces or saying obscenities to their mothers. But their behavior is not criminal.

[Travlyr]

Of course not. I also don't approve of people spitting in their own faces or saying obscenities to their mothers. But their behavior is not criminal.
Their actions debase currency which is fraud.

[low preference guy]

Their actions debase currency which is fraud.

Where is the fraud? They just decided to buy currency to encourage a bubble. Is buying something fraud?

[Travlyr]

Where is the fraud? They just decided to buy currency to encourage a bubble. Is buying something fraud?
The fraud comes from inflating fiat currency and transferring wealth from the people to the inflater.

[low preference guy]

The fraud comes from inflating fiat currency and transferring wealth from the people to the inflater.

If you buy something and do nothing else, and as a result other people buy believing the price will rise further, and then you sell what you bought, you committed no fraud.

If you colluded with the government to affect the price, that's a crime, but I wasn't talking about that.

[Travlyr]

If you buy something and do nothing else, and as a result other people buy believing the price will rise further, and then you sell what you bought, you committed no fraud.

If you colluded with the government to affect the price, that's a crime, but I wasn't talking about that.
Right, but that is not what is going on. When central banks print money then they increase the money supply which in turn raises prices which transfers wealth from the people to the inflater. That manipulation of currency is fraud.

[low preference guy]

Right, but that is not what is going on. When central banks print money then they increase the money supply which in turn raises prices which transfers wealth from the people to the inflater. That manipulation of currency is fraud.

I have never talked about central banks; your post makes me wonder if you're reading the same thread. I was referring to the emazur's point about "private manipulation". From the context, it's clear he meant "private manipulation" with no unfair advantages given by the government, or a relation to a central bank. The last 7 posts or so were a complete waste of time.

[emazur]

I decided to email the show and request Peter read over the page I scanned for him and to readdress my questions on an upcoming show. For those interested, here is the scan:
http://imgur.com/UC0tp.jpg

[MN Patriot]

Read about Black Friday here: http://en.wikipedia.org/wiki/Black_Friday_(1869)

As is often the case, government was at the root of this economic collapse.


Black Friday, September 24, 1869 also known as the Fisk/Gould scandal, was a financial panic in the United States caused by two speculators’ efforts to corner the gold market on the New York Gold Exchange. It was one of several scandals that rocked the presidency of Ulysses S. Grant. During the reconstruction era after the American Civil War, the United States government issued a large amount of money that was backed by nothing but credit. After the war ended, people commonly believed that the U.S. Government would buy back the “greenbacks” with gold. In 1869, a group of speculators, headed by James Fisk and Jay Gould, sought to profit off this by cornering the gold market.

Government was the initial fraud, issuing money backed by nothing.

[Travlyr]

Thanks emazur, where did you find this information?

[Bern]

Competing currencies - allowing folks to use gold, silver, oil or any other commodity would make it difficult for anyone to create a bubble in one (or a limited set of) commodity(ies). People would just shift to using a different one as price imbalances occurred.

It also sounds as if some regulation of the futures market - ensuring that any contracts are guaranteed to be honored - would help alleviate "irrational exuberance".

[AlexMerced]

I was the last caller and asking about gold manipulation on Black Friday in 1869.

According to my history book, 2 speculators named Gould & Fisk were buying up as much gold & gold futures as they could in order to create a bubble, and they planned to dump the gold for a huge profit before the bubble popped. They cut a deal with President Grant's brother-in-law who assured the men that he would convince Grant not to dump the government's supply of gold onto the market in order to keep the price of gold stable. Gold soared to $162/oz but when Grant learned of the plan, he did dump $4 million of gold onto the market and the price collapsed, and as a result businessmen who needed gold to pay debts and wages were ruined by the 100's, and thousands of workingmen lost their jobs.

I'm a hard money advocate but I was playing devil's advocate by asking Schiff whether he thought this would be an argument against the gold standard, but he surprisingly said he wasn't familiar with Black Friday and merely said that overall the gold standard has proved to be the most reliable form of money. Since he wasn't familiar with what happened, I'm not quite satisfied w/ his answer - scientifically created gold and unemployment tsunamis that benefited profiteers are not something most people would just be willing to live with (BTW, the book mentions that even though that Gould and Fisk suffered very little from this failed adventure - "Jim Fisk simply refused to honor his commitments to buy at higher than the market price and hired thugs to threaten those who insisted". I also wanted to ask him whether or not a similar scheme could be hatched by manipulating the price of the dollar or other fiat currencies, but he didn't have time to answer.

This is why while gold is the best money, competing privately issued currencies should be allowed. Cause if such a behavior is done it won't work out so well when people transfer over to a silver or platinum money.


Gold restrains government if they have a monopoly on money,

but the ideal is to treat money like any good and allow private issuance and competition the lack of a monopoly would be a major disincentive to manipulative behavior like the one you outly in this history book.

[emazur]

Read about Black Friday here: http://en.wikipedia.org/wiki/Black_Friday_(1869)

As is often the case, government was at the root of this economic collapse.



Government was the initial fraud, issuing money backed by nothing.

But what if a similar situation were to arise and the government is completely uninvolved? Let's say the U.S. killed off fiat money and the Treasury issued gold certificates that were backed 100% by gold and that independent agencies were able to confirm they had all the reserves. Several years after the adoption of this 100% gold dollar, just a few of the ultra-elite gather collude to drive up the price of gold by buying up all the gold and gold futures they can get their hands on. They are successful and gold reaches record highs and consumers go gaga over gold mania. The ultra-elite then sell off their gold when they feel the bubble is getting close to bursting, and profit massively. Everyone who was borrowing money (not speculating) during the crisis, to grow a business for example, would be deep in the hole and businesses and employees would be scrambling. Then come the cries for a central bank to "regulate" the money supply.

Bubbles are bubbles, whether artificially induced by the Fed or cabal of profiteers. But I suspect the counter to my above scenario is that it's possible that free-market interest rates (at least from some banks) would rise as the price of gold rose in anticipation of a bursting gold bubble, and that these higher interest rates would keep the demand, and therefore the price, of gold in check. Maybe the low interest rate providing banks get wiped out, customers' savings in those banks get wiped out, the strong banks survive and Americans forever learn their lesson and gold remains a stable currency til the end of time. Then again, there is only this one crash and people go crying to the government to "do something" so it never happens again and we get the Return of the Federal Reserve (sounds like a good movie?).


Thanks emazur, where did you find this information?

I typed the source in the bottom left of the scanned page - "The American Past", 2nd edition by Conlin

[emazur]

It also sounds as if some regulation of the futures market - ensuring that any contracts are guaranteed to be honored - would help alleviate "irrational exuberance".

The ancaps wouldn't like that, nor would they like the fact the private armies they advocate would not have ensured justice as the the people with who can afford the manipulating can also afford the best enforcers, as exampled by Fisk's hired thugs in this case (though I suspect there's more to it that written here and that the government enforcers, who are supposed to be looking out for the people, looked the other way from Fisk's actions for one reason or another).

[Liberty_Mike]

Thanks for the info, Emazur. This Gould & Fisk scandal seems almost the exact opposite of what JP Morgan has recently tried doing with silver.

[Daamien]

I think your title is a bit misleading. It's not that he couldn't necessarily answer your question, it's simply that your question was posed 2 minutes before the end of the show which was not adequate time to facilitate a more nuanced discussion.

Thankfully Peter's show airs 5 nights a week, so I'd advise that you call back soon to revive the conversation. If you're worried about not having enough time, then try calling earlier in the show. The queue can be long at times. Thanks for your question and for listening to the show.

[emazur]

I think your title is a bit misleading. It's not that he couldn't necessarily answer your question, it's simply that your question was posed 2 minutes before the end of the show which was not adequate time to facilitate a more nuanced discussion.

Thankfully Peter's show airs 5 nights a week, so I'd advise that you call back soon to revive the conversation. If you're worried about not having enough time, then try calling earlier in the show. The queue can be long at times. Thanks for your question and for listening to the show.

Well he said he wasn't familiar w/ the event so it didn't matter anyway. I emailed the show w/ the document and I hope he picks up the subject again. I can't usually call earlier, if at all, because of work.

[denison]

This is why while gold is the best money, competing privately issued currencies should be allowed. Cause if such a behavior is done it won't work out so well when people transfer over to a silver or platinum money.


Gold restrains government if they have a monopoly on money,

but the ideal is to treat money like any good and allow private issuance and competition the lack of a monopoly would be a major disincentive to manipulative behavior like the one you outly in this history book.

^^^This. He pretty much answered your question.

[emazur]

^^^This. He pretty much answered your question.

But I've never heard Schiff advocate for competing private currencies. Though I doubt he would be opposed to private currencies, he advocates going back to the original Federal Reserve. Why he thinks it wouldn't quickly degenerate, given that we had 2 depressions within 20 years of the Fed's formation, is another question altogether (maybe I'll call again to discuss that if I have the chance). Also, if some profiteers were willing to fuck around with the demand for gold, there's no reason to think other profiteers wouldn't do the same for other metals, possibly at the same time as the other manipulators.