Zatch
06-06-2011, 02:03 PM
Are We Done With Goldbug Fantasies Yet?
It just never ends, does it? (http://goldnews.com/2011/06/02/fed-lawyer-alvarez-the-federal-reserve-does-not-own-any-gold-at-all/)
For those of you who did not watch yesterday’s monetary policy hearing in the house of representatives, you most likely missed this bombshell exchange between Federal Reserve lawyer Scott Alvarez and committee chairman Dr. Ron Paul. My jaw literally dropped when I heard the Fed’s general counsel declare that the Federal Reserve owns no gold. After 1934, Alvarez explains that the Fed handed its gold over to the Treasury in exchange for gold certificates. When pressed further, Alvarez noted that the gold certificates do not represent any interest whatsoever in the gold itself. He explained the gold certificate listings on the Fed balance sheet, not as a claim to gold, but at most a claim to dollars from the Treasury. See the quotes here (and watch the videos at the bottom of the post):
Why is this a "bombshell"?
If you've followed my writings for any time at all you know my view: All fiat currencies are backed by the future ability of the government involved to levy taxes.
That's all.
We can have a debate about whether this is good or bad, but what cannot be debated is what the backing is for such a currency: It is simply the taxing authority (such as it exists) of the government in question.
This may appear to be an infinite power. However, it is not. Government's ability to tax is limited by the production of the people in the nation and their willingness to submit to taxation. The USSR would have been the most-successful empire in the history of the world were this not the case, and would have won the cold war handily, destroying both The United States and Reagan's doctrine.
Reagan was proved correct, in that the United States had superior production capacity in its citizens, not so much from the lack of taxation but from the relative freedom of action afforded here .vs. the USSR, and thus the US Government was able to "win" the Cold War by causing the USSR to (unwisely) engage in an arms race it could not finance. Nationalism and pride resulted in the destruction of the political system without a shot being fired.
The "goldbug" web sites are all touting this as some sort of feature that makes gold's "ascendancy" more eminent. Nonsense. Gold was de-monetized in 1934 in the United States, whether the "Bugs" wish to believe it or not. There was a common illusion that the "monetary" nature of Gold was maintained through Bretton Woods, which was more fictional than fact, simply due to demonetization in 1934 - an inconvenient fact that people "overlooked" when ratifying Bretton-Woods. But heh, fictions are useful right up until they're not, and in 1971 Nixon decided they were not.
Thus ends, by clear declaration, the fantasy of a certain Congressman and his adherents. I fully expect that there will be much strum and furor over this in the coming days and weeks, but it's all for naught. The events in question took place eighty years ago and are long in the past.
What's to be argued, if we are to have a cogent and useful debate, is why The Federal Reserve, when operating under a clear mandate to maintain stable prices, has for that entire eighty year period of time redefined the word "stable" to be "2% inflation", which, had it been followed, results in a destruction of purchasing power of approximately 80% over that same 80 year time period.
Of course it wasn't followed; we actually got about 50% more inflation than their "target", which has resulted in a ninety-six percent destruction in value.
Were we to follow the mandate of The Federal Reserve Act and holding people to account for their failures, we would be, at the present time, having a capital felony trial for Bernanke and his fellow cohorts on the FOMC. Why? Because The Coinage Act of 1792 provided that: (http://www.constitution.org/uslaw/coinage1792.txt)
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.
The solution to these problems is available to us, and the law as written governing The Federal Reserve provides the standard ("Stable Prices") by which to judge.
We simply have no man or woman in Congress, most particularly the one who claims he is "of the people and for sound money", Mr. Traitorous Paul, who will actually put forward a bill to insert an "or else" into The Federal Reserve Act and put a stop to the debauchery.
Instead, he and his "supporters" wave their arms and show "shock and surprise" at that which occurred eighty years ago and is neither a shock or a surprise to anyone who has both the ability to read and perform simple mathematical calculations.
Since I believe Mr. Paul is capable of both reading and understanding exponents (even if he requires a calculator to do the latter) these theatrics can only be an intentional deception.
To those who "follow" and "like" Mr. Paul: Wake up from your fantasy and face the fact that you have been sold down the river by yet another charlatan who utterly refuses to introduce and press for legislation that will actually address the problem ("sound money") he claims as his "passion."
http://market-ticker.org/akcs-www?post=187537
It just never ends, does it? (http://goldnews.com/2011/06/02/fed-lawyer-alvarez-the-federal-reserve-does-not-own-any-gold-at-all/)
For those of you who did not watch yesterday’s monetary policy hearing in the house of representatives, you most likely missed this bombshell exchange between Federal Reserve lawyer Scott Alvarez and committee chairman Dr. Ron Paul. My jaw literally dropped when I heard the Fed’s general counsel declare that the Federal Reserve owns no gold. After 1934, Alvarez explains that the Fed handed its gold over to the Treasury in exchange for gold certificates. When pressed further, Alvarez noted that the gold certificates do not represent any interest whatsoever in the gold itself. He explained the gold certificate listings on the Fed balance sheet, not as a claim to gold, but at most a claim to dollars from the Treasury. See the quotes here (and watch the videos at the bottom of the post):
Why is this a "bombshell"?
If you've followed my writings for any time at all you know my view: All fiat currencies are backed by the future ability of the government involved to levy taxes.
That's all.
We can have a debate about whether this is good or bad, but what cannot be debated is what the backing is for such a currency: It is simply the taxing authority (such as it exists) of the government in question.
This may appear to be an infinite power. However, it is not. Government's ability to tax is limited by the production of the people in the nation and their willingness to submit to taxation. The USSR would have been the most-successful empire in the history of the world were this not the case, and would have won the cold war handily, destroying both The United States and Reagan's doctrine.
Reagan was proved correct, in that the United States had superior production capacity in its citizens, not so much from the lack of taxation but from the relative freedom of action afforded here .vs. the USSR, and thus the US Government was able to "win" the Cold War by causing the USSR to (unwisely) engage in an arms race it could not finance. Nationalism and pride resulted in the destruction of the political system without a shot being fired.
The "goldbug" web sites are all touting this as some sort of feature that makes gold's "ascendancy" more eminent. Nonsense. Gold was de-monetized in 1934 in the United States, whether the "Bugs" wish to believe it or not. There was a common illusion that the "monetary" nature of Gold was maintained through Bretton Woods, which was more fictional than fact, simply due to demonetization in 1934 - an inconvenient fact that people "overlooked" when ratifying Bretton-Woods. But heh, fictions are useful right up until they're not, and in 1971 Nixon decided they were not.
Thus ends, by clear declaration, the fantasy of a certain Congressman and his adherents. I fully expect that there will be much strum and furor over this in the coming days and weeks, but it's all for naught. The events in question took place eighty years ago and are long in the past.
What's to be argued, if we are to have a cogent and useful debate, is why The Federal Reserve, when operating under a clear mandate to maintain stable prices, has for that entire eighty year period of time redefined the word "stable" to be "2% inflation", which, had it been followed, results in a destruction of purchasing power of approximately 80% over that same 80 year time period.
Of course it wasn't followed; we actually got about 50% more inflation than their "target", which has resulted in a ninety-six percent destruction in value.
Were we to follow the mandate of The Federal Reserve Act and holding people to account for their failures, we would be, at the present time, having a capital felony trial for Bernanke and his fellow cohorts on the FOMC. Why? Because The Coinage Act of 1792 provided that: (http://www.constitution.org/uslaw/coinage1792.txt)
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.
The solution to these problems is available to us, and the law as written governing The Federal Reserve provides the standard ("Stable Prices") by which to judge.
We simply have no man or woman in Congress, most particularly the one who claims he is "of the people and for sound money", Mr. Traitorous Paul, who will actually put forward a bill to insert an "or else" into The Federal Reserve Act and put a stop to the debauchery.
Instead, he and his "supporters" wave their arms and show "shock and surprise" at that which occurred eighty years ago and is neither a shock or a surprise to anyone who has both the ability to read and perform simple mathematical calculations.
Since I believe Mr. Paul is capable of both reading and understanding exponents (even if he requires a calculator to do the latter) these theatrics can only be an intentional deception.
To those who "follow" and "like" Mr. Paul: Wake up from your fantasy and face the fact that you have been sold down the river by yet another charlatan who utterly refuses to introduce and press for legislation that will actually address the problem ("sound money") he claims as his "passion."
http://market-ticker.org/akcs-www?post=187537