What If We Never Left The Gold Standard? Part II [SPDR Gold Trust (ETF), iShares Silver Trust (ETF)]

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July 24, 2014 2:17pm NYSE:GLD NYSE:SLV

record gold holdingsJeff Nielson:  Part I ended by challenging readers to engage in a difficult, mental feat: imagining sanity. Our present pseudo-reality (dubbed “the New Normal” by the Corporate media) has been so insane, for so long, that few of us have any recollections


at all of living in even quasi-sane societies.

More specifically; we live in an upside-down world where virtually all commerce is conducted by swapping worthless scraps of paper (“fiat currency”) for valuable goods and services (or doing so “virtually”). Engaging in commerce where one exchanges value-for-value (i.e. exchanging valuable money for hard assets and services) is now a totally alien concept to the members of our societies.

So imagine sanity. Pretend that we have been sent back in time, to when we had both honest government (enforced through “the golden handcuffs” of a hard, gold standard), and honest money with which to conduct our commerce – gold and/or silver currency. Readers have had a few days now to prepare for this ‘journey’, so hopefully you’re now ready for that leap.

As sophisticated readers understand (and readers of previous commentaries); a hard gold standard enforces fiscal discipline upon governments. They must be able to back all of their spending with gold, thus practically eliminating any/all debt-financing. It is little different than a law requiring governments to “balance their budgets”.

This is a policy for which many right-wing pundits have clamored for years/decades, yet (strangely) these same pundits (except for Ron Paul) never demand a return to a gold standard. Why not create a monetary system which physically enforces the law (i.e. a balanced budget)? It can only be because these “balanced budget” zealots on the Right are being less-than-honest about what their own “balanced budget” policies really represent.

Putting that aside; with a gold standard mandating balanced-budgets, we have a self-correcting, sustainable economic system. This is another concept which will be totally alien to almost all readers. Simply mention the phrase “sustainable development” in our societies; and one will immediately be pigeon-holed by the entire (ultra right-wing) business community (and media) as being some sort of left-wing radical and/or “environmentalist”.

In the New Normal; “sustainable development” is considered insane. By logical necessity; this means our entire Establishment subscribes to the mantra of unsustainable development: deliberately creating (and managing) an economic system which we know – by definition – cannot survive. This is the only path of (supposed) “sanity” for those living in the Wonderland Matrix: more insanity.

In the world of our gold standard, however, we have sustainable economies as well as sane societies. But it only starts with balanced budgets. Balanced budgets mean no debt. No debt means no interest payments (to the parasitic One Bank). No interest payments means our governments get to (productively) use 100% of every revenue-dollar they receive. This introduces readers to yet another concept which will be alien to all: efficient government.

Why have our governments gotten more and more “inefficient” each year? One reason is because every year they waste a larger and larger percentage of every revenue-dollar making interest payments to parasites. All of these massive, Western bond-debts are fraudulent (and thus legally unenforceable), but that is (and was) a topic for another commentary.

With societies with governments which were prudent, fiscally responsible, and made (at least in theory) efficient use of each-and-every dollar they took in; what sorts of people would populate such societies? Would we have societies of irresponsible, over-indebted spendthrifts – as we do in the New Normal? Of course not.

Societies are (more or less) reflections of their governments. “Monkey-see, monkey-do” is one of the most deeply-ingrained behavior traits of our species. It’s why we’re so good at improving upon the ideas of others: we’re masters of imitation.

Unfortunately, we are equally prone to copying bad behavior as we are to copying good behavior. Why does the United States have a murder-rate which grossly exceeds every other (relatively civilized) society in the Western world? At least in part; it’s because the U.S. is the only Western society which practices the barbaric form of penal justice(?) known as “capital punishment”.

Boiled down; the mantra of any capital punishment system is a simple one: it’s O.K. to kill someone if they deserve it. This is not a message which any sane/civilized government would ever want to send to the members of their population. In particular; it’s not a message which any sane/civilized government should ever send to a society of paranoid, gun-toting vigilantes – as exists in the USA.

Monkey-see, monkey-see. Tell people who walk around everywhere they go with a loaded gun that “it’s O.K. to kill someone if they deserve it”, and then watch the people drop like flies – especially when many of these armed monkeys are dangerously unstable.

Conversely, fiscally responsible governments which carried no debt and “knew the value of a dollar” (sic) would breed societies of fiscally responsible citizens – who themselves carried little if any debt. This is one of the reasons why the One Bank spent the better part of a century scheming to eliminate our own gold standard: so it could begin its blood-sucking of greater and greater and greater interest payments.

But let’s return to the lives of citizens in this society of responsible governments and honest money; since it was the question of one of those citizens which inspired this piece. In particular; that reader wanted to know (as he completed paying-off his mortgage) how his own life as a homeowner would have been different if we had remained as a gold-standard/honest-money society.

Simply, he would have never spent nearly as much time, effort, and (mostly) money making those mortgage-payments, because in our low-debt/honest money society the “25-year” or even “20-year” mortgage would be virtually non-existent. The citizens of our societies would simply rebel at the arithmetic of such debt-slavery.

Depending upon the interest rate paid by a homeowner-to-be; with a 25-year mortgage the total (true) “purchase price” (including all interest) can end up being three times the nominal purchase price (or more). Put another way; one-third of the (true) purchase price goes to the vendor actually selling the home, and two-thirds goes to the parasite (i.e. bank) simply financing the transaction as the intermediary.

This is also deemed “normal” by the shills of the New Normal – banker, politician, and economist alike. Obviously a world in which a purchaser voluntary agrees to pay triple the purchase-price of a home for the primary purpose of engorging a financial parasite would only be deemed “normal” by the parasites themselves (and their entourage of sycophants).

In our sane world; most of the money spent by a person buying a home would go to the person selling the home – yet another nearly alien concept. People would save more, and defer their consumption (i.e. “delayed gratification”). Naturally the charlatan economists will all whine that this would “depress consumption”.

Yes. Precisely. We should not be “consumer economies”. We should be economies which manufacture things, not economies based upon shopping for things manufactured by others. Reducing (dramatically) all consumption-by-debt would re-orient our economies away from such mindless consumerism, and towards more-productive endeavours.

Furthermore, (responsibly) depressing consumption in this manner would reduce prices in most areas of our economy, and no sector would see a stronger “correction” (back toward reality) than real estate. Why are the house-prices in every Western economy dramatically-and-insanely more disproportionate in comparison to incomes than at any other time in our history?

In large part (thanks to the bankers); it’s because we have millions and millions of people who cannot afford homes (at these insane prices) buying homes. Just like injecting more “leverage” (i.e. debt) into our markets pumps-up stock prices; force-feeding ludicrous amounts of debt into our housing markets has propelled prices to these (temporary) fantasy-levels.

In our sane society; people would wait to purchase a home until they could (at worst) finance that purchase with a mortgage of 10 years (or less). But this would not mean that such populations would have to wait until they were grandparents to “own their own home”, because home prices would be much, much lower.

How would our sane (hypothetical) world postulated by a reader differ from our own, present insane-asylum? In short; it would be a better world for everyone…except bankers.

This article is brought to you courtesy of Jeff Nielson From Bullion Bulls Canada.


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