A Response
To
Pegging
to Gold and a 100% Gold Standard
Douglas V.
Gnazzo
Jun 21, 2005
Introduction
Steve Saville,
in his weekly market update [for his subscribers] offered some
commentary on Paul Kasriel's remarks recommending that
the Chinese should peg their currency to gold, rather than to
the United States Dollar. According to Mr. Kasriel, China would
achieve better long-term price stability or what he calls purchasing
power, if the Chinese renminbi was pegged to gold rather than
the U.S.$.
Mr. Saville's
basic commentary is that Mr. Kasriel's gold pegging idea is a
very bad idea. Mr. Saville states that over very long periods
of time, gold does retain its purchasing power, "but over
shorter time frames it experiences enormous swings in its purchasing
power based on worldwide swings in confidence in financial assets."
He then offers,
"For example,
gold's purchasing power increased by around 1000% during the
1970s and then fell by more than 80% between 1980 and 2001. Also,
a currency that was pegged to gold would experience wild swings
in its exchange rate over short periods of time in response to
any news that caused the gold price to spike higher or lower."
With all due
respect to Mr. Saville, I don't think he understands what the
gold standard was and wasn't, what the gold exchange system was
and wasn't, the differences between the two, and even more importantly
that neither the gold standard nor the gold exchange standard
were the same as the original hard money system of the Constitution.
Why do I say
that. Well, for one, what does the gold price mean or
refer to? Priced in or by what?
Hard Money of the
Constitution
The original
hard money system of the Constitution was one where a defined
weight of silver was the standard, and the monetary system was
silver and gold coins, that were exchanged one for the other
at the rate of 15 to 1. There was no paper money in the original
Coinage Act of 1792 [click to view the Act - NESARA-The
Coinage Act of 1792.
The definition
of a dollar was clearly expressed in the Coinage Act of 1792,
it being:
"DOLLARS
OR UNITS - each to be of the value of a Spanish milled dollar
as the same is now current, and to contain three hundred and
seventy-one grains and four sixteenth parts of a grain of pure,
or four hundred and sixteen grains of standard silver."
[coinage act of 1792]
This is the
critical point that all who speak on monetary matters do not
seem to get. They define the dollar as being equivalent to the
present dollar bill or Federal Reserve Note. A dollar bill and
the dollar of the Constitution are two entirely different entities.
One is the
original hard money silver standard of a specific weight of silver,
the other is a piece of paper, a bill of credit, an i.o.u. or
promise to pay, an obligation. A silver dollar was not a promise
to pay or an obligation, it was the means of making payment,
it was payment of the obligation, not a receipt for it.
The Fraud
If one follows
the various coinage acts of our monetary history in a chronological
order, one will find that our monetary system did not evolve,
it devolved. It went from honest weights and measures of real
silver and gold coins, to eventually paper money that was backed
or pegged to silver and gold.
At no time
in our history was the backing of paper money greater than 40%.
Which meant what, that 40% of the money was legitimate and that
the other 60% wasn't backed and thus was a fraud? Which 40% was
real and which wasn't real? Or was and is the whole thing a fraud?
Fractional Reserves
This is what
is called fractional reserve backing, which in turn allows for
fractional reserve lending, the lending of that which isn't on
reserve, that the banker doesn't really have on deposit.
This allows
for a dishonest monetary system. This is why the dollar has lost
95% of its purchasing power since 1913. If I were Mr. Saville,
I would be a bit concerned with that loss of purchasing power.
To take a piece
of paper and print numbers on it and to say, look, this dollar
bill is now our money, it was once backed by gold and silver,
but that is not necessary any more, just accept it at face value
and all will be find, is to completely turn the original monetary
system of our country upside down.
Now black is
white and white is black. And furthermore, even to have a paper
currency backed by gold, was a far cry from the original hard
money system of silver and gold coin.
What Is a Dollar
Now we price
gold in "dollar bills", it takes x amount of dollar
bills to buy an ounce of gold. Gold is "worth" $450
an ounce - what rubbish, what double-speak, what Keynesian brainwashing.
The constitutional
definition of a dollar is a weight of silver, the Silver Dollar.
There has never been a constitutional amendment to change it,
thus it still stands, it is the Supreme Law of The Land, regardless
if the government and people follow it or not.
Gold and silver
were not originally "priced" in dollar bills of paper
money. The dollar was a weight of silver that could be exchanged
for a weight of gold, at the ratio of 15 to 1.
The moneychangers
have done just what there name says - they have changed the definition
and meaning of money, without a constitutional amendment, which
means that any such changes are unlawful, as they are not in
pursuance of the Constitution.
To price gold
and silver according to so many paper fiat dollar bills is to
accept the unacceptable, it makes a mockery out of our Constitution,
and assumes that all the people are stupid and do not see the
crooks that are transferring wealth from the people to themselves.
Stop Accepting the
Unacceptable
Even when Roosevelt
blatantly confiscated all the people's gold, they obeyed like
sheep. That was without a doubt against the Constitution, as
it was the confiscation of private property without due process.
We The People must stop accepting the unacceptable.
The Constitution
should either be adhered to, or amended by due process of law.
It should not be ignored and just forgot about.
So I agree
with Mr. Saville that pegging the Chinese renminbi to gold might
not be the best of ideas, but not for the exact reasons that
Mr. Saville states.
This whole
backing ideology is completely wrong and alien to honest money.
Perhaps this is what he was alluding to when he said,
"One of
the most important things to realize is that any half-baked attempt
to have an official link between a national currency and gold
will be doomed to fail because sound money and fractional reserve
banking are incompatible."
Why does one
want to back a paper currency with silver or gold? Isn't it because
the silver and gold provides some type of backing or stability?
Isn't it because the silver and gold make the paper dollar appear
to be more sound, as silver and gold are sound? Hard money is
sound. Paper fiat is not.
If the silver
and gold is good enough to back the money, why not simply make
it the money, as the Constitution did. Anything else is a
half-baked attempt.
Anything else
is second best, at best, and as our current dollar exemplifies,
perhaps much, much less.
But does this mean we should just throw in the towel, and accept
the unacceptable like sheep? I think not.
Honest Money
The reason
gold and silver has been placed under attack is that they are
afraid of silver and gold. Who is they? The banksters. The elite
international collectivists.
Why? Because
it is honest money. It cannot just be created out of thin air.
It must be mined by hard labor from the bowels of the earth.
It is dangerous back-breaking work, it's called labor. It's real.
It's honest.
Only real gold
that exists can be leant out, which means it first must be saved
and be on deposit. This destroys the banksters fractional reserve
game of lending that which they do not have or have earned.
There is nothing
wrong with lending honest money that has been saved and is in
the savings pool. What is wrong is to lend money that
does not exist, that has not been saved, that only comes into
existence by the very act of lending it. This is a vile and despicable
thing. This is wealth transference by the elite few.
I have a novel
idea for both Mr. Kasriel and Mr. Saville, do some reading
and studying of our monetary history. Discover the difference
between the original hard money system of the Constitution and
the gold standard and the gold exchange standard.
Learn why both
the gold standard system and the gold exchanged system were doomed
to fail, on purpose - to tarnish the reputation of gold and silver
so that people would come to accept the unacceptable, so that
the experts such as yourselves not only accept the unacceptable,
you pontificate and push the moneychangers exact ruse upon the
people. You have become their spokesperson, unknowingly, but
that does not change what is.
We have been
fooled - deluded. Wake up. Smell the roses. Return to honest
money - to Silver and Gold, not to paper money backed by it.
Do not accept the unacceptable. Knowledge is power - if used
correctly.
Act accordingly.
Vote accordingly.
Jun 21, 2005
Douglas V. Gnazzo
©2005 Douglas
V. Gnazzo. All rights reserved.
All other views
and comments are invited.
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