A Response
To
Pegging to Gold and a 100%
Gold Standard - Part II
Douglas V.
Gnazzo
Jun 28, 2005
Prelude
This is a rejoinder
to an article of the same title by Steven Saville, posted
on June 24, 2005. I am pleased that Mr. Saville replied to
my earlier article that discussed his piece "Thoughts
on Pegging to Gold and a 100% Gold Standard." It is
only by thought and discussion, and difference of opinion that
learning can take place.
"If all
mankind minus one were of one opinion, and only one person were
of the contrary opinion, mankind would be no more justified in
silencing that one person, than he, if he had the power, would
be justified in silencing mankind." [John Stuart Mill Of
the Liberty of Thought and Discussion.]
It is with the above quote
in mind that we offer the following, as there are many points
that seemed to be misunderstood, which could lead to not only
misunderstandings, but to disinformation as well.
Act One
The following is a direct quote
from initial comments in my first article:
"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."
So the first point to be cleared
up is what I was stating was the critical point of the article.
What the above quote was referring to was what was stated right
before it, which was the following:
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]
The fact that Mr. Saville does
not ever mention the above definition anywhere in his reply,
including in his listing of what he considered the main points
that I "appeared" to be trying to make, is a perfect
example of the exact point I made, namely, that many who speak
on monetary matters do not understand what a dollar is or isn't,
nor the importance that such has on the overall understanding
of monetary policy, or any topic related to money.
The above definition defines
what our Constitution and the Original Coinage Act of 1792 set
as the standard of our monetary system, yet Mr. Saville never
mentions it once. This is why I write what was stated, as the
term "dollar" is constantly thrown about in the most
casual and flippant manner, as if everyone understands what it
is. And for whatever the reason, nothing of substance was added
by Mr. Saville regarding the following statement that went along
with the above quote as far as "importance" was concerned:
"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."
Perhaps this is why so many
accept the unacceptable - paper fiat Federal Reserve Notes of
debt obligation as money, as even the so-called experts seem
to accept it, or not question it.
Act Two
Mr. Saville equates his statement
of:
"Any half-hearted
attempt to make gold part of the monetary system would be doomed
to fail and would lead to gold unjustly getting unjustly blamed
after the inevitable breakdown occurred."
With what he quotes as being
said by me:
"The (non-100%)
gold standard and the gold exchange standard were doomed/designed
to fail, resulting in the reputations of gold and silver becoming
unjustly tarnished."
Which statement I can't for
the life of me find in my original article. What was said was:
"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."
Perhaps these statements are
all the same. I don't think so. It is left for the reader to
decide, as it should be. I would direct attention to "on
purpose," and "so that people would come to accept
the unacceptable."
Act Three
The second comparison made
by Steve was to equate the two following statements, the first
I made, the second he made:
"Fractional
reserve banking is a bad thing. It has, for instance, led to
a 95% loss of purchasing power since 1913." [Gnazzo]
"Sound
money and fractional reserve banking are incompatible."
[Saville]
Granted, these two statements
are close, but I don't see Mr. Saville mentioning the very important
point of a 95% loss of purchasing power of the Federal Reserve
Note, or dollar bill. I do, however, recall Mr. Saville
stating the following about gold's purchasing power:
"For example,
gold's purchasing power increased by around 1000% during the
1970s and then fell by more than 80% between 1980 and 2001."
This appears to be true,
if one accepts the unacceptable - if one accepts the fact that
the powers that be have turned the constitutional definition
of a dollar upside down, and are now allowed to price gold in
terms of x amount of dollar bills, when it was gold that defined
what a dollar was, i.e. a specific weight of silver -
the Silver Dollar.
As I stated in the original
article, which would seem to be of some importance, although
once again, nothing like it is mentioned by Mr. Saville, so perhaps
it isn't:
"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."
And if I recall correctly,
Mr. Saville was given the benefit of the doubt when I stated:
"This whole backing ideology
is completely wrong and alien to honest money. Perhaps this is
what he was alluding to when he said," [Gnazzo]
"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." [Saville]
Act Four
Mr. Saville next equates
the following two sentences, the first is mine, the second his:
"The dollar
should be defined as a weight of gold or silver." [Gnazzo]
"A gold-based
monetary system only works if implemented totally; for example,
if there is no fractional reserve banking and the dollar is defined
as a weight of gold." [Saville]
Once again, I have gone back
and searched the article, but I cannot find where I supposedly
made the statement Mr. Saville claims: that "the dollar
should be defined as a weight of gold or silver."
What I did say was:
"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."
Perhaps Mr. Saville equates
"should be defined," with "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." - but I don't.
The two statements are completely
different. We will leave it for the readers to decide
for themselves, based on the evidence presented or not presented,
as the case may be.
Also, a dollar defined as a
specific weight of silver [Gnazzo], is not the same as a "weight
of silver and gold" [Saville], nor with Mr. Saville's position
of it being a "weight of gold."
This is why I have stated that
many do not understand the difference between the Constitutional
standard of SILVER that was accompanied by a monetary
exchange system, of gold and silver coins that exchanged at a
fixed ratio of 15 to 1; nor the exact difference between such
a hard money system, the gold standard, and the gold exchange
standard - all of which are different.
Act Five
As a perfect example of accepting
the unacceptable, Mr. Saville using the following as a reason
for "noting the major benefits of the current system of
free-floating irredeemable currencies," which, unless I'm
mistaken, is saying that there are good points to the present
system of irredeemable currencies - of accepting "black
for white and white for black."
"And there
are, in fact, two major benefits that we can think of, the first
being that when someone becomes concerned about the on-going
inflation they are free to exchange their dollars (or euros or
Yen) for gold, secure in the knowledge that the gold price will,
within a reasonable amount of time, reflect the effects of the
inflation." [Saville]
Once again, perhaps Mr. Saville
does not think that "to exchange their dollars (or euros
or Yen) for gold, secure in the knowledge that the gold price
will, within a reasonable amount of time, reflect the effects
of the inflation," is to accept the unacceptable, or pricing
of gold in dollar bills, as opposed to the Constitutional Standard
that defines a dollar as a weight of silver that is exchangeable
for a weight of gold, - but I do.
Silver and gold being priced
in dollar bills is not the same as a dollar being a weight of
silver and gold. Period. This is why, unfortunately, even many
so-called gold-bugs get this whole money thing wrong.
For how is one going to "reflect
the effects of inflation" by purchasing gold, and then what,
selling it for debased dollars that have lost their purchasing
power?
How does this protect one against
inflation or the loss of purchasing power if the dollar you sell
your gold for loses more of its purchasing power after
you sell your gold. Then what?
The elite international banksters
have done a very good job of fooling people into accepting the
unacceptable. Do not be fooled. Knowledge is power. Empower yourself.
Final Act
Lastly, Mr. Saville states
"It seems that hard money advocates can't even agree without
getting into an argument."
First, I didn't realize it
was an argument as opposed to a discussion of a difference of
opinion about some very crucial, and generally misunderstood
issues.
Second, I do recall giving
the benefit of the doubt to Steve, and two, making the statement
that "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."
And I do agree with Mr. Saville
on many things he says, I even pay him money for his newsletter,
but I also disagree with some of the things he says, as he does
with me.
It is by our mistakes
that we learn. Perhaps we can both learn from each other. Perhaps
we can all learn from each other. Otherwise:
"If all
mankind minus one were of one opinion, and only one person were
of the contrary opinion, mankind would be no more justified in
silencing that one person, than he, if he had the power, would
be justified in silencing mankind." [John Stuart Mill Of
the Liberty of Thought and Discussion.]
Jun 26, 2005
Douglas V. Gnazzo
©2005 Douglas
V. Gnazzo. All rights reserved.
All other views
and comments are invited.
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