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The Return to a Precious Metal Based Currency

January 28th, 2009



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By:Tom B.

Recently I was engaged in a discussion over the merits of scraping the current fiat based money system in favor of a precious metals one. The comment was made that “there wasn’t enough gold on the planet” to go back to that.

I might disagree with that one. It’s all relative. There is enough gold, just too many dollars in circulation compared to the amount of gold. Because we have been brought up in a world where money that is constantly increasing in supply is the norm, we have the tendency to think that a money source that is small and finite is not “enough” to spread around. (Remember that you can always add silver and other precious metals to the mix if you wish.)

I think that what freaks most people out the most is that their “money” suddenly becomes less of a number amount than it was before the changeover. If we changed back today to gold and silver, yes the dollar would have to be readjusted or there wouldn’t be enough gold and silver to go dollar for dollar against it. Actually they would have to recall all the dollars in circulation and reissue new money based on the new standard. That has been done before. (We’d collect an awful lot of black market money that way! Maybe we could pay down some of the nation’s debt with it?)

A person who is a “millionaire” today wouldn’t be tomorrow. But it’s all relative since the price of everything would come into alignment. The ounce of gold or silver you hold in your hand today would buy the same goods and services as it would tomorrow. The price of gold and silver has not increased over the past few years; the value of the dollar has dropped in relation to gold and silver. You would still own the same things that you did the day before. The VALUE of all your property would still be the same but the “dollar” amount will have changed. All goods and services would be re-priced similarly.

No one would go broke overnight, except for perhaps the people who have orchestrated this Ponzi scheme, and I will shed no tears for them. More good news to add to this; inflation would suddenly come under control since you can’t print more money than there is gold or silver to back it. Debt couldn’t be produced out of thin air from money that doesn’t really exist. Is that really such a bad thing? I would argue that it would be a very good thing.

Asset backed currency also has a limiting factor in terms of what it allows governments to do; they can’t spend more than they have on hand to engage in shenanigans like what we’ve seen over the past nearly 100 years since the Fed was created. If they did, it would soon become pretty evident, and since they would have to tax us to engage in wars and other frivolous spending, those activities would become less common or people might become a little more than disgruntled with their elected officials.

Are there downsides? Of course; all systems do. For example, a precious metal based money system would limit the economic growth and “expansion” dramatically as compared to a fiat money based system. I would argue that we really need to slow down anyway. All this hustling is killing us!



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Your Retirement Savings or Your Government’s?

January 24th, 2009

Speaking of IRAs, the little idea that was floating around a few months ago about nationalizing them, other qualified plans (401(K)’s and 403(b)’s) and pensions has resurfaced. A friend, who had never heard about this before, heard it being thrown around on one of the financial market reality game shows (CNBC I think he said). He was shocked to hear about it.

http://www.usnews.com/blogs/capital-commerce/2008/10/24/nationalizing-401k-plans-down-argentine-way.html

A simliar scheme to nationalize pension plans is being proposed in Argentina and may have already been approved.

http://www.findingdulcinea.com/news/Americas/October-08/Argentina-Announces-Plan-to-Nationalize-Pension-System.html

Do you think it’s a trial balloon being lofted?

Do they think that there’s enough pain out there yet to make such a plan work?

Since the majority of the Investment Banks have converted to Commercial Banks, are they no longer caring about gathering assets in the retirement plan sector, so there will no longer be a lobby against such a proposal?

Or will they be good with the idea because they will be the benefactors of this since someone will have to manage the accounts?

It definitely would put lot of people in the financial services industry out of business. And while this may please some who look at financial advisors with great disdain, I personally will be none too happy about it (but of course I have a personal stake in this one I will admit. I don’t think this negates my argument). But are the sheeple so tired of losing their life savings in a corrupt system that they’d be willing to turn it over to the Nanny State to take care of them?

Or are they smart enough and alert enough to see this for what it really is (a grab for the rest of the money, and control over what little is left that they don’t have control over), and break out the torches and pitchforks?

From one corrupt system into another. What a choice!

Am I asking too many rhetorical questions?

Make no mistake about it; having enough money to meet and exceed your needs is freedom, freedom to have choices. Lack of it leads to economic slavery and a lack of choices. Giving what you have over to the State for the promise of security is giving up your freedom.

Yes, there is risk involved in investing your money, but the greater risk is giving control of it over to the people who have shown a lack of responsibility in managing the money that We the People have so blindly given over to them in the form of our tax dollars. Are you really going to be so willing to let them fool you twice?

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