What the Freight!?! Gold Not Cash?

Weblog by Dave Stover

July 13 Ben Bernanke instructed us a number of issues:

1. If we (the U.S.) don’t increase the debt ceiling there will likely be dire financial penalties.

2. Gold is NOT cash however an asset.

On the primary depend: your accountant involves you and says, “If we don’t increase our credit score restrict with our distributors, we are able to’t cowl all of our obligations this month.”

Your response can be, or needs to be, “WHAT?” So, this month’s revenue won’t maintain the operation? How lengthy has this been occurring?

So the restrict we set years in the past we’re about to surpass and now we’re handcuffed to recurring borrowing simply to pay minimal obligations: curiosity solely on the debt?

Doesn’t that sound quite a bit just like the Mortgage Disaster Calamity the place folks paid solely curiosity on their dwelling debt, then when the rates of interest went up solely barely simultaneous with a dip within the economic system, they misplaced their properties and needed to file chapter?

Does that imply our nation qualifies to be turned over to receivership?

Then your accountant wouldn’t have a lot to say. However would you consent and let him ask the permission of your suppliers to allow you to go deeper in debt simply to make payroll?

Incurring “unhealthy debt” to gas progress is controversial and dangerous sufficient, however to tackle “unhealthy debt” to cowl reckless spending sprees, primary curiosity solely funds on already present debt, and easily to satisfy payroll defies each longstanding, confirmed financial primary that households, firms, and international locations have lived by because the starting of time.

How lengthy will or not it’s earlier than these schemes run the pure course of 1 being overly indebted—receivership?

The second depend is baffling. Gold not cash? Once more, “What?”

Maybe within the narrowest definition in an economist’s parlance this is perhaps a suitable clarification, however nowhere else—definitely not the true world.

Bernanke went on additional to say that the explanation banks maintain gold is that it’s “an asset” very like bonds, and so forth. that worldwide banks maintain, which too usually are not thought of cash.

But when pressed on the purpose of why banks are nonetheless utilizing gold as a substitute of say, diamonds as an asset or hedge, his reply was, “custom.”

Foreign money happened as a way of buying and selling so one might commerce one other for items or sources by a unified customary. The sheep herder might commerce pretty with the farmer, retailers might purchase and promote from area to area or nation to nation, and so forth. This commodity allowed one to “retailer” their vitality, wealth or useful resource in a approach that may very well be typically accepted and simply traded.

Cash–our cash–was gold certificates, payments that may very well be used for all money owed private and non-private, and may very well be redeemed for the commensurate quantity of Gold. As soon as our cash was totally faraway from “the gold customary” politicians might set the worth of the greenback by “financial coverage”.

This enables those that are appointed, by these you choose, to deflate the worth of the mode of the economic system’s alternate.

This implies, the authorized tender that you just use as a spot to retailer your life’s vitality may be manipulated. Sure, your life’s vitality may be manipulated. Because the greenback is a normal unto itself, by growing the variety of {dollars}, somebody can artificially devalue every greenback’s price.

Please perceive, if and when that occurs, the place the place you retailer your life’s vitality has misplaced worth. Your life effort has misplaced worth.

This we might perceive if financial occasions flip within the improper path, however what do you say about those that deliberately devalue that instrument you employ to charge and retailer the worth of your effort and time?

You’re employed to save lots of and retailer and on the identical time others are working to destroy the worth of what you might be saving and storing.

How lengthy ought to this go on earlier than you name it theft?

This complete situation is just made potential by those that imagine the commodity on which our cash was till just lately based mostly and has been the usual of alternate for greater than 5,000 years, gold, is not cash.

NO? Why not?

Is that as a result of gold can’t be so simply manipulated in order to steal the worth of somebody’s blood, sweat, and tears–their life’s work? That’s proper, steal your life’s work.