The Market, stretching the length of written history, has asserted that Gold is Money, and nothing else. by Jeremy Keller
(libertarian)
Wednesday, February 25, 2009
Gravity of Gold
There is only one psychological law that governs man's actions. He always acts according to his perceived self interest, based on what he thinks, feels, or believes the pertinent facts to be. No matter the action undertaken, it can always be accurately framed as a cost-benefit analysis in accordance with this law.
The dissident who yells loudly at his oppressors and the cynic who holds his tongue, occupying the same place and time in history and enjoying the same vantage point, are simply reaching different conclusions by attributing different values to the variables in their shared cost-benefit equation. The dictator who orders the indiscriminate incarceration and torture of all potential opposition seeks to affect the conclusions reached by the previous two individuals. Thus populations of many millions can find themselves choosing to endure remarkable levels of suffering for generations because they fear the math of their lives may likely get worse.
Fortunately, this law works both ways, so that when an individual or group perceives that the likelihood of substantially improving their circumstances is greater than the risk of incurring a prohibitive cost, they better their lot. So the story of man has been spun, in all its splendor and horror.
Gold
Through it all one unmistakable force has emerged, time and time again to stake its claim on the hearts and minds of mankind.
Is its role as a fundamental force exerting pressure on us to be traced back 5000 years? 10,000? Longer? I certainly cannot say, but the market has always returned to it when the participants were of sufficient number and diversity, like salmon to spawn, time and time again. It has survived all of written history, through the wars, the pogroms and genocides, the oppression, the messiahs and the false prophets to re-assert its dominance over the minds of men.
Why is this so? And perhaps more importantly, does it really matter how or why it exerts this influence if thousands of years of human history clearly shows that it indeed does? We do not complain that the force of gravity at sea level registers at only 9.8 m/s squared. We are simply appreciative that it does not fluctuate and if we are wise, take due note of its influence. Understanding is not a requisite for the efficient utilization of this knowledge, but it is very satisfying, so let us proceed!
Gold is money.
Money is power.
Gold is power, but Gold is difficult to come by, even today with our entire technological prowess, it still has to be wrought from the earth with labour and toil. It must be stolen with force of arms or it must be earned. If you are not willing to seize gold from someone who has already done the work, you must provide value in the form of goods or services in exchange. Because it needs neither banker nor bureaucrat to assert or back its value it is known as "real" money.
Many real goods have been employed as money over the millennia by all brands of man, but Gold has always reasserted itself and reminded man that everything else is a temporary substitute for real money. Some will obsess on the cultures less enamored with the yellow metal but no one can name another money that can even begin to claim a place at the table that stretches the length of known human civilization. Even silver, which occupies a roll as money and is in essence gold-lite, is in a very distant second place.
The average intelligent individual of normal ignorance protests, "But what is so special about Gold?"
Besides its track record?
Simply put-
It is durable.
Its representation of objective value is dense, thus large amounts of wealth can be moved by the hands and feet of a single individual.
It is easily divisible without a reduction in volume or mass.
It is axiomatic. Gold is made of Gold. There are no divisible constituent parts.
It is not consumable, like food or fuel, both of which have been used at times as money.
It is difficult to acquire, such that even today it takes great physical toil to wrench It from the earth. And anyone with the desire and the will can go get some, regardless of who is king or how many armies are laying siege to the world. It is as if God himself stood at the gates of heaven and hell and cast the absurd little element evenly around the globe, then fired the starting gun and settled in to watch the race.
It has the capacity to satisfy man's hunger for the luxurious and ornate. This hunger is to be found in every economic strata of human civilization. No matter how poor the person, or how rational and efficient their spending habits, some portion of their purchasing power wrought from their individual productive capacity is saved and spent on something "special". Gold has been adorned as jewelry since the utterance of the first truth and perhaps even earlier.
It is fair. A king and a pauper stand as equals as they gaze across our Mother Earth in search of it. No amount of government "pull" and no army of lobbyists can make it come out of the earth any faster or any easier.
And here comes the sun..hold a gold sovereign up to the sky aside the rising sun and with a straight face explain what you see as a coincidence.
Rejoice Mankind!
Gold is Justice.
The followers of Darwin and the Theory of Evolution and Natural Selection aught to be it staunchest defenders, as Gold can only be honestly acquired with ability. The fit prosper and the needy pass away. This in stark contrast to paper currency which if not 100% backed by a real money is by definition debased and fraudulent. The ability of a lending institution to loan paper funds of "value" in excess of the institutions actual reserves is a function of law and licensing that only The State has the right to grant and is not a reflection of objective value or market sanity. All comers have to comply with the rules of the wielders of power to be allowed in the game and then they don't enjoy the same privileges. I'd like to be able to print up my own free lunch also, but I am denied, not because I lack ability, but because I lack pull.
Oddly though, some modern thinkers assert that even though their premise clearly indicates a multi-million year stumble to end up human in strict concordance with the law of survival of the fittest, it is practical to completely reverse direction in less than a century and expect our survival and continued evolution to result from the able and capable being forced to subsidize the viability of the weak, incompetent, and most ominously, the managers of the common good. While it is arguably the most beautiful of our expressions as human beings to freely give from personal bounties to those in need, this is not nearly often enough done to alleviate suffering, so suffering persists. But if we can not find it in ourselves to adequately address this, from what store of virtue are we going to produce the inclination and commitment required to equip a bureaucrat with the ability and skill to pull it off?
The profane can still be heard clinging to their question that they don't really want an answer to. "But why Gold?"
Because The Market said so.
The Market
Ahhh, The Market! This is the dance known as "the good, the bad, and the ugly." It is not our highest self, but it is our truest self. It is a perpetual auction we attend at our pleasure to bid for and obtain the raw materials, goods and services from which we build and maintain our lives. In the idealized, this exchange is completely voluntary and free of coercion. Regardless of the level of meddling imposed by governments, the participants act in strict accordance with their perceived self interest based on the specific forces present. Every exchange, be it fair or foul, noble or sinister, adds to the record and over centuries and millennia this composition is what gives The Market its form and identity.
Given a sufficient length of time, patterns emerge. If the level of resistance is not prohibitive, whether as a result of geography or political reality, goods tend to show up and be for sale where they hold the highest value. This is part of the relationship of supply and demand and though it is a simple phenomenon, it is clearly a dominant characteristic of The Market witnessed by the human race over time. Some similarly fundamental features are not quite so easy to see.
As we have experimented with all manner and style of exchanges, we have repeatedly discovered the need for an objective representation of an individuals' productivity. For this auction to reach its highest potential in the efficient allocation of scarce resources, a money needed to be found: A yardstick by which to objectively measure and then exchange raw materials, goods, and services. Many candidates have been test driven and only one can be said to have endured. What qualities did we want to embed into this "money"? In our collective best; as a response to our primal fright; flowing from our happiest hopes and most cherished triumphs; enduring the self loathing, the guilt and the anger of desperation; and in direct response to the simple and profound fear of starving to death, what kind of money were we searching for?
Gold is money.
Money is power.
Gold is power, and it is power the human race desires above all other things. For most of us this desire takes the form of empowerment. We want to be able to control the immediate and critical forces in our lives. We want the rules to be fair and consistent. We want the right to earn our way and to keep what we have earned. We desire to act in accordance with our will, so long as we do not threaten our fellows' right to do the same. We want a means to safely store a portion of the proceeds of our productivity. Most of all, we want a solid defense against those who develop a taste for the raw exercise of power and who seek to betray us into harness, who revel in the application of the lash and loot us for all we're capable of giving without collapsing. Indeed, we desire the power to repel these people whom history has made extremely painfully clear are not going away.
We want our money to resist evil.
When did we first suspect the answer? When the next great experiment in personal freedom and liberty commences on planet earth, will we have the savvy to chain the sovereign securely to gold bullion? Will the burn be fresh enough to harden our resolve to teach our neighbors why gold is justice and justice is the requisite of freedom, and ultimately of our survival? Will the gravity of this collapse be sufficient to remind us that we have been meeting for thousands of years exchanging notes and sharing lessons in an effort to solve the equation? The jury of the ages has delivered a unanimous verdict. Let us not underestimate the Gravity of Gold.
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The views expressed
in this article are those of Jeremy Keller only and
do not represent the views of Nolan Chart, LLC or its affiliates.
Jeremy Keller is solely responsible for the contents
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Posted By: Brian McCandliss
Date: 2009-02-25 13:38:59
The Constiutution gives Congress the power to coin money-- NOT print it; so it can only deal in hard currency, not soft paper money.
Likewise, the Constitution gives this no such power to anyone but Congress, and so the Federal Reserve is unconstitutional without an Amendment.
By printing money, the government engages in a Bill of Attainder of private wealth, which is also unconstitutional in that it takes private property for public use without just compensation, by infringing on the value of all privately-owned funds.
Gold, silver, nickel and copper were the only hard currency-items used recognized, so there's no reason the can't be used today; however they would only need to back wealth, while simple title to the coins could be transferred electronically.
The obvious reason is, that there's no way to print gold, silver, copper or nickel.
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