We seemed to be plagued with false theories, text-book economic mentalities and feckless remedies to our economic quagmire that these “economists” have been instrumental in creating. These “Keynesians” in Washington, New York can rely upon little but a continuation of an expansive inflationary policy combined with price and wage fixing, as well as government intervention in yet another attempt to seek stability in an economic and monetary system that is fundamentally unstable by nature.
Few in the Halls of Economic and Political Power seem to realize that the techniques they employ for dealing with economic issues has worn extremely thin. They rely, once again, on the necessity of revaluation of faltering assets, illiquid credit markets and a depreciated currency model. There remain few tricks in the central banking economic planning bag that has not been tried before; yet they remain on a predictable track, moving in a similar direction that will prove just as ineffective and potentially dangerous to the overall stability of this country. Yet, when the unthinkable happens they are ready to come to the rescue with more of the same, doing what they have done for the last three generations with their monetary management skills which, in the end, will amount to little more than a high-sounding euphemism for a continuation of currency depreciation through inflation and government sweet-heart deals for the politically and financially well-connected.
So, instead of returning to a sound monetary system based upon what can only be called automatic currencies such as gold and silver which need no government hand to operate, yet they continue to rely upon a failed system of fiat currency that must be propped up in order to function. We are forced to accept their managed currencies which are based solely upon the guile of taxation and government decree. These so-called economic wizards, these text-book economists in the FED must continually assure government and the people that they have things under control and yet in their hopelessly antiquated minds they must wonder just what real control they have over the situation as they are confronted with massive dislocation within the monetary and credit market. We find ourselves as a nation caught up in every bureaucratic whim, tossed like a ship without a helmsman.
We have been victim of a swindle, carried out by a massive subterfuge created by both bankers and politicians who seem to be engaged in a deliberate destruction of this country's economic and social well-being. They disregard common-sense reality for a fantasy world created around a system of debt. We seemed to be inundated with politicians from whom we never hear a serious discussion of the fundamental problems facing this country; they sit content to listen to the same voices that whisper the same words from the same view point that has guided this country for the last 75 years of failed monetary and economic policies, as well as foreign and domestic policies. They have proven themselves stagnant even when they declare their devotion for reform and the dedication for change.
I have to wonder that somewhere in the back of the minds of these economic and political experts if there is not some sense of the actual dimensions of the problems they have created and support through they actions and inaction? Although they try, they seem to fail to come to grips with the fact that there is absolutely no possible way to bring the current problems, not only with the economy, but also government expenditures within a manageable proportion; in their silence and disregard they disavow any real solutions. With the massive debt and growing pool of future unfunded obligations, perhaps the seek to delay as long as they can on demand payments by stretching out the pain over the next 50 or 60 years, but they fail to realize that the demand payment will come upon this country much sooner than they appear to expect. They now hold both the public and public revenue hostage to a monetary and economic ideology that has proven to be rotten in conception and execution. The day is upon us when the juggling act they have been playing will no longer be effective. I am sure these economic and monetary Neanderthals haven't given it a second thought, but when 3 Cent Dollar will be plunged into hyperinflationary territory the reality they awaken to will be far too little and far too late to save their precious peonage system of fiat money.
The politicians of this country has played in their fiat sandbox for far too long, it has allowed them to tamper and meddle, to overextend their reach and to rely upon deficit spending to achieve questionable political and social goals.
As I have stated before, there was a time when anyone supporting a fiat monetary system and the subsequent economy that could be built upon such a system were considered crack-pots, snake-oil salesmen who didn't have either a firm grasp of the economics of money or the social consequences of such systems. There was a time when every economist of any high repute supported gold specie monetary system because of the soundness such a system offered to society. They understood the merits of such a system, both on the domestic front and the international front since every currency bore a fixed weight of measure and a fixed fineness, the means of exchange on every front was straight-forward and without ambiguity. Gold specie was convertible at a fixed ratio by anyone who held it into any other gold currency unit of exchange and the flexibility it offered, as well as the stability, was and is unprecedented in the annals of monetary mediums.
Gold specie was the first and foremost bulwark against the wiles of political ideology and it was the standard of defense against domestic inflationary policies that wandering bureaucratic minds might envision for the benefit of political ends.
During those heady days, when inflation or deflation did occur, the monetary sound economy would produce a relative quick sequence of economic events to bring back equilibrium within the system without the need for government management or a central bank's counterforce. For instance, when inflation occurred and prices rose domestically this encouraged import, discouraged exports and the balance of trade would shift against the inflating country's economy; gold would then flow out causing a contraction of bank credit backed by the gold specie thus the mechanism brought inflation to a quick end. If you look at the instances of this, when there was no government intervention or banking interference, the chain of events were far shorter, much more direct and far less deep than under our current fiat model which must completely rely upon central bank manipulation to be maintained to such a degree that it can be maintained under such an artificial system of economic management. It is evident, by historical accounts, that as soon as foreign governments, bankers and exchange dealers began to suspect that a county was beginning to suffer an inflationary bout, the exchange rate for the country's currency fell below the “gold ratio” ratio of exchange then gold would flow out and the market in the country losing the gold would bid up the discount rate. So this system, running automatically without management from either the government or a central bank, would effectively halt domestic inflation while drawing funds from foreign lenders, businesses and entrepreneurs abroad because they wanted to take advantage of the higher short-term rates being offered on money and the system once again began to balance itself.
Another very interesting comparison between fiat monetary systems and gold specie systems is in the realm of confidence and fiduciary responsibilities. Since convertibility had to be maintained, the level of confidence in the monetary and banking systems needed to be assured on a daily basis, there was no hiding behind a fractional reserve system that tends to promote irrational decisions on the part of bankers, but at times just shear irresponsibility and sometimes criminal activity. Because of a fixed weight of exchange under gold specie, there was a very dependable exchange ratio, combine that with a flexible convertibility between currencies of different countries and it is easy to see why international trade, investment and lending were undertaken with much more freedom and confidence than under this current monstrosity built upon a fiat monetary mind-set. Additionally, along with the ease of convertibility there was also a relatively stable and uniformity in pricing on the world markets, especially for transportable commodities.
There are few cases where one can say that a gold specie system has broken down, except when a country and its citizens may fear invasion during periods of war; yet in the historic cases that I have researched over the years, I have not found an actual break down in a gold specie system, but have found several instance where it has been abandoned due to government decree, but never in necessity and always in an agenda other than that of economic stability.
I suppose it should be relatively easy to discern that the reason so many central planners, government bureaucratic political ideologues and money managers hate gold is that it prevents them from inflating for the benefit of unwise government expenditures, protectionism through monetary manipulation and nationalistic policies both domestically and abroad. Gold has proven to be the ultimate in providing individual protections, both in terms of private property and rights; it requires a government to listen to the people, to maintain a balanced budget and to bear the responsibility for its actions. Fiat monetary systems do just the opposite, it gives government and central planners a free-hand, not only in the affairs of the people, but also it serves as a means of expansionism, nationalism and in many instances authoritarianism. It is the perfect tool for tyrants.
There is a woe in our land, one that stems from an overly impressive official confidence in a system that is doomed, by its very nature, to fail. By their own account, given the recent GAO report, the government in its present form and its current fiscal condition is completely unsustainable and yet, they continue down the very same path that helped us arrive at this point. This country has been undermined from within by those who, for whatever reason, have maintained their position through a mentality that they “know best”; they have yet to prove it through their actions however. The Federal Reserve is desperately seeking a solution and yet it escapes them because they are so steeped in a quasi-Keynesian mentality that they fail to see beyond their old worn out text-book “solutions” to the very problems that they helped create through that very text-book mentality. They have completely bought into the very system that is now consuming it from within and their stagnant minds are not willing to reach beyond the mire of a very dead economic model that had very questionable beginnings.
This country, nor the world, will ever be able to work itself out of this current situation because the chain of events we are now seeing is nothing more than an unraveling of the debt standard of fiat money which is unstable in concept and promotes the very thing it is touted to prevent.
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