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Why Gold Is The Currency Of The Free And Idle

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Should be working properly now.

What a great piece. Thanks.

 

Reminded me of what got me in to gold in the first place.

A fair free and honest monetary system.

 

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Great podcast. Loved the example of why bartering doesn't work! I'm currently reading 'How to be Free" by the editor of The Idle. From what I've read of it I think you article will be very popular.

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Excellent podcast.

 

Have a copy of it with you, the next time you are on Edge TV? ;)

 

 

No. 42, as well. The solution to the universe's problems could be solved with the right money system.

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A good piece, and very well read.

 

I wish I could have done as well with my reading about Harrison's 18 year cycles.

(When I listen to it now, it just puts me to sleep within 2-3 minutes.)

 

I may try to redo it someday.

 

Your piece

Is a good mix of : facts, opinions, and historical quotes.

 

I think you should send a link to Financial Sense and Goldseek Radio.

Maybe they will use and excerpt or three, and link back

 

"Follow the Yellow Brick road!" - yes, indeed.

 

Hey, didnt the writer of The Wizard of Oz have an interest in Sound Money?

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Excellent podcast.

 

Have a copy of it with you, the next time you are on Edge TV? ;)

 

 

No. 42, as well. The solution to the universe's problems could be solved with the right money system.

Haha. Quite right.

 

And I hadn't noticed the 42 thing. Good observation.

 

Thanks for the comments, everyone. I wasn't sure if it work as a podcast, but I think it does.

 

I should be able to read well - it's what I do for a living after all.

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I should be able to read well - it's what I do for a living after all.

 

Sure, but you make it seem easier to do than it is.

I suppose that is the trick in getting paid for it.

 

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Haha. Quite right.

 

And I hadn't noticed the 42 thing. Good observation.

 

Thanks for the comments, everyone. I wasn't sure if it work as a podcast, but I think it does.

 

I should be able to read well - it's what I do for a living after all.

 

I've just listened and thought it was really enjoyable - a big success and much appreciated.

 

It got me much more interested in the the Idler too. I thought you made intriguing connections between monetary policy and the Idler's ideals, which I begin to see in a new light.

 

It made me remember Marshall Sahlin's book "Stone Age Economics", which among many other points argues that prehistoric people did not have to work too hard to meet their needs - in fact they could get work out of the way fairly quickly and devote themselves mostly to ritual. Also connects with your theatrical interests perhaps?

 

http://books.google.co.uk/books?id=_qPSLy9...lt&resnum=4

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Dominic,

I've only just found this via DolarCollapse (I've been having computer problems!).

 

IMO this is quite exceptional. Very very well done.

 

A little something as feedback:

 

WhyGoldIsTheCurrencyOfTheIdleandFre.jpg

 

Tomorow I will be promoting this widely.

 

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Good stuff! Like the historical approach.

 

btw what happened to the third function of money, that of a measure of value? I notice this function is being neglected these days by a lot of commentators and wonder why that is. :)

 

Also stated was "Golds only use is money as a means to store wealth". Don't you think that the value that has been put on gold by humanity has transcended a mere monetary one? It has often been considered by many cultures as a symbol of power, wealth and status and has accordingly been used to much effect in the political, religious and artistic spheres. Kublai Khan, for example, kept all the kingdom's gold in-house and issued paper currency to be used as mere money. This also provides an insight as to the reason why gold did not flow back to the west from the orient when used for trading. The earlier rational economists thought this could not happen and that trade imbalances would be restored when those nations with much gold would spend freely while those with little would tighten their belts. The false assumption was that all nations would consider gold mere money.... and not as more than a mere means to another end.... which money is.

 

I wonder if it is a peculiarly western and modern idea that "gold is money". Of course, the "primordial" value [as mentioned above] that was placed on gold has also made it the strongest symbol of money and possibly the best currency. Perhaps a perfect currency does not exist.

 

I would hazard a guess the modernity of the west, in the tradition of the frenchified philosophy of Rousseau, is uncomfortable with the idea of power... having polarized it to freedom. Yet, gold is powerful and has a power over our minds. I woud also add the observation of an ancient Greek; "Gold is tried with a touchstone, and men by gold".

 

Just some thoughts.

 

Edit: gold bugs seem to lean towards the orient rather than the occident in regard to gold.

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The audio says the goldsmiths fraudulently lent certificates against the depositors gold.

 

Is that really the case when also the goldsmiths were taking collateral such as family gold or silver or diamonds or other precious possessions that were not wanted to be sold in order to issue a certificate which could be spent in the market place where subsequent claim of gold the families collateral as gold etc was not claimed but instead the gold as money in the vault was claimed?

 

I have to say that most peoples understanding of gold smith fractional reserve banking seems to be based on an incorrect understanding of the practice.

 

If you deposit your mothers wedding ring with a goldsmith for safe keeping you cannot then spend the certificate if the certificate claims your mothers wedding ring. The certificates were valueable because they claimed what was deposited. So either we look at the practice as like a pawn shop where in distress certificate holders spent their certificates or we see that depositors either

 

1. required safe custody of their valueable possessions in return for a certificate for those specific items or

 

2. they deposited an amount of gold for a certificate promising an equal amount of gold which they could, if they wanted, spend without losing something of greater value to them than an amount of gold.

 

Also the same applies for property loans where if the borrower defaults the goldsmith can sell the property to cover his losses so that the depositors were not impacted by his losses providing the goldsmith correctly valued the property and correctly obtained the required securities and correctly calculated the appropriate interest rates. It was for many a skill rather than it being a scam run by crooks.

 

I have the honestly arrived at impression you can construct a fair and reasonable goldsmith banking system using fractional reserve. At the end of the day no system is possible if people are fundamentally dishonest.

 

And if you manage to construct a case that fractional reserve is fraudulent you can then argue that such a system must collapse and and it is time for a new world order and so forth etc etc.

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... I have the honestly arrived at impression you can construct a fair and reasonable goldsmith banking system using fractional reserve. At the end of the day no system is possible if people are fundamentally dishonest.

Fractional reserve banking per se is not fraudulent. The problem however is that the people who are using it have no understanding of it, i.e. they are also not aware of the fact that the system is prone to cause eternal inflationary bubbles and deflationary collapses. The latter ones are now ironed over by central bank money printing, hence fractional reserve banking is putting whole currencies at the risk of hyperinflation.

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I found the essay fascinating and has certainly helped with my very limited knowledge on gold and money.

However it has thrown up some questions.

 

You say that various wars wouldn't have happened if gold standards had been kept, however wouldn't there have then been wars to try and conquer land that was in rich in gold?

Also as gold would be a finite source of money, wouldn't this then start drawing the world back to the times when empires existed?

As they could not make money to buy assets they just went out and conquered the assets?

 

I don't know if i'm going way off track here, or my understanding really is terrible.

I have other questions which i will ask later.

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A good essay. It sums up most of my opinions on the matter.

 

It is a useful and entertaining introduction to the monetary aspects of gold for those who are new to it (most of the general public).

 

You may know that in Finland in olden times squirrel skins were used as money (the Finnish word for money - "raha" is supposedly derived from a variant of the word for squirrel, "orava"). I read just recently that the skins were used in the clothing business so it was indeed a commodity currency.

 

Red squirrels are now very common in Finland, but prior to a hundred years ago they were much rarer due to trapping. In the city suburb where I live there are plenty of cute little squirrels as there are plenty of trees, Scots pines especially, between the buildings as well as park areas.

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A Reading by Dominic Frisby of his essay on gold for The Idler Magazine .

 

idler42.png

 

Something A Little Different. Enjoy.

 

http://commoditywatch.podbean.com/2009/07/...-free-and-idle/

 

http://idler.co.uk/

 

Download Essay

Why_Gold_Is_the_Currency_Of_The_Idle_and_Free.pdf

like it

 

and agree with consumption taxes - if we have any taxes at all

 

only 12 so far

 

http://petitions.number10.gov.uk/TheGoldStandard/

 

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Thanks for all your positive comments, chaps.

 

Will be quoting that squirrel skins one and also looking into that stone age book

 

Have signed up for the petition.

 

Thanks for your enthusiasm Steve N

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PS There will always be was while governments are in charge. But if they don't have the power to print money then sheer economics will reduce the scale of these wars.

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Fractional reserve banking per se is not fraudulent.

 

it is.

 

no-one would deposit anything in a bank knowing that the receipt they received was going to be instantly devalued by fractional reserving unless the interest on the receipt made up for the devaluation - meaning there'd be no point.

 

fractionallly reserving deposits only works if the depositor doesn't understand the system.

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it is.

 

no-one would deposit anything in a bank knowing that the receipt they received was going to be instantly devalued by fractional reserving unless the interest on the receipt made up for the devaluation - meaning there'd be no point.

 

fractionallly reserving deposits only works if the depositor doesn't understand the system.

let the free market sort out those banks who want to be the riskiest (without the central bank back stop)

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let the free market sort out those banks who want to be the riskiest (without the central bank back stop)

 

agreed.

 

if other people want to d1ck about with FRB then that's fine by me - so long as they don't expect me to bail them out when it inevitably collapses.

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I found the essay fascinating and has certainly helped with my very limited knowledge on gold and money.

However it has thrown up some questions.

 

You say that various wars wouldn't have happened if gold standards had been kept, however wouldn't there have then been wars to try and conquer land that was in rich in gold?

Also as gold would be a finite source of money, wouldn't this then start drawing the world back to the times when empires existed?

As they could not make money to buy assets they just went out and conquered the assets?

 

I don't know if i'm going way off track here, or my understanding really is terrible.

I have other questions which i will ask later.

I've asked the same questions myself a number of times and don't feel that I've ever got an answer from anyone. There would be wars, just over different things and gold would be something to fight over. The countries that didn't have it would be enslaved or forced into co-operation with the new gold empires. People tend to conveniently forget that gold standards have usually been in operation during periods of empires, with the militarily strong being in control at the expense of everyone else. Most of the world was effectively enslaved.

 

Here's one critique.

 

What does a gold standard really mean?

 

Let’s think this through - what does a gold standard really mean? Does the hard money crowd want us to go back to carrying around pieces of gold coinage around? In that case, how do we facilitate global trade?

 

Do we just want to revive a gold backing for money? There isn’t enough gold around in the world to support a gold standard at current gold prices. Rough back of the envelope calculations show that the Fed’s holdings of gold, assuming that it is unencumbered and not lent out, is worth around $200 billion at current prices. Remember that the U.S. Federal Reserve is one of the larger central bank holders of gold in the world. While that change might satisfy the gold bugs, it wouldn’t help the vast majority of the population around the world.

 

One of the assumptions of a gold standard is that the currency is backed by gold at a fixed rate. Anyone could turn in their Dollars, euros, Yens, Pound Sterling and so on, to the appropriate central bank and get gold at a fixed gold price. Such a monetary regime also implies a fixed exchange rate arrangement like Bretton Woods. Instead of allowing the market to determine currency prices, the world would return to fixed exchange rates and periodic exchange rate revaluations. Is that really the regime that we want to return to?

 

A gold standard also creates economic volatility in the economy. Monetary theory is based on the elegant formula MV = PQ. Holding V (monetary velocity) constant, changes in money supply directly changes the GDP level. Under a gold standard, money supply is restricted by the supply of gold, based on world mine output. National gold supply could shrink because of shocks. As an example, the Roman empire was subjected to credit crunches during wartime when hostile forces captured Roman gold and territory.

 

http://www.dailymarkets.com/economy/2008/1...-is-a-bad-idea/

 

First credit crunch traced back to Roman republic

 

Politicians searching for historical precedents for the current financial turmoil should start looking a bit further back after an Oxford University historian discovered what he believes is the world's first credit crunch in 88BC.

 

The good news is that Philip Kay knows how the Romans got themselves into financial bother. The bad news is no one knows how they got themselves out of it.

 

"The essential similarity between what happened 21 centuries ago and what is happening in today's UK economy is that a massive increase in monetary liquidity culminated with problems in another country causing a credit crisis at home. In both cases distance and over-optimism obscured the risk," said Kay, a supernumerary fellow at Wolfson College.

 

The monetary historian is giving a lecture today in which he will reveal how Cicero, the Roman orator, gave a speech in 66BC in which he alluded to the credit crunch. Cicero was arguing that Pompey the Great should be given military command against Mithridates VI, king of Pontus on the Black sea coast of what is now Turkey. He reminded his audience of events in 88BC, when the same Mithridates invaded the Roman province of Asia, on the western coast of Turkey. Cicero claimed the invasion caused the loss of so much Roman money that credit was destroyed in Rome itself.

 

=====================

 

"In second-century and early first-century BC Rome, increased inflows of bullion combined with an expansion in the availability of credit to produce a massive growth in Rome's money supply. This increase in the supply and availability of money in turn resulted both in a major increase in Roman economic activity and, eventually, in the credit crisis which Cicero describes."

 

http://www.guardian.co.uk/business/2008/no...epublic-lecture

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People tend to conveniently forget that gold standards have usually been in operation during periods of empires, with the militarily strong being in control at the expense of everyone else.

 

well of course the state has to be strong if it is able to impose a monetary standard (gold or otherwise) on an entire population.

 

Most of the world was effectively enslaved.

 

bit like now then.

 

what else would you expect from a state-imposed currency?

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