The Gold Standard Journal of August 2012

This article contains a short summary of the contents of “The Gold Standard Journal” issued on a monthly basis by “The Gold Standard Institute“.

Misunderstanding ‘Social’ and ‘Democracy’ and the Abuse of Power (page 2): In this section, the author explains that politicians in Europe and the US are ignoring economic facts only to create an impression that the economy is doing fine. Actually the economy is not at all ok; there are enough facts that prove so. Politicians are (ab)using mass media to keep the focus on wrong facts.

Not Orius! (page 5): The author points to the malicious effects of the Keynesian approach. He explains that Keynes his theory did please the people in his environment. After all, Mr Keynes had his roots with a governmental organization. Furthermore, politicians don’t want the truth to be told; the truth implies less power and more discipline for them. It also implies that government spending needs to be controlled more thoroughly. That’s an important reason why politicians don’t like a gold standard.

The author writes: “Only gold can compete against the ballooning government and financial industry. Gold is in fact the only protection against predatory totalitarian people.”  …  ”Bringing back gold means competing with, no against, the government (and their debt mongers, passing off as bankers). It means that you refuse to be milked any further. Why? Because politicians can’t produce gold like they can produce money debt. It is possible that you will be declared an anarchist or an unpatriotic enemy of the state. But just think. Uncritical minds would be an ideal helping hand in this rip-off game. You could put an end to it. By not playing along any more. We have to go on gold again.”

Gold-Backed Bonds (page 7): This chapter focuses on the idea to back a portion of Italian bonds by gold, as well as its pro’s and cons. While gold-backed bonds would look initially like a positive evolution for gold’s value, it could also have some less desired effects.

In a paper system, all assets are backed by the Treasury bond (page 9): Paper based systems are essentially based on the Treasury bond. This kind of system can live as long as there is trust in the bonds. Trust is what holds up today’s system as well. Fundamentally, that’s a big difference with the gold based system, which have a tangible asset (gold) as their cornerstone. Gold is also functioning as the backing of money. By thinking one step further, one can easily see the advantages and disadvantages of both systems; it only requires an open mind.

The stock market verdict of Greece (page 10): The Greek stock market is reflecting the awful financial state of the country. Liabilities cannot be paid back. The relaxed mentality of the people was created over the last two decades by an easy money supply regime of the government. In case the country would go back to a weak currency, the consequences would be a runaway inflation and the destruction of the last productive part of the economy. Lessons will probably be learnt the hard way.

Fake Gold discovered in local Gold market in Malaysia (page 11): Most Malaysians missed the gold and silver bull market. Nowadays precious metals are very hot, as well as investing in it. But some undesired effects are popping up, like eg fake physical gold sold by large local banks and Ponzi type gold investment schemes. The government steps in by setting up a regulated Malaysian gold futures exchange. It’s a sophisticated trading platform, that should make the market more competitive and decrease the premiums on physical gold and silver.

Book review “The Golden Revolution” (page 12): A new book, written by John Butler, explores how the world will look like with one or another form of a gold standard. It adds some context to the current situation by linking today with the events of 1971 (when Nixon defaulted on US government’s gold obligations). It details as well the transition towards a gold standard, an area that hasn’t been explored too often in literature. It is a book that truly differentiates itself because of the quality of the content.

More info in “The Gold Standard Journal” of August 2012