Sunday, November 28, 2010

Money: Scarcity and Value

Capital is the oil of the economic engine. Yes, you don't want people to be able to pluck money off the nearest tree. Money must represent and reflect labor and value. But too much scarcity and the gears in the economic engine grind to a halt. So, after the US goes bankrupt like Iceland, Greece, Ireland, Portugal, and Spain; TPTB will bail us out in exchange for our water, gas utilities, mineral rights, transportation and highway infrastructure, and pension funds.

Even if Ron Paul and other patriots were successful in ending the FED and re-instituting a gold standard; our economic problems wouldn't likely change. For instance, since there is so little gold, our country will be starved of liquidity and growth. Returning to a gold standard may be how TPTB plan to equalize the US with the rest of the world by converting the whole world over from a fiat/debt-based system to a gold standard, while they have been working the last 99 years to monopolize the gold market. Today, TPTB own all gold production. They have admittedly been hording all the gold, they own all the gold mines, and copper mines which produce gold and silver as a byproduct.

Yes, having gold-backed currency was the original intent of the Founding Fathers. But not when TPTB own all the gold. In this case, they will still have total control over money supply of the entire world. So, for now, I say we could back our currency with a basket of commodities including gold. This would provide enough liquidity to satisfy the capital demands of our cash-starved economy.

If we allow the US Treasury to create all the capital, and allow local banks to extend no-interest loans for non-depreciating land, buildings, factories, homes, farms, production machinery, commodities, mining, etc. Then that capital is backed by the assets that it is being used to purchase.

In this case no-one is picking up free money off the ground. The money lent by the bank from the US Treasury must be paid back with labor. If there is enough money in the market due to savings, then people wont need to borrow. New money won't need to be created. If there isn't enough money in the system, then people will borrow, and the US Treasury will create money necessary for the need at the time. This mechanism would prevent inflation or deflation.

I've been thinking more on this issue and realize that the money supply is broken up into parts. M0, M1, M2, M3 etc. Therefore, You can have a gold standard to cover a portion of the money supply M0-M1-M2 which includes cash on hand, checking accounts and savings. Just recognize that gold is in short supply and we may have to take back our gold and copper mines (break the monopoly). Natural resources of this country belong to the people of this country and principally the states. I would get rid of national forest service which only is used to control mineral rights. Gifford Pinchot (1889), First Chief of U.S. Forest Service was a skull and bones member at Yale in 1880. Let States control their own land and minerals.

The portion of the money supply that this no-interest loan/credit system covers does not need to be backed by gold (new M3). The money that is created to be lent to purchase real-estate, machinery, other non-depreciating commodities for the life of the loan, is backed by the asset that the money is purchasing. This money has its own backing. The money that is created by the US Treasury for this purpose is being paid right back.

Right now the media is really pushing people to buy gold. I have been thinking a lot about why the elite have been driving this. 1. A horde of gold will be discovered, gold will drop in price and buyers lose. 2. Society will fall apart and people in possession of gold and silver win. 3. The US will make owning gold illegal and order a nation-wide gold confiscation. 4. The elite will re-institute a gold-standard, gold goes to $10,000/oz, and gold owners are used by elite to support the new system. If I had to guess, I think #4 is the true purpose of the push for gold.

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