Wednesday, October 13, 2010

The After-the-Fed Solutions Debate Begins: Greenbackers vs. Goldbugs

Eric Blair

The battle to expose the Federal Reserve has been long and arduous. It finally appears that after nearly 100 years of absolute economic control and near complete debasement of the dollar, the Fed's reign may be coming to an end. Its eventual demise is certain according to Black Swan author Nassim Taleb and others. With all the recent mainstream talk and speculation about the end of the Fed, it is time to debate solutions for the future of America's currency. This may indeed be the most important discussion of our lifetime.

First, we must be aware that the Federal Reserve, along with other foreign private central banks and the IMF, have long had plans for a global currency.  This is not conspiracy theory mumbo-jumbo anymore, but rather cold hard fact.  Lew Rockwell wrote an excellent article summarizing the IMF's push for a global currency -- the Bancor.  The recent international currency war may be the beginning of creating a false demand for something more stable for international trade.  As all major currencies race to the bottom, the private banking cartel will surely offer their global solution.  We know what their solution will be -- continued debt slavery with more centralized control -- but what will the people's solution be?

There seems to be another currency war brewing right here in America.  The debate between the two most popular proposed solutions of adopting the Greenback or the Gold Standard has just officially begun. Last week, Gary North, a Goldbug and author of Honest Money, wrote a scathing attack of Web of Debt author Ellen Brown, a Greenbacker.  He took select samples from her book in an attempt to tie her public bank solution to Hitler, but failed to address the "interest-free" philosophy of her policy. Despite that, he does manage to frame the Goldbug's argument against the Greenback, or public banking, as inferior:
Brown is a Greenbacker. She is open about this. Most people have never heard of Greenbackism. It has been a fringe movement in American political life ever since the 1860s. The Greenback Party in the 1870s was the first American political party to come out in favor of a pure fiat money economy, a paper money system controlled by Congress with currency irredeemable in gold coins or silver coins.
The Greenbackers are committed to paper money. They are opposed to any form of gold standard. They are opposed to fractional reserve banking. They are opposed to central banking, unless the central bank is 100% owned and controlled by Congress.
A rebuttal piece was then written by Interest-Free Currency activist Anthony Migchels in defense of Brown and the Greenbackers where he goes after North and claims interest-bearing gold can never work:
What it is all about is the Goldbug people versus the Interest Free Money crowd. It is one of the most crucial debates around. As I have mentioned before both on this site and elsewhere, Gold is the preferred currency of the Banking Fraternity and they plan to reinstate it in their world currency, which is coming closer every day....
...North has managed to do something profoundly dishonest and unwise. In this enormous article of his he actually does not mention the problem of interest at all.
This is so totally unfair to Brown’s work, because this is surely one of the most important aspects of her narrative....
Interest free money, either printed debt free by the Government or through interest free credit either by private organizations or again by the State, is simple, proven technology and centuries old.
Yes, many systems have been abused resulting in inflation.
No, interest bearing Gold is definitely not an acceptable solution.
Passions already seem to be running high in the opening round of this most critical debate that surely will shape the future of our economy and society.  Notably, both sides of this argument are in agreement that the Fed is a corrupt organization that must be ended.  North acknowledged that Ron Paul and Ellen Brown share this common ground, but says the Tea Party movement (liberty movement) has "no economic understanding" and "They cannot distinguish Ron Paul's opposition to the FED, based on the gold coin standard, from Ellen Brown's opposition, based on a fiat money standard. They are intellectually defenseless."

It seems a bit arrogant of North to suggest that the liberty movement is confused about why Ron Paul and Ellen Brown support ending the Fed, and it's also disingenuous to say that one side of the growing movement is "intellectually defenseless" because of disagreements about the solution. Especially when Brown's public banking movement appears to be immediately workable and is gaining ground as the first pragmatic step being to establish state banks -- as proven in North Dakota, which has a state-owned bank and boasts the lowest unemployment and the only budget surplus of the United States.

The public banking movement opposes the Federal Reserve, like Paul, because it is unconstitutional, but also for a variety of other intellectually defensible positions, starting with the fact that they are a private monopoly who care not for Americans or the country.  There are very real concerns that this group of banksters may maintain dominance of a gold-based system since they already have possession of most of the world's gold -- including much of the mining as well. Furthermore, if they can continue to create money on a fractional basis -- even if backed partially by gold -- and can continue to charge and determine interest, they'll still possess the power to enslave-by-debt people, industry, and entire nations.  Finally, the private profit motive of international banksters, driven by interest, has historically proven to encourage wars as evidenced by their funding of both sides of all wars.  This would also seem to give them dubious power to determine the outcome of those wars.

In turn, it's a given that the liberty movement supports the restoration of the Constitution which clearly states that the coinage of money shall be in gold and that only the elected Congress is authorized to issue and control it. However, the Constitution says nothing of allowing a fractional reserve gold standard run by private bankers which is promoted by some Goldbugs. Furthermore, some Constitutionalists still maintain the strange notion that the government should belong to the people.  Therefore, if we were able to restore the Constitutional principle for a government of, by and for the people, it would seem that interest-free currency issued and controlled by our elected government would be considered more constitutional than the current system.

It is true that gold has been valued in society for thousands of years and it will likely continue to maintain its terrific investment value for the foreseeable future. Gold clearly has a physical value derived from the incredible energy it requires to mine and refine it.  But gold, as a limited resource, is interest bearing and can be hoarded by those with the wherewithal to do so.  This would seem to suggest that gold could then be manipulated by the few who control vast sums of it.  And that sounds a lot like the economic tyranny we face today with the private Fed.

North attacks Greenbackers because they "are opposed to central banking, unless the central bank is 100% owned and controlled by Congress."  As if to say, how dare the people demand ownership of their own currency.  It shows a blinding distrust for Constitutional government and obvious preference for private banking interests.  Goldbugs seem caught up on the fact that a unit of exchange must have intrinsic value, either backed by gold or as an instrument of debt, or both. They feel so strongly that fiat currencies are utterly unreliable, but spend little time discussing the motive behind the interest and supply manipulators. Additionally, it is unfair to suggest that fiat currencies are not redeemable in gold, as any widely acceptable unit of exchange can be traded for gold.  Currently, one can buy an ounce of bullion for around 1400 Fed-deflated U.S. fiat Dollars.

I don't want people to get the wrong impression.  I believe gold is a great investment, especially in these turbulent times.  And I also believe gold has a place in securing America's currency. However, I worry that those who hold dear that a currency must be backed partially by gold in order to have legitimacy are susceptible to supporting a global currency if it includes gold as part of its currency basket.  Perhaps I'm naive, but I'm not sure why a combination of the two solutions is not feasible, with interest-free paper Greenbacks redeemable in gold or silver, while also producing silver and gold coins for circulation -- all tightly controlled by Congress, not a private organization, as per the Constitution.  After all, Fort Knox is supposed to be the people's gold, right?

Let the debate begin.  Tell us what you think would be the best system to replace the Fed.  

This article may be re-posted in full with attribution.


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Anonymous said...

I'm sure Ellen has good intentions but I'm with North. The thing about gold is it doesn't even matter if the bankers have all the gold. The only question is who is producing the most value, that's who all the gold will naturally flow to. Beyond that, a recent financial times article said for the first time ever private individuals own more gold than central banks:
Fiat currencies are inherently worthless, they're a promise, or a hope, that when exchanged it will be perceived to have value. They're all backed up by nothing. The real question is what would you rather store your wealth in, gold or paper. I'd rather gold, silver and other real assets.

webabuser said...

Hi Eric. It is not that gold bugs are gold fetishists. In fact their school (Austrian) is in favor of anything useful to trade without goverment intrusion (included community currencies and so on), they like gold just because it showed to work relatively well. The root of their problem is that they assume (correctly, in my anarchist view) that you cannot trust any hierarchy to do anything without screwing we the ppl big time. For gold nuts, attributing the bankster's power to the gummint, as the greebackers propose, is just moving the problem around without even try to really solve it (they expect that any government would inflate the hell out of any greenbacks for political advantage). I may add that in practice much depends on the political culture of the elites, which is much degraded from the times of JFK (and any civilization inexorably degrade) but this is just another argument to oppose *any* (private or public) fiat money power here and now.

Activist said...

I guess it can be an argument about a unit of exchange vs. a store of wealth -- but that seems to be 2 separate items. What am I missing?

Anonymous said...

I think the issue is if someone wants to print a fiat currency, they can go for it, I just personally don't think many people would be up for accepting a private fiat currency.

The only thing which gives fiat currencies their value today is that they're backed up by the guns of the state and people are literally forced to use them. The state does a good job of "hiding the gun in the room," granted, but it still comes down to should people be forced to deal in some currency simply because of a government mandate?

I don't think it's synonymous with a free society.

I think in a free market some sort of E-gold with 100% reserves where you merely exchange your titles to a certain amount of gold would probably be what most people use in their daily lives, it would have 100% backing and people would have to be very careful with what bank they chose etc., I think the most open bank which could show best they kept 100% reserves and were not pulling any funny business would become the biggest and everyone else would copy in due time.

Something like that called E-gold existed for a while, but the government literally shut it down and seized all their assets! It's hard to see how real money would work because government has literally banned it. They've nationalized the currency industry, we've been under total currency communism for 100 years.

What we need is a totally free market where all services are provided voluntarily and based off actual demand, not just another statist society w/ men with guns running everything and telling us what we "need."

Activist said...

Great Comments all around. Thank you. I believe that gold certainly has a role, and I also have a strong distrust of hierarchy. I like the concept of E-Gold, but I'm afraid I'm to cynical to trust it. It seems very difficult to rely on any system where hierarchy, greed, and consolidation can take place -- which can certainly happen with both proposed scenarios.

Keep the discussion going! This merits and demerits need to be weighed.

Thomas O. Anderson said...

I think everyone is missing an extremely important concept.

While some say a totally "faith-based" fiat form of currency is too risky, others say a rare commodity based system, such as the gold standard, lends itself to manipulation and control.

But what about a store of value that could literally be created by almost anyone? I'm thinking of something like a solar panel or battery; something that a government would guarantee to buy from anyone who created it; something that has real value to the country.

If Joe Smith wanted to make a couple dozen solar panels a week, he could count on a set income. And if some enterprising individual figured out a way to make a thousand a week, he could become very wealthy, in addition to helping create plentiful energy for the country.

Maybe solar panels or batteries are not the proper instruments for this endeavor, but I think you can see the direction "out of the box" to which I'm pointing.

Activist said...


I really dig your out-of-the-box thinking.

"No problem can be solved from the same level of consciousness that created it." -- Albert Einstein

We may need an entirely new system that has yet to be invented...

Anonymous said...

The loss of the US dollar's reserve currency status, which isn't mentioned but which is a future certainty with the first US default, will make much of the fiat currency/gold debate moot. When gold is one of the few asset classes left that holds value the gold-standard and the oil-asset standard will prevail.

the bonocelli said...

Unfortunately, change comes about slowly. And those in power presently will seek, at all cost, to remain in power. There are many systems that will work so much better than the debt slave model which has been forced on us since this country was born. We are still indebted to the Bank of England. And we have been since the Revolutionary War. Are debts have never been repaid through international bankruptcy thus this country, our states and individuals have lost their sovereignty.

History has been re-written many times for purposes of convincing us we live freely and have choices. That is true in certain cases, but you and I control nothing. If you own property, that property can always be repossessed by the gov or corporate entity and you will be paid fair value. But you do not control it, and you do not hold alloidial title. If you own a car, you can not drive it with permission by the state and requirement to have insurance. The privilege of driving that car can be taken away at any time. If your car can be taken from you for any indictment of a crime until you prove your innocent.

We do not have control of our lives, nor our possessions.

I would suggest understanding where we have been and how we got to the point we are at today. Until you understand this history, you are defenseless against the army of lawyers, judges and other officials who determine how you live your life and how you continue to work for them. You do not know the reality of the life that you operate in. Get educated then suggest change. Like I did, you may have a very limited understanding of how this world works. Good luck. The information is overwhelming but the education is well worth it.

Some reading.

Anonymous said...

Eric Blair has posed an interesting question and I hope that as monetary reformists, “gold bugs” and “greenbackers” can unite under a common purpose. Even united, our numbers are small and time is running out.

Respectfully, I think Eric has missed the bigger issue that must be addressed as the specie of money is a secondary or tertiary concern.

Henry C.K. Liu frames the issue as sovereign debt versus sovereign credit and Byron Dale suggests it is between debt money and wealth money. Either terminology contrasts the fundamental choice.

Simply put, our sovereign nation may issue bonds (instrument of debt) or equally dollars (instrument of credit/wealth). In either case, we as a nation solely back up every dollar or bond. Thomas Edison explains the difference much better than I ever could:

“If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also…Both are promises to pay, but one fattens the usurers and the other helps the people. If the currency issued by the Government was no good, then the bonds would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges…”

Why should we borrow, solely with our credit and collateral, from banks that have no money – instead they hold a monopoly given by us to monetize debt – for virtually free.

If we can agree on this important fundamental, then the specie of money and implementation become the next issues to be discussed.
The specie of money really doesn’t matter if we choose to continue with the privately owned debt based system (Federal Reserve).

Essentially, we rent our money and do not own it. This becomes more clear when we recognize that all money is temporary, it is created as debt and destroyed upon principal debt repayment.

If we create our own money as a nation, then the specie of currency may matter. But, I suggest that the United States does not have near enough gold to back a national currency so the point is mute.

At best, the United States may hold 8,100 metric tonnes of gold which is woefully inadequate – see my post linked below for more concise numbers:

Why do I suspect that the U.S. doesn’t have even 8,100 metric tonnes of gold? Three reasons:

1) Did the U.S. “sell” 5,000 tonnes of gold between 2007 and 2008?

The United States Geological Survey:

3,000 tonnes sold in 2008

2,000 tonnes sold in 2007

2) Evidence that the gold disappeared during the 1960s

“While the US pretends to own some gold, the question is have we been lied to about US gold holdings? In other words, are the gold reports from the US all paper stories which lack any presence in actual physical gold?

3) Has the private Federal Reserve actually owned all U.S. gold since or before our bankruptcy of 1933?

One thing that troubles me is that some gold bugs would prefer an international currency partially backed by gold rather than the U.S. reasserting its sovereignty and financial independence by issuing its own national currency.

For example, at the “Single Global Currency Association” website, a Ron Paul quote appears on the same page as quotes from the BIS, Alan Greenspan, Paul Volcker and the Federal Reserve. Ron Paul is quoted from the Congressional Record…

“There’s nothing to fear from globalism, free trade and a single worldwide currency….”

If we want to take back our republic, we must be first be financially independent and free from the debt slavery of the international banking cartel.


Anonymous said...

Yes, I agree on e-gold (same poster from 11:27AM and 11:59AM before), I personally wouldn't own any, but that's mainly because I'm afraid the government will seize it. I forgot they actually did the same thing recently with the "Liberty Dollar" which was backed by silver. Seized all their assets, took them to a kangaroo court etc.

Josh said...

I'm glad you're talking about this.

Welcome to the small group who actually knows about 'free banking.'

This is the solution. It's definitely not the Keynesian solution Ellen Brown proposes. That still leaves the government in charge of the printing press. ...It wasn't always like that.

jpritikin said...

A trustworthy currency requires a whole package of changes to the way we issue currency and how the government works. Please take a look at binary economics and the Just Third Way.

But that's not enough. We also need supporting proposals to fix structural problems in the system:

Kenneth Hulsberg said...

I support Bill Still's monetary reform. (See: Secret of Oz or Money Masters)

Gold has no value to me personally unless I needed it to produce something.

Foods, clothing, shelter, weapons, ammo, love, knowledge, things like that are valuable to me.

Money is just a means of exchange, IMO. It serves to make barter convenient. As long as it's not based on debt, then it can function as a reasonable means of exchange.

The Running Man said...

Great Post Eric,

Your idea is similar to Richard Greco's Idea in "the end of money and the future of civilization", in his model the currency is backed by a silver standard, however there is a fiat credit exchange to keep liquidity (and stave off monopoly) in the system.

If states will not implement North Dakota's provable solution then individuals can print their own currency backed by their silver stores. Individuals can also loan money to others. Many communities have already done a purely fiat system, I can't think of any that has a fiat system backed by commodities.

Anonymous said...

Well, It seems everyone (including the author) are stuck in a paradigm much like the false right/left paradigm. I was there once as well, supporting the greenback solution, this was just after reading a very well written book called the Money Creators by Gertrude Coogan.

My first post on the Daily Paul was Constitutional Money System vs. Gold Standard, there the debate went on for a long time but then Ron Paul made a genius move during that debate, he put forth a bill called Open Competition of Currencies. There you go problem solved no need for a debate, just let the market decide.

Kenneth Hulsberg said...

People tend to think of money as value. Money is not the value in an economy. The physical economy itself is the value. Money is only a means of exchange used to make barter convenient. If you want to increase the value of your physical economy you must increase knowledge of the people. Knowledge is the key to increasing production, increasing discovery, creativity, making technological advancements, producing more in a given amount of time, etc, etc.

YOU are the real wealth.

Look, if I wanted to destroy a nation, all I have to do is create a counter culture revolution, convince the youth to gather, let their genitals hang out, sing praises to peace, love, and dope, convince them it’s cool to be stupid, and within a decade, the entire nation will begin to decline, and by the third to fourth decade it will collapse.

YOU are the real wealth.

Link777 said...

I mostly agree with your analysis, KH. People are the true wealth of the nation. Their knowledge, innovation and labor create wealth. That is why I support rigorous, broad and practical public education for ALL Americans, no matter their background. I believe the investment in children and young adults would pay huge dividends in less than a generation. It would also drastically reduce crime and other social ills.

Activist, thank you for initiating this discussion.

CCoburn said...

A point that I think many people have made is that fiat currency has always & everywhere been devalued by the politicians. Politicians have always & will always do their best to remain in power. And if they have control of the money supply, they will manipulate it for political purposes. This invariably means devaluation as politicians attempt to buy more votes with less capital.

Clearly it is a mistake to allow the currency to fall into the hands of politicians. We made that mistake with the Fed & it would be shear idiocy not to learn from that mistake.

It should also be noted that the Constitution does not require the government to mint money -- it merely authorizes Congress to do so. There is nothing wrong with privately minted money. As long as people are willing to accept it as a medium of exchange, who cares who mints it?

Also there is no Constitutional reason that we should not have fractional reserve banking. While there may be a host of economic reasons, there is no Constitutional reason. Furthermore, there is no authority in the Constitution for the federal government to prevent it. As long as the depositors know what is being done with their money, understand the risks involved & understand that the government will not bail out any bank or insure their deposit, I see no reason to prohibit the practice. Under those circumstances, most depositors would shun the banks that practiced it.

DrKrbyLuv said...

Henry C.K. Liu frames the issue as sovereign debt versus sovereign credit and Byron Dale suggests it is between debt money and wealth money. Either terminology contrasts the fundamental choice.

Simply put, our sovereign nation may issue bonds (instrument of debt) or equally dollars (instrument of credit/wealth). In either case, we as a nation solely back up every dollar or bond. Thomas Edison explains the difference much better than I ever could:

“If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also…Both are promises to pay, but one fattens the usurers and the other helps the people. If the currency issued by the Government was no good, then the bonds would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges…”

Why should we borrow, solely with our credit and collateral, from banks that have no money – instead they hold a monopoly given by us to monetize debt – for virtually free.

And, why are discussing using using gold to back up our money when we have very little, if any gold in reserves? See link below for a better explanation:

One thing that troubles me is that some gold bugs would prefer an international currency partially backed by gold rather than the U.S. reasserting its sovereignty and financial independence by issuing its own national currency.

For example, at the “Single Global Currency Association” website, a Ron Paul quote appears on the same page as quotes from the BIS, Alan Greenspan, Paul Volcker and the Federal Reserve. Ron Paul is quoted from the Congressional Record…

“There’s nothing to fear from globalism, free trade and a single worldwide currency…. The effort in recent decades to unify government surveillance over all world trade and international financial transactions through the UN, IMF, World Bank, WTO, ICC, the OECD, and the Bank of International Settlements can never substitute for a peaceful world based on true free trade, freedom of movement, a single but sound market currency, and voluntary contracts with private property rights…. The ultimate solution will only come with the rejection of fiat money worldwide, and a restoration of commodity money. Commodity money if voluntarily and universally accepted could give us a single world currency requiring no money managers, no manipulators orchestrating a man-made business cycle with rampant price inflation.”

If we want to take back our republic, we must be first be financially independent and free from the debt slavery of the international banking cartel.


PAGAU said...

Excellent topic for debate. Kudos to Activist Post for starting it — although the first thing I would like to point out is this debate is not new, nor is it polarized along this one axis.

Allow me to introduce you to Professor Antal E. Fekete:

Dr. Fekete has given up on those in the Austrian school who insist on an absolute gold standard and has started his own “New Austrian” School. I believe his view to be very important and anyone in this debate should spend some quality time with his writings. Dr. Fekete advocates a hard money standard that is in the control of the people and not the banks or the government. He says this could be accomplished by simply re-opening the mint to gold as it was in the early days of the USA.

I personally would advocate a monetary system modeled on the original intent of the constitution. I think it is very important to understand that constitutional money is not and never has been a gold standard – that is a myth. The banksters did unsuccessfully attempt to impose a gold standard on the people in the late 1800's. The book “The Wizard of Oz” in an interesting study in this regard. The constitution actually specifies a silver standard. They used the commonly accepted standard of the time, the Spanish Milled Dollar, and adapted it as the standard. Silver is not as rare as gold and is much harder for the banks to control. The important point is that money must be under the control of the people who use it and impossible for banks and governments to counterfeit. The constitution does not forbid the use of other things as money by the people as they see fit but it does forbid any state from making anything but silver and gold “legal tender” thereby forcing the people to accept it as payment. The author of this provision in the constitution wrote a book titled “A Caveat Against Injustice” which condemns the use of paper money. It can be found here:
In this book you will find more than a hint of the original intent in the constitution.


AustroContrarianCapitalist said...

By my appraisal, Kenneth Hulsberg is correct. Money by definition is just a “medium” of exchange. Just think about it for a minute fellow Patriots. Before there was a “money economy,” there was a “pure barter economy.” Individuals exchanged “REAL” goods and services for “REAL” goods and services. The problem with a “pure barter economy” was finding other individuals that would always want to barter for the products or services you had. To remedy this (out of human construct), money came to be. While theoretically, anything could be used as “money,” there were certain properties that made some “things” more desirable as money than others. Those properties as identified by Economist Gene Callahan (Economics For Real People, p. 83-5) are: “is widely marketable, transports easily, relatively scarce, relatively imperishable, easy to store, easily divisible, and each unit of the good is very similar to every other unit.” Thus, it should be no surprise that precious metals such as gold and silver were historically used to serve as “money,” or more descriptvely, exchange faciliators.

So how does knowing the “history of money” help? It helps by clarifying our thoughts to identify the true problem. The problem in economies has always been trying to figure out how to facilitate exchange. A system of “money” has been the ONLY system adopted as a solution. Can anybody see where I am going with this??? With the advent of computers, databases, the internet, eBay and the like, is it not possible for a system to develop that “matches” people, (facilitates exchange) just as well, if not better, than “money”? The issue as I see it, is that economies are beholden to a system where what is being used as the “unit-of-account” has a monopoly, forced on the people by government of course! What would happen if such a monoply did not exist? There would be competing “units-of-account.” Instead of everything in an economy being “priced” in terms of paper dollars, perhaps things would be “priced” in terms of gold, donkeys, banannas, haircuts, oil changes, anything and everything REAL (or not real if one so desired). The solution, as always, is of course FREEDOM. There needs to be freedom for competing money and units-of-account. Then and only then, can we be liberated from the yuppies, elitists and financial oligarchs. If I am not mistaken fellow Patriots, this means only one law would have to be abolished, i.e. Legal Tender legislation and we would be free to develop a competing “exchange facilitation system.”

There is also one other point I want emphasize just as I believe Kenneth Hulsberg has "hit-on." People need to remove focus from "money" as a "value." Money, as I said above is not necessary. It is technically not necessary if you can find somebody else that wants to "trade" for what you "have" (savings of "REAL" things) or claims on future "REAL" goods or services you produce). "Money" is just a human construct, added "bureaucracy" to an economy if you will, because government/people are unsatisified with "decentralized-prices," that is pricing goods and services in terms of other goods and services. "Money" is just used as the universal "unit-of-account" or the (government imposed) terms in which goods and services are priced. The take away is this: you can not get something for nothing. You must first produce (or have the ability to) or have saved something of value in order to exchange with someone else for something of value. "Money" is an intermediary. If we can develop a system where money does not have a monopoly as an intermediary, unit-of-account, etc, most economic troubles would dissipate.

nut said...

Goldbug vs. Greenbacker = Heggelian dialectic

Anonymous said...

From the article: "Gold clearly has a physical value derived from the incredible energy it requires to mine and refine it."

The above sentence is a good example of the why I think greenbackers have such a hard time understanding libertarian economics: They have no value theory or only a confused and non-sensical value theory.

Often I'll read a great killer riff from a poster such as this from Anonymous above:

"The only thing which gives fiat currencies their value today is that they're backed up by the guns of the state and people are literally forced to use them. The state does a good job of "hiding the gun in the room," granted, but it still comes down to should people be forced to deal in some currency simply because of a government mandate?"

And I'll think to myself how can this not convince the greenbackers? How can they not want to join us libertarians in immediately abolishing what Anonymous above calls a "statist society w/ men with guns running everything and telling us what we "need."

But then the posts will come in with more ideas on how to tinker with who gives what orders to the men with the guns.

So, my favorite tactic--the ethical argument--the libertarian plea for justice--doesn't always seem to work. So the quote from the article above made me realize that maybe if we can straighten the greenbackers out on value theory, then they'll come around. So here goes:

Value exists separately and subjectively only in the individual minds of each individual. Note that this is an axiom based on libertarian ethics. According to libertarian ethics, it is a crime for individual A to point a gun at individual B in order to make B value in his own brain a commodity the way that A thinks B should.

Therefore, there's no such thing as "intrinsic" value. Value doesn't exist in a commodity. A commodity does not have "'physical' value derived from the incredible energy required to mine it" as the author says of gold above. A commodity can only be valued by the minds of individual human beings. Just because someone labored to dig something out of a giant hole and possibly wasted vast resources to do it, does not guarantee that any human beings will value what was dug out.

So greenbackers, here's my latest plea: "Please don't support soldiers pointing bayonets at my brain and commanding that I value your phony scrip! And don't tell me that you know such behavior by your soldiers is criminal, unjust, sick, and anti-social, but you're only proposing govt greenbacks as a temporary measure until the state withers away. If you really believed that govt greenbacks were criminal, unjust, sick, and anti-social, you'd call yourselves something like "theft-backers" or "value-enforced into each mind via soldiers-backers."

usurykills said...

Before we look at what comes after the FED, let's understand that under our current system banks steal back every penny they loan into existence.

People tend to miss this little factoid. Banks steal every cent they lend. Principal and interest. Both. All of it. The whole enchilada.

Are you outraged, yet? You should be. Everything
you work for, every erg of energy you expend serves only to profit the international banking cartel.

I know what you're thinking -- I'm full of it.

Bankers have an expansive vocabulary to describe
a wide array "sophisticated financial vehicles."
They reel off big words illustrated by fancy
diagrams and incomprehensible formulae.

What they never tell you is that one special, secret word they can barely pronounce but rely upon for all of their wealth: obfuscation.
(wiki: Obfuscation is the concealment of intended meaning in communication, making communication confusing, intentionally ambiguous, and more difficult to interpret.)

From the comments here, it looks like it's working!

They steal EVERYTHING because we can't see the obvious.

Bankers pretend they run some sort of piggy bank where your money is safe and yet they also tell you they've lent it out to other customers. Obviously, they can't do both!

If ten people put $100 in the same piggy bank and an eleventh person borrows that money, there is no money in the piggy bank, right?

Instead of lending the money on hand, bankers are legally able to conjure $1000 (equal to the total savings deposits) and loan that instead.

That's money for nothing, folks. No secret, right? Surely you've heard of "evil" fractional reserve lending...No fractions required on savings.

Even if the bank charges no interest on such a loan, it collects the $1000 over the term of the loan AND IT POCKETS THE MONEY. That's right, pocketed. You already know what happens to the interest.

Given that all money is created as bank debt one way or another, they are stealing every penny ever created. Your house is just gravy. Yum... Real estate...

Are you angry now? Do you feel really stupid?

Don't feel bad, bankers work hard to confuse you.

The government is complicit in this theft so it should come as no surprise they act as a collection agency for the foreign (and domestic) thieves at the central bank.

Boy, do we need deprogramming! All those homeless, starving people turning to crime when it's bankers who should be locked up.

Now you know. The genie is out. Start angry then focus.

From here, you can insert your own crazy idea for how to fix this or you can learn about the singular solution at

PAGAU said...

Ha ha ha...
nut said "Hegelian dialectic"
That one may have slipped by the rest of you guys.
Look here for an explanation:
The same thought occurred to me, Mr. Nut.

The two extremes of this debate are indeed ridiculous. The best solution is obscured by the axis on which the debate is polarized. The worst solution will likely be seen as the only viable solution.

Look at the lesson of "The Wizard of Oz". The "Yellow Brick Road" did not lead Dorothy back home to Kansas -- but the silver slippers did. Look at the silver slippers my friends. This was the way the debate was polarized at a time when paper money was silver certificates and real physical silver was legal tender because silver is what the people naturally choose of their own free will. Silver was the "poor man's gold". People on both sides/extremes of this debate should look at the qualities of silver. If we did in fact move toward competing currencies I believe that people would naturally gravitate toward silver or something with similar qualities.

The interests of the working man is best served when the money he is using requires work to produce. This is an important concept that should not be overlooked. Both Marx and Mises recognized the concept of "frozen labor". The working class will not, absent of any coercion, accept money that will not function as a store of value over time. For the working class their capital is their labor. Their natural choice for money will reflect the world they live and work in. Allowing the working people to choose the vehicle for storing and transporting their capital is the best solution.

The worst solution will of course be a one-world, global paperless currency that exists only as numbers in a computer and is under centralized monitoring and control by a global elite that has a monopoly on the creation of the currency. Let the working stiff struggle for that which the elite can create by mere keystrokes.

This is the way the debate should be polarized. Both gold and fiat paper are on the same side of the debate opposite free choice of currency. Coercion or liberty. But on the question of legal tender, for those times when coercion is needed, I say return to the constitution from which we have strayed.


Activist said:
I guess it can be an argument about a unit of exchange vs. a store of wealth -- but that seems to be 2 separate items. What am I missing?

PAGAU says:
Money has historically served both functions. In a free market, people will naturally seek something that serves both functions simultaneously. This may be hard to see today in this age of consumerism and managed markets. But with the threat of hyperinflation looming, [think Helicopter Ben] perhaps this will change in the near future.


Alan Page said...

This discussion is essential. All of the discussants have missed two essential points that recently came clear to me after trying to fund sustainable activities for fifty year (so I admit to being a slow thinker). These points involve the many classes of investment that can not function effectively in a debt based currency system and the need for an expendable currency base as social needs evolve.
1) Most infrastructure components of our life never have any regular cash payout, yet are essential for the function of our or any society and increasingly important as maintenance functions for our overloaded climate maintenance system. It is common to understand things like hospitals, bridges, colleges, transport routes, etc. as infrastructure, but today we need to expand this concept to include estuarine health (to avoid dead zones at the marine - fresh water junction of all global rivers), farm land maintenance (we can not continue to mine our top soil and feed the current population), water supply availability (it is not appropriate for essential elements for life to be limited only to those who have gold to pay for them – what are you going to charge a turtle or a duck for the water to survive?), global forest health (healthy forests absorb CO2 and release O2, store the absorbed carbon without human involvement for many years and yield a valuable product mix)... This came clear to me after reading Ellen Brown's book, “Web of Debt” because as a forester I have never seen a tree that had any significant debt service capability and whenever I tried to invest in forests I had to do so from discretionary income. The output of the land was never adequate to support the regular maintenance that a healthy forest required. So society must find a way to enable the regular expenditures on these essential long term items that have no regular cash outputs (whether or not they have a final payout as forests do). The function of debt payments simply guarantees that the choices by society will always be focused on short term practices that have an immediate yield component. If you saw your self on a space ship you might understand that it is incredibly important to make sure that the urine processing system or the CO2 recovery system gets the attention that it needs; we have been living as if the Earth based air and water conditioners were unimportant along with a lot of other essential functions, and have instead worried about how to carry around wealth that we truly do not have any right to accumulate. (end part 1)

Alan Page said...

Part 2 of Essential Discussion:

2) We still reside in a world of increasing population, and even if we are able to bring our population into a sustainable realm, the quality of life and the recognition that we are going to have to pay for infrastructure maintenance will require that the amount of money in circulation to increase over time. There is no reliable connection between the rate of gold creation, exploration and extraction and any of the constraints on economic stability. Gold is another of the non-renewable resources that may become scarce as all surficial deposits of gold are found. Therefore it is likely that the value of gold will increase over time. Even without interest caused inflation over time the scarcity and imbalance of gold supply will guarantee that there will be regular or at least periodic inflation.

I suggest that Ellen has correctly identified the source of all value in the full faith and credit of a sovereign region and that there is a duty of the sovereign power to maintain that area essentially as a Scout Troop would maintain an area used for a camp (it should be better on leaving than it was on arrival). This is foreign to our thinking now because we have willingly submitted to nearly 100 years of increasingly effective brain washing and coercion by those who like to charge for something that they did nothing to create (think of the effort needed to fund your next credit card purchase. The effort is all yours, the signatory to the contract with the issuing bank.

It is time for a change and time to recognize that there are many things that are now off the table that will need to be paid for and the payment should be fair and be the natural consequence of humans inhabiting and disturbing an area that is not truly theirs to “own”. If we can not understand these basic concepts we will indeed foul our nest and deserve all the consequences that go along with living on a dump!

ScottTheDot said...

Goldbacking - in this day of easily traded ETFs like the GLD - would be a disaster. It would subject our money to direct market manipulation, not just indirect like we have now through the Fed and other currency producers/manipulators. An open market on the thing that back the currency would make prices unstable, inflation followed rapidly by deflation, and a fantastic opportunity for oil-rich nations, or reserve surplus nations like China, to monopolize our currency by buying up gold reserves on the open market.

AustroContrarianCapitalist said...

There are two types of exchange that can happen in a FREE economy. 1.) Direct-Exchange. Which is to say barter. And 2.) Indirect-Exchange. Which is to say the use of "money" to facilitate exchange.

What I submit to you all, is that humanity has been pre-occupied with "indirect-exchange" at the expense of developing "direct-exchange."

With "indirect-exchange" people are forced to HAVE "money" in order to exchange goods or services with someone else. If a system could develop where all people needed was savings of REAL things and/or the ability to produce REAL things in order to access competing private "exchanges" (marketplaces) that deal in the trading of "goods and services" between individuals. The "private exchanges" would take what you bring to the marketplace, as well as your order for what you want, and a make transactions/trade happen. I can see how such a system would operate similar to eBay, or something like it.

Money is not necessary per se. But what is, is a system that "efficiently" matches people/entities to exchange goods and services.

AustroContrarianCapitalist said...

With a non-monopolized system of money and unit-of-account, "wealth" is then defined not by how much "money" a person possesses, but by a person's ability to produce/possess something of value that others are willing to trade something of value for. Thus, the "dis-honesty" of money and credit as we have today, would virtually be non-existant in such a proposed "free-system." If you did NOT produce/possess something of value by others, you would not be able to get something of value from others. It is hard to imagine how "banksters" could manipulate such a proposed system, since they would have to produce/possess something of value in order to survive... Banks would be depositories of REAL things, so how could they "lend" more than they REALLY had on deposit? They couldn't. We need to focus our intellect, energy and resources to devising and developing a free-market, "direct-exchange" system.

h20junkie said...

I have a humble suggestion:

Greenback system for domestic commerce.

The Bancor or whatever for international commerce.

Who needs the currency market. Besides, by the time the world agrees to just what the international Bancor represents, the Greenback will be thriving in the US.

Daniel said...

a public bank? me and my friends are for it!

lots of possibilities

TB said...

I am surprised no on has mentioned the danger, for me the biggest obvious danger, of a state-run credit system: that is the hyperpoliticization of the loan process. Once the state controls utterly who gets money, then it cannot be long before political considerations begin to dominate the process of acquiring that money. very dangerous.

TB said...

apologize if this posts twice, but...

I think the most dangerous aspect of Greenbackism is the danger of the loan process becoming politicized. Once the state has total control of credit, how long can it be before forms with pointed questions and mysterious processing machinations begin to select for politically-popular/acceptable projects and investments?

jd said...

I favor the ideas of "The Inventor of the United States", Ben Franklin who authored A Modest Enquiry into the Nature and Necessity of a Paper Currency. He wrote therein, " issued to create a house, a road or anything of tangible value BACKS currency AS CERTAINLY as gold or silver"...

Of course, through its Pennsylvania government ownership and control of a stable currency, "The People" of Pennsylvania (for which Franklin's internationally circulated and admired "A Modest Enquiry..." writing) benefited on all fronts by the adoption of 'his' idea.

The allies of Franklin (Jefferson, Father of the Declaration of Independence, Hamilton, Father of the Constitution, Thomas Paine, author of "Common Sense", and others, ie, "THE FOUNDERS") supported a government CREDIT system using a currency supported by real physical value, the amount of currency issue equal to the credit demands of, and therefore naturally "backed" by the productive sector.

Stable Dollar value help, (1) all real productive capital enterprises and (2) productive labor. (ONLY speculators get "hurt".) Currency speculators should not control the value of the Dollar. Stable money is so important that is probably will prove essential for us to enter into Bretton Woods like agreements on money value with other SOVEREIGN governments. (Considering the EU, perhaps I should ask what sovereign governments are left?)

We should not make currency agreements with institutions not representing "The People" of a country in our efforts to stabilize our currency value. Private issue of currency (or even securities) not supported by real value should probably be made a serious CRIME being that doing so Constitutionally defines the act of COUNTERFEITING.

It adds some stabilizing weight to both the Dollar and to gold markets for Treasury to HOLD huge gold reserves at Ft. Knox (Is there any gold STILL there?) using it to stabilize our money, BUYING GOLD with dollars when the value of our dollar is "too high" and BUYING DOLLARS with gold when its value is "too low". (Dollar value always being DEFINED by its relationship to OUR real values.)

We should remember America was the FIRST NATION to issue and control its own CREDIT based currency. The private DEBT based Federal Reserve Dollar system is an abomination. Washington, Lincoln, FDR and Kennedy (and a few other presidents) all issued "Greenbacks" (United States Notes). The State of North Dakota bank is an example of how things should be on the state level. On the private bank level, Muhammad Yunus' is the example to follow. Dr. Yunus DEFINES "Micro Lending" as private banks OWNED by bank borrowers and depositors!

So, that's pretty much all I was taught about the subject when I was a little boy.

John Durham

usurykills said...

@Alan Page: Environmental concerns will exist under any form of money. Urine in drinking water would impact the value of said water.
"What is collateral?" deserves discussion.
So far, no one has answered,"What is money?"

When I pointed out the banks steal all of your money, no one argued it. That's excellent! Keep in mind, once they own the world they'll still demand interest (the world plus five percent.)

Gold is excellent collateral. Whatever entity loaned money against it, the borrower may not legally "manipulate" anything without first settling the debt. That payoff would then be destroyed, removing it from circulation as the money no longer has backing.

Money created must be destroyed if you want to avoid inflation (as interest must outlawed.)

Mike Montagne argues these points much better than I so go to and learn.

Anonymous said...

With technology today and technology to come, conterfiet money will thrive. Greenbacks are worthless now and would be always worthless as rookies will print amd print and print. More laws to try and protect the population from being overwhelmed with counterfeit Greenbacks? Ha! They will not be enforced just as they aren't today. ( the Fed). Gold and Silver. Don't try and change 5000 years of human history. We only can repeat it and learn generationally.

NationalDividend said...

Folks would be well-advised to explore the phenomenal possibilities of Social Credit, as pioneered by English engineer C.H. Douglas and refined further ever since! Here's a good introductory link:

PBRF said...

North is definitely wrong ... but Brown is not fully correct either.

Those who control large quantities of gold can, under the gold standard, manipulate the money supply, causing expansions and contractions, and can rip everybody else off by timing the market.

Market-determined interest rates are a legitimate way to help ensure that resources are allocated efficiently.

There is nothing wrong with the Central Bank loaning out money ... the principal and interest paid back to the Central Bank can be retired from circulation, and new loans can be made so as to keep the money supply expanding at a rate which ensures zero inflation.

Anonymous said...

The Hegelian dialectic point has value. The synthesis may have already been decided.

German economist Georg Friedrich Knapp wrote the book "The State Theory of Money". It says that money must have no intrinsic value. It is given value by being acceptable for payment of government taxes.

Austrian theory is that money must have its own market value. Gold is ideal for this purpose. I believe that von Mises was an optimist as are most libertarians. HIs theories are intellectually sound but presuppose the basic goodness of human nature. Unfortunately that is wrong.

The most important issue is control of the money, whatever it is. Mayer Rothschild said it as everyone knows. Leaving the market to decide puts control back where it is already, in the hands of the plutocrats.

My guess is that what the elite want is what the elite will get in the absence of a greater power. This is where the plot thickens. The People do not have the power to do anything. Only God can rescue us and He plans to do so. How he does it is going to be a shock to everyone, even most Christians.

Anonymous said...

Money represents your ability to produce. Each dollar represents a dollars worth of goods and services. Money is not demand...SUPPLY is demand.
Printing paper money at will, without a corresponding increase in production, is inflationary, irregardless of who does it. It does not magically create more goods and services.

There is a severe lack of understanding of what money is. Hint, it's not paper. As Thomas Jefferson said "paper money is but a ghost of money..." he said the perfect medium of exchange was "specie".

Rather than follow the advice of a two bit lawyer, who finds facts to be about we follow what the founders of our nations demanded for us in the constitution ?

Gold and Silver coins, no central bank, private mints. The solution is simple.

Economics in one lesson, Henry Hazlitt

joebhed said...

There seems a lot of unnecessary misapprehension relating to a government control of credit from those who fear government control of everything, when the alternative we speak of is simply a debt-free money system of government ISSUE.
At the moment debt-free money is created, it is in someone's PRIVATE bank account in a PRIVATE bank.
The government would not have anything to do with credit.
The governmetn's role, as appropriate, is twofold.
1, determine the amount (Q) of money needed.
2. Determine where that money is spent in its budgeting process.
The economist with what Dr. Steve Keen has described as the most sophisticated macro-economic model on the globe, Doshisha University Prof. Kaoru Yamaguchi, has modeled the economic effects of a switch from debt-based money to debt-free money.
His paper is available here.

So, again, I don't see the issue as gold v. greenbacks.
If you understand national economies and you understand national monetary systems and you understand the need for a circulating medium of exchange, the issue is whether a sovereign peoples wishes to issue that circulating medium into existence as a debt, or debt-free.
The Money System Common.

A Davy said...

I think the excellent blogger FOFOA's Freegold system would be best.

Currencies to trade as a means of exchange, which is what they are good at.

A physical only gold market (free of fractional reserve style paper gold) as a store of value, which is what gold is good at.

Anonymous said...

The most important issue is that the $ replacement NOT BE the used as the Worlds Reserve Currency, thus avoiding Triffins Dilema. A "greenback-like" monetary system, in parallel to a Gold system for international trade (the new/old world reserve currency) is the right answer. Gold coins could certainly be minted, so long as the exchange between the gold and the greenback was allowed to float. as Davey said FOFA has outlined a workable solution.

Anonymous said...

I am with the goldbugs/ I think the best monetary system would be a gold coin standard with a 100% reserve requirement on demand deposits/ Essentially, I think demand deposits should be treated by the courts as bailments, and if banks criminally use money entrusted to them for safekeeping for thier own profit they should be prosecuted as criminals/ No more fractional reserve banking! Time deposits are a different story/ If a bank agrees to give a person 5% interest on a sum of money for five years and then the bank turns around and lends this money out to someone else for 10% per year this a legitmate business transaction/ A bank's lending portfolio should match up with its maturities on its time deposits/ With a gold coin standard the people are in control/ If a bank violates its bailment contract with demand depositors and overexpands, then the depositors can take the notes issued by that bank and demand gold coins for the notes so issued/ If a bank cannot redeem its notes for gold coins then it is bankrupt, and its officers should be subject to criminal and civil penalities for violating the bailment agreement with its depositors/ The threat of the bank run and extensive criminal and civil penalities would put a powerful check on a banks ability to create money out of thin air, and protect the value of the currency from thieving banksters of both the central and private variety/

joe plumber said...

I am assuming that the North Dakota state owned bank uses federal reserve notes- why not do what they are doing in individual states and when the FED topples be ready to print state issued currency? Something is going to have to take the place of FED paper, and we will be bartering in the streets anyways when this all ends badly and probably more suddenly then even we who are awaiting its failure expect... I don't think the solutions will be in place by the time the sh*t hits the fan in any case, because even those united against the FED can't agree on the replacement. Local competing currencies will probably pop up all over the place I am guessing, and we may not have monetary unity for a long long time again- perhaps that is for the best?

Anonymous said...

Read Jefferson yourself if you really want understanding.

Put aside your preconceived beliefs and motives and be enlightened. Most of you should come out of this reading ashamed of yourself.

nina said...

However, the Constitution says nothing of allowing a fractional reserve gold standard run by private bankers which is promoted by some Goldbugs. Furthermore, some Constitutionalists still maintain the strange notion that the government should belong to the people. Therefore, if we were able to restore the Constitutional principle for a government of, by and for the people, it would seem that interest-free currency issued and controlled by our elected government would be considered more constitutional than the current system.

PAGAU said...

As I said before, I am not squarely in either camp, but as a result of this discussion, I have learned some things about the greenbacker's position that have surprised me. As a result, I have moved closer to the goldbug's position. The greenbackers see the outrage in paying bankers interest for the dollar bills they create out of thin air – but they do not see the outrage of creating dollars out of thin air no matter who does it. Greenbackers do not seem to recognize the difference between natural vs synthetic money. To simply transfer the exorbitant privilege of money creation from bankers to the government does not make it any less outrageous. This would demand an infinite amount of benevolence on the part of the government and and equal amount of competence on the part of the government to manually manage the entire economy. In a perfect world, this might work – but not in this world. Our confidence in the fed has been proven to be misplaced. Confidence in government will also prove to be misplaced.

There are two major problems:
1) When money is created without work, someone is going to benefit without producing something of value – creating an injustice to those truly produce.
2) Whoever controls the money supply is master of all commerce.

Who will benefit from the issuance of synthetic money? Who could actually be such a master that is able to manage all of commerce? Who would want such a master that actually believes himself capable of managing all of commerce? Certainly not anyone who values liberty and justice. Anyone who seeks such a master seeks bondage.

Perhaps that is our destiny – bondage. This country was founded on republican principles of decentralized control – including decentralized control of money. The people directly controlled the issuance of money in a way that was self regulating and self stabilizing. Today we throw those principles to the wind and seek centralized control of money – somehow by the people via a democratic process. [the jaw drops] This has an eerie familiar ring to it... Oh yea, I remember now...

The "Fatal Sequence" is what is was called:
“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world's greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:
From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage.”
~~~ Author unknown ~~~

I believe what the greenbackers propose has the same temporal nature described in the sequence above. The process of deciding who will be the lucky ones to benefit from newly created synthetic money will eventually descend into a hopeless political quagmire that will result in bondage, then destruction.

Natural money is self regulating. Government's role in money should be to protect the people's money from those who seek to gain advantage by controlling or changing the nature of money. If we decide it is the government's role to control money itself this will cease to be the land of the free.


ColdStanding said...

No gold - too scarce
No greenbacks - no backing

Tally system based upon the joule. You can print your own money, the Joule, if you make your own energy. You have an exact idea of how much energy actually goes into making anything.

DaveR said...

Eric: My book ‘Monetary Revolution-USA’ (on Amazon) answers all the questions and concerns in your article, and offers a plan to; a) allow private mints to issue gold as money , valued by weight and fineness of gold content (some low-value coins would just have a small disc of gold in the center), b) allocate all gold owned by the Treasury and Fed to redeem Fed Notes (thus no ‘run’), c) end the Fed (or let it atrophy and fail), d) end legal tender laws, and other restrictions, and e) allow use of any commodity (but ‘the people’ have always chosen gold for the 9 reasons in the book, and shown in item 8 below). I reply below to various sentences by you and in Comments.
1, Interest-Free Currency activist Anthony Migchels in defense of Brown and the Greenbackers where he goes after North and claims interest-bearing gold can never work. Reply; An odd comment since gold has always ‘worked’ until it is debased by the gov’t.
2, Gold is the preferred currency of the Banking Fraternity and they plan to reinstate it in their world currency, which is coming closer every day....Reply: HuH? Bankers love fiat money and Central banks (mostly to supply more reserves when needed)
3, No, interest bearing Gold is definitely not an acceptable solution Reply: It sure is. As a valuable asset, gold earns rent (interest) when the owner allows someone else to use it
4, in North Dakota, which has a state-owned bank and boasts the lowest unemployment and the only budget surplus of the United States. Reply: Implies the bank was a principal cause. Bad assumption. All it does is avoid paying interest to ‘outside’ banks.
5, , they'll still possess the power to enslave-by-debt people, industry, and entire nations Reply: you are only a slave to debt if you are fool enough to borrow too much
6, Gold clearly has a physical value derived from the incredible energy it requires to mine and refine it. But gold, as a limited resource, is interest bearing and can be hoarded by those with the wherewithal to do so. This would seem to suggest that gold could then be manipulated by the few who control vast sums of it. And that sounds a lot like the economic tyranny we face today with the private Fed. Reply: When valued by weight, the ability to distort pricing and FOREX goes away. If you own a lot you are rich, but can’t manipulate the ‘price;’ because there isn’t one!
7, I'm not sure why a combination of the two solutions is not feasible, with interest-free paper Greenbacks redeemable in gold or silver, while also producing silver and gold coins for circulation -- all tightly controlled by Congress, not a private organization, as per the Constitution. Reply: I gather you mean fiat ‘Paper’. The Constitution doesn’t give Congress a monopoly on issuing coins, just a restriction as to the metal used. Whether issued by gov’t or a private mint, only a valuable commodity avoids historical abuses. The 9 characteristics a commodity used as money must have to maintain popularity with users are; : 1) Rare, with a low amount in existence now, and limited new supply, 2) Malleable, so can be made into coins, 3) Stable physically and chemically; doesn't break, rust, or rot (can be stored; lasts through much handling), 4) Easy to identify (recognize), and determine purity and amount; gold is by density, 5) Difficult or impossible to counterfeit, 6) Homogeneous in content (a melted chunk is the same throughout), 7) Divisible into pieces (diamonds and pearls aren’t), 8) High value per ounce (not bulky to handle or store), and 9) Acceptable to most Sellers (familiar and recognizable).
The ‘market’ has decided that gold fits these requirements best, but silver and copper can have a role in parallel, with no fixed ratios set as to value per gram (i.e., no bi-metallic standard).
I will appreciate feed back on the above comments to
Regards, Dave

chestergimli said...

I am new to this website so I think that what I have to say will be a bit winded. I have to say that I decry the use of the term working class. What is that but a division between those who do the work to provide the goods and services that the citizens of this world need and want and those who sit on their rumps and do nothing to earn it-like moneychangers. The scientists, engineers, and politicians of this world are also of the working class as they are using their minds. I have to agree with usurykills, that the moneychangers don't really lend out anyone's cash, they just make it up. I would like to make up my own cash. I would like to change my checking account to $100,000.00 with the stroke of a pen too. As far as barter is concerned? The human race no longer uses barter in a large way the way we use to. I would never take a cup of sugar to my neighbor and ask to trade for an ear of corn. We might do a little bartering for something that we might want that another person had and didn't want for something we had that we didn't want. But nothing serious. Also in today's world, our work is all specialized. No one grows their own food, builds their own house, sews ALL their own clothes, well, you see what I mean. All of us work in a special section of each category. It is like we are all separate links in a chain. Therefore, why is a medium of exchange needed at all? We all work individually to produce and distribute in our own little sections of the economy so that we can fill the cornucopia of goods and services, which are the centers of distribution-the stores, so that we can all go and take a share of what we have worked to produce and distribute. There need be no haggling over silly prices, for what is worth a lot to one is worth nothing to the other. And this is all that human economy does. Human beings work as a collective unit to produce and distribute that which we need for our survival and for our simple pleasures. Any form of a medium of exchange has no place in this at all. Human beings work so that they can consume which they need to do in order to satisfy their physical-biological requirements. Right now we work in order to enrich a few people sitting at the top of our civilization. They make sure that we have enough to barely survive-some more than others. But right now, they are working to get rid of a large chunk of our population. I guess we are getting too big to control. Also, since our labor is a business expense of the businesses that we work for, a medium of exchange is a direct road to borrowing. Businesses have to ask a higher price for all their goods and services than what they pay the consumers who work for them in order to survive. What this means is that the consumers will not be able to pay the asking prices of companies at the points of distribution-the cornucopia. And since the businesses can't sell their products, this puts them in a financial bind also. That is why we have loans on practically everything we purchase and credit cards for everyday purchases. That is why the medium of exchange based economy is going down the drain. Because no one can handle any more debt and no one is purchasing. All of you who read this read Isaiah 44 14-21 and Isaiah 31:7. Both of these relate to the medium of exchange idea. Also read, in the Douay Rheims Catholic bible, the very last verse in Zacharias. It is very telling. Yes indeed, man cannot fix things. God will have to. And the way he does it will be a surprise even to Christians.

PAGAU said...

chestergimli said:
"read Isaiah 44 14-21 and Isaiah 31:7. Both of these relate to the medium of exchange idea."

PAGAU says:
I beg to differ -- both of these are a satire on the folly of idolatry and have nothing to do with the medium of exchange idea.

On the other hand, Leviticus 19:35 -36 does:
"Do not use dishonest standards when measuring length, weight or quantity. Use honest scales and honest weights, an honest ephah and an honest hin."

The point you made concerning the moneychangers comes much closer to the medium of exchange idea -- as the moneychangers are those who seek to change the value or nature of money.
Jesus drove the moneychangers out of the temple but few really understand the reason why and just how relevant this is for us today.

But Roger Sherman understood this well:
"If what is used as a Medium of exchange is fluctuating in its Value it is no better than unjust Weights and measures, both which are condemned by the laws of GOD and Man, and therefore the longest and most universal Custom could never make the Use of such a Medium either lawful or reasonable."
- Roger Sherman, a delegate from Connecticut and author of the gold and silver coin provision of the Constitution, wrote a scathing condemnation of paper money entitled; "A Caveat Against Injustice" (caveat means warning)


David G. Mills said...

First the author states that the Constitution requires that the coinage of money shall be in gold. This is flat wrong. Article I, Section 8, Clause 5 of the constitution gives Congress the power "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures." It does not mention gold by name or any other metal.

As for going to a gold standard, the history of the gold standard is that once it is imposed, its imposition quickly produces misery and poverty to the citizens who are forced to live under it.

The reason is quite simple. Gold is a scarce commodity and there is not enough of it to go around to create a sound currency system. Currency systems based on gold are easy to be manipulated. If there is only enough gold for the citizens to have a $100 per capita of gold, in trace amounts of gold, we are all guaranteed to be poor in no time.

The implementation of gold coinage in place of cheaper and more abundant copper and bronze coins in a very short time insured that the citizenry of Rome quickly had no money for commerce. A once prosperous Rome quickly fell into economic ruin. The same thing happened in colonial America where Continental scrip was declared by England to be unlawful and within a year of its implementation, according to Ben Franklin, the prosperous colony of Pennsylvania was bankrupt and the people were destitute and homeless. The gold standard is only desired by the rich and it is the enemy of every one else.

The original version of the Wizard of Oz is an allegory about the attempt by America to return to the gold standard in the late 1800's and those who opposed it (Dorothy, the Straw man, the Tin Man, and the cowardly lion all represent people of the day who opposed the return to the gold standard. The return of the gold standard was symbolized by the yellow brick road.

Here is a great video about the history of currency, using the wizard of oz allegory, and a sound refutation of why the return to the gold standard would be a huge mistake. It explains why Ellen Brown's greenback idea is the course we should take after the Fed's demise. Ellen is in fact an interviewee in this award winning documentary by Bill Still called "The Secret of Oz."

View it and weep... or maybe be encouraged to hope that there is a real vehicle for change that could be implemented.

PAGAU said...

David G. Mills said:
First the author states that the Constitution requires that the coinage of money shall be in gold. This is flat wrong. Article I, Section 8, Clause 5 of the constitution gives Congress the power "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures." It does not mention gold by name or any other metal.

PAGAU says:
You are right on the first point, but you are dead wrong on the second point. Gold and silver both are mentioned in Article I, Section 10, Clause 1: No State shall…coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt.

Both our current system, and the system Ellen Brown proposes violate the spirit of this clause at an equal level. But a gold standard does not. Gold qualifies as legal tender but it is not the standard. The standard was set by the Coinage Act of 1792 to be silver. When the value ratio varied between gold and silver, it was the gold content of gold coins that were adjusted to meet the standard of silver.

The Wizard Of Oz allegory does not suit the purposes of the greenbackers unless it is twisted beyond recognition. The take-home message of the Wizard Of Oz is not paper money -- it is the silver slippers. The silver slippers represent the "Poor Man's Gold" -- silver coin and the silver standard -- and if there be any paper money, let it be redeemable silver certificates that are backed by silver.


Anonymous said...

For those who agree with the Goldbugs, i suggest you read, William Jennings Bryan's speech, "Cross of Gold", given during the 1st Gilded Age, over 100 years ago. In it, he argues that if the gold standard is adopted, it will end up being a heavy cross for the working class to bear.
When Andrew Jackson destroyed the early central bank, (The 2nd Bank of the US, or BUS), he became the Only president Ever to pay off the national debt. Shortly afterward, there was an attempt on his life. He told friends, Rothschild was behind the assassination attempt. Lincoln introduced the "greenbacks" in 1863, in order to pay the mounting war debt. After he was assassinated, all "greenbacks" were bought up by the government, at the behest of the banksters, and destroyed.
In June, 1963 JFK started printing Our Own currency, and by November, he was dead.
Today, there are Privately-owned central banks in almost every nation on Earth, including ours with the criminal Federal Reserve. And, in Every case the chief investor is the Rothschild family, the oldest banking family on Earth!! Even their business web pages brag about them being the longest in the banking business and that their investments are found in almost every nation on Earth.
I obviously support the "greenbackers" because their idea is based on 0% interest, and interest, along with inflation and deflation are the devils that Jefferson warned us about. If we must back a fiat currency with gold, then it should bear No interest, and an ample amount must be kept in store to correct for inflation and deflation in the case that the gold market should be cornered by a very few, (which is the case now).

PAGAU said...

Anonymous said:
The Hegelian dialectic point has value. The synthesis may have already been decided.

PAGAU says:
It has been two weeks since you made this point and it has only now come to me what that predetermined synthesis might be. Jim Sinclair is a huge goldbug that does not believe we will see gold backing. He has given a lengthy name to what he believes we will see; the "Federal Reserve Gold Certificate Ratio, modernized and revitalized". A lot has changed since he came out with this prediction. He may have missed the mark on this one a bit but he laid out his reasoning in detail. In the details and in his reasoning can be seen the synthesis.

The Fed is a parasite that has killed its host. The Fed may be ready to move on. A synthesis that seems to satisfy both sides of this debate while creating a new host for the parasite may be what is on the horizon.

The government is on a destructive path of Quantitative easing (money creation) with or without the Fed. If the Fed steps aside at this point it may be possible to politically dodge the finger of blame. Like the road runner who steps aside at the edge of a cliff to watch the momentum carry Wally the Coyote over the edge.


David G. Mills said...

Pagau you don't understand what you read.

The mention of gold and silver in Section 10 is not about the coinage of gold and silver by the federal government. Section 10 prohibits the states from making any sort of currency that is paper based. Section 10 seems to permit states to make their own currency out of gold or silver.

But what state has ever minted gold or silver coin to use as currency? None that I know, at least in recent history.

Maybe you should read some cases about what bills of credit are (essentially paper money) which the states are prohibited from making in Section 10. States are not prohibited from making gold or silver coins because there is no risk in the gold or silver becoming valueless like a state paper currency might (and did in the South during the civil war). The framers of the constitution also did not want competing paper currencies amongst the states.

If you are a goldbug, whether you realize it or not, you are advocating for a system in which the money supply will be so low that the economy will quickly die. Even if you add silver to it, there still will not be enough money to go around.

The real problem today is that the banks can control the supply of money. The world's money supply went down 40% in a one year period between 2007 and 2009 and look what a 40% contraction did to the world's economy. It would be vastly easier to limit the money supply if the only money were precious coins.

Maybe if we went to gold and silver and precious metals as currency we would have "honest money." Except there would only be enough for everyone of us to be lucky to acquire a few hundred dollars worth. I want a currency where it is so cheap and plentiful that ordinary people can easily acquire enough of it to live comfortably.

Rome, using the cheap metals of copper and bronze which were plentiful, flourished until it went to a gold standard. Britain flourished using wood sticks as currency and began its demise after it went to gold. The best currency is currency that is cheaply made and plentiful. If it is not cheaply made and plentiful, there is not enough of it to go around.

There simply has to be enough money in circulation or an economy is unable to flourish. Gold has historically not been able to produce enough currency for economies to flourish.

David G. Mills said...


Oz is the emerald city. Last I checked greenbacks were, well, green.

The point of the silver slippers is that silver creates a much larger money supply than gold.

A Silver standard heads us in the right direction, but it just doesn't match the ability of paper to create a large money supply.

The Wizard of Oz is not a perfect allegory.

David G. Mills said...


One more thing. You were right and I was wrong about the Constitution not mentioning gold or silver at all. It was in a place I wouldn't have expected, given the goldbuggers constant mention of its requirement by the Constitution.

I was wondering where the goldbuggers got their nutty idea about the Constitution requiring the gold and silver to be used as currency, especially since we have used copper, and nickel, and tin, and other cheap metals all throughout our history.

I guess I should have figured that in their zeal to promote their vision of a gold standard, as long as gold and silver are mentioned somewhere in the constitution, that was good enough for them to say that the constitution required it.

It takes some gall to say that the constitution requires it, and to leave it at that, when what the constitution requires is that if the states want to issue a currency, their currency must be in gold or silver.

What a stretch, and that's being kind.

PAGAU said...

David G. Mills said:

"Section 10 seems to permit states to make their own currency out of gold or silver…But what state has ever minted gold or silver coin to use as currency? None that I know, at least in recent history."

PAGAU says:
Actually yes. A lot of foreign coins were circulating also. This probably would make more sense at the time. One of the major objectives at the time was to solve problems with trade between the states -- which at the time were more like sovereign nations are today. (they should still be so today - but I won't go there) Today the problem of floating fiat currencies is a major source of trade disputes. After suffering under competitive currency devaluations the nations will be seeking a standard acceptable to all. Much to the chagrin of western nations - this new standard will likely include gold in some way as power and wealth shifts from west to east and our trading partners demand stability. If we move to greenbacks here in the west, It will be only for domestic use as no one outside our borders will trust it.

The trading disputes that led to the constitutional convention were over similar issues -- or as Mark Twain said: "History does not repeat itself, It rhymes." The hard money guys of the day one out -- not the goldbugs. There is a difference. What resulted from the constitutional convention was not a gold standard.

I am a goldbug but I am not on the goldbugs side of this debate. I am here to prevent this debate from being polarized on a single axis. I don't believe we should have a gold standard. I share the same concerns as the greenbackers in this regard. A gold standard does indeed make the people's money vulnerable to the schemes of the banks. Where I differ with the greenbackers is I see that as only part of the problem. Fiat paper money is not the answer to the problems of the gold standard. Likewise, the gold standard is not the answer to the problems of fiat paper money. This is a false paradigm in the same way as republican vs. democrat. It is the hegelian dialectic like nut said above and it will lead to the wrong answer if you don't pay attention.

In order for money to function as a store of wealth it must have value -- but that does not necessarily mean it must be gold. Likewise, in order for money to function as a medium of exchange it must be plentiful -- but that does not necessarily mean in must be paper. One thing I do believe, money must function as both a medium of exchange and store of wealth. Either extreme can be made to serve both functions only under force of law. That is precisely what I do not want to see. What I do want to see is liberty to choose what I want to accept as payment with one limitation -- that being the legal tender laws. Legal tender laws force you to accept something as payment. I think we need legal tender laws. But no one should be forced to accept as payment that which has no value. No, when it comes to legal tender, that is when the constitution steps in and places limits on what the states can do to impose on liberty of the people. Under the constitution, you are free to accept anything you want as payment, but you may -- I said may -- be forced under state law to accept gold and silver. This is fair and just. This is good law. This is what Article I, Section 10, Clause 1 means to me.


David G. Mills said...


I agree that gold and silver and other precious metals should be part of the currency. I think an argument can be made that precious stones would also make good currency and should be permitted as part of the currency.

The more forms of currency there are, the less likely it is that the money supply can be manipulated. But we still need paper to add to the currency as well. We need something cheap to make and plentiful.

One thing that does really scare me is that the currency has become computer digits. When there is nothing tangible at all, it really becomes a trust me system.

David G. Mills said...


One thing is interesting here. Since Article 10 does seem to say that the states can issue currency in gold and silver, I wonder why the states haven't done it.

Congress could not pass a law prohibiting the states from issuing gold and silver coin. It would take an amendment of the constitution.

Maybe there is a way for gold and silver to be introduced into the currency through the states. Sure seems like it.

Does anybody know whether states have issued their own gold and silver currency in the past? You would think that the states that were rich in these ores would have done it.

PAGAU said...

Bankers Conference on Jekyll Island this weekend.

Walt Thiessen said...

Just saw this post by Mr. Blair. I've taken him up on his offer to debate and written my own article, which he is welcome to comment on at

Bruce Ogden said...

The American people should also demand that our government no longer be involved in enforcing {coercing with negotiations and loans (carrots and sticks), weakening economies with economic/currency manipulation, or the use of military force} policies that benefit the international banking cartel in their business of stealing the wealth of the world, whether it be through U.S. or foreign banks, the U.S. or other governments, the G8 (or G20), the IMF, or other minions of the cartel.

Once the American people have thrown off the yoke of the debt-spider, interest-web, the U.S. should cease to be a neocolonialist instrument of the international bankers in economically subjugating other nations with interest-bearing debt, and ensure cancellation of the current debt of the nations of the world. If the banking cartel refuses to cancel this debt, all national governments should be encouraged by the U.S. to print their own “Greenbacks” and use them to pay off their national debt and to circulate as a manipulation-free, stable national currency that benefits the people and the national economy of the nations of the world, even as we will have done in the U.S.

Weighing the pros and cons of the Goldbug versus Greenbacker solutions to our current, deplorable monetary system ruled by a privately-owned Federal Reserve that functions for the benefit and at the bidding of the international banking cartel, the Greenbacker solution provides many more advantages than that of the Goldbugs and secures no less monetary stability as long as our money is managed according to sound economic and monetary principles as discussed in “Web of Debt” by Helen Brown.

The Federal Reserve has a long history of putting excess money into circulation, mostly as debt based on “fractional reserve banking” where the same money is lent many times over at interest, leading to significant devaluation of the dollar with inflation. Under the bankers’ tyranny, the harder one works to pay off the debt and interest, the more one gets behind. Issuing U.S.-credit-backed Greenbacks such that supply and demand would increase together, would not create excess inflation, while providing for necessary government spending and the exchange needs of a growing economy. In a Greenback financial world, the people and the government would be freed from the debt-spider, interest-web of the international banking cartel, unemployment and income taxes could become a thing of the past, and hard, productive work would be richly rewarded.

Debra Caruthers said...

Hello: I am a newbie to this discussion and also an Arizona resident. It suddenly occurred to me this morning what a travesty it is that the state of Arizona is on the brink of bankruptcy and one of the highest foreclosure states in the nation, while at the same time we are sitting on some of the biggest Silver deposits in the nation. Not only should Arizona charter its own State Bank, but why not take it one step further? Let's begin minting our own silver coins. The State of Virginia is already looking at a similar solution in their own case. I believe Arizona should do the same. And why not also the great state of Nevada -- who also is bankrupt AND also sitting on huge deposits of silver? With the rise of silver prices lately, why not monetize the coin and let it be the backer of the new State-chartered bank. Please tell me if this idea would -- or would not-- work.

Anonymous said...

Good News folks. We are going thru a full circle change back to gold and the fiat process was part of the process to get us into a necessary real-time environment. The economy is a real-time event, afterall. The system should reflect that.

Let's jump to the gold backed solution and then I'll give you the FACT as to why it couldn't be reached without the severing of the gold peg of Bretton Woods and then the introduction of digitization and the internet.

Real-time fully gold backed digital currency allows one to buy a stick of gum on the other side of the world and make instant payment (with no lingering debt) in an instant using a precious metal as a store of value currency.

The real-time capability (to properly reflect market fundamentals) was introduced by the development of the free floating, debt based paradigm as part of this overall process.

The ultimate function of the free floating fiat dollar is not that of a currency. The FACT is that without the free floating development of the dollar, gold backed digital currency could not have come about as it did. The dollar is an inescapable part of the algorithm that bridges the divide between how much gold weight to pay for something that is priced in a national currency. The dollar is essential as the real-time measure for gold where gold is the currency.

The challenge is no longer a monetary design ... it's simply the marketing.

PAGAU said...

Thanks to activist post for starting this post.
...and for this post as well:
Peer-to-peer currency takes banks out of the picture

Now in beta, Bitcoin bills itself as "the first digital currency that is completely distributed." In essence, that means that it's managed collectively by a global network of users, so no bank or payment processor is required between buyers and sellers in any transaction.

Very interesting indeed. Pay attention to this one. Bitcoin is a game changer. According to the technical lead, the CIA has taken an interest in it--he says so in this video:
Bitcoin Discussion with Gavin Andresen and Amir Taaki on This Week in Startups #140


Anonymous said...

INFLATION and money as DEBT, (and the market manipulation it enables), not interest per se, is the people's main enemy, for when in a PMs as currency free market, when money gets tight, its buying power INCREASES inspiring miners to go digging to supply the demand. Its AUTOMATIC!!!

The anti-usury-ists don't get that coercion WILL happen with govt or bank monopoly control of ANY monetary system instituted by LEGAL TENDER laws by diktat.

Let FREE markets rule, only then can man be free of the globalist cartel of money vultures who have already bought most all the govts on the planet.

A mere Half Billion is enough to buy every American legislator and SCJ at about a Million per and they have been and ARE doing it quite successfully.

A small price to pay for the banksters that then get free bailouts of trillions at home and abroad as reward for their heinous crimes against humanity.

Read what American abolitionist Lysander Spooner just after the CW in 1867 had to say about banksters and their control of govts by pursestring to wage their wars of massive profits.

From his "No Treason..." section XVIII

...The Rothschilds, and that class of money-lenders of whom they are the representatives and agents --- men who never think of lending a shilling to their next-door neighbors, for purposes of honest industry, unless upon the most ample security, and at the highest rate of interest --- stand ready, at all times, to lend money in unlimited amounts to those robbers and murderers, who call themselves governments, to be expended in shooting down those who do not submit quietly to being robbed and enslaved.

These money-lenders, the Rothschilds, for example, say to themselves: If we lend a hundred millions sterling to the queen and parliament of England, it will enable them to murder twenty, fifty, or a hundred thousand people in England, Ireland, or India; and the terror inspired by such wholesale slaughter, will enable them to keep the whole people of those countries in subjection for twenty, or perhaps fifty, years to come; to control all their trade and industry; and to extort from them large amounts of money, under the name of taxes; and from the wealth thus extorted from them, they (the queen and parliament) can afford to pay us a higher rate of interest for our money than we can get in any other way. Or, if we lend this sum to the emperor of Austria, it will enable him to murder so many of his people as to strike terror into the rest, and thus enable him to keep them in subjection, and extort money from them, for twenty or fifty years to come. And they say the same in regard to the emperor of Russia, the king of Prussia, the emperor of France, [*49] or any other ruler, so called, who, in their judgment, will be able, by murdering a reasonable portion of his people, to keep the rest in subjection, and extort money from them, for a long time to come, to pay the interest and the principal of the money lent him.

And why are these men so ready to lend money for murdering their fellow men? Soley for this reason, viz., that such loans are considered better investments than loans for purposes of honest industry. They pay higher rates of interest; and it is less trouble to look after them. This is the whole matter.......

Indeed it IS!!!!

cont at

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