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Showing posts from 2011

Lunch with Ron Paul

Ron Paul published Gold, Peace, and Prosperity in 1981.  What makes his pamphlet especially attractive today is the speed with which it can be consumed.  A reader could get through his robust prose during an hour lunch break.

But why would a reader want to do that?  Why not read one of Paul’s more recent books instead, even if it couldn’t be read in one sitting?

The answer is, the earlier work provides an excellent foundation for his later writings.  It offers a clear, non-technical summary of his views on money and the economy.

Ron Paul has made his mark as an advocate of sound money.  As such, he is totally opposed to fiat money and its imposition through the government-supported cartel, the Federal Reserve.  It is largely through a hijacked monetary system that government has become a threat to civilization.  In this pamphlet, Paul puts it all in perspective with everyday language, as if he’s talking to you - over lunch.

Sound money, he says, is money that is “fully redeemable.”  T…

Finding Hope in a World of Perpetual War

Because I'm free
Nothing's worrying me.
“Raindrops Keep Falling on My Head” by Hal David and Burt Bacharach
It takes time to steal a wise man’s freedom.  He can’t be talked out of it.  But he can be made to give it up for something higher.  What’s higher?  Why, his country, of course.  What is his country?  He doesn’t know exactly.  Whatever it means it can’t omit the government.  The government, he learns in government schools, is a vital part of the better things in life.  

It started long ago, well before even the oldest among us were alive.  Ruthless exploiters had taken over the economy.  What was needed was regulation, we were told.  Not market regulation - not the profit and loss kind, which only fed the cutthroats of the world - but government regulation, the kind that uses government ways.  Free markets, we were assured, meant scoundrels were free to chew up innocents.  With government regulations and the institutions they created we would have nirvana.  The bad …

Morgan Monetary Piracy

When a major fractional-reserve breakdown occurred in 1907, Thomas Woodrow Wilson, then president of Princeton, endeared himself to the banking movement by declaring that "all this trouble could be averted if we appointed a committee of six or seven public-spirited men like J. P. Morgan to handle the affairs of our country." [Griffin, p. 448] Colonel Edward Mandell House, a close Morgan associate who served as shadow president when Wilson was elected to the White House, became the "unseen guardian angel of the [banking] bill" that emerged in 1913. [Griffin, p. 459]

Originally drafted at a secret meeting of banking elites at Morgan's hunting lodge on Jekyll Island, Georgia in November, 1910, the Glass-Owen Bill, as it was finally called, overwhelmingly passed the House and Senate on December 22, 1913 and was signed into law by Wilson the following day. [Griffin, p. 468]

The Fed began operations in November, 1914, with Morgan men occupying key positions. The new …

This too will be a brutal passage

"Is everything gonna be all right"?

This is the question Ron Holland raises in a recent article, and of course the only answer is, no one really knows.  "My advice is to legally diversify much of your wealth outside your home country, currency and the political leeches running everything and then live your life."  What else can we do?  We can pay close attention to the big banks and the governments they fund. 

1.  "As a contrarian I believe if the PIIGS return to their national currencies, this could actually benefit both them and those northern European nations remaining in the euro. While a win/win situation for individual nations this would be catastrophic for the banking elites and they seldom lose and why I believe the banks and EU politicians will do their best to keep every nation in the EU."

2.  "If you want to know what will happen in the US, just watch the mega-bank bailouts in Europe and the forced austerity measures on the already bankru…

Commodity money takes care of itself

In his 1982 article, “Monetary Policy: Theory and Practice,” Nobel laureate Milton Friedman said that "if a domestic money consists of a commodity, a pure gold standard or cowrie bead standard, the principles of monetary policy are very simple. There aren’t any. The commodity money takes care of itself."  [emphasis added]

It takes care of itself. Consider that thought for a moment, then ask yourself why we've had politically-appointed bureaucrats running the money and banking system since 1913. The "official" reason was to maintain the stability of the dollar and avoid the kind of panics that plagued the 19th century economy. But the dollar has all but dried up in value, and the crises today are threatening to bring the whole planet to its knees.

Does this mean Friedman was right, even if he was never gold's champion?  Did commodity money keep economies in balance, both within and between nations?

Clearly, the views not only of central bankers but of their …

Preface to "The Jolly Roger Dollar"

The following is the preface to my forthcoming book, The Jolly Roger Dollar: An Introduction to Monetary Piracy, which will soon be available on Amazon.

Money and banking should be permanently divorced from the State.

Mankind should be divorced from the state but that’s going well beyond the scope of this little book.  For now, at least, our goal should be to kill central banking wherever it exists and open up the market to alternative moneys - alternatives to the fiat paper issued by central banks. Market participants should be free to choose what they wish to use for money without government interference.  Legal tender laws, since they constitute invasions of private property, should be repealed.  For the same reason, banking should lose the legal privileges that protect the practice of fractional reserve lending.  What is needed is freedom - freedom to conduct our monetary and banking affairs regulated only by private property rights and economic law.

The cover of this book was crea…

The Utah Monetary Declaration

Earlier this year Utah passed a legal tender act authorizing the use of federally-minted gold and silver coins as money within the state.  Seeking to expand this idea to other states, sound money advocates from across the country met at the University of Utah campus in Salt Lake City on Monday, September 26, 2011 and drafted a declaration they are urging people to circulate as far and wide as possible, but especially to their state representatives.  

Special thanks to Ron Hera for making this issue public.

Here is the Utah Monetary Declaration:

Utah Monetary Declaration

WHEREAS, money, as a medium of exchange, a store of value, and a unit of measure promotes economic activity, growth and productivity by facilitating specialization and trade, the accumulation of wealth and its long-term investment, as well as accountability in setting prices, tracking progress, and settling accounts;
WHEREAS, natural money – precious metal coin – by virtue of its inherent qualities of recognizability, m…

Austrians Remove the Burden of Fear

Bad ideas are sometimes the hardest to de-throne.It’s probably accurate to say most people think of money as the paper currency printed by governments.And it is money in the sense that it functions as a medium of exchange, but is it sound, is it vulnerable to inflation?Its very existence is evidence that it is, so why are so many people reluctant to switch to a money that isn’t?
There any many myths surrounding hard money currencies, and one of them is that money, both its nature and supply, is best left to the alleged guardian of our rights, the state.The fact that money came into existence on the market and its ultimate form and supply were determined by economic law, is disregarded.Money matters belong to the state, because the state, unlike the rest of us, is in a position to remove itself from market discipline.Since the state is necessary to our survival, the story goes, it cannot do its job unless it can control the growth of money.Money therefore must be of such a nature that i…

Who said it, when and where?

Over the years I've accumulated a long list of quotes about money and banking extracted from online articles and books I've read.  Unlike most other sites that post pithy remarks from famous authors, I include hyperlinks to their sources, so that anyone who wishes can not only verify a quote but, perhaps more importantly, read the context in which it was used.  And unlike other sites, most of these quotes originated with today's financial writers and economists, writing from a perspective consistent with Austrian School principles -- people like Peter Schiff, Lew Rockwell, Steve Saville, Joseph Salerno, Gary North, Edwin Vieira, Judy Shelton, Frank Shostak, Ron Paul, and others, even Alan Greenspan.  What these writers have in common is their respect for a market-sponsored commodity money, traditionally gold and silver coins.

My purpose in publishing these hyperlinked quotes is to draw attention to the vast literature of criticism that has arisen over the money and banking…

From "golden fetters" to handcuffed investors

"The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves." - Alan Greenspan, 1966

An NBER working paper by Carmen Reinhart and Belen Sbrancia describes how Western governments in the post-world war economies unloaded their debts on credulous citizens through a policy of financial repression.  Because it is politically palatable (as opposed to outright default, hyperinflation, or overt tax increases) some analysts expect governments to try it again.  One part of it - inflation - is already well-underway.  Financial repression means savers (investors) will be forced to pay leviathan's debts, whether they like it or not.

The particulars of financial repression vary, but the general scheme is this: Using its power to violate private property rights, the government makes the domestic investment community a "captive audience."  With central bank cooperation it mandates low nominal interest ra…

The Fed and gas prices

Last week Austrian economist Robert Murphy testified before Congress on the Fed's role in raising gasoline prices.  Here is part of what he had to say:

After hitting record highs in the summer of 2008, the price of crude oil crashed amidst the financial crisis and slowdown in world economic growth. After hitting a low of $33.87 per barrel on December 19, 2008, the benchmark price of a Cushing oil futures contract had risen to $96.91 by May 17, 2011. . .

There are two main routes through which Fed policy could have influenced oil prices (quoted in dollars). First, the Fed could have caused the dollar to depreciate against other currencies. Second, the Fed could have raised the price of oil relative to most other goods and services. In the remainder of this written testimony, I will first lay out the extraordinary interventions of the Federal Reserve in the wake of the financial crisis, and then turn to each of the two possible connections to oil prices.

The Extraordinary Intervent…

That Other Invisible Hand

As Adam Smith explains, the free market brings its wonders to the world by virtue of an invisible hand.Individuals cooperating under the international division of labor and seeking generally to satisfy their own wants end up promoting the general welfare, often without intending to or without realizing it.
Not to be outdone, government too has developed a systemic hand that is usually not seen.Unlike the market, when this hand moves, we lose.Through inflation, government snatches the market’s bounty for its own purposes, enervating our lives accordingly.
As a “stealth tax,” inflation requires no legislation to impose, no agency to collect, and diverts responsibility for damages onto politicians’ favorite whipping boys.It gives government the ability to buy almost anything for nothing, while creating endless problems that serve as a pretext for intervention.Inflation is the foundation of arrogant government and a prescription for our own demise.
Government inflates through its central ba…