Entry Submitted by MRH at 9:49 PM EST on December 14, 2019
"The Gold Standard: The Illusion of Value" by Ron Giles - 12.14.19
I have a great deal of respect for Ron Giles and his wisdom. However, I do have to beg to differ on a point that he has made in his most recent posting regarding the "value" of gold when used for the backing or standard of setting a value of "money" or legal tender. To get a feel for where this will go, one must look at a few things to set the stage.
In The United States of America, one of our founding documents that is included in the 1st public law is The Constitution for the United States of America. That Constitution stipulates what may be used as legal tender at Article I, Section 10, clause 1, or rather it forbids any other thing from being used rather than gold or silver coin for legal tender.
As stated therein, "Article I, Section 10, Clause 1: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."
So as we can see here, nothing can be used for payment of debts other than gold or silver coin. It should be noted, that when paper money is used, it does have to be tied to a specific serialize gold or silver bar in a vault, but can be exchanged for an equal amount of gold or silver on demand. But what is a debt? Black's Law Dictionary defines debt as, "A sum of money due by certain and express agreement;"
This leads us to the definition of money. "In the usual and ordinary acceptation it is gold, silver or paper money as circulating medium of exchange, and does not embrace notes, bonds, evidences of debt, or other personal or real estate. Lane v. Railey, 280 Ky. 319, 133 S.W. 2d. 74, 79, 81. Currency; the circulating medium; cash."
So as we can see here, money is gold or silver coin or a representation of those commodities in paper form. Things like "notes", such as the Federal Reserve Note, do not constitute "money".
So getting back to the so called value of gold and silver coin we have to comprehend that gold and silver is what sets value. The value of gold and silver coin does not change. It is the value of other items of trade in goods and services that changes. If for example, one can typically buy 1 sheep for a one ounce gold coin, and a farmer decides he will give two sheep because he has plenty of them, the value of the gold coin did not rise. The value of the sheep went down. The gold is by what the value of all other items are compared. Additionally, if one can buy a one ounce gold coin for $1,300 in Federal Reserve Notes and next month he has to give $1,500 in Federal Reserve Notes, the value of the gold did not rise. The value of the Federal reserve Note went down.
So when one says that gold "costs" more, it is not technically the gold's value that went up. It was the value of the currency being used to "purchase" that money that went down. When the Federal reserve Bank was allowed to take control of America's money, it was initially required to keep about 75% of assets to currency ratio. As the years progressed and with politician payoffs, that ratio was gradually lowered until Nixon just removed The United States of America off of the gold standard. The Federal Reserve Note has depreciated an average of about 16% just since 1960. The one ounce gold coin is still stamped with $50. As of April of 2009, it had depreciated 3.33% since the year 2000. So when we see the "price" of gold go up, it is not gold's value that changed. It is the value of the currency that changed.
The problem arose when the currency used, the Federal Reserve Note, to purchase the commodities for stamping coin was lower than the face value of the coin being stamped. When the face "value" of the Federal Reserve Notes was less than the value the silver in the dime than the dime represented on its face, the Federal Reserve bank had to reduce the amount of silver in the coin. That was when copper started being added to the coins and that was the way coins were stamped until we left the gold standard altogether. But again, the value of the silver did not rise. The value of the fiat currency used to pay for it went down. That is the issue with fiat currency systems. They are debt based and debt is being paid off with debt rather than real money.
______________________________________________________
If you wish to contact the author of any reader submitted guest post, you can give us an email at UniversalOm432Hz@gmail.com and we'll forward your request to the author.
______________________________________________________
All articles, videos, and images posted on Dinar Chronicles were submitted by readers and/or handpicked by the site itself for informational and/or entertainment purposes.
Dinar Chronicles is not a registered investment adviser, broker dealer, banker or currency dealer and as such, no information on the website should be construed as investment advice. We do not support, represent or guarantee the completeness, truthfulness, accuracy, or reliability of any content or communications posted on this site. Information posted on this site may or may not be fictitious. We do not intend to and are not providing financial, legal, tax, political or any other advice to readers of this website.
Copyright © 2019 Dinar Chronicles
"The Gold Standard: The Illusion of Value" by Ron Giles - 12.14.19
I have a great deal of respect for Ron Giles and his wisdom. However, I do have to beg to differ on a point that he has made in his most recent posting regarding the "value" of gold when used for the backing or standard of setting a value of "money" or legal tender. To get a feel for where this will go, one must look at a few things to set the stage.
In The United States of America, one of our founding documents that is included in the 1st public law is The Constitution for the United States of America. That Constitution stipulates what may be used as legal tender at Article I, Section 10, clause 1, or rather it forbids any other thing from being used rather than gold or silver coin for legal tender.
As stated therein, "Article I, Section 10, Clause 1: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."
So as we can see here, nothing can be used for payment of debts other than gold or silver coin. It should be noted, that when paper money is used, it does have to be tied to a specific serialize gold or silver bar in a vault, but can be exchanged for an equal amount of gold or silver on demand. But what is a debt? Black's Law Dictionary defines debt as, "A sum of money due by certain and express agreement;"
This leads us to the definition of money. "In the usual and ordinary acceptation it is gold, silver or paper money as circulating medium of exchange, and does not embrace notes, bonds, evidences of debt, or other personal or real estate. Lane v. Railey, 280 Ky. 319, 133 S.W. 2d. 74, 79, 81. Currency; the circulating medium; cash."
So as we can see here, money is gold or silver coin or a representation of those commodities in paper form. Things like "notes", such as the Federal Reserve Note, do not constitute "money".
So getting back to the so called value of gold and silver coin we have to comprehend that gold and silver is what sets value. The value of gold and silver coin does not change. It is the value of other items of trade in goods and services that changes. If for example, one can typically buy 1 sheep for a one ounce gold coin, and a farmer decides he will give two sheep because he has plenty of them, the value of the gold coin did not rise. The value of the sheep went down. The gold is by what the value of all other items are compared. Additionally, if one can buy a one ounce gold coin for $1,300 in Federal Reserve Notes and next month he has to give $1,500 in Federal Reserve Notes, the value of the gold did not rise. The value of the Federal reserve Note went down.
So when one says that gold "costs" more, it is not technically the gold's value that went up. It was the value of the currency being used to "purchase" that money that went down. When the Federal reserve Bank was allowed to take control of America's money, it was initially required to keep about 75% of assets to currency ratio. As the years progressed and with politician payoffs, that ratio was gradually lowered until Nixon just removed The United States of America off of the gold standard. The Federal Reserve Note has depreciated an average of about 16% just since 1960. The one ounce gold coin is still stamped with $50. As of April of 2009, it had depreciated 3.33% since the year 2000. So when we see the "price" of gold go up, it is not gold's value that changed. It is the value of the currency that changed.
The problem arose when the currency used, the Federal Reserve Note, to purchase the commodities for stamping coin was lower than the face value of the coin being stamped. When the face "value" of the Federal Reserve Notes was less than the value the silver in the dime than the dime represented on its face, the Federal Reserve bank had to reduce the amount of silver in the coin. That was when copper started being added to the coins and that was the way coins were stamped until we left the gold standard altogether. But again, the value of the silver did not rise. The value of the fiat currency used to pay for it went down. That is the issue with fiat currency systems. They are debt based and debt is being paid off with debt rather than real money.
______________________________________________________
If you wish to contact the author of any reader submitted guest post, you can give us an email at UniversalOm432Hz@gmail.com and we'll forward your request to the author.
______________________________________________________
All articles, videos, and images posted on Dinar Chronicles were submitted by readers and/or handpicked by the site itself for informational and/or entertainment purposes.
Dinar Chronicles is not a registered investment adviser, broker dealer, banker or currency dealer and as such, no information on the website should be construed as investment advice. We do not support, represent or guarantee the completeness, truthfulness, accuracy, or reliability of any content or communications posted on this site. Information posted on this site may or may not be fictitious. We do not intend to and are not providing financial, legal, tax, political or any other advice to readers of this website.
Copyright © 2019 Dinar Chronicles
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