The Mandrake Mechanism-(How the Fed Creates Money)

The Creature from Jekyll Island -Book Excerpt ^ | May 1998 | G. Edward Griffin

[AdamSelene235]

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[egarvue]

Aaah, yes, another fiat money/gold standard/federal reserve article here at Free Republic, brought to you by the good men who get paid by the word.

[MineralMan]

Gold bug alert.

[bvw]

That our money is by being fiat and debt-pillared, debit-foundationed is the greatest wall to our liberty. It is at best a benign socialist's wall, at worst a tyrant's. In the US that we have always been closer to the former is a blessing. It's not a blessing we best count on, or should rely on, or come to accept as the best of all worlds. It is a degraded state of affairs. Not one we should accept forever.

Hard money, like fulsome Liberty, full Liberation, is state of existance that quickly and harshly marks all moral and ethical accounts to market. Fiat money, soft money, is never so harsh -- while it can be the whip of tyrants and the wall of a slave's prison, fiat money doesn't cut through or hammer to bits and dust like hard money does when used by the selfish, the theives, the delusional.

Only a few generations of our Nation knew this full Liberty -- but full Liberty was scary. We were too corrupt to stick with it in good use, and yet not heartless enough to stick with it anyway. So we dropped back to this slave's condition, less responsible, and less harsh in accounts for that. Let us have strength, seek good and mercy and be honest in all dealings, and then we may again achieve that higher state, over the walls, once again returning to the City of Liberty.

[fourdeuce82d]

In the United States neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper.

And intrinsically, gold is just a heavy yelowish metal that looks pretty, conducts electricity well, and is much to soft to make tools from. So what?

Isn't value, in the end, a human construction?

[mvpel]

If you don't like it, don't read it, my friend.

With respect to Federal Reserve Notes, here's an interesting site I recently found - http://www.wheresgeorge.com/ - it allows you to track the FRNs you spend through various holders.

[AdamSelene235]

And intrinsically, gold is just a heavy yelowish metal that looks pretty, conducts electricity well, and is much to soft to make tools from. So what?

It takes 2 supernovas to get gold distrubution found on this planet.

Its a good deal harder to fake than paper. That is its only value. I think uranium futures would work nicely as well.

I would argue for a repeal of legal tender/forced tender laws. There is no need threaten people with violence over their choice of currency.

Nor is there any reason to force gold upon people.

[Mr. Quarterpanel]

I am STILL trying to figure out what the author is getting at.

While the salient points offered are true, there is much interpretation going along with the stated points. The main reason that money has value (fiat of not) has to do with the availability of it for loans, the ability of said loans to be paid back, and the confidence that the money will be available to pay it back. To strip the value from the current system WILL cause economic collapse worldwide. The coin of the realm in the world is the mighty US buck. To return to a "hard currency" (like gold) would place money out of reach from the average citizen, and price volitility for comodities would prevent a stable economic situation from developing for a long time, if ever.

You can post 1000 word chapters outlining the situation (sort of), but the truth is, a stable currency is what helps keep the price of comodities reasonably stable. Before the current situation, economic depressions were commonplace. The price of oil is a good example: talk of war, and the price jumps $10. Without the mediating effects a stable currency, that price jump might be $50-$100. Enough to bankrupt every airline, and most bulk carriers around the world. Without those, other businesses then can't do business, and the cascade continues until: economic depression.

But this is just my .00002 oz of gold's worth.

[fourdeuce82d]

Its a good deal harder to fake than paper.

DOH- hadn't thought of that, good point.

That is its only value.

well, false teeth made from it look and last better than paper...*grin*

[Southack]

"It takes 2 supernovas to get gold distrubution found on this planet. Its a good deal harder to fake than paper."

Nonsense.

Only someone who has NEVER traded gold in the wild would make such an absurd statement. Many a gold-plated watch has been marketed as "solid gold", and electroplated jewelry fools dillettantes time and again.

To guard against such counterfeits, real gold traders actually insist that gold be melted down and tested before each trade, something that I ran into when dealing with a certain Swiss bank some years ago when I simply wanted to park some of the ugly yellow metal there.

Likewise, compare the effects of standing on a street corner holding up a gold bar versus holding up a $100 bill.

The C note will get you a cab or into your favorite club time and again, whereas people will actively *AVOID* your gold bar like the plague.

If you want "intrinsic" value, then BUY something intrinsic with your paper currency, such as guns, ammo, food, water, clothes, oil, or land.

But don't try to use intrinsic value as a currency. That's called "bartering", and that system was surpassed millenia ago as the superior medium of exchange.

Nor is money "created" with or by debt. Money is two things: a store of value and a medium of exchange. In other words, currency is *labor* stored in an easily transferable form.

If money could simply be created by borrowing, then Africa would be the wealthiest continent on the planet right now!

But money isn't simply created by borrowing, but rather, money represents all of the productive labor for a nation. The more productive a nation, the more the sum of all the nation's currency becomes worth, which in turn dictates the feasibility parameters of being ABLE to borrow, loan, exchange, store, etc.

[AdamSelene235]

Many a gold-plated watch has been marketed as "solid gold", and electroplated jewelry fools dillettantes time and again.

Sheesh, any moron with a scale and a glass of water can determine density in 60 seconds. 19.3 g/cm^3 is hard to fake.

Aqua Regia works nicely as well.

[zechariah]

a stable currency is what helps keep the price of comodities reasonably stable.

Actually, exactly the opposite is true. Compare commodities prices before and after 1972 when we finally abandoned all pretense of a gold standard. Commodity prices have been significantly more volitile in the past 30 years than in all previous history.

[z]

[zechariah]

That's called "bartering", and that system was surpassed millenia ago as the superior medium of exchange.

Oh, I always thought "millenium" meant 1000 years. But all of the world's major powers were on honest-to-goodness gold standards 100 years ago.

[z]

[Southack]

"Sheesh, any moron with a scale and a glass of water can determine density in 60 seconds. 19.3 g/cm^3 is hard to fake."

And dropping a gold-plated watch into water and calculating density is performed just *how* often?!

Please, don't make me laugh.

[Southack]

"Oh, I always thought "millenium" meant 1000 years. But all of the world's major powers were on honest-to-goodness gold standards 100 years ago."

A "gold standard" for a currency is NOT bartering.

How far back in time do you have to go before BARTERING was the preferred medium of exchange instead of currency/coins?!

Surely more than 100 years...

[AdamSelene235]

And dropping a gold-plated watch into water and calculating density is performed just *how* often?!

We were talking about monetary gold.

[Southack]

No, your claim was that gold was harder to fake than paper due to it taking two super novas to create gold.

But gold is easy to fake (electroplating, et al). You can buy 1 ounce "gold" U.S. double eagle coins today for $20, and those coins would fool many a gold bug, as would gold plated watches and various faux jewelry.

[AdamSelene235]

But gold is easy to fake (electroplating, et al). You can buy 1 ounce "gold" U.S. double eagle coins today for $20, and those coins would fool many a gold bug, as would gold plated watches and various faux jewelry.

Aqua Regia or a simple density test will catch both cases in under 60 seconds with very little cost.