How to Restore the Gold Standard
Can we save the dollar before central banking kills it?
Our deficits are now stuck at 8% of GDP — unprecedented in peacetime. And our national debt just hit $35 trillion — unprecedented in the history of man.
Even the central bankers realize that this isn't sustainable. That we are coming to the day our paper money utopia crumbles.
Historically, from Song Dynasty China to Weimar Germany, when paper dies we return to hard money. Because backing the dollar with hard money like gold -- and eventually Bitcoin -- is the only way to finally kill the money printer.
Happily, we can actually do this without the crash.
When Paper Money Dies
The other day Charles Payne sent me a quote by 1970's Fed Chair Paul Volcker who wrote, paraphrasing:
“It is a sobering fact that central banking has led to more inflation, not less. We did better with the 19th century gold standard, with passive central banks, with currency boards, or even with ‘free banking’. The power of a central bank, after all, is the power to create money and, ultimately, the power to create is the power to destroy.”
This is a fairly striking admission of failure from -- by all accounts -- the best Fed Chair we've had since Wall Street forced the Fed on us in 1913.
A central bank is indeed an extraordinary thing: it’s a privately-owned, federally-licensed counterfeiter the regime can use to seize literally everything in the world by printing money.
It’s why we have inflation and recessions.
It’s why we have Wall Street bailouts and a colossal national debt.
It's why the government has grown to dominate our economy and our lives.
In contrast, under the gold standard we had zero cumulative inflation over 124 years.
We had a federal government that was 7 times smaller as a percent of GDP.
In 1913 we had a national debt of 8% of GDP. Today, it’s 140% -- in fact, it's rising by almost 8% per year.
How we Get Back to Gold
So how do we get back?
Simple: back the dollar with gold at today's price -- twenty five hundred per ounce -- then mandate that if gold flows out the Treasury has to buy it back in before it does anything else -- before it pays Ukraine, before it pays interest on the national debt.
Presto.
Why? Because if they keep printing money it creates inflation and gold goes to, say, twenty six hundred an ounce.
At 2600 people can make free money handing 2500 to the Fed for an ounce of gold and turning around and selling that ounce for 2600.
Gold flows out. And now Treasury has to buy it in at 2600.
In other words, they lose money on the money printer: they give it away for 25 and buy it at 26.
Inflation in a Gold Standard
That means that, under a gold standard, the Fed and Treasury are forced keep money creation low enough for zero percent inflation -- for stable gold.
In practice, that would mean they can’t print more than gold demand — roughly the same as GDP. Which is about a trillion less per year compared to today.
On the ground, this means interest rates above inflation -- no more paying hedge funds to borrow.
It means no more quantitative easing to buy up rich people's assets leaving inflation for the poors.
It means no more Wall Street bailouts.
And, above all, it chokes off the spending cancer of the welfare-warfare industrial complex.
It could even include ending or reducing fractional-reserve banking -- where banks lend out money they don't have -- by tightening long-standing reserve requirements so banks don't inflate and they don't crash in the first place.
What’s Next
Neither the gold standard nor full reserve banking are remotely on the bingo card for the foreseeable future. And, historically, it takes a crisis to put them there.
But it's important to remember how easy it is to solve our financial catastrophe if and when we get a politician brave enough to try.
Read Next:
Are We Already in a Recession?
The Rich Get Richer, Thanks to the Fed
Will Debt Sink the American Empire?
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It's always good to look for alternatives, but I can't see what would work.
I don't claim to know everything, but it seems that gold could cover about 2% of the money in circulation (which happens to be the same as "paper money"):
https://rayhorvaththesource.substack.com/p/where-is-americas-gold-and-why-does
Inflation is caused by money borrowed at an interest. The USD has been "borrowed" by the taxpayer from a private bank since the Federal Reserve Act of 1913 at an interest... The greatest heist in history... The Rockefellers own over 160 central banks, and the global investment firms own/control just about everything that matters... Who is the "we" who could do anything about it?
The DBDCs are being developed on schedule, and I can't see how anyone can do anything about it:
https://rayhorvaththesource.substack.com/p/the-final-stage-to-a-one-world-government
Agreed all. EXCEPT it assumes that the Treasury actually owns any Gold now, rather than IOUs and paper swap receipts? This is also why the new BRICS+ trade unit of exchange, rumored to be backed 40% by Gold, should be quite interesting and should nicely stir the pot?
And surely, to establish an adequate money supply, using Gold at $2500 would not be adequate? Most experts believe that a revalued price of ~$30,000 would be required.
And either way, it would, of course be a 180 degree change in mentality for the Fed which, right now is the only Central Bank still suppressing the price of Gold via its Agent Banks in the paper futures "Markets" and BIS via Gold Swaps