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US spends 28 Eiffel towers made of pure GOLD

1. [verwijderd] 21 januari 2008 16:55

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   In Mises's monetary reform proposal, and under the classical gold standard, the various substitutes for coin – bank notes, bank drafts and acceptances, and demand deposits – are supposed to be fixed in value to the underlying coin and exchangeable for it. The conversion agency would function as a resale buyer and wholesale distributor of the coins, and equally as a buyer of last resort for the paper money of the Federal Reserve.
   
   The question that is most difficult to answer about the transition to a new gold standard is how long it should take. The transition plan envisioned by Mises called for a period of time in which the free market in gold discovered the new parity rate that would produce neither inflation nor deflation.
   
   It is probable that the price of gold established after some oscillations on the American market will be higher than $35 per ounce … maybe somewhere between $36 and $38, perhaps even somewhat higher. Once the market price has attained some stability, the time has come to decree this market rate as the new legal parity of the dollar and to secure its unconditional convertibility at this parity.[9]
   
   Mises did not discuss how long this transition period should last before fixing the new par value for the dollar, but it would have to last as long as it might take to build a political majority. This is almost a truism, because Congress would have to enact legislation to fix the gold weight of the US dollar.
   
   The choice for advocates of a gold-coin monetary system, therefore, is straightforward: either we move ahead with a program for US gold coins denominated by weight, with no face value in terms of dollars – thereby starting the transition period immediately – or we sit on our hands, perhaps for decades, debating the fine points of banking theory, until the paper money system collapses around us. Even then, it is not obvious that the collapse of the paper money system would bring about the political pressure necessary to restore a gold standard. We might end up with controls on wages, prices, credit, and exchange controls instead of a gold-coin standard.
   
   Longer-Term Benefits of Bullion-Weight Coinage
   
   Over the longer term, assuming the transition to a new gold standard is successful (with Congress enacting a gold value for the dollar and fiscal policy disciplined by monetary convertibility), there are still distinct advantages to retaining the coinage in units of troy weight rather than assigning an official, stamped dollar value on the face of the coins.
   
   First, Gresham's law – Bad money drives out good – tends to affect even the most perfect gold-coin standard. If we want gold coins to circulate freely in an economy where all prices are quoted in dollars, the coins themselves should not be denominated in dollars. Gresham's law operates even when bank notes are 100 percent warehouse receipts for gold. People might be able to trust that bank notes are fully backed by gold, but given the choice of which to spend and which to keep in the cash box, the paper will be spent and the coin will be saved because each monetary instrument has its own subjective value qualities.
   
   The mere fact that honest coins are more secure than even the most secure paper is a sufficient qualitative difference to give them a premium value. The subjective evaluation of every person in the free-market economy must be employed to help keep the monetary system honest and noninflationary. To assure that gold coins move in active commerce, rather than sitting in vaults, we must let free-market pricing operate. Let the coins command a slight premium everywhere except at the conversion agency, which would have to redeem any excess Federal Reserve dollar bank notes (token money) for honest coin at the par value in response to public demand.
   
   Gresham's law is a natural consequence of price fixing, mandating the exchange of items with different marginal utilities at a ratio not determined by the free market. It is, in fact, a special case of setting a price by law slightly too low for gold coins, the preferred form of money for long-term savings. Only the conversion agency should be mandated by law to exchange genuine coin for paper dollars at the par value. There are costs in terms of real resources, opportunity costs in the operations of a gold coin monetary system. These costs are worth paying; they must be paid to have an operational monetary constitution that prevents financial exploitation, but the issue of "Who pays?" must also be considered.
   
   Most economists who support a gold-coin standard do not recognize the importance of distributing the marginal costs of coinage throughout the entire spectrum of the monetary economy. In the 19th century, this system of fixing the face value of gold coins in terms of paper bank notes, rather than by units of weight, led to the centralization of gold hoards in bank vaults, which made it all the easier for governments to confiscate them. The simple confusion of the coin and the denomination of the money produced the effect of Gresham's law during the classical period. If it is left up to the government, the central bank, or the banking system to absorb the costs of having coin always on hand to redeem bank notes at face value, the managers at each stage will attempt to economize these costs, rather than charging the consumer for them, and there will be a constant pressure to take coins out of circulation and replace them with substitutes: paper bank notes and demand deposits.
   
   If the coinage is denominated only in terms of troy ounces and fractions of an ounce, the free-market pricing structure takes care of this problem instantly and effortlessly. The official conversion agency must redeem Federal Reserve notes at par, but others should be free to charge a competitive premium for gold coins (that is, to discount Federal Reserve notes). This would tend to assure a continuing flow of gold coins into private ownership.
   
   Ludwig von Mises proposed to solve this problem by forcing the circulation of gold coins by prohibiting any paper bank notes in the $5, $10, and $20 denominations. In 1952 it seemed reasonable to him that the dollar might be worth something nearer l/40th ounce, so gold coins could replace those denominations. Today only the $100 bill would be affected by this proposal, since gold coins now would be too tiny for most commercial transactions. Where they would find most popular utility would be in financial transactions and in the purchase of consumer durables, because of the generally higher prices. Over time, the Federal Reserve dollar will come to be recognized as a form of token money that is just a tiny fraction of a gold ounce.
   
   We can only make political use of the fact that the public treasures hard money over paper money if we make it clear that there is a difference. A different denomination for each form – "dollars" for paper and "troy ounces" for coin – is the easiest and most obvious way to achieve this objective. There is a specious similarity in this proposal to the gold exchange standard of the 1920s, but the active circulation of small-denomination gold coins would defeat any such criticism. The denial of any small-denomination coins was the distinguishing feature of the pseudo–gold standard adopted in the 1920s and perpetuated under the Bretton Woods arrangement in 1944.
   
   So long as the conversion agency performed its role, it would also be impossible for the Federal Reser
2. [verwijderd] 21 januari 2008 16:56

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   So long as the conversion agency performed its role, it would also be impossible for the Federal Reserve System to produce a monetary inflation because the conversion agency, which would be completely separate from the government's banking activities, would be engaged in the process of absorbing excess dollars from circulation, in exchange for the troy-ounce coins that it issues. If the Federal Reserve made the opposite mistake, as it has often done in the past, of overly restricting the money supply, the market could always sell coins to the conversion agency to obtain any dollars demanded. A precise balance would be achieved between the general public's demand for money in the form of coin and its demand in the form of bank notes or deposit accounts with banks by the existence of the conversion agency as something separate from the Federal Reserve.
   
   Agenda for Monetary Reform
   
   The genius of Ludwig von Mises was his profound insight into the free-market process, the science of catallactics. The most important thing I have learned from his work is that the achievement of a new gold standard in our society will have to come from the free market itself. This is why I believe the first step must be a new troy-ounce gold coinage, even without any legal tender qualities or special tax treatment. As we have found in recent banking deregulation, the market develops new procedures and techniques in the monetary and financial system, and Congress follows with repeal of old, restrictive laws. This is the political and economic dynamic process that we also can harness to restore gold to its proper monetary role.
   
   All the government needs to do is to get out of the way. The political and economic agenda for monetary reform, therefore, consists of the following steps:
   
   Congress must adopt the legislation recommended by the Gold Commission to bring a new US gold coinage into circulation, denominated only in troy-ounce units and fractions thereof.
   
   Advocates of the remonetization of gold must work both in the political arena and in the marketplace to get as many of these new coins into the possession of the public as possible. Politically, this means resisting taxation or any regulations on the utility of the new gold coins for purposes of exchange either for other goods and services or for dollars. As Ludwig von Mises demonstrated in his Theory of Money and Credit,[10] it is the marketability of a good that gives it a monetary character. The more easily recognized and marketable the new gold coinage becomes, the more it will be recognized as genuine pieces of money.
   
   The fact that the troy ounce of gold is well defined and the paper dollar has no fixed referent at all should be made the focus of continued education and debate, just as we are now doing. The continuing academic work by students of Carl Menger and Ludwig von Mises in monetary and financial theory is vitally important, particularly to expose the fallacies of centralized macroeconomic planning and the failure of "managed money." The acquiescence of the economics profession, which is today disdainful of gold, will have to be secured. Serious academic work will stimulate interest in a new Gold Commission, which would be able to focus this research in economic theory on the political issue of monetary reform. It is essential to move the center of monetary debate from the question of how the central bank should perform monetary management to the more general question of managed money versus market-process money.
   
   The objective would remain to persuade a majority of Congress to enact a new par value for the US dollar in terms of gold. When every American family is familiar with gold coins and understands the intrinsic defects in a managed paper standard, a majority in Congress can be persuaded by the demands of voters to enact a new par value for the US dollar and to establish the conversion agency described by Mises.
   
   Except for random shocks in the financial markets, due to Federal Reserve central-planning mistakes, and occasional political disturbances, such as a Middle East war or troubles in South Africa, the dollar value of the troy-ounce coins should stabilize, just as we saw in 1984. The old myth that "gold is too unstable to serve as money" will be disproven by the common popular experience.
   
   The strategy set forth in these four steps, I believe, is the only politically feasible way it can be done. All of the wishful thinking about restoring the gold standard by electing the "right person" to be president, or by attempting to educate the general public, will fail without first making available a tangible gold coinage as something they can see, touch, use for a portion of their savings, and become accustomed to using for many kinds of transactions. Public opinion polls have shown strong support for monetary stability. There is substantial support for a gold standard among the American public, yet the various proposals for enacting a par value for the dollar are dismissed by congressmen, the financial and business press, and "experts" of all stripes.
   
   The task at hand, therefore, is to remove every roadblock to the realization of the will of the majority. The sentiment for gold must be mobilized. The question is no longer "Why do we need a gold standard?" but "How do we get it enacted?" To restore the gold standard to its central role in our system of constitutional government, we must lead a second kind of American revolution, a popular movement for honest money.
   
   As Mises wrote, "Without such a check all other constitutional safeguards can be rendered vain."[11]
   
   The gold standard as a constitutional restraint on our government was abolished in the United States, not in 1934 nor in 1971, but in 1819 with the US Supreme Court case of McCulloch v. Maryland.[12] With this famous Supreme Court interpretation of the Constitution, the federal government acquired the sovereign power to manipulate the nation's money, from which the legal tender laws of the Civil War, the central-banking powers of the Federal Reserve System, and the ultimate prohibition on any private use of gold as money in 1934 derived. This link between sovereignty and currency manipulation has been ably argued by Henry Mark Holzer.[13]
   
   The key to the government's power to manipulate money is its control over the definition of the word "dollar." A troy ounce coinage in widespread circulation would significantly alter the public's perception of the government's monetary role. If the Congress should ever attempt to change the par value of the dollar in terms of the gold coinage, the holders of coins would be fully protected. Financial promises to pay coins would be protected, in a way that promises to pay dollars would not be. Best of all, as a result of the separation of currency and coin denominations, there would be no public purpose served by asking citizens to turn in old coins for new ones; the crime of January 1934 would not be repeated.
   
   Restoring a gold coinage is also the highest duty we now face, as citizens of this country. We no longer live in a world where the free market is taken for granted. On the contrary, most people assume government must control and guide the economic system for the benefit of all. Ludwig von Mises suffered during most of his career because he understood too well the stakes of this ideological conflict:
   
   "Cynics dispose of the advocacy of the restitution of the gold standard by
3. [verwijderd] 21 januari 2008 16:57

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   "Cynics dispose of the advocacy of the restitution of the gold standard by calling it Utopian. Yet we have only the choice between two Utopias: the Utopia of a market economy, not paralysed by government sabotage, on the one hand, and the Utopia of totalitarian all-round planning on the other hand. The choice of the first alternative implies the decision in favour of the gold standard."[14]
   
   I believe the goal of a market economy, not paralyzed by government sabotage on behalf of vested interests and pressure groups is an ideal worth fighting for. This is why I first ran for Congress, and it is the only reason I believe justifies political action.
   
   Notes
   
   [1] Ludwig von Mises [1952], The Theory of Money and Credit (Irvington-on-Hudson, New York: Foundation for Economic Education, 1971), pp. 448–52.
   
   [2] Ibid., p. 448.
   
   [3] Ibid.
   
   [4] Ibid., p. 450.
   
   [5] Ibid., pp. 395–99.
   
   [6] Ibid., p. 452.
   
   [7] Ibid., pp. 450–51.
   
   [8] Murray N. Rothbard, Man, Economy and State (Los Angeles: Nash, 1970), p. 941n.
   
   [9] Mises, Theory of Money and Credit, p. 449.
   
   [10] Ibid., pp. 30–34.
   
   [11] Ibid., p. 452.
   
   [12] 17 US 316.
   
   [13] Henry Mark Holzer, Government's Money Monopoly (New York: Books in Focus, 1981).
   
   [14] Mises, Theory of Money and Credit, p. 457.
   
   See the Ron Paul File
   
   
   
   
   
   January 19, 2008
   
   Dr. Ron Paul is a Republican member of Congress from Texas.
   
4. [verwijderd] 21 januari 2008 17:33

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   Re de titel van deze draad;
   
   Howdy,
   
   Ik hoorde dat het er nu al 30 gouden torens zijn.
   
   In plaats van klagen daarover, waarom doen diegenen die daar bezwaren tegen maken er niets tegen?
   
   B.v. Amerika aanvallen?
   
   Bush zou jullie aanvallen, als het omgekeerde het geval was :-) hahaha
   
   >--:-)-->
   
   p.s. Gung Ho schrijft op 18 januari 2008:.............................."It is probable that the price of gold established after some oscillations on the American market will be higher than $35 per ounce … maybe somewhere between..........$36 and $38, perhaps even somewhat higher........... Once the market price has attained some stability, the time has come to decree this market rate as the new legal parity of the dollar and to secure its unconditional convertibility at this parity."....................................................
   
   En dit was geschreven op 18 Jan 2008 ????????????????
   
5. [verwijderd] 21 januari 2008 18:09

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   Re: 30 gouden torens
   
   Howdy, Aangezien de goudprijs verdubbelde*** sinds het er 28 waren, zijn de huidige 30 torens eigenlijk maar 30 : 2 = 15
   
   Dus we gaan vooruit, i.p.v. achteruit, nietwaar?
   
   >--:-)-->
   
   p.s. Misschien weet Von Mises het niet maar de goudprijs is al meer dan $35, $36 , hahaha
6. [verwijderd] 21 januari 2008 18:12

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   Ach 9.000 miljard. Die Amerikanen leven er lekker van. En ze hoeven het toch niet terug te geven?
   
   De goudprijs is sinds 2006 trouwens aardig gestegen, dus mogelijk minder gouden Eifels.
   
   
7. [verwijderd] 21 januari 2008 19:28

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   quote:

   Amor Arrows schreef:

   Re de titel van deze draad;
   
   Howdy,
   
   Ik hoorde dat het er nu al 30 gouden torens zijn.
   
   In plaats van klagen daarover, waarom doen diegenen die daar bezwaren tegen maken er niets tegen?
   
   B.v. Amerika aanvallen?
   
   Bush zou jullie aanvallen, als het omgekeerde het geval was :-) hahaha
   
   >--:-)-->
   
   p.s. Gung Ho schrijft op 18 januari 2008:.............................."It is probable that the price of gold established after some oscillations on the American market will be higher than $35 per ounce … maybe somewhere between..........$36 and $38, perhaps even somewhat higher........... Once the market price has attained some stability, the time has come to decree this market rate as the new legal parity of the dollar and to secure its unconditional convertibility at this parity."....................................................
   
   En dit was geschreven op 18 Jan 2008 ????????????????
   
   

   Het is niet allemaal goud wat er blinkt steeds meer blijkt da de US koper voor goud heeft verkocht vandaar deze prijzen...
   
   Copper was trading with a backwardation of $35 -- the premium for the cash metal over three-months price, after months of trading with a discount for the cash material.
   
   mvrgr jo jo