Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
Mitchell’s laws:
●Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening <the gap between rich and poor.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●Everything in economics devolves to motive, and the motive is the Gap.
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Most polls have flaws. Sometimes the mere order of questions biases the results. Quite often, the wording of questions decides the answers.
There are bad polls; truly gawd-awful polls and there are political polls. These later range from O.K. to ignorant to “I-can’t-believe-anyone-would-create-such-a-ridiculous-piece-of-sh*t” polls.
And then we come to the ultimate poll for suckers, courtesy of the right-wing Washington Post. Here it is in its entirety:
Mr. Obama: “Is Ft. Knox Empty?”
Cast Your Vote Now!
YES_________
I am gravely concerned that President Obama may have emptied Ft. Knox. As a U.S. Citizen and taxpayer, I demand a complete and immediate audit of U.S. Gold reserves.NO__________
Barack Obama would never go so far as to permit America’s gold reserves to be withdrawn to finance massive public debt.Enter Email Address:* _____________________________________(required)
It’s a simple fact. The United States Bullion Depository at Ft. Knox has not been fully audited since the Eisenhower administration!
Honest financial institutions openly embrace audits to prove that they are good and faithful stewards. But the federal authorities who control the nation’s once vast gold reserves at Ft. Knox? They haven’t allowed a comprehensive audit to be conducted since 1953!
In fact, no visitors whatsoever are permitted at the Depository, not even United States Congressmen. According to the U.S. Treasury website, “this policy is strictly enforced.”
Is the U.S. gold reserve being whittled away to finance federal spending? Did we ship all our gold to New York to dump on the market or to China to cover our debts? Is the vault at Ft. Knox in fact empty, as many have suggested?
Let’s pause for a moment from these breathless, clearly biased questions, to answer with a couple of inconvenient facts:
1. Gold does not finance federal spending. Dollars finance federal spending. Even if the U.S. did not own one gram of gold, this would have no effect on the federal government’s ability to pay its debts.
Apparently, the author of this poll doesn’t understand (or want you to understand) that President Nixon completely divorced the dollar from gold.
People do not accept dollars for being backed by gold, simply because dollars are not backed by gold.
The poll continues:
The feds refuse to audit the gold reserves, so Money Metals Exchange is auditing public opinion. We want to know your opinion – since an audit has not been permitted in over half a century. Do you suspect that Ft. Knox is empty?
VOTE NOW to register your opinion, and you’ll also be entered in a special drawing to win 50 FREE U.S. Silver Eagle Coins worth over $1,000!
We’ll send poll results to every member of Congress, and to the most powerful federal official most Americans have never heard of, United States Treasurer Rosa G. Rios, who oversees the U.S. gold reserve!
Ooooh! Everyone loves a conspiracy. The Treasurer and the members of Congress will be shocked — SHOCKED — to learn that many Americans want to know how much gold is in Fort Knox.
The whole subject is beyond silly, but gold bugs claim:
1. Gold is “real money.”
Fact: Gold isn’t even fake money. Gold never has been money, which always is determined by a creator, usually a government. Gold always has been a commodity used for barter.
The same is true of silver, platinum, palladium, copper, brass, bronze, etc. All are commodities used for barter.
2. Gold is a “store of value.”
Not sure exactly what a “store of value” means, but I suspect it means that over time, people have wanted it. The same can be said about the above-mentioned metals as well as diamonds, antiques, my house and a good book.
If “store of value” is supposed to mean gold keeps its value, surely that isn’t true. The value (price?) of gold bounces up and down in yo-yo fashion, just like any commodity. By clever time selection, one can prove gold is a great investment or a terrible investment — and it doesn’t even pay interest or dividends, and it costs insurance and storage.
3. For thousands of years, gold has had value, but fiat money can go worthless.
Yes, if the United States dollar becomes worthless, and the nation becomes destitute, and you own gold (or silver, platinum, palladium, copper, brass, bronze, etc.), you will be able to barter them for the food no one can afford to grow and the clothing no one can afford to weave.
If you think that is a viable financial plan, I have bridge to sell you.
Further, ALL money is fiat money, in that by definition, it is created by the FIAT of the issuer. Gold itself, never has been money.
Gold coins have been money, by the fiat of various governments. Those governments arbitrarily decided (i.e. by fiat) how many dollars, lira, pesos, francs, etc. were to equal a gram of gold or an ounce of silver. And those decisions changed through the years — again, by government fiat.
U.S. pennies once were copper and nickels were nickel. So, were copper and nickel money?
And as for that “thousands of years” nonsense, I remind all that for thousands of years horses were a primary method of transportation. They were replaced by technology. But a few suckers kept buying buggy whips. Gold too, has been replaced by technology, and a few suckers keep buying it.
Bottom line, the federal government would be neither more nor less able to pay all its bills, if Fort Knox were empty or chock full of gold. There are only two groups who want you to care:
*The bullion dealers (Money Metals Exchange et al, who make their fortunes operating the “greater fool” scheme. (Similar to a Ponzi scheme or a “bubble,” the “greater fool” scheme means you buy something at too high a price, hoping to find a greater fool who will buy it from you at an even higher price.)
*The rich, who want suckers to believe money is a physical entity, and the federal government can run short of dollars.
This belief justifies deficit reduction. Because deficit spending benefits the poor more than the rich, deficit reduction widens the gap between the rich and the rest. And widening the gap is the primary goal of the rich. (It’s the gap that makes them rich. The wider the gap, the richer they are.)
So go to the Washington Post article and answer the poll. You might win “50 FREE U.S. Silver Eagles worth over $1,000!”
Is it just me, or do you also find it hilarious that in a poll about gold, the prize is silver coins?
You just can’t argue facts with suckers. The Nigerian bank con relies on this.
Rodger Malcolm Mitchell
Monetary Sovereignty
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Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
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10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.
THE RECESSION CLOCK
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.
#MONETARYSOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Excellent summary. I will add that gold is still being mined. If the supply of gold is rising, the price of gold will fall, with all other factors being equal.
There is a Twilight Zone episode where thieves steal gold and then hibernate, figuring that when they wake up, nobody will be looking for them. At the end of the episode, technology has advanced where gold can be manufactured, and its value is minimal.
http://en.wikipedia.org/wiki/The_Rip_Van_Winkle_Caper
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I was mostly with you until you actually started talking about gold. If anything is going to be audited it should be the federal reserves rather than just looking for gold in FT Knox. If there is no gold there, I know Germany has been asking for their gold back and China and India have been buying gold like crazy, it has been gone long ago and it was not Obama who sold it off.
However as you say gold is no longer money and does not finance federal spending but it is considered an asset by the federal reserves and by the banking system under Basil III and I believe all the other Basils…
In any case a few points..
1) First you say gold is never has been money then you say it was money via fiat..so which is it or please explain the difference…I am not following that…
2) Under one you say that gold has always been “been a commodity used for barter”…yes it was commodity money and because it was a commodity, the characteristics of which gave it value, it was one of the reasons why it became money.
In addition you say that gold was used for barter but I hope you realize when you came down to it all money is used for barter. The dollar is basically used for barter. You are holding on to dollars so you can barter for goods and services!
3) Under #2 gold being a store of value…I think you need to look into this a bit further. Yes the price of gold goes up and down but it holds its value in terms of what it can buy. Even when gold was under $500 in late 1990’s what it could buy was about the same as it is today.
Try a little experiment and tell me if I am wrong. Take the price of oil in late 1990’s when it was under $50 a barrel (I think it got down to $20/$30) and say you owned a barrel of oil (or 10 barrels or whatever) and sold it for dollars. Then with your dollars do two scenarios.
One look up how much gold you could purchase and say you bought that amount and held it to today (you put it under your bed) and went ahead and sold it today. Then see how many barrels of oil you could buy at today’s prices with dollars that you received from selling the gold.
Now under the second scenario take the dollars you received from selling the barrel (s) of oil and say you put those dollars under your bed and you took them out today, see how many barrels of oil you could get for those dollars today??
When you do that either I am wrong or your understand why people say gold is a store of value.
4) For number #3 it could always happen but I don’t think the dollar is going to go worthless anytime soon causing the nation to be destitute. However fiat dollars have no value other than dollars and by fiat. If you took the fiat away dollars would have no value where as gold would still have value..that is the issue here.
Also when you say that if the dollar became worthless we could no longer grow food or produce things, because people would not have money ie..dollars that is…sorry to be so frank..but it is just nonsense..I won’t say anymore..!!
Again the article itself may be stupid and may just be a dig on OBama and as you pointed out has nothing to do really with US finances unless the debate is about going back on a gold standard….but you really should not talk about the other aspects of gold if you don’t really understand them!!
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Gold is an asset. Money is an asset. But gold is not money.
Gold is a “store of value”? Then so are silver, platinum, palladium, copper, brass, bronze, land and shares of stock. Are they money?
There is no such thing as “commodity money,” and there never has been a time when gold was money. Unfortunately, this is a semantic discussion, depending on your definition of “money.”
All money is the debt of the issuer, backed by the full faith and credit of the issuer. Gold is not a debt and is not backed by anyone’s full faith and credit.
“If you took the fiat away dollars would have no value where as gold would still have value.” Exactly right, which is why gold is just a commodity — an essentially useless metal — not money.
Now a question for you: What is the name for a scheme in which people are encouraged to purchase a commodity that has very little use, with the promise that in the future, people will pay even more for that commodity having very little use?
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Could you buy food, clothing, and other services directly (without selling them) with land shares of stock? You could with gold – and that Rodger, is the difference.
Gold was money and continues to be the only real money. There are various businesses that accept gold for their goods and services. Further, bitcoins are money because there are people willing to hold them and businesses willing to accept them. Just because you say so, does not make it so Rodger.
Additionally, it is not government decree only that creates money. People and businesses have to accept it as well. And there is the reason why gold is the ultimate currency – people on their OWN FREE WILL have chosen gold times and times over through history.
The same holds true for the dollar being the reserve currency. It’s not just because the US is a powerful nation, there are others, it’s because people businesses across the globe, on their OWN FREE WILL, are willing to hold them.
The US’s fold reserves are still there, this conspiracy is pure nonsense and I’m not sure why people subscribe to it – it’s pure nonsense. If people had an ounce of brains in them, they would know that the gold would show up somewhere else in the world. Well, where is it conspiracy nuts?
Aside from the better political environment, powerful army, the largest stockpile of gold reserves is what makes the dollar as strong as it is.
Case in point, why is it that most nations only accept dollars (not local currency) for repayment of debts?
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“Could you buy food, clothing, and other services directly (without selling them) with land shares of stock? You could with gold – and that Rodger, is the difference.”
What’s your point (aside from the fact that your statement is wrong)? Actually, nearly all your statements are wrong, so don’t bother trying to tell me your point.
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I don’t know if you just like to mock gold, if you really do not understand it or what but in any case I never said that gold currently acts as money money…..but to suggest gold was never money…that is just wrong and I think you need to take another look at history!! And yes there has been commodity money… I don’t know where your getting your information from but I think you need to take another look.
“If you took the fiat away dollars would have no value where as gold would still have value.” —
— I mangled that sentence up pretty good…. What I meant to say is that if you put both money and gold under your mattress and took them both out after a period of time the money will buy you less goods while the gold will buy you about the same amount of goods as when you put it under your mattress!
As for your question I really don’t know…maybe a dollar bill..ow wait that will loose value….
Based on what you asked I don’t know However I can name you a commodity that has some uses and carries the promise that in the future you can exchange it for about the same amount of goods and services as when you purchased it……
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” . . . but to suggest gold was never money…that is just wrong . . . “
Who could argue with your facts and logic?
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gold is considered an asset by the federal reserves and by the banking system under Basil …
— Stockpiles of copper and strategic petroleum reserves and land and other property or commodities are the asset of anyone that owns them. Gold too.
1) First you say gold is never has been money then you say it was money via fiat
— Money has historically existed as account entries, bookkeeping. Rodger said gold *coins* were treated as money when a Govt “by fiat” established a fixed price between a quantity of metal and a coin with a stamped currency denomination.
— People *do not* engage in “barter” with money by definition. Exchanging goods by swapping account credits and debits — including routine business credit like net30 and net90 — is called “commerce”. There may be another term.
The mainstream neoclassical delusion is that money is merely a “veil” over complex barter. Therefore the actual roles of money, the money supply, and credit expansion & contraction is excluded from much of mainstream economic teaching and simplistic supply/demand applied to Macro. Some of them including Krugman argue that point, with extreme ramifications. For example that the collapse of the Bubble and extreme & sudden halt of credit expansion — the Bubble required not mere steady-state or slow expansion but exponential expansion of credit — should not have affected the economy at all, because of these ideas that banks are mere intermediaries between savers and debtors and how money is just this “veil” that doesn’t change anything in economic relations. So why did sales collapse, profits collapse, business collapse, employment collapse when credit expansion collapsed? It made no sense to mainstream economics. Most are still cluelessly wedded to stupid but easy-to-comprehend theories.
2) one of the reasons why gold became money
Gold became *used* in place of money primarily for foreign trade and foreign wars in Europe which by definition occur outside of the domain of a political and monetary sovereign. Currency exchange did not exist. There was no global banking. England couldn’t pay German mercenaries to attack France in the form of Tally Sticks that were taxable money under the English king.
Foreign explorers couldn’t pay servants and soldiers and guards in distant lands in English currency —- unless England had political control over the area — so they paid servants in a universal commodity that had a market price, not a politically “fixed” price by fiat. At times, tobacco crops had a stable enough price that tobacco was used as a “medium of exchange” for a form of barter in a state of anarchy in the wilderness — i.e. in the absence of a taxing political regime that could support actual money, govt-backed account credits. Columbus forced natives to mine silver (shiny rocks) because it was a valuable commodity everywhere, not because it was “money” like taxable Tally sticks or pieces of paper with the King’s stamp or seal.
when you came down to it all money is used for barter. The dollar is basically used for barter. You are holding on to dollars so you can barter for goods and services!
— this is nonsense, unless we redefine modern commerce to be functionally equal to barter in a state of anarchy. Ebay and Paypal, for example, would not exist in the absence of the govt-created Internet and enforcement of various contracts. People would have to literally ship commodity metals or other commodities to each other like in the days of wagon trains carrying treasure chests of gold, and would have to trust all parties along the way. Credit as we know it would not exist.
— We might as well define modern medicine as the same thing as application of leeches to balance the 4 elements, Earth, Air, Fire, and Water.
gold could buy was about the same as it is today
— but modern commerce WOULD NOT EXIST so our modern economy would not exist, so what could people buy in a primitive barter economy? By the way, even primitive cultures kept accounting records. As soon as people settled down and invented agriculture and formed villages instead of being wandering nomads, they used actual *money* provided by local authorities (priests, kings, warlords that provided military protection as well as subjugation).
Gold as a commodity *can* roughly maintain it’s market value over the long term relative to other commodities, so it’s good for the Rich, the Bankers, the hoarders, but it totally sucks for the actual purposes of having an economy, which is the kinds of commerce and trade that feed people and cause housing and other manufactured goods and useful services to exist.
For govts to promote investing in production with fiat currency is expansionary of the *real* economy of “stuff”. For govts to deliberately lean on promoting hoarding of shiny rocks is anti-economic. Shiny rocks don’t produce anything.
4) I don’t think the dollar is going to go worthless anytime soon causing the nation to be destitute. However fiat dollars have no value other than dollars and by fiat. If you took the fiat away dollars would have no value
Yes, if the entire political regime of the United States of America ceased to exist — was destroyed by war — and the USA was no longer able to (a) maintain a national defense (b) collect taxes and fines (c) enforce domestic laws including contracts and corporate law, then the “fiat” would no longer exist.
Short of a successful mob revolution or successful nuclear attack, there is no way that the Pentagon, its private military contractors, the Army, federal police, the FBI, the IRS, Congress, the courts, and the Executive is all going to just disappear or step down. And they have constructed means to maintain a govt, albeit a temporary military dictatorship, even in the case of a successful nuclear strike on Washington DC. The “fiat” is not going away.
In some kind of apocalyptic scenario, yes commodity gold would have some intrinsic value, as would food stocks and as many right wingers point out, lead (bullets) would have a lot of intrinsic value in apocalyptic anarchism, because only YOU could protect your gold and food from the roaming hordes of hungry desperate people.
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I know of no instance when gold was money.
Gold COINS have been money, by the fiat of various governments — as have silver coins, copper coins, nickel coins, brass coins and aluminum coins.
Strangely, I never see claims that copper, nickel, brass or aluminum are money, though sometimes I see claims that silver is money.
Today, in America, gold coins are not money, though coins made of other metals are money. This is by the fiat of the American government.
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To all gold bugs, please feel free to buy and hoard gold. Enjoy yourselves.
Oh, you don’t actually own any gold? You just like to talk about gold? Have you considered tulip bulbs and Beanie Babies?
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The stupid, misinformed articles by ignoramus authors on economics continue unabated:
http://www.americanthinker.com/blog/2014/11/harikiri_by_yen.html
Japan is monetary sovereign.
Booth doesn’t understand MMT/MS.
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Yes, consider these two lines from the article:
There was a time when debt hawks said that a sovereign debt exceeding 60% of GDP would be the death knell for an economy. Then 100%. Then 150%. Then 200%. Now, at 260%, it’s “sooner or later.”
“Sooner or later” is a safe prediction. “Sooner or later” the sun will burn out and become a dark ember.
Meanwhile, the U.S. ratio is about 70% and the debt-hawks are screaming like banshees.
And of course, no debt-hawk article would be complete without the inevitable (and meaningless) mention of “Weimar” and “Zimbabwe.”
The only question — the question I have asked for many years, every time I read such an article: “Is the author really that ignorant or does he simply wish to widen the gap between the rich and the rest?”
There are no other alternatives.
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Here is another one:
http://wallstcheatsheet.com/business/economy/how-hyperinflation-will-happen.html/
Lira thinks that hyperinflation is imminent.
It’s hard sometimes to tell if these guys actually believe what they are writing or not (I did not see an ad for gold on this page).
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Gold’s true value is in its superior electrical conductivity, malleability and usefulness in chemical research. The money part is strictly an accepted fairy tale passed on through generations. Oxygen is far, far more valuable.
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“Gold’s true value is”
According to (libertarian-minded) Lysander Spooner, a self-taught attorney and philosopher in the early 1800s, the value of gold is related to it’s use as decoration, shiny rocks.
Spooner explained the insanity of Govts manufacturing and stamping a face value on gold coins — which would cause the prices of commodity gold bullion to rise — which would cause people to hoard gold, to REMOVE gold from the money supply, and to melt it down for sale to goldsmiths who returned it to decoration. Then the Fed Govt would have to get more gold from miners to create coins at that fixed “fiat” price.
In order to maintain some fiscal sanity, I believe that Govts had to enact and enforce un-libertarian laws making it ILLEGAL to melt down govt coins to more valuable commodity metal, even though it was the economically sensible thing to do under the circumstances.
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What on earth does this have to do with the Washington Post?
And since when are they ‘right-wing’?
But mostly what’s it got to do with them, since they didn’t create this poll and it’s not hosted on their website, nor does it mention them anywhere on the page?
Oh I see. You mean the Washington *Times*.
HUUUUUUGE difference.
I think you owe WaPo an apology. I know I’d be offended.
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You’re right on both counts. My deepest apologies to all those offended by being called “gold bugs.” I know I would be, too.
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For those saying that folks that believe in gold are nuts or misinformed – I’d like to hear your thoughts on why the US implemented the following. When trust in the system erodes, the population runs to the safest of them all – that is ultimately gold whether you or the government likes it or not.
http://en.wikipedia.org/wiki/Gold_Reserve_Act
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@RMM: The right-wing conservatives seem to have this maniacal obsession with the alleged Left-wings’ Cloward-Piven strategy to overthrow the government by overloading the welfare system.
see here:
http://en.wikipedia.org/wiki/Cloward–Piven_strategy
With the federal government being monetary sovereign, this could not actually happen? The government could not run out of money to fund these various benefit programs from my understanding of MMT/MS. What do you think?
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As if these boneheads would believe the results of an audit…
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@RMM: I didn’t know where to post this, but I thought it was interesting. Michael Parenti gives an interesting and enlightening talk on global politics and trade:
Western leaders apparently not only try to subvert their own countries for their own benefit, but in third world countries as well.
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http://www.cnbc.com/id/102160307
“As the precious metal continues to look for a floor, traders are eyeing a Swiss referendum Nov. 30 that could require that country’s central bank to hold 20 percent of its foreign exchange reserves in gold.”
What good can come out of that? Will the other 80% need to be in bitcoin?
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Will the other 80% need to be in bitcoin?
😀
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