The Case for Gold (LFB)

Sure, it is an asset but so are many things that governments and central banks own: There is no special reason why gold should be reported, listed, touted, purchased in scary times, but not these other assets. The truth is that gold does have a huge and continuing role to play. And it is more than purely psychological. It is deeply embedded in the history of money itself and in the development of the world economy as we know it.

Governments destroyed the gold standard long ago but they know better than anyone that there is no surer means of financial security, proven over nearly all times and all places.

But here is an interesting question. What precisely are governments and central banks seeking to protect with their gold holdings and acquisitions? It is not you and me. It is about their system and their interests. As much as they love foisting the paper stuff on the population, risking even the destruction of the means by which we earn, save, and provide for ourselves, when it comes to government and central bank finance, gold serves serves them well.

They deny it publicly but their actions speak more loudly than their press conferences. This should and could be the job of the private sector. The first time that I heard Murray Rothbard make this claim, I was amazed.

The leading historian of private coinage is George Selgin. His book Good Money is one of the most fascinating books on monetary history ever written. The country is England and the time is the Industrial Revolution. The official Mint was cranking out only large denomination coins suitable for old-world trade by large companies, but this was a time when the bourgeoisie was being born. Small manufacturers all over the country needed small denominations to pay their workers. Button makers jumped at the chance to mint small denomination coins for factories to pay their workers. The free market picked up where government left off!

You can guess what happened. The result was the same as today when private traders have come up with digital currencies to compete with the government: Laissez-Faire Books is the only source for the hardbound version of this fascinating book , and there is a limited number still available. Doubling the exchange ratio, the authors point out, doubles the money supply. While Fed Chairman Ben Bernanke has been hailed as a hero in the wake of the financial crisis for printing money, Lehrman and Paul would label him no better than a counterfeiter who illegally prints money.

Legal tender laws must be abolished. The government must accept payment for taxes in gold. The authors also address concerns over transition effects in real estate markets, agriculture, heavy industry, small business, exports, and banking, The transition would take no more than three years, with the decade to follow as one of unrivaled prosperity, full employment, and rapid economic growth.

The authors propose a return to the classic gold standard, defining the dollar to a fixed amount of gold: Some people are all for Ben Bernanke and friends manipulating fiat currency. Extreme opponents favor the Hayekian approach of letting the market decide what money is, a view pushed by Ron Paul in recent years.

Why gold, you ask? The market picked gold centuries ago. The yellow metal emerged as best for indirect exchange. It is after all, marketable, divisible, portable, stable in value, durable, recognizable, and homogenous. The use of paper money is only continued under the boot of government force and coercion. If Romney takes the White House, he has the opportunity for government to be proactive and return peacefully to sound money. Not a Kabuki theater of stacking the commission with gold haters, but an honest consideration of sound money. Laissez Faire Books has printed this report in a new and beautiful edition.

Every bit of the text applies today, even the last chapter on the path to reform. Had it been implemented back then, we could have avoided every economic calamity of the last 30 years. And it can still be implemented today. Secure your copy of this book toda y.

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He received his master's degree under the direction of Murray N. Rothbard at the University of Nevada, Las Vegas, after many years in the business of banking. He is founder and editor of LibertyWatch magazine. Chris Campbell notifies you on the digital currency that you should avoid and it might surprise you. Chris Campbell explains how nothing is certain but death and taxes. He also delves into the the difference between wealth and money. Find out more here…. Today, LFT digs into the unholy personal and financial alliances between bankers, presidents and their cabinets.

Take a look at this blank check. If it were restrained by a gold standard or monetary competition, the Fed would be a menace, but not a mortal threat. As it is, the Fed, and, by extension, the government itself, holds our entire economic future hostage. It has done nothing of the sort. Instead, it acts as a method by which the Fed is permitted to pay a rate of return on bank deposits in an environment that is risk-free for the industry.

Banks are now in the unprecedented position of ignoring their customers both depositors and would-be borrowers and still enjoying a high rate of return on their balance sheets sustained by Fed-created money and an unlimited guarantee on deposits courtesy of federal deposit insurance. These are the types of extremes that the Fed has pursued to sustain an unworkable system. This is a predictable trajectory: Each new step away from free-market money creates new problems that seem to cry out for more intervention, which creates more problems, and so on until the entire system unravels.

• The Case for Gold (LFB) by Lewis Lehrman,Ron Paul.
• A New Case for Gold.
• There's Still a Case for Gold.

And this is precisely what we are seeing. The risks are very high for the middle class. The incredible bust of might turn out to be just a warm-up.

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Another, even worse meltdown threatens because rather than face reality, the Fed papered over problems. As a result, hyperinflation is a real possibility, and it is not possible for the Fed to simply pull a lever to stop it once it starts. Bank runs will continue to threaten. The dollar will continue to lose its purchasing power. Government will continue to grow.

It is no longer possible to make money through saving money in the normal way that economic structures would provide in a normal market. Saving is no longer rewarded with even a normal rate of return. To be sure, the insiders find ways to make money regardless through risky and far-flung techniques. It is the middle class — the people who live honestly and work hard to provide for themselves — who are being harmed.

How much more evidence do we need? A failed system has proven itself a failure too many times. I will once again issue this challenge: Reform the monetary system or strangle the future of freedom itself. This is the choice we face. It is not too late. And such reform has never been easier. The government should permit free enterprise a role in the management of money.

Let the entrepreneurs take over where the Fed failed. In an ideal world, we would see the dollar made good as gold. This would be the first action of a responsible Congress and president. But even without reforming the dollar, it should be legal for producers and consumers to migrate to other market-based systems of money and banking. The need for reform has never been more urgent. The case for reform is fundamentally the same today as it was when it was first published. The principles never change.

Freedom and sound money are inseparable.