Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14
Bullish Silver Stealth Buying - 24th Oct 14
Blood in the Streets to Create the Gold Stocks Investor Opportunity of the Decade - 24th Oct 14
Swiss ‘Yes’ and ‘No’ Gold Initiative Campaigns Compete at Launches in Bern - 24th Oct 14
War And The Law Of Unintended Consequences - 24th Oct 14
Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - 24th Oct 14
Saudi Move to Cut Oil Prices Is Now Russia's Biggest Economic Threat - 24th Oct 14
US Stock Market Top Is Now In Sight - 24th Oct 14
New Profit Points in the Shifting Balance of Power, Welcome to Saudi America - 24th Oct 14
QE Failure & Folly Of Paper Mache, Treasury Bond Integrated Lifeline Patches - 24th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

Gold Cross, The End of Honest Money

Commodities / Gold and Silver 2013 Feb 14, 2013 - 12:15 PM GMT

By: Bill_Bonner

Commodities

You shall not crucify mankind upon a cross of gold. ~ William Jennings Bryan

The season of fasting is upon us. No more high living. It's time to cinch up our belts... to put on a gaunt face and a smug look. Alone among friends and associates, we will keep Lent.


So neglected is Lent that even Google has forgotten about it. When we searched for it, it proposed "lentil soup."

Lent is meant to rehearse the 40 days and nights that Jesus spent fasting in the desert before going public. We remember the lean days with prayer, meditation and self-denial. No alcohol will cross our lips from Ash Wednesday till Easter Sunday. (Except on Sundays. And saints' days. And national holidays. And days that begin the letter "T" or have a date that is a prime number.)

Yes, dear reader, we will be true to the church calendar, with a few emendations of our own.

Why? Because we wish to remember that periods of gluttony and wantonness must be followed by periods of fasting and correction. Yin and yang must be kept in balance. Pain and pleasure... good and bad... right and wrong – all must get what is coming to them. Otherwise, the entire world gets out of whack.

We fast to remind ourselves that there are hardships... there are lean periods in life. Not just in our drinking lives... but in our economic lives... and in our emotional lives too. There is adversity. There is pain and penance. We fall in line, observing church rituals, so that we don't fall apart when real adversity hits us in the face. We endure Lent so we can enjoy Easter.

Yes: Corrections are a part of life.

You correct your mistakes... or you are corrected by them. No other outcome is possible.

But along comes the doctrine and practice of modern central banking. All these MIT-educated central bankers have a different idea. They work tirelessly to avoid correction... to prevent pain... and to bring back the good times of free-spending revelry. Now they have a program – "QE to Eternity" – which promises to keep the economy pain free forever.

A "Wicked Project"
To fully understand how this came about, we step back to the founding of the United States of America, in whose Constitution today's central bank money was specifically prohibited. The states (which had the power then to mint their own money) were not to "make any thing but gold and silver coin legal tender in payment of debts."

James Madison, in The Federalist Papers, described allowing paper money as "improper or wicked project." And in his 1819 Dartmouth College v. Woodward decision, Chief Justice John Marshall explained that paper money had "weakened the confidence of man in man and embarrassed all transactions between individuals by dispensing with a faithful performance of engagements."

Not that paper money was necessarily the work of the devil, but Satan had a hand in it. When you can counterfeit money – and get away with it – it's a hard habit to stop. You are soon hooked on it.

Congress resorted to paper money – greenbacks – during the War Between the States. Five hundred million paper dollars were issued. This led to higher prices, which pleased debtors. They borrowed in expensive money; they repaid in cheap greenbacks. Prices in the North rose 75% from 1860-1865.

A Cross of Gold?
After the war, the greenbacks went away. But the desire for cheap money continued.

Farming was the largest sector of the economy in the 19th century. Typically, farmers borrowed to expand their farms during booms, when prices were high. Then, in the correction, they cursed the bankers who had lent them money and railed against the gold standard.

Late in the century, William Jennings Bryan took up their cause as his own. The rural proletariat had gone bust in the farm crash of the 1880s... and now found itself so deep in debt it was willing to take up with a fool like Bryan, if he promised relief.

The roads choked up with dust when Bryan came to a cow town in the Midwest. There, he ranted and raved against all that the farm folk detested – often sweating like a hot shower in the summer heat.

"You shall not crucify mankind upon a cross of gold," he roared to the approving hallelujahs of the yokels.

The speech had a ring to it. It was a rhetorical flourish with great power. Remembered and repeated, it is still today probably more readily recognized than Lent. But it was empty: nothing more than bombast and fraud.

There is some liturgical disagreement about it. But Lent generally ends on Good Friday, when Jesus was crucified on a cross of wood. Since then, millions have been crucified financially by paper money (a wood product). No one has ever been nailed to a cross of gold.

What Bryan had against gold was the same thing that all paper money pushers – including modern central bankers – have against it. Gold is uncooperative and stiff-necked. You borrow it and you have to pay it back. The lender expects to get his money back in real money.

And since the supply of gold rarely grows faster than the supply of goods and services for which it is exchanged, prices remain more or less stable. Debtors are not let off the hook.

Prices rose from 1800-1913, when America's central bank was founded, by 176%, says Paul Moreno. New discoveries of gold in Alaska, South Africa and Australia had increased the money supply significantly. But that was nothing. In the 100 years since, when paper money was the stuff most often issued by the U.S. Treasury, prices have gone up 448%.

Bryan got his way after all. Nobody in America suffers from an honest currency. Nobody pays back as much as he has borrowed. Even contracts with "CPI adjustment" clauses fail to make the lender whole; the feds have seen to that too.

Bill Bonner
The Daily Reckoning

Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and Empire of Debt: The Rise Of An Epic Financial Crisis and the co-author with Lila Rajiva of Mobs, Messiahs and Markets (Wiley, 2007).

http://www.lewrockwell.com

    © 2013 Copyright The Daily Reckoning, Bill Bonner - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014