Best of the Week
Most Popular
1.RED ALERT: Paris Terror Attacks - What to Expect Next - STRATFOR
2.Paris Terror Attacks, Death Pangs of a Dying Religion, and Impact on BrExit EU Referendum - Nadeem_Walayat
3.Paris Terror Attacks, Islamic State Attempting to Spark Civil War in France - Nadeem_Walayat
4.Three Shocking Charts That Prove Gold Price Rally Is Coming - Sean Brodrick
5.Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - Mike_Shedlock
6.Africa Population Explosion - Why Europe's Migrant Crisis is Going to Get A Lot Worse - Video - Nadeem_Walayat
7.Gold Mining Stocks May Be The Buy Of The Century - Jeff_Berwick
8.Grandmaster Putin Beats Uncle Sam at His Own Game - Mike_Whitney
9.BRICS? No, CRISIS - Raymond_Matison
10.UK Housing Market Affordability, House Prices Momentum and Trend Forecast - Nadeem_Walayat
Last 5 days
Will Turkey Drag NATO into War With Russia in Syria? - 25th Nov 15
George Osborne’s Autumn Statement and Spending Review Full Text - 25th Nov 15
Will Fresh QE From ECB Boost Gold? - 25th Nov 15
Sheffield, Yorkshire and Humberside House Prices Forecast 2016-2018 - 25th Nov 15
Investors Watch Out For The Auto Industry… - 24th Nov 15
BEA Revises 3rd Quarter 2015 US GDP Economic Growth Upward to 2.07% - 24th Nov 15
Stock Market Supports Are Being Broken - 24th Nov 15
Is Gold Price on the Verge of a Breakout? - 24th Nov 15
Fed’s Tarullo: U.S. Interest Rates Liftoff Should Wait for Signs of Inflation - 24th Nov 15
Silver Price, COT, US Dollar Updates and More - 24th Nov 15
UK Regional House Prices Analysis - Video - 23rd Nov 15
Crude Oil Swinging For The Fences - A 20 to 1 Option Play - 23rd Nov 15
US Dollar, CRB, Oil, Gas, Copper and Gold - The Chartology of Deflation - 23rd Nov 15
UK Regional House Prices, Cheapest and Most Expensive Property Markets - 23rd Nov 15
Stock Market Rally Losing Momentum? - 23rd Nov 15
Will Gold Price Drop Below $1000 Soon? - 23rd Nov 15
Gold and Silver Sector Big Green Light and Low Risk Entry Setup... - 23rd Nov 15
Limits to Economic Growth - Challenge and Choices - 22nd Nov 15
Long Dollar Trade and Current Copper Price Below Cost of Production - 22nd Nov 15
UK Housing Market House Prices Affordability Crisis - Video - 21st Nov 15
The Fed Has Set the Stage for a Stock Market Crash - 21st Nov 15
Stock Market Primary V Wave Continues - 21st Nov 15
Gold And Silver - Value Of Knowing The Trend - 21st Nov 15
UK Footsie Bulls Set To Foot The Bill - 21st Nov 15
UK Housing Market Affordability, House Prices Momentum and Trend Forecast - 21st Nov 15
GDX Gold Miners’ Strong Q3 Results - 20th Nov 15
End of Schengen, Stock Market’s Technical Strength Grows - 20th Nov 15
Justice for All and The Curious Case of Zambia - 20th Nov 15
Paris, Sharm el-Sheikh, and the Resurrection of Old Europe - 20th Nov 15
Silver Prices and The Management of Perception - 20th Nov 15
Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - 20th Nov 15
Waiting for Goldot Again - 20th Nov 15
Michael Curran Goes Down-Market Shopping for Gold Stock Winners - 20th Nov 15
Why Isn’t This Incredibly Bearish Bond Market Development Making the News? - 19th Nov 15
SPX Appears to have Stopped its Rally - 19th Nov 15
The Great Fall Of China Started At Least 4 Years Ago - 19th Nov 15
Using Elliott Waves: As Simple As A-B-C - 19th Nov 15
Has Deflation Been Ddefeated? - 19th Nov 15
Dow Jones Stock Market Index is Not Going to Crash - 19th Nov 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Reasons to Get Excited About Japanese Stocks

Gold Cross, The End of Honest Money

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

By: Bill_Bonner


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).

    © 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.

© 2005-2015 - 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

Biggest Debt Bomb in History