If you have not watched the video The Money Masters, I would recommend it. Very thorough and excellent refute of central banking and all its corruption and inherent dangers. However, I would like to understand from others the validity of it’s solution to not have a gold standard but to have government issued “Notes” to pay off the national debt.
Their analyses, conclusion, and solution seems sensicle. However, wouldn’t the government, with the power to print Notes, be enticed at some point to print too much and then again causing inflation?
The link to the video is below. I look forward to any input.
Daniel, the video has a point…the central bankers control and estimated 2/3 of the gold. So if we go back to a Gold Standard, wouldn’t that give more power to them? For instance, Rothbard proposes re valueing gold and paying off the debts. Let’s say we revalue the gold we have (if we have any in Fort Knox) to pay the debt, this revaluation will greatly appreciate the value of all gold controlled by central bankers.
The government is already doing that. They already issue and sell fresh crisp Treasury Notes (or “Notes”) and use the sale proceeds to pay off old Treasury Notes that have become due (“the national debt”). If paying off debt with debt was possible, you would be able to pay off (eliminate) your credit card debt by simply transferring your debt balance to another credit card company. If you’ve figured out a way of paying off debt with debt, I predict a Nobel prize in your future. Just like Krugman.
DD5, yes the notes (bills and bonds) the U.S. Treasury now prints are purchased by the Federal Reserve through the wall street investment bankers. The Fed “deposits” fund into the IB’s who then can increase the money supply through fractional reserve banking…and thus more inflation. However, the video states than rather than issuing “Notes (bills, and Bonds),” the U.S. Treasury should just issue Notes directly to pay the national debt. Thus, skipping the investment banks and not allowing the fractional reserve system to increase the money supply. They have a valid point here that I am trying to understand.
When Austrolibertarians say that we should return to the gold standard, what we really mean is that we should let the market decide what the money should be. Historically, it has been gold (and silver), but this doesn’t mean that gold must be money. Say the bankers stole the gold, then some other commodity would become money. Furthermore, what would the bankers do with the gold? If they spend it, then they would lose control of that gold. If they don’t spend it, so as to not lose control of the gold, then what useful purpose does the stolen gold serve? The market would simply adjust to another commodity as money.
They use the country of Guernsey as an example. A country that printed its own paper money backed by the government with NO interest payment due to a centralized bank. The country did and does just fine economically. I believe today they are even on a flat tax system for both individuals and corporations which draws capital to the country and thus a strong financial center.
The video is anti centralized banking, money printing, fractional reserve banking, IMF, World Bank, and New World Order which I appreciate. I am just saying their final solution surpised me and I am wondering if there is some validity to it.
What does it matter to you how the government will increase the money supply?
Also, problem of the the national debt and the problem of increasing the money supply are not necessairly the same problem. Much of the debt is not financed by inflation, but by savers, some domestic and some foreigners.
Now about paying off the debt by just printing money directly. They can do that. They can print money, pay off the debt, and continue to print more money there after in order to finance the deficits which can no longer be financed by debt in order to pay for everything they ever promised.
Daniel, the gold would not be spent but used in reserve to issue a new world currency…SDR’s. The SDR’s become the currency and countries can hold these in reserve as long as they have faith in say the World Bank of the IMF. Sacrastically speaking “This SDR is in full faith backed by your World Gov’t the IMF (as long as you don’t redeem it in gold).”
Interesting point in the video was that in America back in the late 1800’s people were using silver for the medium of exchange. The international/foreign central bankers did not like this or want this because they had gold and not silver. In addition, since silver was about 15x more plentiful for gold, the international bankers beileived silver would be too plentiful and thusgiving up too much control to the American people.
DD5, intesting point made by the video is that the national income tax was passed into law 2 years after the Federal Reserve Act of 1913. This was because the central bankers wanted assurance by the U.S. Gov’t that if it borrowed all this money to the gov’t that they were going to get paid back with interest. Does the U.S. constitution allow the Federal Gov’t to establish and “coin” or print our currency? If this is so, why do we allow the Fed Reserve to do this and not the gov’t?
Why would the govt need to tax your income just so it can pay back the bankers, when it can simply tax your income and not borrow from the bankers in the first place.
John, I’m not going to debunk every fallacy in that movie.
So if we go back to a Gold Standard, wouldn’t that give more power to them?
a lot of ifs.
obviously whatever gold the central banks have should be either returned to the people or auctioned into a market. rather going to goldmoney than a previously existing mode or standard would be preferred - that is , if gold or silver makes better money anyway.
DD5, The central bankers make money from borrowing money. THe more they borrow, the more they make. The gov’t couldn’t tax as much as it wanted to without a revolt so they borrowed from the Fed. The Fed wanted the gov’t to take in more income from the people so they could borrow more AND be insured that they could get paid back with interest. The additional tax revenue is like a hedge for the Fed.
John, the “problem” is much simpler than you imagine. I prefer a world where no entity is able to simply create a “Note” out of thin air (and not backed by anything of value) and FORCE me to accept it in exchange of my full-days work. You see, I WORKED all day and this “entity” just SAT on his a** and printed something on a piece of paper to pay me with. Wouldn’t you like it if after the house painters just finished painting your house-siding (while you watched TV all day inside), you could simply create a “Note” saying “Consider yourself paid.”? Money is simply a medium of exchange. It is absurdly unfair (and wrong on so many levels) to grant ANYBODY the power to create a worthless “Note” and FORCE everyone to accept it as payment for something with actual value.