Anarchy – only when is the question

Ray Kurzweil’s book, The Age of Spiritual Machines. Moore’s Law will fail at around 2020, at which point a paradigm shift in computing technology will occur.


SDR + 21 Inc = anarchy

These two technologies can and will provide a replacement for the Internet as we know it and the global finance system.

The only question is when. And it looks like a little after 2020, the hardware required for software defined radio will plummet in price when silicon chips are replaced with another information processing technology. Information processing technology is essentially switching technology and this could be biological via DNA and protein structures where light as used instead of electrical circuits through the logic gates which they do currently.

Cryptocurrencies the way ahead

Why is are these technologies emerging? (“They can’t stop it”)

Code is law – a quick overview, click here (Havard Magazine)

The immediate future

Colu’s OpenAsset
Local Exchanges
Barter / Paying your tax

bitcoin <- the lightening network

One of bitcoin’s blockchain ideas is executing scripts, this gave birth to Ethereum, however that will be eclipsed this “Turin complete” system like Tau Chain: A ‘Decentralized App Store’ with Greater Flexibility than Ethereum, providing a defined cost of computing. (Click on the link above to read the Coin Telegraph article)

CT: How does it compare to Ethereum?

HMC: Ethereum is a Turing complete logic, per block. This means they can easily prove that they can compute any computable thing in one block, but at the cost of not being able to necessarily know how much resource it will take to do the block’s computation.

Because of this, they need to back their resources with a fixed token asset, and set a network-wide resource price on computations in order to avoid abuse of resource.  Further, in order to secure exchange, they require everyone who is validating the block to effectively re-execute everything that has ever been executed.

To contrast, Tau is a decidable complete logic, per block, with Turing completeness recovered by the iteration of multiple blocks.  This means that we cannot compute any computable thing in one block, but we can know exactly how much resource expenditure a block will require to verify. We can still compute any computable thing; it may just require structuring the execution to run over the span of multiple blocks.  Because of this, Tau resources do not need to be backed directly by a token, and resource exchange can be negotiated by the users as they see fit.

Further, because it is decidable Tau can contextualize all of its logical resolutions, the only processes that necessarily must be re-executed by all participants is the resource expenditure required to persist the root chain securely. Any other process need only be re-executed by participants interested in verifying activity that occurred within that context, and can be ignored by other users, without sacrificing any security in the long run.



Friday 13th November 2015 & when singularity meets cheap energy

Everybody in the West wants a high standard of living created by cheap energy, at the end of the last century we got into bed with the Middle East; for which we are now paying the price for pissing people off. Everybody knows about the Miners Strike. A bunch of people allegedly getting very high quality coal out of the ground uneconomically.

Whereas nobody talks about the ARMS manufacturers in the UK (4th in the world) supplying weapons with UK tax payers money as a subsidy to Syria and Yemen etc. (Thank you Mr Blair for reneging on your manifesto promise to stop Credit Export Guarantees.) WE HAVE CAUSED the current refugee crisis.

If you think the refugee crisis is WRONG, think about tax credits, social housing, the NHS, education, the police, the armed forces – the West is built on CHEAP energy. Could we have these things without the shit in the Middle East? Think carefully about the things you dislike in the news because the odds are we’re actually personally involved with perpetuating the bollocks.

“Deficit spending”, does the average politician actually know what it is? Do you know what it is? It is a belief that in the future, things will be better and that we will forward BORROW from the unborn TODAY so that we can pay for the welfare state and the miltary industrial complex TODAY; to perpetuate the control of energy supply in foreign countries – we really don’t care about. Until the population who are sick of being shelled and gassed by the weapons we’ve supplied to their dictators decide to upsticks and visit us.

In order for the unborn to pay this debt back GROWTH will have to occur to allow the unbridled credit expansion which has come to exist since the US came off the Gold standard in 1971 to continue financing the Vietnam war by printing dollars to make bombs and guns.

The problem when any policician say “MORE GROWTH” it assumes that some magic bullet will come along, graze the next Einstein’s arse whilst coming out of the shower, cause a eureka momment and come up with an idea to produce almost free energy.

Fusion nuclear power – it ain’t going to happen for maybe another 10-15 years.

So what’s likely to happen is the system gambles on the creation of almost free energy from which ever solution rears it head. This gamble is being determined by “credit expansion”, a phrase you will hear thrown around on serious news programmes. When you hear this phrase, just substitute it for “free energy is just around the corner” so there is no need to worry about the debt being shovelled from a large height on the unborn.

The problems of the world really just start at the point in time when “singularity” meets almost free energy.

Religions will be regulated by the wealthy 1%, they are just not going to tolerate the extremists who are brainwashed by their respective “cults”. The 1% will gain the support of enough percentage to DNA profile people at birth to deal with this problem, I believe that eugenics in it’s broadest terms represents one of the greatest challenges within our lifetime.

Imagine a world where things are plentiful and everyone need not starve or have a poor education. That world could be now, but more so in the future, because the 1% will see a way to obtain yet more wealth by playing with the gene pool. The 1% have historically controlled the allocation of wealth and money.

Or maybe Skynet decides the fate of humanity?

Ray Kurzweil’s Singularity University

Ray Kurzweil’s latest graphs show that technology’s breakneck advances will only accelerate — recession or not. He unveils his new project, Singularity University, to study oncoming tech and guide it to benefit humanity.

What is the Middle Class?

The middle class by classical definition on wikipedia is “about 25 percent of British society, reported high economic capital, high status of mean social contacts, and both high highbrow and high emerging cultural capital.” however you classify a person by this measure they nearly all have something in common.

What is comfortable, whilst we can look up a dictionary definition of comfortable as well, lets assume that one of the defining factors in modern life is not having to worry about money too much on a day to day basis.

Middle class begets more middle class with the 6% of the elite thats pretty much a solid majority which control the country. That’s leaving out who is actually in power politically, but it’s actually the group of people that who shape the way society functions.

This group has always been in control in one way another through the years even when the country was under a feudal rule. Anything that disturbs this section of society’s distribution of wealth causes concern. Until something threatens this group’s existence or standard of living it doesn’t pay attention to it.

Does this group perpetuate the selfish gene? It certainly becomes an interesting mind experiment if we apply the theory to the “group”. I personally cannot see any reason why it shouldn’t.

We came from a society that only allowed certain segments to vote but over time the vote became inclusive. Now in the 2015 UK General Election, can we honestly say that we would want this to be so? Just over 50 years ago since World War II, half a lifetime, we have a political force that ten years ago would have been labelled “racist, fascist, bigots“. Who are these people? Well whilst the group is inclusive to both sides of the political spectrum it contains a percentage that are part of my definition of the comfortable middle class.

What is money? Well I’d would hazard a guess that most people don’t give the monetary system any more thought to that question than say where there Peacocks £2.99 t-shirt is manufactured or what the hourly rate of pay in relation to the UK minimum wage is there. What I can explain in a few sentences is after the financial crash of 2008 occurred, the “central banks” that help governments control the economy started to print money in a slightly different way to the Weimar republic of Germany between 1919-1923. Instead of printing money with paper, the central banks post-2008 generated it with computers.

Debtonomics (New economic term – Economics based on Debt, rather than Capital)
Now in pre-Hitler Germany printing money led to inflation, this led to goods costing more tomorrow than they do today. Too much money in the system, so people needed more wage money to stand still to survive what needs to be bought tomorrow.

Post-2008 computer generated money by mainly the US has caused an unprecedented boom in the stock market. This is the future value that pension companies place in companies they buy into. They want to obtain the highest return on their investment for their stakeholders. The stakeholders are the widows and pensioners who are no longer largely in the tax system paying “work force”.

So much money has been created out thin air, that companies are seeking to add value to their companies not by manufacturing new widgets that society needs nor providing services which are better than their competitors but just acquiring companies that do make things or have a better service product.

The new money printing called “Quantitative Easing”, regards of how it creates money maybe actually causing deflation, many “experts” believe this to be true. Personally with the frequent changes in measuring CPI and the dumping of the RPI in 2013 which lie to believe is hard to choose.

The long-term consequences of global QE are likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity.

was said by Guggenheim’s Chairman of Investments and Global Chief Investment Officer, Scott Minerd. 26th March 2015. We are happy that increasingly more “serious people” come to the same conclusion which we posited first a 6 years ago wrote Zerohedge. “The cost of QE is greater than the income lost to savers and investors.”

Summary of QE
We know who QE is screwing and we know who QE is benefitting. Therefore do we need to understand the global economics – nope.

Fit for power? (UK)
We have politicians who want our vote, whose economic advisers are woefully unqualified by anybodies standpoint to navigate the post-2008 economic post-consumer society.

We have a society that may limit our path to inflationary growth because tomorrows manufactured goods will always be cheaper tomorrow and from a country point of view we will allow whole national infrastructure industries to be wiped out by economic rules created in a Keynesian pre-2008 world.

Do supermarket suppliers receive a fair market price for their products?
What will happen to the quality of the arable land in Europe under the stewardship of the European Union?

Middle Class, Working Class – do I care?
I don’t care because these labels aren’t helping anybody in any shape of form.

The monetary system is changing
Bitcoin will be patched in preparation for the lightning network – see Blockstream hires Rusty Russell

The new class system will comprise of those who:

  • Really understand money – (as the way money used to be, like gold)
  • Those that can create added value with digital money and digit assets
  • Those that use it

Such is the dy/dx of change with respect to the understanding of money and wealth transposing on society that any references to class, cease to have any meaning.

The solution is not tax

2008 banking crisis bailout shite cost approximately £1.2 trillion

That government bit of entertainment gave every working person a £40,000 mortgage. And they say it’s hard to get a mortgage at the moment? Bollocks. If you want to extend the government balance sheet Mr & Mrs Tax Payer can apply any time – 100% available and 0% down!

How are YOU making your repayments out there?

Perspective WWI cost £22.3 trillion in today’s money and in 2014 the UK government paid the last £2 billion on the Chamberlain War Bonds.

Now the UK over that time had profound prosperity and periods of full employment, unemployment in my mind only became linked with Tebbitism. “GET ON your bike”- valid in the post war boom years but not relevant when he used it. Government around that time onwards were sold on the pointlessness of funding education in a service lead economy. The only manufacturing business worthy of state subsidy was the arms industry employing a lot of middle class well educated engineers, scientists and a lot of well paid blue collar workers.

The debt actually IS NOT the problem, its the ability to pay it back, majority employment on tax credits doesn’t pay the nations debt back, it will ONLY make the working class who pay taxes EXTREMELY poor.

Moan Chomsky – “As long as the general population is passive…

Someone on facebook posted a Moan Chomsky quote and I just went off on one this morning…

It’s not that the general population is passive or apathetic on purpose, even if they did see the world for the way it is. Then they would still behave the same. It’s called human greed.

If you were to explain to someone living in the UK: how credit export guarantees are used to kill people in third world counties we’ve never seen – with tax payers money. Arming Genocide in Rwanda.

How many people the military industrial complex employs on every industrial estate up and down the country? The UK is the FOURTH largest manufacturer of WEAPONS. The City of London is without doubt the money laundering capital of world bar none, drugs, arms deals, tax avoidance…

They would find it awful.

Show them “The 4 Horsemen Of The Apocalypse” documentary – link at the bottom.

Then explain that for the country to stop this behaviour, they’d have a lower standard of living.

Yes, that less money to spend, higher prices for everything, fewer holidays, fewer car upgrades. Less money to spend on their family. Less welfare state, lower pensions.

Humans breed more successfully than rats.
If we reduced are birthrate in the 1st world, that would significantly reduce global warming over a 20 year period.
Each person in the UK contributes 20 tonnes of CO2 per annum.
80% of landfill is disposable nappies.
Now the children of today have two+ children – you can see how this continues.
And for every person born into a Western society we buy more cheap shit from abroad manufactured without any pollution control. Our purchases make their economies boom, thery have yet more children BECAUSE of our consumerism of having yet more children. Third world starts getting more successful, next they see TV, want meat. ONE kilogram of beef takes 5000 litres to produce.

Meanwhile back at home we have no way of looking after old people in any dignified manner.
Or the means to support our NHS or education.

17% of all boys aged 16-19 years old are illiterate. Thus rendering 25-30% workforce unemployable. They ain’t NEVER EVER going to be tax payers people. WAKE UP YOU FUCKWITS.

Now at home – all YOU really care about is your family.

Noam Chomsky you can’t wake these people up if you Monty Python style put 20,000 volts up ’em.

It’s not that they are stupid or asleep. Liberalism gave them these choices.

“Crony capitalism” created the system we live in the UK


Maybe Cameron isn’t an idiot? But a closet property developer #CameronCryptoBollox

Well our Prime Minister David Cameron really set the tongues wagging for the 1% with a vague concern about the small issues surrounding the freedom of speech on Monday 12th January 2015. The alleged “I am clearly an idiot with mentally challenged advisers” was as follows:

“Are we going to allow a means of communication between people which even in extremis, with a signed warrant from the Home Secretary personally, that we cannot read?”

“No we must not. The first duty of any government is to keep our country and our people safe.”

You see, I live near to Totnes in the UK, you may have heard of it even Internationally, it’s the home of Transition Town. Every now and again we’ll get the odd strange planning application come up in the local paper. The Duke of Somerset to build on green belt, yarda yarda. Then there’s the plot at the end of Plymouth road by the Council offices, yarda yarda and again a lovely green field site previously owned by the Dartington Hall Trust. Going under concrete as I type.

So I reckon Cameron is maybe a closet property developer? If you follow a local planning issue in your town and I’m writing as a Brit, I’m sure it’ll be the same story in your own town where ever you live.

  • Property Developer wants to build 100 homes
  • Property Developer applies to build 500 homes
  • Local outrage
  • Local authorities grant permission for 150 with stipulation to provide help for local amenities
  • Property Developer horse trades and settles for 100 without helping out local authorities

Directive 2006/24/EC-Directive 2002/58/EC 

According to the directive, member states will have to store citizens’ telecommunications data for a minimum of 6 months and at most 24 months. Under the directive the police and security agencies will be able to request access to details such as IP address and time of use of every email, phone call and text message sent or received. A permission to access the information will be granted only by a court. On 8 April 2014, the Court of Justice of the European Union declared the Directive invalid in response to a case brought by Digital Rights Ireland against the Irish authorities and others. (Wikip)

Germany’s Merkel urges new EU law on data tracking
15th January

An EU directive on data retention was made invalid by a European Court of Justice (ECJ) ruling last April.

That 2006 directive opened up private communications data to police, but message content was still protected.

Ms Merkel’s statement contrasts with the uproar in Germany last year over US mass surveillance of internet traffic.

She was speaking in the lower house of parliament (Bundestag) about measures to prevent attacks like the killing of 17 people in Paris last week by Islamist gunmen. (BBC)

Have have ever met a poor property developer? Or builder?
So as we know that banning encryption is clearly a stupid planning request, but we can see that providing the requirement for several hundred million or possibly a billion pounds plus of IT expenditure would be of great benefit to the private IT sector. The very same people who are calling Cameron an idiot – I’m not so sure.

bitcoin, the bazaar and Generation X

bitcoin by stealth
For the people who don’t have a bitcoin wallet or believe that Bitcoin is a technology that needs any time wasted thinking about it. Yes I’m talking directly to you, the Warren Buffet‘s of this world. Do you have an email address?

Warren Buffet as the man in street?
Warren Buffett giving a speech in 1998 to Florida University students saying he would flunk any student who gave a valuation to an internet company. Yes Warren Buffet strikes again as a seemingly intelligent person uttering complete rubbish. However he has consistently grown his folio by X% year on year without fail for 50 years. So we must respect this. But when the media start quoting people and never investigate the facts, you have to wonder who the media is serving.

There can be no doubts that there will be a long length of time before you are paying for goods and services with bitcoins in the High Street until using a wallet becomes as easy as sending a text or email and that took 10 years.

However before AOL and Compuserve seeded the market to the masses for email via walled garden, there were enough early adopters between:

  • Academia
  • Early commerical dial-up
  • AOL / Compuserve – aka Walled Garden but with Internet email gateways

I would postulate that these three based at around 1993/4 were enough to be the basis of a 5% of email users that took us up to the total user base of 1998/2000. Where SSL and payment gateways were created to handle automated credit card transactions. So lets have a look and see if it’s a 5% rule here?

1992 – 5 million users Microsoft Outlook launched
1999 – 400 million users Blackberry launched

Woe! – I was way wrong, it was actually in the region 1.25% – not 5%,  based on this source:

So what are those or could be those three groups’ now to get us to 1999 with bitcoin:

  • Early adopters
  • Travel agents
  • Street level

I’ve listed travel agents because when I went to Ireland in 2013 I was actually able to obtain the official exchange rate buying bitcoin in pounds on and meeting John in Starbucks in Dublin after we arrived by ferry. John was the Ireland side of another localbitcoin transaction. People often report that bitcoins are for hoarding, but plainly they aren’t when you go on holiday, because you can actually get a fair exchange. Yes bitcoin probably a privilege club right now, WASP male. However the remittance market will come, and when it does it really will help the poor and the unbanked around the world.

bitcoin and the bazaar (aka price stability)
So what on earth would cause your taxi driver, plumber, gardener, take-a-way to accept bitcoin?

The simplicity of a bitcoin wallets usage,  security and price stability are on their way each year, as I hypothesise that adoption rate of bitcoin should actually guide and signal the fiat value. The number of bitcoin users now in relation to the total practical user base within the next 5 years of bitcoin should outline it’s fiat price, by virtue of the curves the Internet has shown us.

When people assumed you have a mobile number and you can safety assume that anybody over the age of 14 in the UK has a mobile phone and email address, we can clearly see critical mass.

For email this was perhaps between 2008-2010. 80% of the UK population who were going to have an email address had got one. I am guessing wildly here.

As clearly we can assume that “bitcoin” / brand exposure in society/media is far greater and faster than the “Internet” was – like for like analysis. IE bitcoin equaled General Motors on the Internet in 2013. PWC report. The adopt curve despite it’s price stability and ease of use issues – is far faster than the Internet or email was.

Warren Buffet didn’t understand the “Internet” in 1998, nor does he understand “bticoin” in 2014. In way that’s interesting in itself, because he is of the age group that are determining bitcoin legal legislation. IE They haven’t a clue. If politicians had understood the Internet in 1998, and the capability it would have given the NSA, would they not have put more into it at the time to control it? Or more likely we’ll just have a wait and see approach by each country, with a slow trickle of decisions.

Does bitcoin need price stability in the short term for adoption to increase?

I am not sure, if more exchange hubs spring up at a local community level, travel agents and cafés who provide ultra competitive exchange rates in return for footfall. They provide’ll transparency and brand visibility.

At retail level, bitcoin payers could potentially obtain discounts because they not incurring cash or credit/debit card charges to retailers. In the UK as a retailer you have to pay your bank to pay in cash! On average to accept a debit card it’s £0.09 per transaction, however I cannot find a small business rate less then 19pence myself.

The UK’s Online Retail Association – IMRG 2013:

  • 1 in 3 online sales via mobile
  • Online retail sales up 18% year-on-year in December
  • 16% growth for the online retail market in 2013
  • 2013 ‘year of the mobile’: twice as much spent on mobile devices in December 2013 compared to December 2012
  • Forecast for 2014: 17% market growth and £107 billion to be spent online

Town centre stores are shutting down at a rate of 18 a day across Britain, according to figures.  Sept 2013. Analysing 500 UK town centres, they showed 3,366 stores closed while just 3,157 opened, a net reduction of 209 shops. This was an improvement on the same period last year when the net reduction was 953, but shows the high street is still struggling.

UK High Street – ****ed.

How many cash accepting High Street businesses will there be in 10 years in the UK?

Will the older people only just grew up with computers and mobile phones yearn for the days of cash born between 1961 and 1981? Will this group be the large second generation adopter? Generation X?

Generation X
The generation who are about to have it bad, loose you job at 40, you are ****ed.  Bought an endowment mortgage at the wrong time – mid 1970’s – ****ed. Pension – ****ed. Future ****ed. And because their children cannot get work, they will NEVER be the welfare state their parents enjoyed.

I think this is has got to be the most interesting group of future bitcoin users, old enough to take on the complexities of the technology with our current smartphones and angry enough to treat it like cash.

This is the group that currently runs small businesses, pay the most UK taxes and traditionally a plumber will accept “cash” for a discount when fitting a washing machine. Remember that large companies do not pay taxes and in the UK are now employing 1/2 million people on zero hour contracts, which is the same as the US. Your’re as good as fired at any time. Next week their are no hours for you to work – so you get zero pay.

In the UK, the government has created this problem, because it allowed a duality of UK tax payer and UK corporate non tax payer. And in the High Street this is having devastating results. For the rest of the 98% of UK tax payers as corporate entities or the self-employed. Inflation caused through quantitative easing maybe a touch paper to the adoption of bitcoin as days of “cash” are numbered if we look at money technology over the next 10 years. Surely money isn’t good, or a £5 pound note, but expression of this unit of X represents

Mark Cross is a consultant for - 37Coins is your global Bitcoin wallet. It makes financial transactions as simple as sending a text.

Bitcoin: The timeline, Mark’s hypothesis

PayPal Beacon launches

Ethereum launches, or rival build your own “Decentralized Autonomous Corporation“ come to exist on Darknet based on Ethereum‘s ideas

PayPal Wallet includes Bitcoin

National Banks provides Bitcoin Wallets


Case for the 100 Percent Gold Dollar by M.N. Rothman

Mises Daily: Monday, May 23, 2005 by 

Publication history: Leland Yeager (ed.), In Search of a Monetary Constitution. Cambridge, MA: Harvard University Press, 1962, pp. 94-136. Reprinted as The Case For a 100 Percent Gold Dollar. Washington, DC: Libertarian Review Press, 1974, and Auburn, Ala: Mises Institute, 1991, 2005. © Mises Institute, 2005. More on the author.


PDF copied from source site in case it  disappears…

Case for the 100 Percent Gold Dollar

To advocate the complete, uninhibited gold standard runs the risk, in this day and age, of being classified with the dodo bird. When the Roosevelt administration took us off the gold standard in 1933, the bulk of the nation’s economists opposed the move and advocated its speedy restoration. Now gold is considered an absurd anachronism, a relic of a tribal fetish. Gold indeed still retains a certain respectability in international trade; as the pre-eminent international money gold as a medium of foreign trade can command support. But while foreign trade is important, I would rather choose the far more difficult domestic battleground, and argue for a genuine gold standard at home as well as abroad. Yet I shall not join the hardy band of current advocates of the gold standard, who call for a virtual restoration of the status quo ante 1933. Although that was a far better monetary system than what we have today, it was not, I hope to show, nearly good enough. By 1932 the gold standard had strayed so far from purity, so far from what it could and should have been, that its weakness contributed signally to its final breakdown in 1933.

Money and Freedom

Economics cannot by itself establish an ethical system, although it provides a great deal of data for anyone constructing such a system—and everyone, in a sense, does so in deciding upon policy. Economists therefore have a responsibility, when advocating policy, to apprise the reader or listener of their ethical position. I do not hesitate to say that my own policy goal is the establishment of the free market, of what used to be called laissez faire, as broadly and as purely as possible. For this, I have many reasons, both economic and non-economic, which I obviously cannot develop here. But I think it important to emphasize that one great desideratum in framing a monetary policy is to find one that is truly compatible with the free market in its widest and fullest sense. This is not only an ethical but also an economic tenet; for, at the very least, the economist who sees the free market working splendidly in all other fields should hesitate for a longtime before dismissing it in the sphere of money.

I realize that this is not a popular position to take, even in the most conservative economic circles. Thus, in almost its first sentence, the United States Chamber of Commerce’s pamphlet series on “The American Competitive Enterprise Economy” announced: “Money is what the government says it is.”[5] It is almost universally believed that money, at least, cannot be free; that it must be controlled, regulated, manipulated, and created by government. Aside from the more strictly economic criticisms that I will have of this view, we should keep in mind that money, in any market economy advanced beyond the stage of primitive barter, is the nerve center of the economic system. If, therefore, the state is able to gain unquestioned control over the unit of all accounts, the state will then be in a position to dominate the entire economic system, and the whole society. It will also be able to add quietly and effectively to its own wealth and to the wealth of its favorite groups, and without incurring the wrath that taxes often invoke. The state has understood this lesson since the kings of old began repeatedly to debase the coinage.

The Dollar: Independent Name or Unit of Weight?

“If you favor a free market, why in the world do you say that government should fix the price of gold?” And, “If you wish to tie the dollar to a commodity, why not a market basket of commodities instead of only gold?” These questions are often asked of the libertarian who favors a gold standard; but the very framing of the questions betrays a fundamental misconception of the nature of money and of the gold standard. For the crucial, implicit assumption of such questions—and of nearly all current thinking on the subject of money—is that “dollars” are an independent entity. If dollars are indeed properly things-in-themselves, to be bought, sold, and evaluated on the market, then it is surely true that “fixing the price of gold” in terms of dollars becomes simply an act of government intervention.

There is, of course, no question about the fact that, in the world of today, dollars are an independent entity, as are pounds of sterling, francs, marks, and escudos. If this were all, and if we simply accepted the fact of such independence and did not inquire beyond, then I would be happy to join Professors Milton Friedman, Leland Yeager, and others of the Chicago school, and call for cutting these independent national moneys loose from arbitrary exchange rates fixed by government and allowing a freely fluctuating market in foreign exchange. But the point is that I do not think that these national moneys should be independent entities. Why they should not stems from the very nature and essence of money and of the market economy.

The market economy and the modern world’s system of division of labor operate as follows: a producer supplies a good or a service, selling it for money; he then uses the money to buy other goods or services that he needs. Let us then consider a hypothetical world of pure laissez faire,where the market functions freely and government has not infringed at all upon the monetary sphere. This system of selling goods for money would then be the only way by which an individual could acquire the money that he needed to obtain goods and services. The process would be: production à “purchase” of money à “sale” of money for goods.[6]

To those advocates of independent paper moneys who also champion the free market, I would address this simple question: “Why don’t you advocate the unlimited freedom of each individual to manufacture dollars?” If dollars are really and properly things-in-themselves, why not let everyone manufacture them as they manufacture wheat and baby food? It is obvious that there is indeed something peculiar about such money. For if everyone had the right to print paper dollars, everyone would print them in unlimited amounts, the costs being minuscule compared to the almost infinitely large denominations that could be printed upon the notes. Clearly, the entire monetary system would break down completely. If paper dollars are to be the “standard” money, then almost everyone would admit that government must step in and acquire compulsory monopoly of money creation so as to check its unlimited increase. There is something else wrong with everyone printing his own dollars: for then the chain from production of goods through “purchase” of money to “sale” of money for goods would be broken, and anyone could create money without having to be a producer first. He could consume without producing, and thus seize the output of the economy from the genuine producers.

Government’s compulsory monopoly of dollar-creation does not solve all these problems, however, and even makes new ones. For what is there to prevent government from creating money at its own desired pace, and thereby benefiting itself and its favored citizens? Once again, non-producers can create money without producing and obtain resources at the expense of the producers. Furthermore, the historical record of governments can give no one confidence that they will not do precisely that —even to the extent of hyperinflation and chaotic breakdown of the currency.

Why is it that historically, the relatively free market never had to worry about people wildly setting up money factories and printing unlimited quantities?[7] If “money” really means dollars and pounds and francs, then this would surely have been a problem. But the nub of the issue is this: On the pristine free market, money does not and cannot mean the names of paper tickets. Money means a certain commodity, previously useful for other purposes on the market, chosen over the years by that market as an especially useful and marketable commodity to serve as a medium for exchanges. No one prints dollars on the purely free market because there are, in fact, no dollars; there are only commodities, such as wheat, automobiles, and gold. In barter, commodities are exchanged for each other, and then, gradually, a particularly marketable commodity is increasingly used as a medium of exchange. Finally, it achieves general use as a medium and becomes a “money.” I need not go through the familiar but fascinating story of how gold and silver were selected by the market after it had discarded such commodity moneys as cows, fishhooks, and iron hoes.[8] And I need also not dwell on the unique qualities possessed by gold and silver that caused the market to select them—those qualities lovingly enunciated by all the older textbooks on money: high marketability, durability, portability, recognizability, and homogeneity. Like every other commodity, the “price” of gold in terms of the commodities it can buy varies in accordance with its supply and demand. Since the demand for gold and silver was high, and since their supply was low in relation to the demand, the value of each unit in terms of other goods was high—a most useful attribute of money. This scarcity, combined with great durability, meant that the annual fluctuations of supply were necessarily small—another useful feature of a money commodity.

Commodities on the market exchange by their unit weights, and gold and silver were no exceptions. When someone sold copper to buy gold and then to buy butter, he sold pounds of copper for ounces or grams of gold to buy pounds of butter. On the free market, therefore, the monetary unit—the unit of the nation’s accounts—naturally emerges as the unit of weight of the money commodity, for example, the silver ounce, or the gold gram.

In this monetary system emerging on the free market, no one can create money out of thin air to acquire resources from the producers. Money can only be obtained by purchasing it with one’s goods or services. The only exception to this rule is gold miners, who can produce new money. But they must invest resources in finding, mining, and transporting an especially scarce commodity. Furthermore, gold miners are productively adding to the world’s stock of gold for non-monetary uses as well.

Let us indeed assume that gold has been selected as the general medium of exchange by the market, and that the unit of account is the gold gram. What will be the consequences of complete monetary freedom for each individual? What of the freedom of the individual to print his own money, which we have seen to be so disastrous in our age of fiat paper? First, let us remember that the gold gram is the monetary unit, and that such debasing names as “dollar,” “franc,” and “mark” do not exist and have never existed. Suppose that I decided to abandon the slow, difficult process of producing services for money, or of mining money, and instead decided to print my own? What would I print? I might manufacture a paper ticket, and print upon it “10 Rothbards.” I could then proclaim the ticket as “money,” and enter a store to purchase groceries with my embossed Rothbards. In the purely free market which I advocate, I or anyone else would have a perfect right to do this. And what would be the inevitable consequence? Obviously, that no one would pay attention to the Rothbards, which would be properly treated as an arrogant joke. The same would be true of any “Joneses” “Browns,” or paper tickets printed by anyone else. And it should be clear that the problem is not simply that few people have ever heard of me. If General Motors tried to pay its workers in paper tickets entitled “50 GMs,” the tickets would gain as little response. None of these tickets would be money, and none would be considered as anything but valueless, except perhaps a few collectors of curios. And this is why total freedom for everyone to print money would be absolutely harmless in a purely free market: no one would accept these presumptuous tickets.

Why not freely fluctuating exchange rates? Fine, let us have freely fluctuating exchange rates on our completely free market; let the Rothbards and Browns and GMs fluctuate at whatever rate they will exchange for gold or for each other. The trouble is that they would never reach this exalted state because they would never gain acceptance in exchange as moneys at all, and therefore the problem of exchange rates would never arise.

On a really free market, then, there would be freely fluctuating exchange rates, but only between genuine commodity moneys, since the paper-name moneys could never gain enough acceptance to enter the field. Specifically, since gold and silver have historically been the leading commodity moneys, gold and silver would probably both be moneys, and would exchange at freely fluctuating rates. Different groups and communities of people would pick one or the other money as their unit of accounting.[9]

Names, therefore, whatever they may be, “Rothbard,” “Jones,” or even “dollar,” could not have arisen as money on the free market. How, then did such names as “dollar” and “peso” originate and emerge in their own right as independent moneys? The answer is that these names invariably originated as names for units of weight of a money commodity, either gold or silver. In short, they began not as pure names, but as names of units of weight of particular money commodities. In the British pound sterling we have a particularly striking example of a weight derivative, for the British pound was originally just that: a pound of silver money.[10] “Dollar” began as the generally applied name of an ounce weight of silver coined in the sixteenth century by a Bohemian, Count Schlick, who lived in Joachimsthal, and the name of his highly reputed coins became “Joachimsthalers,” or simply “thalers” or “dollars.” And even after a lengthy process of debasement, alteration, and manipulation of these weights until they more and more became separated names, they still remained names of units of weight of specie until, in the United States, we went off the gold standard in 1933. In short, it is incorrect to say that, before 1933, the price of gold was fixed in terms of dollars.

Instead, what happened was that the dollar was defined as a unit of weight, approximately 1/20 of an ounce of gold. It is not that the dollar was set equal to a certain weight of gold; it was that weight, just as any unit of weight, as, for example, one pound of copper is 16 ounces of copper, and is not simply and arbitrarily “set equal” to 16 ounces by some individual or agency.[11] The monetary unit was, therefore, always a unit of weight of a money commodity, and the names that we know now as independent moneys were names of these units of weight.[12]

Economists, of course, admit that our modern national moneys emerged originally from gold and silver, but they are inclined to dismiss this process as a historical accident from which we have now been happily emancipated. But Ludwig von Mises has shown, in his regression theorem, that logically money can only originate in a non-monetary commodity, chosen gradually by the market to be an ever more general medium of exchange. Money cannot originate as a new fiat name, either by government edict or by some form of social compact. The basic reason is that the demand for money on any “day,” X, which along with the supply of money determines the purchasing power of the money unit on that “day,” itself depends on the very existence of a purchasing power on the previous “day,” X-1. For while every other commodity on the market is useful in its own right, money (or a monetary commodity considered in its strictly monetary use), is only useful toexchange for other goods and services. Hence, alone among goods, money depends for its use and demand on having a pre-existing purchasing power. Since this is true for any “day” when money exists, we can push the logical regression backward, to see that ultimately the money commodity must have had a use in the “days” previous to money, that is, in the world of barter. [13]

I want to make it clear what I am not saying. I am not saying that fiat money, once established on the ruins of gold, cannot then continue indefinitely on its own. Unfortunately, such ultrametallists as J. Laurence Laughlin were wrong; indeed, if fiat money could not continue indefinitely, I would not have to come here to plead for its abolition.

The Decline from Weight to Name: Monopolizing the Mint

The debacle of 1931-1933, when the world abandoned the gold standard, was not a sudden shift from gold weight to paper name; it was but the last step in a lengthy, complex process. It is important, not just for historical reasons but for framing public policy today, to analyze the logical steps in this transformation. Each stage of this process was caused by another act of government intervention.

On the market, commodities take different forms for different uses, and so, on a free market, would gold or silver. The basic form of processed gold is gold bullion, and ingots or bars of bullion would be used for very large transactions. For smaller, everyday transactions, the gold would be divided into smaller pieces, coins, hardened by the slight infusion into an alloy to prevent abrasion (accounted for in the final weight). It should be understood that all forms of gold would really be money, since gold exchanges by weight. A gold ornament is itself money as well as ornament; it could be used in exchange, but it is simply not in a convenient shape for exchanges, and would probably be melted back into bullion before being used as money. Even sacks of gold dust might be used for exchange in mining towns. Of course it costs resources to shift gold from one form to another, and therefore on the market coins would tend to be at a premium over the equivalent weight in bullion, since it generally costs more to produce a coin out of bullion than to melt coins back into bullion.

The first and most crucial act of government intervention in the market’s money was its assumption of the compulsory monopoly of minting—the process of transforming bullion into coin. The pretext for socialization of minting—one which has curiously been accepted by almost every economist—is that private minters would defraud the public on the weight and fineness of the coins. This argument rings peculiarly hollow when we consider the long record of governmental debasement of the coinage and of the monetary standard. But apart from this, we certainly know that private enterprise has been able to supply an almost infinite number of goods requiring high precision standards; yet nobody advocates nationalization of the machine-tool industry or the electronics industry in order to safeguard these standards. And no one wants to abolish all contracts because some people might commit fraud in making them. Surely the proper remedy for any fraud is the general law in defense of property rights.[14]

The standard argument against private coinage is that the minting business operates by a mysterious law of its own—Gresham’s Law—where “bad money drives out good,” in contrast to other areas of competition, where the good product drives out the bad.[15] But Mises has brilliantly shown that this formulation of Gresham’s Law is a misinterpretation, and that the Law is a subdivision of the usual effects of price control by government: in this case, the government’s artificial fixing of an exchange rate between two or more moneys creates a shortage of the artificially under-valued money and a surplus of the over-valued money. Gresham’s Law is therefore a law of government intervention rather than one of the free market.[16]

The state’s nationalization of the minting business injured the free market and the monetary system in many ways. One neglected point is that government minting is subject to the same flaws, inefficiencies, and tyranny over the consumer as every other government operation. Since coins are a convenient monetary shape for daily transactions, the state’s decree that only X, Y, and Zdenominations shall be coined imposes a loss of utility on consumers and substitutes uniformity for the diversity of the market. It also begins the long disastrous slide from an emphasis on weight to an emphasis on name, or tale. In short, under private coinage there would be a number of denominations, in strict accordance with the variety of consumer wants. The private stamp would probably guarantee fineness rather than weight, and the coins would circulate by weight. But if the government decrees just a few denominations, then weight begins to be disregarded, and the name of the coin to be considered more and more. For example, the problem persisted in Europe for centuries of what to do with old, worn coins. If a 30-gram coin was worn down to 25 grams, the simplest thing would be for the old coin to circulate not at the old and now misleading 30 grams but at the new, correct 25 grams. The fact that the state itself had stamped 30 grams on the new coin, however, was somehow considered an insuperable barrier to such a simple solution. And, furthermore, much monetary debasement took place through the state’s decree that new and old coins be treated alike, with Gresham’s Law causing new coins to be hoarded and only old ones to circulate.[17]

The royal stamp on coins also gradually shifted emphasis from weight to tale by wrapping coinage in the trappings of the mystique of state “sovereignty.” For many centuries it was considered no disgrace for foreign gold and silver coins to circulate in any area; monetary nationalism was yet in its infancy. The United States used foreign coins almost exclusively through the first quarter of the nineteenth century. But gradually foreign coins were outlawed, and the name of the national state’s unit became enormously more significant.

Debasement through the centuries greatly spurred a loss of confidence in money as a unit of weight. There is only one point to any standard of weight: that it be eternally fixed. The international meter must always be the international meter. But using their minting monopoly, the state rulers juggled standards of monetary weight to their own economic advantage. It was as if the state were a huge warehouse that had accepted many pounds of copper or other commodity from its clients, and then, when the clients came to redeem, the warehouseman suddenly announced that henceforth a pound would equal 12 ounces instead of 16, and paid out only three fourths of the copper pocketing the other fourth for his own use. It is perhaps superfluous to point out that any private agency doing such a thing would be promptly branded as criminal.[18]

The Decline from Weight to Name: Encouraging Bank Inflation

The natural tendency of the state is inflation. This statement will shock those accustomed to viewing the state as a committee of the whole nation ardently dispensing the general welfare, but I think it nonetheless true. The reason seems to be obvious. As I have mentioned above, money is acquired on the market by producing goods and services, and then buying money in exchange for these goods. But there is another way to obtain money: creating money oneself without producing—by counterfeiting. Money creation is a much less costly method than producing; therefore the state, with its ever-tightening monopoly of money creation, has a simple route that it can take to benefit its own members and its favored supporters.[19] And it is a more enticing and less disturbing route than taxes—which might provoke open opposition. Creating money, on the contrary, confers open and evident benefits on those who create and first receive it; the losses it imposes on the rest of society remain hidden to the lay observer. This tendency of the state should alone preclude all the schemes of economists and other writers for government to issue and stabilize the supply of paper money.

While countries were still on a specie standard, bank notes and government paper were issued as redeemable in specie. They were money substitutes, essentially warehouse receipts for gold, that could be redeemed in face value on demand. Soon, however, the issue of receipts went beyond 100 percent reserve to outright money creation. Governments have persistently tried their best to promote, encourage, and expand the circulation of bank and government paper, and to discourage the people’s use of gold itself. Any individual bank has two great checks on its creation of money: a call for redemption by non-clients (that is, by clients of other banks, or by those who wish to use standard money), and a crisis of confidence in the bank by its clients, causing a “run.” Governments have continually operated to widen these limits, which would be narrow in a system of “free banking”—a system where banks are free to do anything they please, so long as they promptly redeem their obligations to pay specie. They have created a central bank to widen the limits to the whole country by permitting aft banks to inflate together—under the tutelage of the government. And they have tried to assure the banks that the government will not permit them to fail, either by coining the convenient doctrine that the central bank must be a “lender of last resort” or reserves to the banks, or, as in America, by simply “suspending specie payments” that is, by permitting banks to continue operations while refusing to redeem their contractual obligations to pay specie.[20]

Another device used over the years by governments was to persuade the public not to use gold in their daily transactions; to do so was scorned as an anachronism unsuited to the modern world. The yokel who didn’t trust banks became a common object of ridicule. In this way, gold was more and more confined to the banks and to use for very large transactions; this made it very much easier to go off the gold standard during the Great Depression, for then the public could be persuaded that the only ones to suffer were a few selfish, antisocial, and subtly unpatriotic gold hoarders. In fact, as early as the Panic of 1819 the idea had spread that someone trying to redeem his bank note in specie, that is, to redeem his own property, was a subversive citizen trying to wreck the banks and the entire economy; and by the 1930s it was thus easy to denounce gold hoarders as virtual traitors.[21]

And so by imposing central banking, by suspending specie payments, and by encouraging a shift among the public from gold to paper or bank deposits in their everyday transactions, the governments organized inflation, and thus an ever larger proportion of money substitutes to gold (an increasing proportion of liabilities redeemable on demand in gold, to gold itself). By the 1930s, in short, the gold standard—a shaky gold base supporting an ever greater pyramid of monetary claims—was ready to collapse at the first severe depression or wave of bank runs.[22]

100 Percent Gold Banking

We have thus come to the cardinal difference between myself and the bulk of those economists who still advocate a return to the gold standard. These economists, represented by Dr. Walter E. Spahr and his associates in the Economists’ National Committee on Monetary Policy, essentially believe that the old pre-1933 gold standard was a fine and viable institution in all its parts, and that going off gold in 1933 was a single wicked act of will that only needs to be repealed in order to re-establish our monetary system on a sound foundation. I, on the contrary, view 1933 as but the last link in a whole chain of unfortunate actions; it seems clear to me that the gold standard of the 1920s was so vitiated as to be ready to collapse. A return to such a gold standard, while superior to the present system, would only pave the way for another collapse— and this time, I am afraid, gold would get no further chance. Although the transition period would be more difficult, it would be kinder to the gold standard, as well as better for the long-run economic health of the country, to go back to a stronger, more viable gold standard than the one we have lost.

I daresay that my audience has been too much exposed to the teachings of the Chicago School to be shocked at the idea of 100 percent reserve banking. This topic, of course, is worthy of far more space than I can give it here. I can only say that my position on 100 percent banking differs considerably in emphasis from the Chicago School. The Chicago group basically views 100 percent money as a technique—as a useful, efficient tool for government manipulation of the money supply, unburdened by lags or friction in the banking system. My reasons for advocating 100 percent banking cut much closer to the heart of our whole system of the free market and property rights.[23] In my view, issuing promises to pay on demand in excess of the amount of goods on hand is simply fraud, and should be so considered by the legal system. For this means that a bank issues “fake” warehouse receipts—warehouse receipts, for example, for ounces of gold that do not actually exist in the vaults. This is legalized counterfeiting; this is the creation of money without the necessity for production, to compete for resources against those who have produced. In short, I believe that fractional-reserve banking is disastrous both for the morality and for the fundamental bases and institutions of the market economy.

I am familiar with the many arguments for fractional-reserve banking. There is the view that this is simply economical: The banks began with 100 percent reserves, but then they shrewdly and keenly saw that only a certain proportion of these demand liabilities were likely to be redeemed, so that it seemed safe either to lend out the gold for profit or to issue pseudo-warehouse receipts (either as bank notes or as bank deposits) for the gold, and to lend out those. The banks here take on the character of shrewd entrepreneurs. But so is an embezzler shrewd when he takes money out of the company till to invest in some ventures of his own. Like the banker, he sees an opportunity to earn a profit on someone else’s assets. The embezzler knows, let us say, that the auditor will come on June 1 to inspect the accounts; and he fully intends to repay the “loan” before then. Let us assume that he does; is it really true that no one has been the loser and everyone has gained? I dispute this; a theft has occurred, and that theft should be prosecuted and not condoned. Let us note that the banking advocate assumes that something has gone wrong only if everyone should decide to redeem his property, only to find that it isn’t there. But I maintain that the wrong—the theft—occurs at the time the embezzler takes the money, not at the later time when his “borrowing” happens to be discovered.[24]

Another argument holds that the fact that notes and deposits are redeemable on demand is only a kind of accident; that these are merely credit transactions. The depositors or noteholders are simply lending money to the banks, which in turn act as their agents to channel the money to business firms. And why repress productive credit? Mises has shown, however, the crucial difference between a credit transaction and a claim transaction; credit always involves the purchase of a future good by the creditor in exchange for a present good (money). The creditor gives up a present good in exchange for an IOU for a good coming to him in the future. But a claim—and bank notes or deposits are claims to money—does not involve the creditor’s relinquishing any of the present good. On the contrary the noteholder or deposit-holder still retains his money (the present good) because he has a claim to it, a warehouse receipt, which he can redeem at any time he desires.[25] This is the nub of the problem, and this is why fractional-reserve banking creates new money while other credit agencies do not—for warehouse receipts or claims to money function on the market as equivalent to standard money itself.

To those who persist in believing that the bulk of bank deposits are really saved funds voluntarily left with the banks to invest for savers, and are not just kept as monetary cash balances, I would like to lay down this challenge: If what you say is true, why not agree to alter the banking structure to change these deposits to debentures of varying maturities? A shift from uncovered deposits to debentures will of course mean an enormous drop in the supply of money; but if these deposits are simply another form of credit, then the depositors should not object and we 100-percent theorists will be satisfied. The purchase of a debenture will, furthermore, be a genuine saving and investment of existing money, rather than an unsound increase in the money supply.[26]

In sum, I am advocating that the law be changed to treat bank notes and deposits as what they are in economic and social fact: claims warehouse receipts to standard money—in short, that the note and the deposit holders be recognized as owners-in-law of the gold (or, under a fiat standard, of the paper) in the bank’s vaults. Now treated in law as a debt, a deposit or note should be considered as evidence of a bailment.[27] In relation to general legal principles this would not be a radical change, since warehouse receipts are treated as bailments now. Banks would simply be treated as money warehouses in relation to their notes and deposits.[28]

Professor Spahr often uses the analogy of a bridge to justify fractional-reserve money. The builder of a bridge estimates approximately how many people will be using it daily. He builds the bridge on that basis and does not attempt to accommodate all the people in the city, should they all decide to cross the bridge simultaneously. But the most critical fallacy of this analogy is that the inhabitants do not then have a legal claim to cross the bridge at any time. (This would be even more evident if the bridge were owned by a private firm.) On the other hand, the holders of money substitutes most emphatically do have a legal claim to their own property at any time they choose to redeem it. The claims must then be fraudulent, since the bank could not possibly meet them all.[29]

To those who want the dollar convertible into gold but are content with the pre-1933 standard, we might cite the analysis of Amasa Walker, one of the great American economists a century ago: “So far as specie is held for the payment of these [fractional-reserve backed} notes, this kind of currency is actually convertible, and equivalent to money; but, in so far as the credit element exceeds the specie, It is only a promise to pay money, and is inconvertible, A mixed [fractional-reserve] currency, therefore can only be regarded as partially convertible; the degree of its convertibility depending upon the proportion the specie bears to the notes issued and the deposits.”[30]

For a believer in free enterprise, a system of “free banking” undoubtedly has many attractions. Not only does it seem most consistent with the general institution of free enterprise, but Mises and others have shown that free banking would lead not to the infinite supply of money envisioned by such Utopian partisans of free banking as Proudhoun, Spooner, Greene, and Meulen, but rather to a much “harder” and sounder money than exists when banks are controlled by a central bank. In practice, therefore free banking would come much closer to the 100 percent ideal than the system we now have.[31] And yet if “free trade in banking is free trade in swindling,” then surely the soundest course would be to take the swindling out of banking altogether. Mises’ sole argument against 100 percent gold banking is that this would admit the unfortunate precedent of government control of the banking system. But if fractional-reserve banking is fraudulent, then it could be outlawed not as a form of administrative government intervention in the monetary system, but rather as part of the general legal prohibition of force and fraud.[32] Within this general prohibition of fraud, my proposed banking reform would leave the private banks entirely free.[33]

Objections to 100 Percent Gold

Certain standard objections have been raised against 100 percent banking and against 100 percent gold currency in particular. One generally accepted argument against any form of 100 percent banking I find particularly and strikingly curious: that under 100 percent reserves, banks would not be able to continue profitably in business. I see no reason why banks should not be able to charge their customers for their services, as do all other useful businesses. This argument points to the supposedly enormous benefits of banking; if these benefits were really so powerful, then surely the consumers would be willing to pay a service charge for them, just as they pay for traveler’s checks now. If they were not willing to pay the costs of the banking business as they pay the costs of all other industries useful to them, then that would demonstrate the advantages of banking to have been highly overrated. At any rate, there is no reason why banking should not take its chance in the free market with every other industry.

The major objection against 100 percent gold is that this would allegedly leave the economy with an inadequate money supply. Some economists advocate a secular increase of the supply of money in accordance with some criterion: population growth, growth of volume of trade, and the like; others wish the money supply to be adjusted to provide a stable and fixed price level. In both cases, of course, the adjusting and manipulating could only be done by government. These economists have not fully absorbed the great monetary lesson of classical economics: that the supply of money essentially does not matter. Money performs its function by being a medium of exchange; any change in its supply, therefore, will simply adjust itself in the purchasing power of the money unit, that is, in the amount of other goods that money will be able to buy. An increase in the supply of money means merely that more units of money are doing the social work of exchange and therefore that the purchasing power of each unit will decline. Because of this adjustment, money, in contrast to all other useful commodities employed in production or consumption, does not confer a social benefit when its supply increases. The only reason that increased gold mining is useful, in fact, is that the large supply of gold will satisfy more of the non–monetary uses of the gold commodity.

There is therefore never any need for a larger supply of money (aside from the non-monetary uses of gold or silver). An increased supply of money can only benefit one set of people at the expense of another set, and, as we have seen, that is precisely what happens when government or the banks inflate the money supply. And that is precisely what my proposed reform is designed to eliminate. There can, incidentally, never be an actual monetary “shortage,” since the very fact that the market has established and continues to use gold or silver as a monetary commodity shows that enough of it exists to be useful as a medium of exchange.

The number of people, the volume of trade, and all other alleged criteria are therefore merely arbitrary and irrelevant with respect to the supply of money. And as for the ideal of the stable price level, apart from the grave flaws of deciding on a proper index, there are two points that are generally overlooked. In the first place, the very ideal of a stable price level is open to challenge. Hoarding, as we have indicated, is always attacked; and yet it is the freely expressed and desired action on the market. People often wish to increase the real value of their cash balances, or to raise the purchasing power of each dollar. There are many reasons why they might wish to do so. Why should they not have this right, as they have other rights on the free market? And yet only by their “hoarding” taking effect through lower prices can they bring about this result. Only by demanding more cash balances and thus lowering prices can the dollars assume a higher real value. I see no reason why government manipulators should be able to deprive the

consuming public of this right. Second, if people really had an overwhelming desire for a stable price level, they would negotiate all their contracts in some agreed-upon price index. The fact that such a voluntary “tabular standard” has rarely been adopted is an apt enough commentary on those stable-price-level enthusiasts who would impose their ambitions by government coercion.

Money, it is often said, should function as a yardstick, and therefore its value should be stabilized and fixed. Not its value, however, but its weight should be eternally fixed, as are all other weights. Its value, like all other values, should be left to the judgment, estimation and ultimate decision of every individual consumer.[34]

Professor Yeager and 100 Percent Gold

One of the most important discussions of the 100 percent gold standard in recent years is by Professor Leland Yeager.[35] Professor Yeager, while actually at the opposite pole as an advocate of freely-fluctuating fiat moneys, recognizes the great superiority of 100 percent gold over the usual pre-1933 type of gold standard. The main objections to the gold standard are its vulnerability to great and sudden deflations and the difficulties that national authorities face when a specie drain abroad threatens domestic bank reserves and forces contraction. With 100 percent gold, Yeager recognizes, none of these problems would exist:

Under a 100 percent hard-money international gold standard, the currency of each country would consist exclusively of gold (or of gold plus fully-backed warehouse receipts for gold in the form of paper money and token coins). The government and its agencies would not have to worry about any drain on their reserves. The gold warehouses would never be embarrassed by requests to redeem paper money in gold, since each dollar of paper money in circulation would represent a dollar of gold actually in a warehouse. There would be no such thing as independent national monetary policies; the volume of money in each country would be determined by market forces. The world’s gold supply would be distributed among the various countries according to the demands for cash balances of the individuals in the various countries. There would be no danger of gold deserting some countries and piling up excessively in others for each individual would take care not to let his cash balance shrink or expand to a size which he considered inappropriate in view of his own income and wealth.

Under a 100 percent gold standard… the various countries would have a common monetary system, just as the various states of the United States now have a common monetary system. There would be no more reason to worry about disequilibrium in the balance of payments of any particular country than there is now reason to worry about disequilibrium in the balance of payments of New York City. If each individual (and institution) took care to avoid persistent disequilibrium in his personal balance of payments, that would be enough The actions of individuals in maintaining their cash balances at appropriate levels would “automatically” take care of the adequacy of each country’s money supply.

The problems of national reserves, deflation, and so forth, Yeager points out, are due to the fractional-reserve nature of the gold standard, not to gold itself. “National fractional reserve systems are the real source of most of the difficulties blamed on the gold standard.” With fractional reserves, individual actions no longer suffice to assure automatically the proper distribution of the supply of gold. “The difficulties arise because the mixed national currencies—currencies which are largely paper and only partly gold—are insufficiently international. The main defect of the historical gold standard is the necessity of ‘protecting’ national gold reserves.” Central banking and its management only make things worse: “In short, whether a Central Bank amplifies the effects of gold flows, remains passive in the face of gold flows, or ‘offsets’ gold flows, its behavior is incompatible with the principles of the full-fledged gold standard. Indeed, any kind of monetary management runs counter to the principles of the pure gold standard.”[36]

In view of this eloquent depiction of the 100 percent gold standard, why does Yeager flatly reject it and call instead for freely fluctuating fiat money? Largely because only with fiat money can each governmental unit stabilize the price level in its own area in times of depression. Now I cannot pause to discuss further the policy of stabilization, which I believe to be both fallacious and disastrous. I can only point out that contrary to Professor Yeager, price declines and exchange rate depreciation are not simple alternatives. To believe this is to succumb to a fatal methodological holism and to abandon the sound path of methodological individualism. If, for example, a steel union in a certain area is causing unemployment in steel by insisting on keeping its wage rates up though prices have fallen, I consider it at once unjust, a cause of misallocations and distortions of production, and positively futile to try to remedy the problem by forcing all the consumers in the area to suffer by paying higher prices for their imports (through a fall in the area’s exchange rate).

One problem that every monetary statist and nationalist has failed to face is the geographical boundary of each money. If there should be national fluctuating fiat money, what should be the boundaries of the “nation”? Surely political frontiers have little or no economic meaning. Professor Yeager is courageous enough to recognize this and to push fiat money almost to a reductio by advocating, or at least considering, entirely separate moneys for each region or even locality in a nation.

Yeager has not pushed the reductio far enough, however. Logically, the ultimate in freely fluctuating fiat moneys is a different money issued by each and every individual. We have seen that this could not come about on the free market. But suppose that this came about by momentum from the present system or through some other method. What then? Then we would have a world chaos indeed, with “Rothbards,” “Yeagers,” “Joneses,” and billions of other individual currencies freely fluctuating on the market. I think it would be instructive if some economist devoted himself to an intensive analysis of what such a world would look like. I think it safe to say that the world would be back to an enormously complex and chaotic form of barter and that trade would be reduced to a virtual standstill. For there would no longer be any sort of monetary medium for exchanges. Each separate exchange would require a different “money.” In fact, since money meansa general medium of exchanges, it is doubtful if the very concept of money would any longer apply. Certainly the indispensable economic calculation provided by the money and price system would have to cease, since there would no longer be a common unit of account.[37] This is a serious and not farfetched criticism of fiat-money proposals, because all of them introduce some of this chaotic element into the world economy. In short, fluctuating fiat moneys are disintegrative of the very function of money itself. If every individual had his own money, the disintegration of the very existence of money would be complete; but national—and still more regional and local—fiat moneys already partially disintegrate the money medium. They contradict the essence of the monetary function.

Finally, Professor Yeager wonders why such “orthodox liberals” as Mises, Hayek, and Robbins should have insisted on the “monetary internationalism” of the gold standard. Without presuming to speak for them, I think the answer can be put in two parts: (1) because they favor monetary freedom rather than government management and manipulation of money, and (2) because they favored the existence of money as compared to barter—because they believed that money is one of the greatest and most significant features of the modern market economy, and indeed of civilization itself. The more general the money, the greater the scope for division of labor and for the interregional exchange of goods and services that stem from the market economy. A monetary medium is therefore critical to the free market, and the wider the use of this money, the more extensive the market and the better it can function. In short, true freedom of trade does require an international commodity money—as the history of the market economy of recent centuries has shown—gold and silver. Any breakup of such an international medium by statist fiat paper inevitably cripples and disintegrates the free market, and robs the world of the fruits of that market. Ultimately, the issue is a stark one: we can either return to gold or we can pursue the fiat path and return to barter. It is perhaps not hyperbole to say that civilization itself is at stake in our decision.[38]

The 100 Percent Gold Tradition

I therefore advocate as the soundest monetary system and the only one fully compatible with the free market and with the absence of force or fraud from any source a 100 percent gold standard. This is the only system compatible with the fullest preservation of the rights of property. It is the only system that assures the end of inflation and, with it, of the business cycle?[39] And it is the only form of gold standard that fully meets the following argument of the Douglas subcommittee against a return to gold: “An overriding reason against making gold coin freely available is that no government [or banks?] should make promises which it would not be able to keep if the demand should arise. Monetary systems for over a century have expanded more rapidly than would be permitted by accretions of gold.”[40]

While this is undoubtedly a “radical” program for this day and age, it is important to note briefly that this program is squarely in a great tradition: not only in the economic tradition of the classical economists and the currency school, but also in the American political tradition of the Jeffersonians and the Jacksonians. In essence, this was their program. In passing it should be noted that almost all historians, with the notable exceptions of William Graham Sumner and Joseph Dorfman, have misinterpreted the Jeffersonians and Jacksonians as economically ignorant and anti-capitalist agrarians lashing out at a credit system they failed to understand. Whether one agrees with their position or not, they wrote in full and sophisticated knowledge of classical economics and were fully devoted to capitalism and the free market, which they believed were hampered and not aided by the institution of fractional-reserve banking.[41] In fact, it might almost be said that these Americans were unterrified members of the currency school, lacking the almost blind devotion to the Bank of England of their more pragmatic British cousins. Indeed, the currency principle was enunciated in America several years before it made its appearance in England.[42] And such founders of the currency principle in America as Condy Raguet realized what the more eminent British tragically failed to see: that bank deposits are just as fully money substitutes as bank notes, and are therefore part of the broad money supply.[43]

After the Civil War, hard-money economists were preoccupied with battling the new greenback and free-silver problems, and the idea of 100 percent gold virtually faded from view. General Amasa Walker, however, wrote into the 1860s and even he was surpassed in acumen by the brilliant and neglected writings of the Boston merchant Charles H. Carroll, who advocated 100 percent gold reserves against bank deposits as well as notes, and also urged the replacement of the name “dollar” by gold ounce or gold gram.[44] And an official of the United States Assay Office, Isaiah W. Sylvester, who has been completely neglected by historians, advocated a 100 percent dollar and parallel standards.[45] In the present century the only economist to advocate a 100 percent gold standard, to my knowledge, has been Dr. Elgin Groseclose.[46]

The Road Ahead

Having decided to return to a 100 percent gold dollar, we are confronted with the problem of how to go about it. There is no question about the difficulty of the transition period required to reach our goal. But once the transition period is concluded, we will have the satisfaction of possessing the best monetary system known to man and of eliminating inflation, business cycles, and the uneconomic and immoral practice of people acquiring money at the expense of producers. Since we have many times the number of dollars as we have gold dollars at the present fixed weight of the dollar, we have essentially two alternative, polar routes toward 100 percent gold: either to force a deflation of the supply of dollars down to the currently valued gold stock, or to “raise the price of gold” (to lower the definition of the dollar’s weight) to make the total stock of gold dollars 100 percent equal to the total supply of dollars in the society. Or we can choose some combination of the two routes.

Professor Spahr and his associates wish to return to the gold standard (though not to 100 percent gold) at the current “price” of $35 an ounce, stressing the importance of fixity of the weight of the dollar. If these were before 1933 and we were still on a gold standard, even if a defective one, I would unhesitatingly agree. The principle of a fixed weight for the dollar, and above all the principle of the sanctity of contract, are essential to our entire system of private property, and therefore would have been well worth the difficulties of a severe deflation. Aside from that, we have built deflation into an absurd ogre, and have overlooked the healthy consequences of a deflationary purgation of the malinvestments of the boom, as well as the overdue aid that fixed income groups, hit by decades of inflationary erosion, would at last obtain from a considerable fall in prices. A sharp deflation would also help to break up the powerful aggregations of monopoly unionism, which are potentially so destructive of the market economy. At any rate, while the deflation would be nominally sharp, to the extent that people would wish to save much of their present cash holdings, they would increase voluntary savings by purchasing bank debentures in lieu of their deposits, thereby fostering “economic growth” and mitigating the rigors of the deflation.

On the other hand, there is no particular reason to be devoted to the $35 figure at the present time, since the existing “gold standard” and definition of the dollar are only applicable to foreign governments and central banks; as far as the people are concerned, we are now on a virtual fiat standard. Therefore, we may change the definition of the dollar as a preliminary step to return to a full gold standard, and we would not really be disturbing the principle of fixity. As in the case of any definition of weight, the initial definition is purely arbitrary, and we are so close now to a fiat standard that we may consider any dollar in a new standard as an initial definition.

Depending on how we define the money supply—and I would define it very broadly as all claims to dollars at fixed par value—a rise in the gold price sufficient to bring the gold stock to 100 percent of total dollars would require a ten- to twentyfold increase, This of course would bring an enormous windfall gain to the gold miners, but this does not concern us. I do not believe that we should refuse an offer of a mass entry into Heaven simply because the manufacturers of harps and angels’ wings would enjoy a windfall gain. But certainly a matter for genuine concern would be the enormous impetus such a change would give for several years to the mining of gold, as well as the disruption it would cause in the pattern of international trade.

Which course we take, or which particular blend of the two, is a matter for detailed study by economists. Obviously little or none of this needed study has been undertaken. I therefore do not propose here a detailed blueprint. I would like to see all of those who have become convinced of the need for a 100 percent gold standard join in such a study of the best path to take toward such a goal under present conditions. Broadly, the desired program may be summarized as follows:

1. Arrival of a 100 percent gold dollar, either by deflation of dollars to a gold stock valued at $35 per ounce, or by revaluation of the dollar at a “gold price” high enough to make the gold stock 100 percent of the present supply of dollars, or a blend of the two routes.

2. Getting the gold stock out of the hands of the government and into the hands of the banks and the people, with the concomitant liquidation of the Federal Reserve System, and a legal 100 percent requirement for all demand claims.

3. The transfer of all note-issue functions from the Treasury and the Federal Reserve to the private banks. All banks, in short, would be allowed to issue deposits or notes at the discretion of their clients.

4. Freeing silver bullion and its representative in silver certificates (which would now be issued by the banks) from any fixed value in gold. In short, silver ounces and their warehouse receipts would fluctuate, as do all other commodities, on the market in terms of gold or dollars, thus giving us “parallel” gold and silver moneys, with gold dollars presumably remaining the chief money as the unit of account.

5. The eventual elimination of the term “dollar,” using only terms of weight such as “gold gram” or “gold ounce.”[47] The ultimate goal would be the return to gold by every nation, at 100 percent of its particular currency, and the subsequent blending of all these national currencies into one unified world gold-gram unit. This was one of the considered goals at the abortive international monetary conferences of the late nineteenth century.[48] In such a world, there would be no exchange rates except between gold and silver, for the national currency names would be abandoned for simple weights of gold, and all the world’s money would at long last be freed from government intervention.

6. Free (but presumably not gratuitous) private coinage of gold and silver.

I must here differ with Professor Mises’ and Henry Hazlitt’s suggestion for return to the gold standard by first establishing a “free market” in gold by cutting the dollar completely loose from gold, and then seeing, after several years, what gold price the market would establish.[49] In the first place, this would cut the last tenuous link that the dollar still has to gold and yield us a totally fiat money. Second, the market would hardly be a “free” one, since almost all the nation’s gold would be sequestered in government hands. I think it important to move in the reverse direction. The Federal government, after all, seized the people’s gold in 1933 under the guise of a temporary emergency. It is important, for moral and economic reasons, to permit the people to reclaim their gold as rapidly as possible. And since the gold is still held as hostage for our dollars, I believe that the official link and official convertibility between dollars and gold should be re-established as soon as Congress can be so persuaded. And finally, since the dollar is merely a weight of gold, properly speaking, it is not at all appropriate to establish a “market” between dollars and gold, any more than there should be a “market” between one-dollar bills and five-dollar bills.

There is no gainsaying the fact that this suggested program will strike most people as impossibly “radical” and “unrealistic”; any suggestion for changing the status quo, no matter how slight, can always be considered by someone as too radical, so that the only thoroughgoing escape from the charge of impracticality is never to advocate any change whatever in existing conditions. But to take this approach is to abandon human reason, and to drift in animal- or plant-like manner with the tide of events. As Professor Philbrook pointed out in a brilliant article some years ago, we must frame our policy convictions on what we believe the best course to be and then try to convince others of this goal, and not include within our policy conclusions estimates of what other people may find acceptable.[50] For someone must propagate the truth in society, as opposed to what is politically expedient. If scholars and intellectuals fail to do so if they fail to expound their convictions of what they believe the correct course to be, they are abandoning truth, and therefore abandoning their very raison d’être, All hope of social progress would then be gone, for no new ideas would ever be advanced nor effort expended to convince others of their validity.


[1] The precise ratio of gold weights amounted to defining the pound sterling as equal to $4.86656.

[2] Actually, if they had been consistent in their devotion to a fixed definition, the Spahr group should have advocated a return to gold at $20 an ounce, the long-standing definition before Franklin B. Roosevelt began tampering with the gold price in 1933. The “Spahr group” consisted of two organizations: The Economists’ National Committee on Monetary Policy, headed by Professor Walter E. Spahr of New York University; and an allied laymen’s activist group, headed by Philip McKenna, called The Gold Standard League. Spahr expelled Henry Hazlitt from the former organization for the heresy of advocating return to gold at a far higher price (or lower weight).

[3] At one point, the price of gold reached $850, and is now lingering in the area of $350 an ounce. While gold bugs like to mope about the alleged failure of gold to rise still further, it should be noted that even this “depressed” gold price is tenfold the alleged eternally fixed rate of $35 an ounce. One side effect of the rising market price of gold was to ensure the total disappearance of the Spahr group. Thirty-five dollar gold is now not even a legal fiction; it is dead and buried, and it is safe to say that no one, of any school of thought, will want to resurrect it.

[4] For a critique of some of these schemes, see Murray N. Rothbard, “Aurophobia, Or: Free Banking On What Standard?”, Review of Austrian Economics 6, no. 1(1992); and Rothbard, “The Case for a Genuine Gold Dollar,” in Llewellyn H. Rockwell, Jr., ed. The Gold Standard: An Austrian Perspective(Lexington, Mass.: Lexington Books, 1985), pp. 1-17.

[5] Economic Research Department, Chamber of Commerce of the United States, The Mystery of Money (Washington, DC.: Chamber of Commerce, 1953), p. 1.

[6] A person could also receive money from producers by inheritance or other gift, but here again the ultimate giver must have been a producer. Furthermore, we may say that the recipient “produced” some intangible service—for instance, of being a son and heir—which provided the reason for the giver’s contribution.

[7] The American “wildcat bank” did not print money itself, but rather bank notes supposedlyredeemable in money.

[8] On the process of emergence of money on the market, see the classic exposition of Carl Menger in his Principles of Economics, translated and edited by James Dingwall and Bert F. Hoselitz (Glencoe, Ill.: Free Press, 1950), pp. 257-85.

[9] The exchange rate between gold and silver will inevitably be at or near their purchasing-power parities, in terms of the social array of goods available, and this rate would tend to be uniform throughout the world. For a brilliant exposition of the nature of the geographic purchasing power of money, and the theory of purchasing-power parity, see Ludwig von Mises, The Theory of Money and Credit, 2d ed. (New Haven: Yale University Press, 1953), pp. 170-86. Also see Chi-Yuen Wu, An Outline of International Price Theories (London: Routledge, 1939), pp. 233-34.

Since I am advocating a totally free market in money, what I am strictly proposing is not so much the gold standard as parallel gold and silver standards. By this, of course I do not mean bimetallism, with its arbitrarily fixed exchange rate between gold and silver, but freely fluctuating exchange rates between the two moneys. For an illuminating account of how parallel standards worked historically and how they were interfered with, see Luigi Einaudi, “The Theory of Imaginary Money from Charlemagne to the French Revolution,” in Frederic C. Lane and Jelle C. Riemersma, eds.,Enterprise and Secular Change (Homewood, Ill.: Irwin, 1953), pp. 229-61.

Professor Robert Sabatino Lopez writes, of the return of Europe to gold coinage in the mid-thirteenth century, after half a millennium: “Florence, like most medieval states, made bimetallism and trimetallism a base of its monetary policy… it committed the government to the Sysiphean labor of readjusting the relations between different coins as the ratio between the different metals changes, or as one or another coin was debased… Genoa, on the contrary, in conformity with the principle of restricting state intervention as much as possible [italics mine], did not try to enforce a fixed relation between coins of different metals. Basically, the gold coinage of Genoa was not meant to integrate the silver and bullion coinages but to form an independent system” (“Back to Gold, 1251,” Economic History Review [April 1956]: 224).

On the merits of parallel standards and their superiority to bimetallism, see William Brough, Open Mints and Free Banking (New York: Putnam, 1898), and Brough, The Natural Law of Money (New York: Putnam, 1894). Brough called this system “Free Metallism.” On the recent example of pure parallel standards in Saudi Arabia, down to the 1950s, see Arthur N. Young, “Saudi Arabian Currency and Finance,” Middle East Journal (Summer 1953): 361-80.

[10] The fact that there was never an actual pound-weight coin of silver is irrelevant and does not imply that the pound was some form of “imaginary” unit of account. The pound was a pound of silver bullion, or an accumulation of a pound weight of silver coins. Cf. Einaudi, “Theory of Imaginary Money,” pp. 229-30. The fundamental misconception here is to place too much emphasis on coins and not enough on bullion, an overemphasis, as we shall see presently connected intimately with government intervention and with the long slide downward of the monetary unit from weight of gold and silver to pure name.

[11] The monetary unit was not just a pure unit of weight, such as the ounce or the gram; it was a unit of weight of a certain money commodity, such as gold. The dollar was 1/20 of an ounce of gold, not of just any ounce. And hero we find a crucial flaw in the idea of a composite-commodity money which has been overlooked: Just as we cannot call the monetary unit an “ounce” or “gram” or “pound” of several different, or composite, commodities, so the dollar cannot properly be the nameof many different weights of many different commodities. The money commodity selected by the market was a single particular commodity, gold or silver, and therefore the unit of that money had to be of that commodity alone, and not of some arbitrary composite.

[12] This is why, in the older books, a discussion of money and monetary standards often take place as part of a general discussion of weights and measures. Thus in Barnard’s work on international unification of weights and measures, the problem of international unification of monetary units was discussed in an appendix, along with other appendixes on measures of capacity and metric system. Frederick A. P. Barnard, The Metric System of Weights and Measures, rev. ed. (New York: Columbia College, 1872).

[13] Ludwig von Mises developed the very important regression theorem in his Theory of Money and Credit, pp. 97-123, and defended it against the criticisms of Benjamin M. Anderson and Howard S. Ellis in his Human Action (New Haven: Yale University Press, 1949), pp. 405-08. Also see Joseph A. Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), p. 1090. For a reply to Professor J. C. Gilbert’s contention that the establishment of the Rentenmark disproved the regression theorem, see Murray N. Rothbard “Toward a Reconstruction of Utility and Welfare Economics,” in Mary Sennholz, ed., On Freedom and Free Enterprise (Princeton: Van Nostrand, 1956), p. 236n.

The latest criticism of the regression theorem is that of Professor Patinkin, who accuses Mises of inconsistency in basing this theorem on deriving the marginal utility of money from the marginal utility of the goods that it will purchase, rather than from the marginal utility of cash holdings the latter approach being used by Mises in the remainder of his work. Actually, the regression theorem in Mises’ system is not inconsistent, but operates on a different plane, for it shows that the very marginal utility of money to hold—as elsewhere analyzed by Mises—is itself based upon the priorfact that money has a purchasing power in goods. Don Patinkin, Money, Interest, and Prices(Evanston, Ill.: Row, Peterson 1956), pp. 71-72, 414.

[14] Presumably, on the free market private citizens will also safeguard their coins by testing their weight and purity—as they do their monetary bullion—or will mint coins with those private minters who have established reputations for probity and efficiency. Even in the heyday of the gold standard there were few writers willing to go beyond the bounds of social habit to concede the feasibility of private minting. A notable exception was Herbert Spencer, Social Statics (New York: Appleton, 1890), pp. 488-89. The French economist Paul Leroy-Beaulieu also favored free private coinage. See Charles A. Conant, The Principles of Money and Banking (New York: Harper, 1905), vol.1, pp. 127-28. Also see Leonard K. Read, Government—An Ideal Concept (Irvington-on-Hudson, NY: Foundation for Economic Education, 1954), pp. 82ff. Recently Professor Milton Friedman, though completely out of sympathy with the gold standard has, remarkably, taken a similar stand inA Program for Monetary Stability (New York: Fordham University Press, 1960), p. 5.

For historical examples of successful private coinage, see B. W. Barnard, “The Use of Private Tokens for Money in the United States,” Quarterly Journal of Economics (1916-47): 617-26; Conant, vol. 1, pp. 127-32; Lysander Spooner, A Letter to Grover Cleveland (Boston: Tucker, 1886), p. 69; and J. Laurence Laughlin, A New Exposition of Money, Credit and Prices (Chicago: University of Chicago Press, 1931), vol. 1, pp. 47-51.

[15] Thus, see W. Stanley Jevons’ criticism of Spencer in his Money and the Mechanism of Exchange, 15th ed. (London: Kegan Paul, 1905), pp. 63-66.

[16] See Mises, Human Action, pp. 432n, 447, 754. Mises was partly anticipated at the turn of the century by William Brough: “The more efficient money will always drive from the circulation the less efficient if the individuals who handle money are left free to act in their own interest. It is only when bad money is endorsed by the State with the property of legal tender that it can drive good money from circulation” (Open Mints and Free Banking, pp. 35-36)

[17] The minting monopoly also permitted the state to charge a monopoly price (“seigniorage”) for its minting service, which imposed a special burden on conversion from bullion to coin. In later years the state granted the subsidy of costless coinage, over-stimulating the transformation of bullion to coin. Modern adherents of the gold standard unfortunately endorse the subsidy of gratuitous coinage. Where coinage is private and marketable, the firms will of course charge a fee covering approximately the true costs of minting (such a fee is known as “brassage”).

[18] Besides the minting monopoly, the other critical device for government control of money has been legal-tender laws, superfluous at best, mischievous and a means of arbitrary exchange-rate fixing at worst. As William Brough stated: There is no more case for a special law to compel the receiving of money than there is for one to compel the receiving of wheat or of cotton. The common law is as adequate for the enforcement of contracts in the one case as in the other” (The Natural Law of Money, p. 135). The same position was taken by T. H. Farrer, Studies in Currency,1898 (London: Macmillan, 1898), pp. 42ff.

[19] This is a corollary of Franz Oppenheimer’s brilliant distinction between the two basic alternate routes to wealth, production and exchange, which he called “the economic means”; and seizure or confiscation, which he called “the political means” Inflation, which I am defining here as the creation of money (i.e., an increase of money substitutes not backed 100 percent by standard specie), is thus revealed as one of the major political means. Oppenheimer defined the state, incidentally, as the organization of the political means” (The State [New York: Vanguard Press, 1926], pp. 24ff.).

[20] It is a commonly accepted myth that the excess of wildcat banks in America stemmed from free banking; actually a much stronger cause was the tradition, beginning in 1814 and continuing in every economic crisis thereafter, of permitting banks to continue in operation without paying in specie.

It is also a widespread myth that central banks are inaugurated in order to check inflation by commercial banks. The second Bank of the United States, on the contrary, was inaugurated in 1817 as an inflationist sop to the state-chartered banks, which had been permitted to run riot without paying in specie since 1814. It was a weak substitute for compelling a genuine return to specie payments. This was correctly pointed out at the time by such hard-money stalwarts as Daniel Webster and John Randolph of Roanoke. Senator William H. Wells, Federalist of Delaware, said that the Bank Bill was “ostensibly for the purpose of correcting the diseased state of our paper currency by restraining and curtailing the overissue of bank paper, and yet it came prepared to Inflict upon us the same evil; being itself nothing more than simply a paper-making machine.” Annals ofCongress, 14 Cong., 1 Sess., April 1, 1816, pp. 267-70. Also see ibid., pp. 1066, 1091, 1110ff.

As for the Federal Reserve System, the major arguments for its adoption were to make the money supply more “elastic” and to centralize reserves and thus make them more “efficient,” i.e., to facilitate and promote inflation.. As an additional fillip, reserve requirements themselves were directly lowered at the inauguration of the Federal Reserve System. Cf. the important but totally neglected work of C. A. Phillips, T. F. McManus, and R. W. Nelson, Banking and the Business Cycle(New York: Macmillan, 1937), pp 21ff, and passim. Also see O. K. Burrel, “The Coming Crisis in External Convertibility in U. S. Gold,” Commercial and Financial Chronicle (April 23, 1959): 5.

For a discussion of the historical arguments on free or central banking see Vera C. Smith, The Rationale of Central Banking (London: King, 1936).

[21] During the Panic the economist Condy Raguet, state senator from Philadelphia, wrote to a puzzled David Ricardo as folIows: “You state in your letter that you find it difficult to comprehend, why persons who had a right to demand coin from the Banks in payment of their notes so long forbore to exercise it. This no doubt appears paradoxical to one who resides in a country where an act of parliament was necessary to protect a bank, but the difficulty is easily solved. The whole of our population are either stockholders of banks or in debt to them… An independent man, who was neither a stockholder or debtor, who would have ventured to compel the banks to do justice, would have been persecuted as an enemy of society…” Raguet to Ricardo, Apri1 18, 1821, in David Ricardo, Minor Papers on the Currency Question, 1809-23, ed. Jacob Hollander (Baltimore, Maryland: The Johns Hopkins Press, 1932), pp. 199-201.

In 1931, for example, President Hoover launched a crusade against “traitorous hoarding.” The crusade consisted of the Citizens’ Reconstruction Organization, headed by Colonel Frank Knox of Chicago. And Jesse Jones reports that, during the banking crisis of early 1933, Hoover was seriously contemplating invoking a forgotten wartime law making hoarding a criminal offense. Jesse H. Jones and Edward Angly, Fifty Billion Dollars (New York: Macmillan, 1951), p. 18. It should also be noted here that the Hoover administration’s alleged devotion to retaining the gold standard is largely myth. As Hoover’s Undersecretary of the Treasury has declared rather proudly: “The going off [gold] cannot be laid to Franklin Roosevelt. It had been determined to be necessary by Ogden Mills, Secretary of the Treasury, and myself as his Undersecretary, long before Franklin Roosevelt took office.” Arthur A. Ballantine, in the New YorkHerald-Tribune, May 5, 1958, p. 18.

[22] Currently, the worst example of government aid to banks is the highly popular deposit insurance—for this means that banks have virtual carte blanche from government to protect them from any redemption crisis. As a result, virtually all natural market checks on bank inflation have been destroyed. Query: If banks are thus protected from losses by government, to what extent are they still private institutions?

[23] The other very important difference, of course, is that I advocate 100 percent reserves in gold or silver, in contrast to the 100 percent fiat paper standard of the Chicago School. One-hundred percent gold, rather than making the monetary system more readily manageable by government, would completely expunge government intervention from the monetary system.

[24] I want to make it quite clear that I do not accuse present-day bankers of conscious fraud or embezzlement; the institution of banking has become so hallowed and venerated that we can only say that it allows for legalized fraud, probably unknown to almost all bankers. As for the original goldsmiths that began the practice, I think our opinion should be rather more harsh.

[25] It is usual to reckon the acceptance of a deposit which can be drawn upon at any time by means of note or checks as a type of credit transaction and juristically, this view is, of course, justified; but economically, the case is not one of a credit transaction. If credit in the economic sense means the exchange of a present good or a present service against a future good or a future service, then it is hardly possible to include the transactions in question under the conception of credit. A depositor of a sum of money who acquires in exchange for it a claim convertible into money at any time which will perform exactly the same service for him as the sum it refers to has exchanged no present good for a future good. The claim that he has acquired by his deposit is also a present good for him. The depositing of money in no way means that he has renounced immediate disposal over the utility that it commands.” Mises, The Theory of Money and Credit, p. 268. What I am advocating, in brief, is a change in the juristic framework to conform to the economic realities.

[26] Professor Beckhart has recently called our attention to the long-standing and successful practice of Swiss banks of issuing debentures of varying maturities, and the recent adoption of this practice in Belgium and Holland. While Beckhart contemplates debentures for long-term loans only, I see no reason why banks cannot issue short-term debentures as well. If business needs short-term loans, it can finance them by competing with everyone else in the market for voluntarily saved funds. Why grant the short-term market the special privilege and subsidy of creating money? Benjamin H. Beckhart, “To Finance Term Loans,” New York Times, May 31, 1960.

[27] A bailment may be defined as the transfer of personal property to another person with the understanding that the property is to be returned when a certain purpose has been completed… In a sale, we relinquish both title and possession. In a bailment we merely give up temporarily the possession of the goods.” Robert O. Sklar and Benjamin W. Palmer, Business Law (New York: McGraw-Hill, 1942), p. 361.

Nussbaum surely begs the question when he says “Only in a broad and non-technical sense may the relationship of the depository bank to the depositor be considered a fiduciary one. No trust proper or bailment is involved. The contrary view would lay an unbearable burden upon banking business” (italics mine). But if such banking business is improper, this is precisely the sort of burden that should be imposed. This is but one example of what happens to jurisprudence when pragmatic considerations of “public policy” supplant the search for principles of justice. Arthur Nussbaum,Money in the Law, National and International (Brooklyn, N.Y.: Foundation Press, 1950), p. 105.

[28] On warehouse receipts as bailments, cf. William H. Spencer, Casebook of Law and Business(New York: McGraw-Hill, 1939), pp. 661ff.

Perhaps a proper legal system would also consider all “general deposit warrants” (which allow the warehouse to return any homogeneous good to the depositor) as really specific deposit warrants,” which, like bills of lading, establish ownership to specific, earmarked objects.

As Jevons, noting the superiority of specific deposit warrants and realizing their relationship to money, stated: “The most satisfactory kind of promissory document… is represented by bills of lading, pawn-tickets, dock-warrants, or certificates which establish ownership to a definite object. The important point concerning such promissory notes is, that they cannot possibly be issued inexcess of the goods actually deposited, unless by distinct fraud [italics mine]. The issuer ought to act purely as a warehouse-keeper, and as possession may be claimed at any time, he can never legally allow any object deposited to go out of his safe keeping until it is delivered back in exchange for the promissory note… More recently a better system [than general deposit warrant] has been introduced, and each specific lot of iron has been marked and set aside to meet some particular warrant. The difference seems to be slight, but it is really very important, as opening the way to a lax fulfillment of the contract… Moreover, it now [with general warrants] becomes possible to create a fictitious supply of a commodity, that is, to make people believe that a supply exists which does not exist… It used to be held as a general rule of law, that any present grant or assignment of goods not in existence is without operation” (Money and the Mechanism of Exchange, pp. 206-12; see also p. 221).

[29] A bank that fails is therefore not simply an entrepreneur whose forecasts have gone awry. It is business whose betrayal of trust has been publicly revealed. Furthermore, a rule of every business is to adjust the time structure of its assets to the time structure of its liabilities, so that its assets on hand will match its liabilities due. The only exception to this rule is a bank, which lends at certain terms of maturities, while its liabilities are all instantly payable on demand. If a bank were to match the time structure of its assets and liabilities, all its assets would also have to be instantaneous, i.e., would have to be cash.

[30] The Science of Wealth, 3d ed. (Boston: Little, Brown, 1867), p. 139. In the same work, Walker presents a keen analysis of the defects and problems of a fractional-reserve currency (pp. 126-222).

[31] See Mises Human Action, pp. 439ff. Mises’ position is that of the French economist Henri Cernuschi, who called for free banking as the best way of suppressing fiduciary bank credit: “I want to give everybody the right to issue banknotes so that nobody should take banknotes any longer” (ibid., p. 443). The German economist Otto Hübner held a similar position. See Smith, Rationale of Central Banking, passim.

[32] In short, our projected legal reform would fully comply with Mises’ goal: “to place the banking business under the general rules of commercial and civil laws compelling every individual and firm to fulfill all obligations in full compliance with the terms of the contract (Human Action, p. 440). Another point about free banking: to be tenable it would have to be legal for 100 percent reserve partisans to establish “Anti-Bank Vigilante Leagues,” publicly calling on all note and deposit holders to redeem their obligations because their banks were really and essentially bankrupt.

[33] Cf. Walker, pp. 230-31. In A Program for Monetary Stability, p.108, Milton Friedman has expressed sympathy for the idea of free banking, but oddly enough only for deposits; notes he would leave as a government monopoly. It should be clear that there is no essential economic difference between notes and deposits. They differ in technological form only; economically, they are both promises to pay on demand in a fixed amount of standard money.

[34] The totally neglected political theorist Isabel Paterson wrote as follows on the “compensated” or “commodity dollar” scheme of Irving Fisher, which would have juggled the weight of the dollar in order to stabilize its value: “As all units of measure are determined arbitrarily in the first place, though not fixed by law, obviously they can be altered bylaw. The same length of cotton could be designated an inch one day, a foot the next, and a yard the next; the same quantity of precious metal could be denominated ten cents today and a dollar tomorrow. But the net result would be that figures used on different days would not mean the same thing; and somebody must take a heavy loss. The alleged argument for a ‘commodity dollar’ was that a real dollar, of fixed quantity, will not always buy the same quantity of goods. Of course it will not. If there is no medium of value, no money, neither would a yard of cotton or a pound of cheese always exchange for an unvarying fixed quantity of any other goods. It was argued that a dollar ought always to buy the same quantity of and description of goods. It will not and cannot. That could occur only if the same number of dollars and the same quantities of goods of all kinds and in every kind were always in existence and in exchange and always in exactly proportionate demand; while if production and consumption were admitted, both must proceed constantly at an equal rate to offset one another” (The God of the Machine [New York: Putnam, 1943], p. 203n).

[35] Leland B. Yeager, “An Evaluation of Freely-Fluctuating Exchange Rates,” unpublished Ph.D. dissertation, Columbia University, 1952.

[36] Ibid., pp. 9-17

[37] Professor Yeager indeed concedes that an independent money for each person or firm would be going too far. “Beyond some admittedly indefinable point, the proliferation of separate currencies for ever smaller and more narrowly defined territories would begin to negate the very concept of money.” But our contention is that the “indefinable point” is precisely definable as the very first point that fiat paper enters to break up the world’s money. See Leland B. Yeager, “Exchange Rates within a Common Market,” Social Research (Winter 1958): 436-37.

[38] Other criticisms by Yeager are really, as he recognizes at one point, criticisms of any plan for 100 percent banking, fiat or gold. There is, for example, the problem of how to suppress new forms of demand liabilities that might well arise to evade the legal restrictions. I do not think this an important argument. Fraud is always difficult to combat, and indeed continues in numerous forms to this day (as does all manner of crime). Does this mean that we should give up outlawing and punishing fraud and other crimes against person and property? Secondly, I am sure that the practical problems of law enforcement would be greatly reduced if the public were to receive a thorough education in the fundamentals of banking. If, in short, 100-percent-money advocates were allowed to form Anti-Bank Vigilante Leagues to point out the shakiness and immorality of fractional-reserve banking, the public would be much less inclined to evade such restrictions than it is now.

[39] Pace the Mises-Hayek theory of the trade cycle, which was shunted aside but not refuted by the Keynesian Revolution.

[40] Report of the Subcommittee on Monetary, Credit, and Financial Policies of the Joint Committee on the Economic Report, 81 Cong., 2 Sess. (Washington 1950), pp. 41ff.

[41] The conservative economic historians of the late nineteenth century saw Jackson as an ignorant agrarian trying to destroy capitalism and calling for inflation against the central bank. The progressives of the Beard school took much the same approach, except that they applauded the Jacksonians for their alleged anti-capitalist stand. The most recent Bray Hammond-Thomas Govan school have again shifted their praise to the Whigs and the Bank of the United States, which they view as essential to a modern credit system as against the absurdly hard-money views of the Jacksonians.

[42] During the Panic of 1819, for example—several years before Thomas Joplin’s enunciation of the currency principle in England—Thomas Jefferson, John Adams, John Quincy Adams, Governor Thomas Randolph of Virginia, Daniel Raymond (author of the first treatise on economics in the United States), Condy Raguet, and Amos Kendall all wrote in favor of either a pure 100 percent gold money, or of 100 percent gold backing for paper. See Murray N. Rothbard, “The Panic of 1819: Contemporary Opinion and Policy,” Ph.D. dissertation (Columbia University, 1956). John Adams considered the issue of paper beyond specie as “theft,” aid Raymond called the practice a “stupendous fraud.” Similar views were held by the important French ideologue and economist, and friend of Jefferson, Count Destutt de Tracy. Cf. Michael J. L. O’Connor, Origins of Academic Economies in the United States (New York: Columbia University Press, 1944), pp. 28, 38.

[43] Failure of the British currency school to realize this Led to the discrediting of Peel’s Act of 1844, which required 100 percent reserve for all further issue of bank notes, but left bank deposits completely free.

[44] On Carroll, see Lloyd W. Mints, A History of Banking Theory (Chicago: University of Chicago Press, 1945), pp. 129, 135ff., 155-56; and especially the collection of Carroll’s writings, Organization of Debt into Currency and Other Papers, Edward C. Simmons, ed. (Salem, N.Y.: Ayer, 1972).

[45] Isaiah W. Sylvester, Bullion Certificates as Currency (New York, 1882). On parallel standards, also see Brough, Open Mints and Free Banking, passim. For Brough’s attack on the disruption caused by independent currency names, see ibid., p. 93.

[46] Thus Groseclose: “The practice of the goldsmiths, of using deposited funds to their own interest and profit, was essentially unsound, if not actually dishonest and fraudulent. A warehouseman, taking goods deposited with him and devoting them to his own profit, either by use or by loan to another, is guilty of a tort, a conversion of goods for which he is liable in… law. By casuistry which is now elevated into an economic principle, but which has no defenders outside the realm of banking, a warehouseman who deals in money is subject to a diviner law: the banker is free to use for his private interest and profit the money left in trust…

“Sooner or later we must abandon the pretense that we can eat our cake and have it, that we may have money on deposit ready to be withdrawn at any moment, and at the same time loaned out in a thousand diverse enterprises, and recognize that the only assurance of liquidity of bank deposits is to have the actual money waiting on the depositor at whatever moment he may appear. This would not mean the extinction of credit, nor the disappearance of lending institutions. But it would mean the divorcement of credit from the money mechanism, the cessation of the use of credit instruments as media of exchange. It would mean the disappearance of the most insidious form of fictitious credit. We could still have investment banking providing credit at long term, and bill brokers and finance companies, providing credit at short term; but such credit would not be the transfer of a fictitious purchasing power drawn from the reservoirs of a banking system whose own sources derive from the use of the bank check; the credit available would be true credit that is, the transfer of actual, existing wealth in exchange for wealth to be created and returned at a future time. Such credit would not be inflationary, as is bank credit, for every dollar made available as purchasing power to the borrower would be the result of the abstinence from the exercise of purchasing power on the part of the lender; it would be merely the transfer of purchasing power, not the creation of purchasing power by fiction” (Money, The Human Conflict [Norman: University of Oklahoma Press, 1934], pp. 178, 273).

Professor F.A. Hayek, in his Monetary Nationalism and International Stability (New York: Longmans, Green, 1937), was highly sympathetic to 100 percent gold, and demonstrated, in some excellent analysis the superiority of 100 percent gold to the mixed, fractional-reserve gold standard and to independent fiat moneys. In the end, he apparently set aside the proposal because of the difficulties of bank evasion; moreover, he concluded, rather inconsistently, by considering the ideal monetary system as directed by an international central bank, with the gold standard as only second best. Robbins, while discussing 100 percent money, was more sympathetic to free banking under a gold standard. Lionel Robbins, Economic Planning and International Order (London: Macmillan, 1937). pp. 269-305. In recent years, Hayek has abandoned the gold standard completely on behalf of a composite-commodity standard: “A Commodity Reserve Currency,” in his Individualism and Economic Order (Chicago: University of Chicago Press, 1945), pp. 209-19. Since Hayek’s major reason for the shift is that the total supply of gold is not flexible enough to change when demanded (and since, even in his earlier work Hayek wrote of a “rationally” determined total supply of world money, regulated by an international monetary authority), it is clear that Hayek does not see that no specific total supply of money is better than any other, and that therefore no government manipulation of the supply is desirable.

[47] For an eloquent plea for using pure units of weight for money instead of national names, see Jean-Baptiste Say, A Treatise on Political Economy, New American ed. (Philadelphia: Grigg and Elliot, 1841), pp. 256ff. Say also favored a freely fluctuating market between gold and silver.

More recently, Everett R. Taylor has advocated private coinage of gold and silver, and a 100 percent gold dollar, while another writer, Oscar B. Johannsen, has favored private coinage and free banking under a gold standard. Taylor, Progress Report on a New Bill of Rights (Diablo, Calif.: privately published, 1954); Johannsen, “Advocates Unrestricted Private Control Over Money and Banking” Commercial and Financial Chronicle (June 12, 1958): 2622ff.

[48] See Barnard, Metric System of Weights and Measures, and Henry B. Russell, International Monetary Conferences (New York: Harper, 1898), p. 61.

[49] Mises, The Theory of Money and Credit, pt. 4; and Henry Hazlitt, Return to Gold (New York:Newsweek, 1954).

[50] Clarence Philbrook, “‘Realism’ in Policy Espousal,” American Economic Review (December 1953): 846-59.

What was money? And the TechnoMonarchy

In times past people traded things that they found, made or grew with other people for things that they wanted.

Bitcoin has had me thinking for a number of years now and I am sure my thoughts will keep changing.

We used to live in a world without limits to growth and mankind could argue whose God was best, but as we zoom off over 7 billion people we’ve maxed out on oil, probably never to exceed 100 million barrels per day extraction rate. It takes 9 grams of oil to produce 1 gram of food to put into your mouth in the West.

The Keynesians have had their day while it lasted, time for the thrift mungers – the Austrians.  It seems to me that both will deliver inequalities in times of boom and bust cycles of the stock exchanges.

Bitcoin seems to be creating so far, a bloodless Civil War. Should the store of wealth be based in favour on those who manipulate the markets for their own kind, the 1%. Who produce nothing and make nothing or should the store of wealth be held by the new 1%, the TechnoMonarchy?

The early adopters of Bitcoin, the stake holders now I believe are a new TechnoMonarchy, many of which understand:

  • Bitcoin’s current price is irrelevant†
  • Find Austrian Economics appealing

†Bitcoin isn’t just a value store

Gordon Kecko, produces wealth through the slavery of the IMF and sleeps well at night and certainly doesn’t care about the poverty of future generations through debt creation.

Where as Ivor Geek, thinks that military industrial complex has got out of hand and “believes” that Austrian economics maybe a fairer distribution of wealth. “Hell it can’t be any worse than the shit we’re in and I’m prepared to gamble a couple of thousand $/£/€”

What appeals to geeks most are the facts, for example:

  • Is the tax take going up or down
  • Are governments/corporations getting stronger or weaker
  • Are Western governments still helping to kill people in countries we are not supposed to be in, using techniques and weapons against the Geneva convention
  • Is Britain still a fuel stop for rendition flights
  • Is MI6 still outsourcing torture to foreign nations

The bottom line is that TechnoMonarchy I’m describing or anonymous, doesn’t need  a political party, meetings or a manifesto, they know that the wheels need re-attaching. This is a spiritually human thing and the re-basing of money is central.

Bitcoin price, currency, commodity – Monarchy

Well the long term 18+ month stability of Bitcoin “may” depend of whether it gets classed as a commodity. Tax wise if it gets classed as a commodity I’m reliably informed by a city type in the Castle Pub, Totnes that this will cause the big boys to get involved, like Fidelity the other day. But then they immediately got leaned on by Uncle Sam.

The Swiss are taking a view in the New Year, the Germans have already classed it as private currency. The UK is undecided, but I was advised by the tax office myself – that I’m to do my tax return for CGT as currency.

So at moment it’s as clear as mud.

The more interesting issue is that the Swiss used the tally stick in rural areas as late as the 19th Century. And Britain’s BOE absorbed the last of the Monarchy’s tally stick in the UK in about 1850, at 60% discount of value.

If you believe that the government is a pawn of the military industrial complex? And we would be better off without the people who just make money up. Both at a spiritual level and a planet conservation angle – then you should be perhaps voting for Bitcoin as currency.

I personally believe that puts you firmly in the position of supporting the Monarchy. As the Monarchy issued tally sticks of supply without the backing of government, gold or silver.

Essentially the aristocracy wealth was based on land value, and it’s probably where the planet needs to be if the human species is not to destroy itself. Because ultimately even if you culture food in a jar and don’t go mad watching day time TV, you’ll have to fucking live somewhere!

Transition decline based on energy is utter BOLLOCKS.

Thorium nuclear power and nanotechnology will solve our energy problems in the next twenty years.

What is at issue is the 95 rare elements that keep the wheels on the consumer society and level debt in the Western World, coupled with future life expectancy that is truly frightening. Boiled frog syndrome springs to mind.

The politics of Bitcoin

and the fall of the military industrial complex

Someone wrote a another piece on FaceBook slamming Cameron this morning. Or whoever ad nor-seam, I see these politician bashing pieces on a weekly basis that drive me mad, I am SICK of it. Stop wasting your breath people. Suggest something that might help instead of whingeing. Russel Brand please – get off the fence.

Like politics changes anything post Vietnam and the US coming off the gold standard to finish financing it? Austrian Economics is the ONLY way to put a brake on selfish humans destroying the planet. Greens should be buying into Bitcoin to destroy the military industrial complex and stop chasing the Keynesian failed economics of continual growth. It don’t work and never will. Bitcoin is the NEW politics, you are either with us, or just rambling on about the old world of politics, which is quite frankly to me obviously broken. Bitcoin is the biggest reversal of Capitalism and Democracy since the Enclosures in the UK. Since Capitalism is not a free market, fails to put a price on the planets 95 elements that keep capitalism rolling, and Democracy is at best in the UK manipulated by boundary changes!

For the planet’s sake we don’t have enough time to debate this Keynesian economics was someone’s wet dream. Austrian Economics isn’t fair either or in some ways does fail to care about the “population”, but it’s sort of better to have a planet to be standing on and air that you can breath. To the nay slayers who protest that technology will fix everything and let the population of the planet ever expand, I say rubbish. Lets look at some trends here, technology is just allowing humans to pollute the planet and space. Monsanto, the people who brought you Napalm, Planet Killers Inc, like they are a technology company whose benefits have net benefits to the pollution and sustainability of the planet?  Hell no – that’s capitalism for you, capitalism means destruction of the planet. It doesn’t put a price on raw materials it uses, ultimately the IMF does and they are fully discounted to a group of maggots called “corporate entities”.

Next up socialism/communism, disrespects the planet in similar ways just a slightly different tune. Words and chorus are different I grant you, but the results are still the same old rock and roll, it’s still a one four, five chord combination in there – just listen and you can always hear it.  IE No proper prices attached to the planet resources. Therefore failed from a whole Earth prospective.

Now for going down a third way, we’ve only got 20 years before they the technologists perfect nuclear power.

Can we imagine a world where energy is very cheap and safe? Humanity abuses the planet enough already. Oh and lets not mention the “real war” – nanotechnology. Nanotechnology and cheap safe electricity equals “planet melt down”. This is a world I will be glad not to be living in. Bitcoin does not stop this, short of a religious event nothing will, but the real democratisation of money creation gives stakeholders choice of what can happen at a local level in their own “communities”. Maybe that could help, as the “means of productions” becomes local with the advent of thorium power and nanotechnology.

If there is a third way out there – I hadn’t noticed it, have you?

Now left and right have a vested interest in preventing Thorium power coming to market for as long as possible, because on a global level “power blocks” start to loose massive influence and importance. Especially as many sovereign nations will have imploded under the debt bomb many people know exists. The UK is printing in the region of £700 billion pounds between 2012 and the next General Election to keep the wheels on the welfare, healthcare and the military industrial complex rolling. Britain will soon be in as much debt as the Wiemar Republic before it collapsed. 913% of it’s economy. February 2013  Britain’s debt was 900% of it’s economy, but of course it’s different now?

Source: / Moneyweek

Why do you need a standing army to protect oil and gas reserves that have a different value than they do today? Then why do you need a military industrial complex, which boundaries are you protecting and why?

Mark Cross @markcross
2013/11/22 AM

And the news, everything is now cheaper for you

Wednesday morning, alarm goes off. rainy outside, still dark, opened the chicken door while they were still asleep. Kettle on, tea up.

Absolute 80’s on the remote “click”, 7.30 news, The Coalition announce plans to regulate the price of fuel on motorways and use the safety signs to advise you of the pump prices as you drive along.

Is it me or could Sky or BBC news just come directly from the Central Office of Information? Has it always been like this? I have suddenly seen the light?

I am a great fan of 1984 and Brazil, we live in a wall to media enveloped world if you conform to a reasonable level of society’s norms. X-Factor and Big Brother is surely the Soma of the Brave New World which is our reality. If you consider yourself middle class, the Bake off – 8 million viewers, yes that’s YOU out there in the UK.

The news is like a bunch of born again Christians ranting on positively about the Good News God has written into the Bible. But really it’s worse than religiously convince well meaning bunch of people being positive, the Matrix knows that the programme is wrong.

Without a Gold standard there will be no sensible stable price on oil: (good random Austrian Economics link)

If there is no sensible price on oil, then democratic countries will continue to spin their plebs a continual diet of newspeak,  and manipulated model for money supply in favour of the ruling Elite. Why, because they can continue to feed the plebs the dream of “more tomorrow”.

Debt tomorrow (modern fiat funny money) assumes that the future generations can pay it, by the same number of people in future generations paying more tax percentage during their lifetime than the previous generation OR more population paying a similar level of tax burden?

So lets look at the paragraph above
A lot of economists and oil pundits would not argue with the following statement: we are unlikely to be able to obtain anymore oil out of the ground per day than 100 million barrels.

Yes we have limits to growth folks, it takes 9 grams oil to produce 1 gram of food. Forget about water, forget about coal, forget about copper… Just concentrate on FOOD.

Either way the future looks grim for future generations, it doesn’t matter which way you cut it.

Revolutions start with ONE person
Essentially the ruling Elite can never loose grip, they can always choose to change lane and keep driving around the world, they are never to run out of resources – IE Slaves. But the slaves can choose to individually not pay their tax burden in the Sovereign Country they live in. If and when a concentrated minority group in one single country adapt a digital currency with the properties of Bitcoin then they will as a collective economically dictate a fixed monetary policy on the majority. The “mass adoption” inflection point for this economic disruption as a time line will be hard to calculate or impossible to predict.

If you cannot calculate somethings arrival or predict when it is going to happen, it becomes interesting. It’s like having a parcel tracking number from DHL or FedEx, you know IT IS going to arrive, you just don’t know when.

Universal Stamp for Credit Worldwide

I wrote this is response to Dave Birch’s Mad Man for a day blog entry. He went to a Weve get together about the future of  NFC payments. (Near Field Communication). He had to take the position that NFC payments weren’t going to happen. Which got me thinking about money generally as usual…

Eurogroup Chairman Jeroen Dijsselbloem caused uproar in financial markets by saying in an interview with Reuters and the Financial Times that the Cyprus solution gave a flavour of how Europe would handle future bank crises, by making banks solve their own problems rather than using European taxpayers’ money. Reuters 26/03/2013

Negative Interest Rates, QE is it working? Is money velocity increasing?

Imagine in the words of a Rolf Harris:

“Can you see what is yet?”

Then in the voice of David Attenborough:

“Here if we look closely anywhere in the Western World and look at the habitat of the small shop keeper. In the UK we can observe this nervous creature – the independent business paying all taxes at full whack with the full cream burden of employers PAYE contribution. The wilder-beast of the High Street savannah being savaged at every increase in Uniform Business Rates to International Cheetah – ACME Corporation, it pays almost no corporation tax with it’s HQ domiciled in the Cayman Islands mopping up every retail opportunity.

Ah but hold on, I can see some Cheetahs struggling, the savannah of the High Street’s habitat of grass land has become so mismanaged and overgrown that the rarest of species the “shopper” is struggling to actually get to the water lagoons. Their travel money to get there is being taken by 7% inflation, rising unemployment, poor pay from the said Cheetah employer and soaring energy costs back at their caves caused through a lack of investment in the National Grid since the mid 1950’s.

Oh dear, the future doesn’t look good for the shopper’s disposable income, even if they do get to the High Street Water Hole of the Cash Machine. They find themselves increasingly confused about the future, their off-spring are in increasingly deficit of an education not fit for purpose and many who thought they could raise extra revenue by renting out a nest box, find that their fledglings just refusing to saddle themselves with “debt” just to work for the ACME Corporation for 6 peanuts an hour. The older shoppers with off-spring still with them struggle even to help their young ones with third party car insurance to help them discover the High Street. So in these times of draught the youngsters are just glad of a monthly phone contract as hand-out.

So called experts in the field of economics predict just a handful of ACME Corporation operating out of town to maximize off-shore profits with kick backs in the form of reduced business rates for bringing employment to the area. But ACME Corporation pack is growing for strength to strength with the lock-in of the staff discount. Observers have commented that this relationship is very similar to early industrialisation for the business development of the pub to “lock” in profit to the balance sheet.

The economic equivalent of soil scientists are however getting very worried about the ability of the High Street to even sustain “Small Businesses” and with the success of PayPal handling the DWP Identity Contract, many observers in the payment management field – see PayPal as a natural contender for the Universal Stamp for Credit Worldwide USCREWD. It started off a pilot scheme to replace Food Stamps in the US, however this same behaviour was seen in the UK with a welfare payments card. However many can see the benefits of the USCREWD system where more the productive beasts can be crated up and exported to another farm depending on their economic output inabilities and they should be happy as they will get to keep their benefits – not matter where they are put out to graze.”

Lets make pie of party politics and redefine politics, PERIOD

Subtitle: Health 25% Welfare 12% Pensions 27% Defence 9%

I read this interesting piece on the Guardian site – it got me thinking

It’s always been my bug bear that defence spending is about the lost opportunites to do some contructive with human activity.

The percentages above are the split of money spent from Central Government Spending for 2013

The interesting thing is that as a percentage of GDP, welfare spend was higher under Thatcher and Major, and lowest under good ‘ol Tony “War Criminal” Blair.

Looking back at the – hurrah, we’re spending less on defence and more on health.

That’s the actual reality.

It’s the state funded pension black hole that’s the problem. A quarter of the UK Central government spending is consistantly on state funded pensions. Ah – that’s not the actual problem, it’s the fact that it paid for by the workers of today, not yesterday.

UK: In 2004, there were approximately 4 working age individuals (aged 20-64) for every 1 person aged 65 and over. By 2056 this ratio is predicted to fall to about 2:1

So the percentage of GDP available for government spending is SHRINKING

“John Doe” expects money to keep raining down from Central Govenment (whatever that is) forever, sorry mate – IT ISN’T going to happen. It won’t be there, remember it’s SHRINKING

Please as my best friend used to say – “spare me the trauma”, something magical isn’t going to drop out the Narnia cupboard, people are selfish and greedy / protective of their own family unit.

So when you bump into a “John Doe” whaling on about something must be done abou the state of housing/schools/hospitals, please ask them – which bit of the pie chart they want to re-allocate?

Does it not make more sense to offer the people choices of “govenment” based on the percent of cake spent on which item?

Or how about having it as a Manifesto requirement? A party MUST state the percentage of the cake will be spent on what? And the policical party becomes the marketing machine to deliver these percentages palatably.

Surely poor spend in a pie sector is either fraud or poor management. Neither of which are any policital party’s fault. (Read Civil Service or Contractor)

Glenn Beck Everybody For Anal Probes

Gordon posted this on FaceBook, headed:

Citizens of the USA: you have a choice between Obama and this.
Glenn Beck: “Everybody For Anal Probes”

In response I wrote:

Well – they are about as bright as us when it comes to making choices. I mean somebody out there voted for a UK Government which allowed for social security support beyond two children. Which “Eric half a bee” could have worked out it would have been a financial nightmare later.

The public deserve the Government they get, because 90% of the electorate are too stupid to vote / insufficient education. 5% control the system/media/voting/boundary changes. And the 5% that see the corruption, wouldn’t take up arms to do anything about it, it’s easier for the educated to turn a blind eye and get by on £20-100k.

Essentially “we’re middle class and comfortable – so I don’t see the problem” (& then move to Totnes) and this “equality” is created by the truly selfish bastards – the first 5% I narrated above who brand it as “Capitalism”.

Well that’s my first rant for the day… MX

2012 Microsoft Healthvault to replace the ill feted NHS spine project

At a press conference held for the opening on the new DNA sequencing laboratory for New Scotland Yard, the Minister of Health, The Rt Hon C U Bollocks (Complete Utter Bollocks) said the government had thought long and hard about the decision, but in summary Microsoft Healthvault represents the best value to the tax payer.

Software and Community in the Early 21st Century – keynote by Eben Moglen at Plone 2006 

“What does Firefox have to do with social justice? How will the one laptop per child project discourage genocide? How soon will Microsoft collapse? Watch Eben Moglen’s inspiring keynote from the 2006 Plone Conference ( mp3 or qt; or YouTube). The video presentation is ordinary, so the mp3 is an equally good format. ‘If we know that what we are trying to accomplish is the spread of justice and social equality through the universalization of access to knowledge; If we know that what we are trying to do is build an economy of sharing which will rival the economies of ownership at every point where they directly compete; If we know that we are doing this as an alternative to coercive redistribution, that we have a third way in our hands for dealing with long and deep problems of human injustice; If we are conscious of what we have and know what we are trying to accomplish, when this is the moment for the first time in lifetimes, we can get it done.'”

IR: …”Second reaction is the link with Mk1. Marxism which identified the condition of people as a consequence of their relationship to the ‘Means of production’.”

ZDNet: Government to force handover of encryption keys

Businesses and individuals may soon have to release their encryption keys to the police or face imprisonment, when Part 3 of the RIP Act comes into effect
The UK Government is preparing to give the police the authority to force organisations and individuals to disclose encryption keys, a move which has outraged some security and civil rights experts.

The powers are contained within Part 3 of the Regulation of Investigatory Powers Act (RIPA). RIPA was introduced in 2000, but the government has held back from bringing Part 3 into effect. Now, more than five years after the original act was passed, the Home Office is seeking to exercise the powers within Part Three of RIPA.

Full article here.

Who runs the UK?

The US appears to be run by corporations, who provide funds for political parties in elections.
The US TV networks do not carry International news, why not?


The population would switch their TV off and not watch the ads.


The UK carries International news, but this does not mean the UK population switches the TV – therefore advertisers are happy to have ads inbetween the sought after evening news slots.


Does this tells us about the dummying down of the US population v the UK – just still bright enough to follow the news?

So if the corporations run the US, who is running the UK?