Joined: 25 Sep 2008
|Posted: Sat Apr 25, 2009 9:10 pm Post subject: Forget Gold! Waterboard Bankers!
GOLD. My friend Mark asked me whether it would be a good idea to go back on the gold standard. Mark, I said, that would be a great waste of gold. Think about it – what would happen if we went back on the gold standard? Take note, it wouldn’t work unless all the nations in the world did it, and that would mean that for every dollar the US puts in circulation, and every Euro the Eurpoean Union puts in circulation, every peso that Mexico circulates, etcetera, every country, would have to set aside a large supply of solid gold bullion, very large amounts of it, humongous amounts, really, in huge vaults. Security would be an enormous issue, and the gold would be unavailable for any other purpose. While we had it in the vault, we couldn’t use it to manufacture medical, scientific, or consumer devices or for jewelry. It would be totally wasted, sitting there for what? Symbolic purposes. Totally symbolic purposes. And to back all the money currently in circulation, of course, the price of gold would skyrocket to around a hundred thousand dollars an ounce. Alternatively, you could drastically reduce the money supply, which would mean a Starbucks would cost like ten cents, Obama would get paid about fifty dollars a month, and the AIG bailout would only cost around a hundred and eighty million.
But let’s say we’re willing to leave the world’s store of value in the care of a trusted gang of mercenaries like Blackwater (that has, by the way, changed its name to Xe – and just as an aside, you know, the owner of Blackwater is a guy named Prince, so he might actually become the hired killer formerly known as Prince if they take the quest for corporate anonymity far enough, but let’s return to the topic at hand – gold). Let’s give the devil his or her due – what would be the purpose of going back on the gold standard? Well, it would slow the growth of the money supply down to however fast the Canadians (who pretty much control the ecologically devastating mining industry) could tear up the planet to get that hundred-thousand-dollar-an-ounce shiny stuff, and of course, you could weigh it, and with a hand calculator you could figure out how many dollars the bankers would have to share. Leverage would be constrained. The money-lending business would have limits. A huge stack of bullion in a room surrounded with armed guards would perform a symbolic function that takes the place of – takes the place of what? Of honest bookkeeping.
Honest bookkeeping – that’s all we need. People talk about going back to barter, but it doesn’t have to be that primitive. Let’s imagine there’s a market in town, a farmer’s market. It works this way. You have to bring something to the market to trade. The market will open at seven a.m. Everyone sets their price in a unit of value we’ll call a “Mercator,” or Mercs for short So I can put my tomatoes on sale for 3 pounds for a merc. The butcher will offer lamb shanks for 3 mercs a pound, etc. No money changes hands. Instead, every time there’s a sale made, we call for a transactor, and he or she records the transaction in a book. Sales will be made all day long, and at 3 o’clock the market closes. The transactors do the books, and all the balances are reconciled. The transactors go around and give each merchant a statement of their daily balance and transactions completed. If anyone has a negative balance, then they have to either make it up from their merc account, or take a loan from the transactors, or cancel the transaction. Then all goods will change hands at, say 4 o’clock in the afternoon. Of course, we could do all this on computers, in real time, at a data clearinghouse, and have no one show up anywhere, and take delivery at scheduled dates and times. We could do it with million-ton shipments of tomatoes and tankers full of oil. In fact – big dirty secret – large companies and nations do it all the time. Cuba and Venezuela swap oil for medicine, Israel and China swap metals for weapons. Long, long ago, before the US entered the Second World war against Germany, the US swapped bombsights for industrial diamonds, and that trade worked out beautifully – the Nazis used the diamonds to cut steel into weapons that killed Americans, and the Americans used the bombsights to drop bombs on German civilians. You see, when there’s a war to get done, the merchants of death won’t let a lack of cash get in the way.
My point is, that money is a substitute for honest bookkeeping. In a straight barter deal, there’s no bookkeeping. To facilitate multiparty exchange, though, you need a market, and for a market to function smoothly, you need a unit of value for the purely mathematical purpose of reducing all transactions, literally, to a single common denominator. I know I went over your head there if you flunked third grade math, but if so, it’s time to hit the books, because you’ve been getting shafted since you let your buddies count the popsicle money. The common denominator, that unit, has had a lot of names – usually going back to a word for “weight.” A “peso,” literally means a “weight” of silver or gold. A “dollar” is a word for “tollar,” meaning a unit of ten weights. If you buy hash or opium in India, they will still sell you a “tollar,” which is ten grams. Gold was perfect. When you weren’t using it to trade, you could hang it on your woman or your slave. But money became popular. Why? Because people cheat.
The King dealt with cheating like this – he said – I’m going to make a coin, and stamp my royal symbol on it. This coin will be made of pure gold, silver or copper, and it will be marked on both sides with my symbol, so you can’t shave off a piece of it and pass it off as a complete coin. It will be of a regulation size, so if it’s any smaller than that, it’s not a real coin, or it’s been shaved. And to be sure that it’s made of real gold, it will be of a specified weight. If it looks like a gold coin, but it’s not the right weight, it’s counterfeit. And if you counterfeit my money, I will cut your hand off, or hang you, or both. These were ways of preventing cheats from screwing with the all-important fulcrum of exchange – a true, unchanging common denominator. The King didn’t know it, but he was relying on the absolute, unchangeable and unique atomic weights of pure metals, something that has to do with their atomic structure, to prevent counterfeiting. That is a very good hedge against cheating.
As you can see, when you have gold in circulation this way, it’s always available to be melted down and turned into jewelry. Or if you had jewelry, and you wanted money for it, you could give it to the King’s mint, and he would give you back money stamped with the King’s head.
And it is absolutely true what the gold bugs say, that when the French financiers created paper money, if with the beginning of widespread financial fraud. Since then, the workingperson has had to deal with the value of their money going up or down based on the scams of financiers who have sharper pencils and bigger record books, and who now use computers to pyramid deals that completely undermine the reliable value of that common denominator that is the basis of all exchange. We will never return to gold as a standard of value, but it would behoove us to adopt stern rules to enforce honest bookkeeping. I’m not saying cut off hands, or hang people, but how about a little waterboarding? I hear the CIA waterboarded Al Zubaydah 183 times, and as a result, he provided a lot of useful information. If we waterboarded bankers, they might be able to tell us how all that “wealth” they “created” just happened to disappear. And that would be really useful.
Fight on all occasions. Fight the more for duels being forbidden, since consequently there is twice as much courage in fighting.
A. Dumas, The Three Musketeers.