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Noch´n kleiner g Artikel zum Gold (sorry für die Formatierung)

verfasst von JüKü, 15.01.2002, 22:23

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http://www.lewrockwell.com/north/north82.html
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<h1 align="center">Gold:
The Sovereign Power of the Veto</h1>
by Gary
North

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The
price of gold has recently been making another of its upward moves. These
upward moves have been beaten back so consistently over the last 22 years
that there is not much interest by the financial press or investors. But
there will come a day when the threat of central banks to sell gold -
which they sell mainly to each other - will no longer scare gold buyers.
They will start taking delivery of their futures contracts. That will change
everything.
If
officials in the central bank of China ever decide to use the bank's
enormous supply of dollar reserves to start buying gold, they will make
their bank the dominant central bank on earth. At some point, they will do
this. They will finally understand how vulnerable the G-8 nations are to a
determined central bank that wishes to get its corporate hands on the West's
gold.
If
Chinese central bank officials should also demand physical delivery of their
gold bars >from the vault in the New York Federal Reserve Bank, they will
announce to the West,"Your days of wine and roses have ended. Call
this revenge for the opium wars." They will have achieved a symbolic
victory over the West in general and the United States in particular.
The
Chinese could do this tomorrow. I think they are likely to do it sometime in
this decade. When they do, they will become the dominant central bank. I
think this is what they want: symbolic affirmation of their new-found
international economic might. They are fast becoming the 800-pound gorilla
in the world's export markets. By 2010, they will be that gorilla, if you
count Hong Kong, which they control, Taiwan, which has sent $180 billion in
private investment into China since 1991, and 40 million overseas Chinese,
who serve as the middlemen in the expansion of Chinese foreign trade.
The
West's best chance of avoiding this transfer of international power is to
continue to educate younger Chinese economists in one or another of the
West's gold-hating graduate schools in economics. The professors must teach
the Chinese that gold is just another commodity, except that it's a
barbarous relic.
The year
that China takes delivery of 1,000 tons of barbarous relic is the year that
China will replace Japan as the dominant nation in what might be called the
Greater East Asia Co-Prosperity Sphere.
JANUARY,
1980
Why has
the price of gold trended lower since January, 1980? Part of this drop was a
reaction to the large price rise in 1978-80, which had been driven by the
inflationary policies of the Federal Reserve System under the long-forgotten
and unlamented Chairman of the Board of Governors, G. William Miller. He was
not an economist. He was a corporate executive without any known
understanding of monetary theory. His tenure of office was brief: March,
1978 to August, 1979, but public confidence had been lost. He was replaced
by Paul Volcker, who adopted tight money policies in October, after being
persuaded by other members of the Board.
Meanwhile,
OPEC had driven up the price of oil for the second time in the decade, this
time under Jimmy Carter. By 1979, there was deep pessimism regarding
Carter's political leadership and the economy. This elected Ronald Reagan in
1980.
In late
1979, Iranians kidnapped the staff of the American embassy.
Throughout
1979, there was also Bunker Hunt's squeeze on silver, which drove up the
price to $50/oz from under $5 a year earlier. He had been taking delivery of
silver contracts all year, terrifying the shorts. Poor Hunt. He was about to
lose his second fortune. The first had taken place in 1971, when Qadaffi had
nationalized Hunt's oil holdings. As soon as the Gulf sheikhs saw that
Qadaffi had gotten away with this massive theft, they decided to squeeze the
West. That fabulously successful oil squeeze began in 1973, the same year
that Hunt began buying silver futures at $1.95/oz. What stopped Hunt in 1980
was two-fold: Volcker's tight money policies and the COMEX, which changed
the rules. No further purchases of silver future contracts were accepted by
the exchange except for shorts who were covering their positions. By March,
1980, the price of silver was at $11. Hunt lost a billion dollars. He had to
borrow from the FED to cover his position. He then uttered those memorable
words,"A billion dollars just doesn't go as far as it used to."
Silver never has recovered.
The last
two decades have seen a fall of the price of all raw commodities. The
nominal price of oil has stayed up, but price increases of finished goods
and services have dramatically lowered the purchasing power of the dollar
since 1980. It costs $2,150 to buy what $1,000 bought in 1980, according to
the inflation calculator at the Bureau of
Labor Statistics. The percentage of American family incomes that is
spent on food, for example, has gone down year by year. So, all the metals
have dropped in price and have stayed down except for brief upward moves.
Is this
a permanent feature of the West's economy? Those who think that we are
running out of raw materials say no. They are generally not economists. Most
economists say yes. They argue that improved extraction techniques and
resource-discovery techniques and technological substitutes will continue to
place a premium on the knowledge-service economy in relation to commodities.
Throughout the twentieth century, the economists have been correct about
this except during wartime.
This
scenario applies to commodities that are used in production. But one
commodity is not generally used in production: gold. From about 2,000 B.C.
until today, gold has been used mainly as money. The issue is: Used by whom?
THE
INVENTION OF COINAGE
To
facilitate exchange, a medium of exchange is crucial. Barter is too
inefficient. If you don't have what I want to obtain, or I don't have what
you want to obtain, there will not be an exchange unless a third party steps
in. He will get a high commission for his specialized knowledge of markets.
Money
reduces these commissions by making exchange between producers easier, i.e.,
converting exchangers from producers into consumers. The best definition of
money was provided by Ludwig von Mises in 1912: the most marketable
commodity." Historically, the most widely acceptable money
commodities have been gold and silver. We read of the patriarch Abram,
"And Abram was very rich in cattle, in silver, and in gold"
(Genesis 13:2).
Sometime
between 700 B.C. and 635 B.C., the king of Lydia, in Asia Minor, began
producing the first coins. They were round, uniform, and stamped with a
lion's head, the symbol of the Lydian dynasty. This invention was soon
imitated by the Greeks. Originally, the coins were electrum: silver and gold.
Under King Croesis ("Creesis"), all of the Lydian coins were gold.
He was the famous king discussed by Herodotus, who made war on the Persians
and lost his empire. But his economic innovation reigned until 1933. I think
it will reign again, but that's another story. For the story of Lydia's
coinage, read Chapter 2 of Peter L. Bernstein's book, The
Power of Gold.
The
world was re-shaped by that invention: the extension of trade and the
division of labor. Wealth increased. But there was another consideration,
one which became the basis of the visible destruction of the gold standard
in the 20th century. Lydia's invention carried with it an assertion, an
implication, and a symbol: the sovereignty of the State over coinage. The
stamp of the dynasty marked the coins as the monopoly of the State. Civil
governments have claimed this sovereignty over money ever since. The stamp
not only announced the coin's authenticity; it announced a monopoly. He who
counterfeited a coin by adding base (cheap) metals was a violator of the
State's exclusive right. The State had to authority to bring negative
sanctions against the violator - not on the basis of his having committed
a fraud, but on the basis of violating the exclusive authority of the State
to produce the coinage.
The
practice of debasement had been condemned by the prophet Isaiah two
generations before the invention of coinage."Thy silver is become
dross, thy wine mixed with water" (Isaiah 1:22). His condemnation was
an extension of the law against false weighs and measures.
 
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Ye shall do no
unrighteousness in judgment, in meteyard, in weight, or in measure (Leviticus
19:35).

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But
thou shalt have a perfect and just weight, a perfect and just measure
shalt thou have: that thy days may be lengthened in the land which the
LORD thy God giveth thee. For all that do such things, and all that do
unrighteously, are an abomination unto the LORD thy God (Deuteronomy
25:15-16).

The
presence of an authoritative stamp made a coin more acceptable in trade. It
reduced the product-seller's risk of not weighing or testing the coins. The
fact that the stamp was imposed by the authority of the king did not, in and
of itself, make the coin a monopoly instrument of trade. What made it a
monopoly was the decision of the king to monopolize the production of coins.
He did not authorize others to use his stamp even when their coins matched
the weight and purity of his coins. He could have charged them a stamping
fee for use on their coins - a trademark fee, in other words. He refused.
From that time on, civil governments resisted the production of coins by
private parties. Coins were deemed an aspect of State sovereignty.
So,
three separate analytical issues were involved: (1) the reduction of
transaction costs associated with small coins compared to large ingots; (2)
the reduction of transaction costs associated with officially stamped metal;
(3) the assertion of State sovereignty over coinage. The third was not
necessary to the first two.
THE
FINAL COURT OF APPEAL
The
judicial issue of sovereignty in the pre-modern world (say, pre-1660) was
the issue of divine right. The assertion of divine right was the
judicial-theological issue of the final earthly court of appeal. He who
possesses legal sovereignty cannot be sued, apart from his permission, for
he is judged by no human court. Sovereignty is why the U.S. government
cannot be sued without its permission, according the long-established
doctrine of"legal immunity." This is why there is so much
political pressure on the U.S. government to allow American or foreign
citizens to appeal to the World Court and other international jurisdictions
above the U.S. Supreme Court. To be the King of the Hill, a court must be
the final court of appeal. Without a world supreme court, there cannot be
world government.
The
final judicial court of appeal for money is a nation's supreme court. But
the final economic court of appeal is the free market. A court can determine
what is lawful money. The free market determines what is actual money. A
civil government can legislate the price of money: exchange rates between
two forms of money; price controls on goods. The free market will determine
what the rates of exchange are in actual exchanges: the black market rate of
exchange.
Gresham's
mid-16th century law says,"Bad money drives out good money." This
form of Sir Thomas's law is imprecisely stated. Here is the correct version:
"The monetary unit that is artificially overvalued by law will drive
out of circulation the monetary unit that is artificially undervalued by law."
This means that there will be a shortage of any artificially undervalued
currency. The best recent example was the U.S. dollar in relation to
Argentina's currency unit in December, 2001. The dollar was artificially
undervalued by Argentina's law. Almost no one could buy dollars at the
government's fixed exchange rate. There was a shortage of dollars at the
phony low price.
As
always, government-enforced price ceilings create shortages (too much demand).
Government-enforced price floors create gluts (too much supply).
The
government can pass all the price controls it wants. The free market will
respond: shortages and gluts. Whenever you hear of a shortage or a glut,
think:"At what price?" Whenever a price is established by law,
the shortage or glut will remain until this legislated price randomly
matches the free market price, at which time, there is no further need for
the legislated price.
Politicians
do not understand that the final court of appeal is the free market. The
economy trumps the State. Governments, by imposing added risk for the
detection of an illegal transaction - a voluntary exchange at free market
prices - do raise transaction costs, but governments cannot establish the
price at which exchanges will take place. There is no appeal beyond the free
market. The market, not civil governments, is sovereign.
Politicians
rarely believe this. So, they play power games with prices. By establishing
by law which currency unit is acceptable for paying taxes, politicians can
determine which currency unit functions as money in tax-related transactions.
But politicians cannot determine at what prices this tax/currency unit will
function as money. The free market - buyers and sellers of money -
establish the money prices of goods and services. Consumers, not governments,
are sovereign over the value of money.
COUNTERFEITING:
LEGAL AND ILLEGAL
Gold has
served as money in free markets for over four millennia. Paper money was an
invention of the Mongols less than a millennium ago. Within a century, they
had destroyed their currency. Commercial bank-created money is less than six
hundred years old. Central bank-created money began in 1694, with the Bank
of England.
Here is
a nearly unbreakable rule: politicians serve their own self-interest by
paying off their constituents with money collected from their opponents'
constituents. When the taxation of their opponents' constituents threatens
to create a tax revolt, or the defeat of the incumbents at the next election,
or both, incumbent politicians seek ways to keep the money flowing to their
special-interest voting blocs without visibly taxing their opponents'
special-interest voting blocs.
The key
word here is"visibly."
Monetary
inflation is the preferred solution of politicians. The real cause of the
public's increased cost of living can be hidden from most voters, who are
economically ignorant, naive, and trusting. Price increases can be blamed on
profit-seeking speculators and capitalistic price-gougers.
If the
currency system were exclusively private, then there could be no element of
sovereignty for counterfeiters. Counterfeiters could be brought into a court
of law and prosecuted for fraud: false weights and measures. They could not
claim that they are beyond the law, above the law, and immune from law suits.
Governments
can and do make these claims of immunity. They transfer by law to central
banks this same political sovereignty. This is why the mixing of judicial
sovereignty over money and economic sovereignty over money eventually leads
to fraud on the part of governments: monetary debasement, either openly
("thy silver has become dross"), or through the printing of more
paper IOU's for gold or silver than there is metal on reserve, or through
the adding of digits in bank computers.
When a
national government has established a State-run gold standard by persuading
the public to exchange their gold for the government's IOU's of gold at a
fixed price, then the public can retaliate against future monetary inflation.
Prices rise due to the increase in the money supply. This would raise the
money-price of gold, except that the government or its central bank has
promised to sell gold at an official price to anyone who brings in an IOU.
The demand for gold therefore rises at the government's artificially
legislated price. This is a rational response of the IOU-holders. The
government is subsidizing the price of gold.
Two
groups want access to the promised gold: (A) people who think the government
will soon change the rules and (1) stop paying gold for IOU's (default), or
(2) reduce the amount of gold that has been promised (devalue the currency);
(B) industrial or ornamental users of gold who want to take advantage of the
subsidy.
If the
government wants to maintain full value of its IOU's for gold, then it must
stop inflating the currency. This will cause a recession: the reversal of
the prior policy of monetary inflation, and the restoration or prices,
especially of capital goods.
Politicians
lose elections during recessions."It's the economy, stupid." So,
they want the good times to continue to roll, which means the printing
presses must continue to roll. But then the gold reserves of the government
will be depleted.
What's a
government to do?
Franklin
Roosevelt's answer was two-fold: (1) confiscate the gold of American
citizens in 1933, and, once the gold had come in and had been turned over to
the privately owned Federal Reserve System, (2) raise the price by 75% in
1934, thereby transferring to the FED a huge windfall profit. The FED's
monetary base rose because of the higher monetary value of its newly
received gold, so commercial banks created new credit money to take
advantage of these increased central banking reserves. The result was the
economic recovery of 1934-36. But when the FED raised bank reserve
requirements in 1936, thereby reducing the increase of bank credit, this
produced the recession - a whopper - of 1937.
http://www.independent.org/tii/news/990500Timberlake.html
Because
the government also raised taxes in 1936, this added to the economy's woes:
a double-whammy.
After
1932, Americans were no longer able to pressure the government to change its
monetary policies. They lost the right of redemption. This abolition of the
public's right of redemption had been the decision of European governments,
1914-1925, in response to the war: a suspension of gold payments. Whenever a
major war broke out in Europe, governments suspended gold redemption. Why?
Because they planned to inflate the money supply to pay for the war. It
happened during the Napoleonic wars. It happened in 1914. In between,
1815-1914, Europe enjoyed a century of price stability.
The
public's right of redemption of gold serves as a veto on the government's
expansion of fiat money, or the central bank's expansion of credit money.
Until the right of redemption is suspended by the government, the public
holds the strong hand.
Every
government-run monetary system is a compromise with the free market. Every
government-run gold standard is based on promises: IOU's issued for gold at
a fixed price. Such a promise is no better than the promise of politicians.
The government can always invoke its sovereign right to change the rules. It
can legally renege on its promises. It is judicially sovereign.
The war
against gold is part of the larger war of political sovereignty - the
State's self-imposed immunity from law suits - against free market
sovereignty. In this case, it is a war by the politicians against the
public's right to select whatever they as individuals want to use as their
currency unit, and their right to bring counterfeiters to justice in the
State's courts. Private, profit-seeking counterfeiters have no immunity from
law suits, unlike legalized private counterfeiters (central bankers).
In the
case of the law suits brought by Americans against the Roosevelt
Administration in 1933, the Supreme Court refused to hear the cases. (The
most detailed account of this subterfuge should be available in March: a
1,600-page book on the Constitutional history of the dollar, written by Ed
Viera, author of a shorter, earlier edition of this book, Pieces of Eight.
Viera is a Harvard-trained lawyer who has devoted his career to the money
question. He is also an Austrian School economist.)
Every
gold standard that is established by a civil government is a pseudo-gold
standard. It is no better than a government promise, a government that
claims sovereignty over money, i.e., legal immunity from prosecution for
breaking its promise to redeem gold for its earlier IOU's.
When it
comes to gold standards, only one is real: a gold standard that has
developed through voluntary exchange on a free market, in which
counterfeiting is exclusively private and illegal under the statutes
governing fraud. Under such a legal order, no one may lawfully issue more
receipts for gold or silver than he has metal in reserve to deliver. Every
warehouse receipt for the monetary commodity must be backed 100% by the
amount of metal specified in the receipt, which is a legal contract. Any
issuing of more receipts to the metal than there is metal in reserve is
counterfeiting: dishonest weights.
Any form
of gold standard in which the civil government is the issuer of warehouse
receipts for metal is inherently a temporary measure. The promise of"full
redemption on demand" is no more reliable that the promises of
politicians. The guarantee is just one more government con job to separate
the public from its wealth - in this case, gold. It is a sucker's play.
And do the suckers love to play! Paper receipts for gold. How convenient: no
more heavy lifting. And it's 100% guaranteed, free of charge, by the
government. What a deal! It's something for nothing!
With the
government as the fiduciary agent, the deal has always been nothing for
something. This is why, in the 20th century, the central banks wound up with
most of the world's gold.
When
someone tells you that he is for"the gold standard," think one
word: sovereignty. If, in the proposed version of the gold standard
that someone is pitching, any agency of civil government is the sovereign
guarantor of warehouse receipts to gold, redeemable on demand, I strongly
suggest that you keep your hand upon your wallet and your back against the
wall.
WHO
VETOES WHOM?
With any
pseudo-gold standard, the government retains the right to veto any attempt
by the public to veto the government's monetary policies. When holders of
government IOU's for gold begin to present their IOU's and take home their
gold, the government can intervene and refuse to pay. Remember, it is not
the government's gold; it is the IOU-holders' gold. Anyway, that was what
was originally promised. But agents of governments lie. This is their
primary function operationally in every democracy: to deceive the citizenry.
A pseudo-gold standard allows undeceived citizens to call the deceivers'
bluff until the government publicly reneges. This is why any gold standard
is hated by all modern political liberals and most conservatives: it places
a veto in the hands of citizens. The overwhelming majority of the
intellectual defenders of State power dismiss the gold standard as a
barbarous legal institution based on a barbarous relic. Why barbarous?
Because it places a veto in the hands of the barbarians: citizens and
non-citizens who can legally buy up the IOU's with depreciating paper money
and then launch a gold run on the government's treasury or the
government-licensed counterfeiters: central banks and their clients,
commercial banks.
The
monetary skeptics announce,"There's gold in them thar vaults!"
When the gold flows out, the day of reckoning draws closer for the purveyors
of counterfeit IOU's for gold. The counterfeiters grow desperate."Their"
gold is now being demanded by barbarians - arrogant citizens who think
that a government promise is worth its weight in gold. Finally, the
counterfeiters end the illusion of their pseudo-gold standard. They had
persuaded the public to sell the government their gold in exchange for IOU's.
Then the government defaults."Tough luck, suckers!"
This has
been going on for three hundred years. The suckers - IOU-holding citizens
- never learn. We are more trusting of known crooks (legally immune
politicians) than money center bankers are who lend money to Latin American
dictators.
CONCLUSION
The
public trusts the government, which claims judicial sovereignty: immunity
from law suits. The public also trusts Alan Greenspan. The American public
has not had legal government-issued or bank-issued IOU's to gold in their
collective hands since 1933. They have voluntarily renounced the power of
the veto. It has been even longer for most Europeans.
The
economic veto over monetary policy has been transferred by the market to
bond speculators. There are fewer of them than citizens who used to hold
gold coins. But they do have a lot of power. They are hated by the
government. The Street.com's Daniel Gross reminded us in November, 2001:
 
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In 13 years at the
helm of the Fed, Greenspan has built up an enormous amount of
credibility and clout - in Washington and New York. His actions in
controlling the movement of interest rates have been credited with
making or breaking the past two presidencies. George Bush - the elder
- explicitly blamed Greenspan for dooming his one-term presidency by
not cutting rates quickly enough in 1991."I reappointed him, and
he disappointed me," Bush said.

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Greenspan,
on the other hand, [i]made Clinton's presidency. The Fed Chairman
strongly suggested, early on, that the president focus on deficit
reduction because that would please him and, in turn, the bond market.
Clinton exploded:"You mean to tell me that the success of the
program and my reelection hinges on the Federal Reserve and a bunch of
[bleeping] bond traders?" But with the market-savvy Robert Rubin
whispering in his ear, Clinton chose the path of budgetary restraint.
Greenspan ratified his 1993 budget plan, and the rest is economic history.
In
today's political/investing culture, it is difficult for policymakers to
make much progress without the cooperation of the bond market. And because
the bond market regards Greenspan as an oracle par excellence, the
74-year-old former devotee of Ayn Rand now occupies the catbird seat.

[/i]
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http://www.thestreet.com/comment/ballotdance/1164057.html
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The
bleeping bond traders today are called"bond vigilantes." This
name fits. Vigilantes in the old West used to string up suspected
malefactors when the government refused to prosecute, or when, in some
cases, the people at the end of the ropes were the local government.
For
politicians, the free market's speculators who publicly expose the
government's monetary policies as detrimental to the public are regarded by
the government as barbarians or vigilantes. Politicians hate any veto power
held by the public. Bond market speculators are exercising a veto on behalf
of the public. The government will do what it can to bankrupt them, hamper
them, or in some way remove their veto power. But, in the long run, there is
no escape. The free market will veto bad economic policies. The free market,
not the State, is economically sovereign. Economic sovereignty trumps
judicial sovereignty in the long run.
Keynes
dismissed the long run."In the long run, we are all dead." Well,
Keynes is dead, and his theoretical legacy is dying. But, for the moment,
the rival sovereignties are about equally matched: market vs. State.
But if
the Chinese central bank ever starts exchanging Western currencies for gold,
and then demands physical delivery, the West's central banks will face
something more ominous than a handful of private gold bugs. It will face a
rival that has the money to drive up the price of gold to 1980-levels. If
Western central banks try to thwart this price rise by selling gold, the
Chinese will smile."Almond eyes wish to subsidize our purchase of
gold? We accept!" The West would then be between a rock and a 24-carat
hard place.
If you
want to know what the"yellow peril" is in central banking circles
these days, this is it.
January
15,
2002

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© 2002
LewRockwell.com

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Noch´n kleiner *g* Artikel zum Gold (sorry für die Formatierung) - JüKü, 15.01.2002, 22:23