From: The National Inflation Association
Federal Reserve Chairman Ben Bernanke today said that the Federal Reserve is prepared to act with an additional round of quantitative easing if there is any weakening of the U.S. economy and threat of deflation. Bernanke also said that the Fed could act in other ways to stimulate the economy, such as cutting the interest rate that the Fed pays to banks on their $1.5 trillion in excess reserves that they currently keep parked at the Fed. NIA believes this $1.5 trillion alone would multiply into $15 trillion once it circulates through the U.S. economy and if Bernanke on top of that unleashes any additional quantitative easing, it will just about guarantee hyperinflation. Bernanke has made it very clear that he is prepared to print money until the U.S. dollar becomes worthless and the incomes and savings of all U.S. citizens are destroyed.
Ron Paul today asked Bernanke whether or not he watches the price of gold and if he thinks gold is money. Although Bernanke admitted that he does watch the price of gold, Bernanke said that gold is not money, but it is only an asset. Bernanke explained that central banks only hold gold as a “tradition”. The truth is, gold has been accepted as money throughout all civilizations over periods of thousands of years. Bernanke doesn’t want U.S. citizens to wake up and realize that they can opt-out of the criminal Federal Reserve system if they get rid of their U.S. dollars and store all of their wealth in gold and silver. To see a video of Ron Paul’s exchange today with Bernanke, simply visit our blog at: http://inflation.us/blog/2011/07/video-of-ron-paul-asking-bernanke-if-gold-is-money/
The U.S. Constitution defined gold as legal tender and the current fiat currency system we have today where Bernanke can steal from the purchasing power of the poor and middle-class and redistribute this wealth to his banker friends on Wall Street is unconstitutional, immoral, and illegal. The U.S. dollar originally only had purchasing power because it was backed by gold. Today, the U.S. dollar is a fiat currency that is backed by nothing. Any remaining purchasing power the U.S. dollar still has is just an illusion and will soon evaporate due to Bernanke’s actions.
In order for an item to function as money, it should be liquid and easily tradable, easily transportable, and durable. It should be divisible into smaller units without destroying its value and should also be fungible, meaning one unit of equal weight must be equivalent to another (which is why diamonds can’t be used as money). The item must also be a specific weight, measure, or size, so that it is easy to count. It must be long lasting, durable, and not perishable or subject to decay (which is why food items can’t be used as money).
Money must be easily recognizable and most importantly, it must be difficult to counterfeit. The U.S. dollar simply isn’t real money because Bernanke has been counterfeiting trillions of dollars out of thin air. Money shouldn’t require a mark or image to be valuable, but it should just be valuable based on weight and measure. Gold is valuable based on its weight and measure, and fits all of these other qualities and characteristics as well. Never do people explore shipwrecks hoping to discover U.S. dollars, because dollars that Bernanke can print at will even if they could survive the corrosion of the ocean, simply won’t have any purchasing power left by the time explorers can locate them. People explore shipwrecks for gold, because it will last underwater for thousands of years and always retain its value.
When Zimbabwe’s President Robert Mugabe ordered their central bank to implement exactly the same monetary policies that Bernanke has been ordered to implement here in the U.S., the Zimbabwe dollar became worthless and Zimbabweans were forced to pan their rivers for gold. Citizens of Zimbabwe who were able to find 0.1 gram of gold after a long hard day’s work of shifting through thousands of buckets full of mud, were able to take that 0.1 gram of gold and exchange it for a loaf of bread. Those who were too old or weak to pan for gold simply couldn’t afford food and starved to death.
NIA recommends to all U.S. citizens that they read this eHow article about homemade gold panning: http://www.ehow.com/how_7763218_homemade-gold-panning.html This is a skill all Americans will need to have in order to survive hyperinflation. Unfortunately, unlike in Zimbabwe, most gold in U.S. rivers has already been explored for, so Americans might not be as lucky as Zimbabweans.
In order for an asset to be considered money, its supply must be kept scarce. Bernanke has spent a total of $4.7 trillion since the financial crisis of late-2008, which has flooded the world with excess liquidity of U.S. dollars and led to massive inflation in the prices of food and energy, the two items that Americans need most to live and survive. The inflation problems in China are a direct result of their currency peg to the U.S. dollar and willingness to accept the dollars we print in return for the real goods they produce. As soon as the Chinese central bank decides to end their currency peg, China’s currency will increase in purchasing power and all of the monetary inflation the U.S. has exported to them will flow back to the U.S. like a giant tsunami.
Ron Paul today pointed out exactly what we said in our last article. Since the last Presidential election about three years ago, the U.S. dollar has lost about half of its purchasing power priced in gold. Although the U.S. government’s Bureau of Labor Statistics (BLS) has reported only 2% annual price inflation over the past three years, when you account for how the U.S. government used to calculate price inflation before the implementation of hedonics and quantitative easing, annual price inflation has actually been closer to 9%. Soon when price inflation begins spiraling out of control, Bernanke will be forced to raise the Fed Funds Rate north of 10%, which will cause our interest payments on the national debt to soar to over $1 trillion per year. The U.S. government will then need to immediately end Social Security, Medicare, Medicaid, and all other entitlement programs, to have any chance of survival.
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us
Gold is money of that there is no doubt. On its own gold is not easy to use for day-to-day transactions in the open marketplace. Silver may be usable but is still far from easy to use as a monetary medium of exchange. There is a solution to all this and that is to use Internet free monetary systems or private money in the Hayek model.
Bitcoin at bitcoin.com is a possible prototype for the idea of disbursed money operating on the Internet in cyberspace. While all this is very nice and dandy why does it matter? Currently, our currencies are becoming slowly but surely worthless. There is a singularity point when currency simply fails and that is all there is to it. Weimar, Zimbabwe and Argentina are all states that have experienced hyperinflation with disastrous consequences to the populations of those nations. Does this have to be the case?
When economies collapse because the money is worthless there are always alternatives in a shady areas of the black markets that necessarily take over economic exchange. It would perhaps be preferable to permit the development of alternative Internet-based means of exchange that would prevent a descent into a monetary black hole that is the norm following hyperinflation. Providing alternative money systems should be encouraged and legal tender laws adjusted to provide for them. Money systems backed by gold, silver and other intrinsically valuable entities would provide hard money with very little leeway for stealth taxation by way of inflation. This would be a means of inserting something akin to the gold standard into a collapsed economy or preferably well in advance of an economy heading towards collapse.
On the surface, this seems to be a silly idea, but is it? There are alternative monetary systems being developed they are out there on the Internet. There are problems with them such as using such currencies or monetary systems in the day-to-day market. No one wants to carry around a lap top computer, though cell phones may be a very viable technological solution for the means of exchange.
There may also be a need to be able to create monetary notes with encoded monetary values on them that can be circulated as gold backed paper that is redeemable either is gold or on gold backed accounts on the Internet. It should be possible to create the notes and voluntarily destroy the notes said that value is either assigned to them for a specified time and then cashed back into cyberspace. It may also be possible to distribute coins backed by similar arrangements so that all the usual conveniences of money are available to the general population. These are all issues that need applied intelligence and inventive skill.
Alternatives to existing currencies may be vital to prevent the complete collapse of civil society in the face of massive hyperinflation. It behooves all of us to consider the possibility of establishing means of exchange networks well in advance of critical economic failure as hyperinflation starts to take hold on our economy. A hard currency get-out may well be a way of preventing complete collapse of the economy. However, legal tender laws need to be adjusted or even abolished so that alternative monetary systems can be up and running in tandem with the national currency. These are all technical problems not issues that should prevent alternative money from being made available for all of us.
Considering the possibility of catastrophic hyperinflation as being a very real possibility it is very important to take action. It seems that many politicians either don’t consider hyperinflation to be credible or don’t care if it is credible. This has got to change, and one way of changing it is to advance the idea of hard money independent of the nation state and international world government pseudo-states. Merely arguing for monthly alternatives should frighten the horses enough to prevent the absurd debt ceiling idiocy that we are saddled with at the moment. It is high time for a political party and the presidential candidate to adopt the idea of hard money. To advocate such an entity will draw immense fire from the left where the denizens of fraudulent currency reside. This is an argument that would do well in the upcoming presidential election. Once this becomes commonplace not only will independent monetary arrangements be possible but existing currencies would become the subject of very close scrutiny.
Competing currencies and monetary systems is the way to go so that the best of breed emerges to set the ultimate standard but always leaving the door open for innovation and alternatives. This is a whole new way of seeing money. It is high time that there was an alternative to putting up with state stealth taxation by way of crippling inflation, now is the time to bring it on.