Exactly Why

A good friend of mine wrote this week once again that he believes, he KNOWS, that we must return to the gold standard both nationally and globally. However, in his post, down near the end, he wrote, "It would scuttle the grand plans of the political con artists who yearn to get rich by running the paper-money printing press overtime." And that to me is exactly why we will not ever return to a gold standard.

People don't even understand the basics of economics. Not their fault; of course, they believe what they are taught and told by people whom they trust, from teachers to professors to politicians. They don't understand that the stock market is a large imaginary, mutually-agreed-upon loss and profit quagmire. Its promotion solely depends on those who will profit the most from it. In good times, this is fine, it's ok, to be a little bullish, faithful, aggressive. In bad times, bearish times, folks are frightened. But of what? Common sense will dictate your investments, if you understand enough to ignore the hoopla and passion and to determine for yourself where the next boom (or bust) will lie. Never play with money that you don't have, don't trust a certificate but cold cash. Simple - yet all too easily run amok by ugly and talentless American Idol wannabes who know that people, especially gullible uneducated people, will follow hype instead of reason. Nevertheless, remember in the back of your mind that until your stock splits or sells and you have cash in hand, the whole stock market is purely imaginary; betting on products or services that have not even been invented yet. The dot com boom and bust, the Enron debacle, the housing boom and bust - all of these were led by people who knew exactly what they were doing and how money works - and who overhyped their products and seduced the gullible (as well as paid off the politicians) to keep their pockets lined at John Q's expense. They counted on the fantasy and excitement, the get-rich-quick eagerness and swallow-it-whole philosophy of the purposefully, determinedly ignorant. (The top three orchestrators of the Fannie Mae/Freddie Mac debacle are now Obama's financial advisors. Hand in glove, hand in glove, follow the money!)

Our dollars are built on the same fantasy, the same false sense of security. They have no grounding in gold, no basis in anything valuable and rare. If you print more dollar bills based on nothing at all, then you are being paid with nothing, are spending nothing. It is for this reason that prices of everything go up and the dollar's worth declines. The fantasy is fine and it works - for a little while - as long as people believe in it. But when it stops working - as it inevitably does, as more and more dollars are printed with no basis for their value - then people start scrabbling around for something that they can trade, or hold, that is valuable.

It is for this reason I believe that, by either force or suasion, the governments of the world will gather up all of the gold held in the hands of individuals. As governments take over banking and finance for their countries, they and they alone must hold the basis of that finance to make a profit or even to stay solvent and stable.

Have you ever known anything run by a government bureaucracy to make a profit or even to stay stable financially? Their attitude of - "If we need more money, will just raise taxes!" or "If we need more money, will just print more!" has gotten us where we are today. And it is a fantasy swallowed whole once again by the American people. There's really no hope for those who insist that they know nothing about economics, but insist on letting, even demanding, that their government or their stockbroker buy them into prosperity.