3 Min. Gold News – Synopsis of Jim Rickards with Daniela Cambone at Stansberry – Aug 14, 2021

 

3 Min. Gold News

 

A synopsis of Jim Rickards, New York Times bestselling author of The New Case for Gold, The Death of Money, Currency Wars, The Road to Ruin, Aftermath and The New Great Depression with Daniela Cambone , Editor-At-Large and Anchor at Stansberry Research.

 

Jim is the Editor of Strategic Intelligence, Chief Global Strategist for Meraglim Inc., former general counsel for Long Term Capital Management, and a consultant to the U.S. Intelligence community and U.S. Department of Defence.

 

Topics:

 

US Better off before or after the Gold Standard?
Money Supply
Gold and the Great Depression
Digital Currencies
New Gold Standard
New Bretton Woods
Nixon Shock
Stages
Cryptocurrency Regulation

 

by Elaine Diane Taylor

 


It’s the 50th anniversary of Nixon removing the US from a gold standard.

 

US BETTER OFF BEFORE OR AFTER THE GOLD STANDARD?

The US was better off before the Federal Reserve (the Fed) was created in 1913.

People hate central banks.

The US had two they got rid of before the Fed came along. The first they got rid of in 1812 and the second in 1836 under Pres. Andrew Jackson.

Between 1826 and 1913 there was no central bank (Fed) and it was the greatest era of prosperity, low inflation, invention and efficiency in almost all recorded history.

We get along fine without a central bank (Fed) and we thrive with a gold standard.


MONEY SUPPLY

The Fed can expand and contract the money supply as needed to keep inflation under control or to grow the economy.

You can also have that with a gold standard – you don’t need a central bank.

From 1913 to 1971 the US had a gold standard and also had “discretionary monetary policy” meaning the ability to print or destroy money.

So you can have a gold standard and print money if needed but it keeps you from going too far.

Until 1945 the law in the US was that the base money supply, called M2, was controlled by the Fed and could be up to 2.5 times the US gold holdings priced at the market price.

Gold was priced at $20.60 per ounce and then changed later to $35 per ounce.

If you take $35 per ounce (the market price) and multiply it by the US gold holdings, it means that the Fed could have made the money supply 2.5 times as much fiat money as that amount.

You can print money with a gold standard you just can’t get crazy.


GOLD AND THE GREAT DEPRESSION

You hear people say that gold was the cause of the Great Depression.

But the money supply during the Great Depression never exceeded 100% of the gold supply. 

So not 2.5 times the gold supply.

That means the money supply could have been 2.5 times greater than it was in the Great Depression with a gold standard.

The Fed messed it up badly but it had nothing to do with gold.

Gold was never a constraint.

 

DIGITAL CURRENCIES

The central banks are moving towards digital central bank currencies (CBDCs).

These aren’t cryptocurrencies.

With the central banks’ CBDCs the digital dollar is still a dollar and the digital yen is still a yen..

This means the central banks would still have “discretionary monetary policy” authority and could expand the money supply if they wanted to.

(Cryptocurrencies are not created by a central bank, they are “de-centralized”, so not subject to central bank control or expansion desires.)

The difference is that the CBDCs would be faster and cheaper than the current fiat system for digital payments (both domestic and cross-border payments).

Each person might have a digital wallet at the Fed and intermediate the banking system.

That would not be inconsistent with a gold standard.

No one is going to walk around with gold bars or coins in their pocket but there could be a digital gold backed currency.

There could be a system where a digital currency is backed by physical gold that’s stored in a safe place outside the banking system. Purchases could be made with a debit card that’s linked to the gold. There are some forms of that right now.


NEW GOLD STANDARD

Gold standards have failed in the past because they set the price of gold too low.

The dollar would be priced to a defined weight of gold, and no different than any other cross-trade like dollar-to-yen or dollar-to-euro.

But they have to get the cross-trade price right.

The price has to be high enough to support all world commerce, leverage, commercial loans, and the whole financial system.

They could price the gold at today’s market price of about $1,800 per ounce but that would be highly deflationary and create a fiasco.

It’s not a matter of how much gold there is, it’s a matter of making the price per ounce high enough to cover the whole amount needed to run the world monetary system.

It couldn’t be done at the current $1,800 per ounce price but it could be done at a $15,000 min. per ounce price.


NEW BRETTON WOODS

A reset might be done in an orderly process where the G20 convenes and the process is done right, but Jim doesn’t think that’s going to happen.

He thinks what will happen is that the current system is going to fall apart and there will be a panic-style loss of confidence in dollars, euro, yen and all central bank controlled currencies.

Jim believes a reset will be done on an emergency basis after the system has fallen apart from a lack of confidence.

The number one question for gold is going to be, “What’s the price?”

 

NIXON SHOCK

August 15, 1971 stopped foreign trading partners from redeeming their US dollars for physical gold.

He said it was temporary.

He thought they’d have a new Bretton Woods and go back to a gold standard, but it just never happened.


STAGES


1. World War I – the government had citizens trade their physical gold at the bank for paper money, with a promise to redeem it back for gold.

2. The government melted the gold down into 400 oz. bars and then said they’d just leave it all in the vaults of the banks.

3. The central banks took the gold from the commercial banks.

4. The government took it all from the central banks and put it in the Treasury.

The first thing on the asset side of the Federal Reserve’s (US central bank’s) balance sheet is an IOU from the Treasury for the gold the government took. The Treasury owns the gold.

5. President Roosevelt made it contraband so US citizens couldn’t own it.

6. Only foreign trading partners could get the US gold, and then Nixon ended that in 1971.


The lesson is that it happened in stages over about 40 years.

The elites took the citizens’ gold in stages, piecemeal, and then it was all gone and all the citizens had was fiat.


CRYPTOCURRENCY REGULATION

Daniela points out that it reminds her of how the government is regulating cryptocurrencies.

That they might not make a sweeping change – it might be done in stages.

Jim agrees.

It’s called “Piecemeal social engineering” first proposed by Karl Popper.

The biggest advocate of piecemeal social engineering today is George Soros.

 

Jim Rickards can be found on Twitter and at James Rickards Project.

Daniela Cambone can be found on Twitter and at DanielaCambone.com

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Thank you to Jim Rickards for including me in his bestselling book The New Case for Gold.

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.

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Here is an example of the handmade boxes being created for the Raw Gold Luxury jewellery line. The resin “river” is made with small stones from my favourite hidden waterfall along British Columbia’s Gold Rush Trail. Each presentation tile has a piece of gold in the “water”. :)  I hike in to the waterfall myself.

 

 

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Elaine_RedRock_5

My thoughts…

How we frame money is not just a way of trading. It’s a way of thinking.

The worldview of how we communicate dictates how we think and what we think about. It’s important to look at things that are far away to see perspective and be able to connect dots of what is similar and what is different between small and large patterns.

The world is getting closer to flipping its value exchange system from mechanical to electronic.

With this change comes a shift in not only the way we trade goods and services for “money”, but in the way we  order our lives. It will take seconds to process a payment digitally so we will change how we think of time and space.

The medium itself is what orders how we think, process and create experiences. Some types of media are hot, like radio, and some are cool, like TV, but it’s the prevalent medium itself that frames the possibilities.

The advent of electricity changed the “day” from sunup to sundown to any time at all. Around the world. Instant communication made being “there” as real as being there. Conciousness is the connection between humans and that could now be done without being in the same room, or field, or country.

Societies shift from linear thought to symbolic thought in repeating cycles. With the advent of electricity we moved from reading in long sentences, learning in step-by-step processes, and breaking jobs into tiny repeated activities in a production line, into an instant on/off world.

Light floods an area and we longer have to wait for the sun to rise.  The tortoise no longer wins the race against the rabbit.

We live with “eureka” moments of insight built by connecting non-linear smudges of information.

Newspapers became little frames of information instead of long paragraphs of prose. Then more photos were included, using symbols to create meaning.

It’s like we’re back to hieroglyphs with layered meaning, instead of the phonetic sounding out of multi-used non-tied-in squiggles that represent a sound.

The media world is now digitally driven. Books, games, music and movies.

And the financial world is switching last as it’s the biggest communication avenue of power and value.

All the money.

The world is switching from the core, the root, below-the-ground up. And those with the money at the moment don’t want to lose it in the process.

So the centralized kids and the decentralized kids are all rushing to make the biggest toys in the game so they can rule the new playground.

The BIS (Bank for International Settlements) sees their biggest central bank threat as being the Big Tech companies who are building their own non-financial world tokenized money. The whole concept of what a bank is is changing.

The BIS and IMF are in persuasion mode as they use the economic hardship made from policy decisions about lockdowns to create more loans. More debt. More ties. All while trying to level off the US and level up other nations so they can rule them all. But the CB system failed. The have nations have more and the have-not nations have less. Their recent speeches show their floundering. They want Big Tech companies to give them all digital IDs for every person, so the central banks will have control over everyone. I don’t think that will happen. Popcorn is standing by.

I’ve been quiet on social media and on this blog while the anger phase of the mourning period passes. A new music piece is ready to be recorded as well as a Bob Dylan cover “Don’t Think Twice”, which seems appropriate for the times.

The old world has gone.  Some know it, some are being blindsided with it, and most are going to be absolutely floored when it hits.

It’s coming

We’re going from a mechanical steam powered train on steel tracks to a rocket ship leaving the atmosphere. From an extension of our legs to an extension of our nervous system.

We’ll value handmade individual goods that are sold through digital means using blockchain technology.

It’s not a future of one or the other. It’s not a future of none of it. The structures for the resetting of the global system have been worked on for many years. People are in place and they’ve been tied together for years. Walled gardens are planted.

In order for a global trade of value to work it must be inexpensive and fast. The domestic payment systems will become digital and the big kids already have that wrapped up. The bigger institutions are catching up. Things like SWIFT and FOREX are quickly digitizing.

The bigger issue for defi has been everyone else – not the US dollar and the Japanese yen, but all the currencies that are smaller and all the unbanked in the smaller economies that only had slow and expensive options to send money across borders.

Defi platforms, ledgers, apps and tokens. The new system will let them trade and transfer value across borders and currencies in near instant time, and at a very low cost.  Global and out into the universe.

Regulation in the US is being crafted and performed like theatre. Enjoy the show.

It’s coming.

I believe the foundation at the bottom of it all will still be physical gold. No trust exists and for good reason.

Tokenized.

Art and music and money will all be tokenized anchored to gold and each other.

But at this moment it’s a world without an anchor.

You are fed with cake and follies.

You are tethered (Tether) to the shell.

They were bailing out the breeches.

They’ll be bailing in the hell.

from A World Without an Anchor

 

Elaine~

 

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Coins and Crowns

words and music Elaine Diane Taylor
SOCAN/ASCAP
from the album Coins and Crowns

Coins and Crowns is featured in Episode 1 of Mike Maloney’s documentary series Hidden Secrets of Money.

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Not Much of a Holiday (Bank Holidays and Media Persuasion)

words and music Elaine Diane Taylor

Single available on iTunes

 

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A Terrible Breeze    (War and Social Media)

The news comes down
A little bluebird sings
Words of war
Fire and furious things
Of testing might
‘Til no patience knows
If keeping still
Still keeps you safe at home

It’s a terrible breeze
They speak of today
Of threats that used to live a world away
We all know wind
Can blow both ways
And a terrible breeze can blow it all away

A worldwide net
Sees our village grow
Until we all forget
What each one used to know
How a blind bird’s wings
Can reach the shore
And turn the wheel of peace and war

Village fools sinking down, down, down
Debt and gold wound in numbered shrouds
Deal of a life it’s bread and clowns
Can we afford another go around?
The news comes down.

It’s a terrible breeze. The news comes down.

words and music Elaine Diane Taylor

Single available on iTunes

 

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AlbumCover.PreparingfortheFall

Preparing for the Fall is a live boutique album available for digital download  — featuring Wag the Dog, Black Swan Dive,  American Pie and Gods of the Copybook Headings. Also available on iTunes, Google Music, Amazon Music and major digital distributors.

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The Gods of the Copybook Headings

words by Rudyard Kipling and music by Elaine Diane Taylor

from the album Preparing for the Fall.

 

The copybooks of the early 1900s gave us all the wisdom we need. The sayings that were copied are the truths, the gods of our world. All the empires who followed the gods of the marketplace have fallen, and there’s terror and slaughter when the gods of the copybook headings return. The lyrics are by Rudyard Kipling. One of my gurus.

Another Week on Wall Street

words and music Elaine Diane Taylor

from the album Coins and Crowns.

A little grease (Greece) is floating out to sea, and little pigs (Portugal, Italy, Greece and Spain) are bobbing up and down, they’ll send a storm and we’ll see, when the tide goes out who’s naked on the beach“. The world is changing as we know it.

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.

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