Juxtapose the following excerpt from the synopsis of "The Case Against the Fed" from the Mises store:
> Rothbard calls for the abolition of the central bank and a restoration of > the gold standard.
With a notion set forth a documentary entitled "The Money Masters": that 70% of the world's gold is owned by a very small group of people.
Additionally, the same documentary cites the American Civil War as a time when American bills were produced to fund the war. These monies were not backed by anything but were immensely successful and debt-free (no interest).
I'm very excited to hear what some of you think with regards to this information. I have recently begun a journey down the rabbit hole of politics, history and economics. It's fascinating and _very_ scary at the same time.
You have to be careful listening to "The Money Masters", since it's a mix of truth and completely wrong and misguided economic policies.
What's correct about that "documentary" is that fractional reserve banking enrich the few at the expense of the many.
What's wrong is almost everything else.
They fail to understand a basic economic law, which is that the size of money supply doesn't matter, any size is optimum for the economy to function properly.
They beleive that increasing the supply of money causes prosperity, and the only thing wrong about it is that it enriches private indivudual. Same for the FED. What they critisize is not that it exploits the poor, but that it enriches private banks and that it's "secret". What they promote is a FED but totally controlled and run by politicians and bureaucrats.
There's so many things that are wrong in the documentary that it makes an uninform public know even less about sound economics than before he watched it. For instance, tally sticks were not money, they were mostly bonds certificates. They were not even homegenous goods. Continental scripts didn't create prosperity, they were all inflated out of existance. Ben Franklin was pro-fiat money because he owned a printing press (literally) and had government contracts to print the money himself.
The whole documentary is a primitivo-socialist rant against what is "private", "secret", and glorifies the government. They promote a masively inflationary government managed money, without realizing that it's exactly what we have now.
To answer your specific question, I seriously doubt that "70% of the gold supply" is in the hand of a small group of people. Rich people don't hold they wealth in gold, they hold land or financial assets. Central banks hold about 12-18% world money supply, depending of the source, and that's already a huge part.
But anyhow, it wouldn't matter, since money holdings represent always a very small part of the total wealth in an economy, and for it to confer any advantage to their holders, they have to spend it.
First, the gold standard wasn't just a gold standard. The Coinage Act of 1792 included gold, silver, copper, and nickel for using precious metals for various denominations. You could carry around today's equivalent of $800.00 with 1 oz. of gold as opposed to carrying a stack of 40 twenty dollar bills.
Anyway, the scarcity of gold would have two free market responses:
1) People would have higher incentive to dig for more gold diluting the 70% held in the hand's of a small group.
2) That small group would have incentive to spend their gold.
The free market, when fully operational, favors a decentralization of wealth. This is why the "Trust" met together to formulate the Federal Reserve in 1910. They were losing market shares from the advantages they gained from legislation in the 1870s. Smaller banks were popping up every where and were actually loaning money they had instead of fractional reserve banking. The Government was paying down it's debt and was on it's way to being out from under the burden of debt it carried. They wanted to do more then rearrange the deck, they wanted to own the whole casino. So they met with Senator Aldrich to form legislation that would continue this rate of capital extraction in a way that was in their favor. And thus the Federal Reserve was born. I will remind you that at that time those seven people who met to form the Federal Reserve easily represented over 1/3rd of the entire planet's wealth.
Putting the printing press in the hands of the legislators instead will take things from bad to worse. In fact, there is no authority for that in our Constitution either. Our Constitution says in Article 1 Section 8 that Congress was authorized to COIN money. Not CREATE money. No individual or group should be left with that power and our founders understood this(with the exception of Alexander Hamilton).
Suppose that small group holding 70% as you allege, what good would it do them? The prices would automatically adjust to the 30% in circulation and if they introduced it back into the economy, the prices would readjust and they would no longer have 70%. So unless they actually contribute something extremely worthwhile to the economy, they wouldn't be able to keep 70%, and even if they horded it, that would do them no good either.
angryrabbit: Earlier today I found the American Monetary Instititute. I'm uncertain what their views really are due to a terrible design, but they do have some material expressing strong disagreement with the Austrian school of monetary thought. From their website: "Here's why the AMI considers the Austrian School as monetarily illiterate and not having done their homework...". Does anyone have any experience with, or opinions regarding, the AMI?
Earlier today I found the American Monetary Instititute. I'm uncertain what their views really are due to a terrible design, but they do have some material expressing strong disagreement with the Austrian school of monetary thought. From their website: "Here's why the AMI considers the Austrian School as monetarily illiterate and not having done their homework...".
Does anyone have any experience with, or opinions regarding, the AMI?
Yeah, I read their position before.
They fit right in "The Money Masters" crowd.
The author, Zarlenga, uses arguments such as quoting aristotle on money and concluding that since he is ancient, and "closer to the [historical] origin of money", his point of view must be more correct than say Mises, who lived in the 20th century (see his powerpoint presentation).
Zarlenga is profoundly ignorant of economics theory, and they discourage their following from reading economic treatise, since according to them they would "corrupt their mind". He is an historisist that beleives that thuth comes out of quoting famous people (mostly politicians).
One book (available for free on this site) that I strongly recommend is Rothbard's "What has our Government done to our money".
Then read Mr Zarlenga's paper, and I think his limits will be obvious to you.
> I personally like the hours unit like they use in Ithaca, NY > found here. Money that is based on labor, I think is better > then fiat and precious metals combined.
Economics for Real People responds with:
>The attempt to use labor as the common unit of value, as >did Marx and the British classical economists, doesn’t succeed. > The cost of Rich’s labor is his subjective evaluation of what he > had to give up in order to perform the work in question. The > value to Helena of Rich’s labor is her subjective valuation of > the fruits of his efforts. To attempt to calculate profit and loss > in terms of the ticking of a clock or the expenditure of energy > is to miss entirely the economic aspect of what is occurring.
Edward Griffin has a good review of that movie Money Masters here:
http://www.freedom-force.org/freedomcontent.cfm?fuseaction=meetstill&refpage=issues
Aragon:Edward Griffin has a good review of that movie Money Masters here: http://www.freedom-force.org/freedomcontent.cfm?fuseaction=meetstill&refpage=issues
I am very confused about the question of where the gold is for small investors. I am finding it very difficult to find any bullion coins any more. Why would that be? With this very strained economy the demand is huge. Where is the supply? Why are the mints pumping out coins as fast as they can? Why aren't new mints opening? Is it government action behind the disappearance of coins? Are owners of coins hoarding what they have? Is the supply from mines too unstable? Is Comex delivering?
And what about the price? Around $800 today in the face of low supply (at least of coins and small bars) and high demand. What accounts for that? How can even "the Cartel" knock the price down like that in these conditions. I really don't get it. Any good explanations here?
Here's one response