Category: Sound Money

Why Americans are Looking for a Safe Haven from the Dollar

Listen to the Audio Mises Wire version of this article.

As the Federal Reserve’s quantitative easing practices generate the biggest debt bubble in history, gold futures are trading at record highs, a phenomenon some have called “a bit of a mystery.” However, this “mystery” was solved long ago by the laws of economics. The only “mystery” here is why—contrary to centuries of economic wisdom—we allowed centralized paper money to become the dominant form of currency in the first place.

As recent waves of civil unrest and economic turmoil have prompted some to look back in time and reflect on the observations of the Founding Fathers, it seems most have opted to reject them entirely. Yet among the founders’ many warnings against the institutions that would eventually dominate the modern world are the timeless—and astonishingly accurate—warnings against central banking.

On August 1, 1787, George Washington wrote in a letter to Thomas Jefferson that “paper currency [can] ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.” Jefferson also opposed the concept, warning that “banking establishments are more dangerous than standing armies.” James Madison called paper money “unjust,” recognizing that it allowed the government to confiscate and redistribute property through inflation: “It affects the rights of property as much as taking away equal value in land.”

In other words, inflation is a hidden form of taxation. Washington understood this. Jefferson understood this. Madison understood this. And generations of preeminent economists since then—from Ludwig von Mises to F.A. Hayek, to Murray Rothbard—have understood this quite clearly.

And there’s nothing controversial or mysterious about sound money, that is, currency backed by some form of secure, fixed weight commodity like gold or silver. Both have been valued in some fashion for six thousand years and have been used as currency for around twenty-six hundred years. As confidence in the dollar continues to nosedive, the market is not only putting more confidence in gold and silver, but in some cryptocurrencies sharing many of the characteristics of gold.

The presidencies of Woodrow Wilson and Franklin D. Roosevelt are rightfully regarded as some of the darkest years for freedom in America. Often overlooked, however, are the deeply repressive monetary policies introduced by both presidents. In 1838, Senator John C. Calhoun foreshadowed the economic evils that would eventually emerge at the peak of the Progressive Era, explaining, “It is the nature of stimulus…to excite first, and then depress afterwards….Nothing is more stimulating than an expanding and depreciating currency. It creates a delusive appearance of prosperity, which puts everything in motion. Everyone feels as if he was growing richer as prices rise.”

Seventy-five years later, the autocrats running the Wilson administration dealt two devastating blows to liberty with the Federal Reserve Act and the Revenue Act, forever marking 1913 as a tragic year for liberty. Both laws struck at the heart of property rights by establishing the Federal Reserve System and the income tax, respectively. Then, in 1933, Roosevelt issued Executive Order No. 6102, requiring Americans to surrender much of their gold to the US government. Shortly after, Congress passed the Gold Reserve Act of 1934, artificially raising the price of gold and guaranteeing the government a profit of $14.33 for each ounce of gold it had seized from the people.

Finally, in 1971, President Richard Nixon—like any self-respecting twentieth-century Keynesian—committed himself to finishing the work of Wilson and Roosevelt by closing the gold window, forever divorcing the gold standard from the dollar. Rather than usher in a new era of economic stability, this unnatural union between the Fed and the federal government produced a vicious loop of boom-bust cycles and depressions. The consequences have not only been inflation and devaluation (both of which have stripped the people of their purchasing power and savings); now, every time a depression hits, the government is allowed to do two things: grow its power and tax and spend at will without fear of accountability.

In other words, with every inflation of currency comes an inflation of government power.

With government shutdowns of local economies, the second economic quarter of this year was among the worst in history, with the total debt-to-GDP reaching a staggering 136 percent. As the national debt approaches $27 trillion (with even bigger spending bills in the works), we can expect the days of such flagrant government spending to come to a screeching halt. If we continue on this path, that correction will result in an unprecedented collapse of the dollar and the monetary system. The ultimate danger in this scenario: the government eventually confiscates the vast majority or even all private property in order to pay off the national debt. As German American economist Hans Sennholz once said, “Government debt is a government claim against personal income and private property—an unpaid tax bill.”

This is why a dramatic downsizing of government is key to bringing the US out of this manic, outmoded cycle of depressions and upswings. For the government to fulfill its core function as a safeguard of liberty, we must prevent it from meddling in affairs beyond the boundaries prescribed by the Founding Fathers. This includes a swift withdrawal from the use of paper fiat currency and spending cuts across the board.

Such a sweeping transformation could begin with the state governments, the legislatures of which could override the federal government by passing legislation allowing individuals to use gold and silver currency.

Regardless, if meaningful legislative action is not taken somewhere, we have little choice other than to acquiesce to the gloom and terror of socialism—a system that would devour all in its path and make slaves of once free people for generations to come. Freedom is the natural ability of people to control their own destiny. Sound money has the ability to help keep people free.Author:

Stewart Jones

Stewart Jones is an Eighth Generation South Carolinian who enjoys running, writing and advancing the cause of liberty in the South Carolina House of Representatives (SC HD 14). He is a Certified Bitcoin Professional and he has owned and operated Greenwood I.T., LLC for over a decade specializing in managing technology for small businesses, healthcare professionals and Inc. 5000 clients.

Orignally appeared in the Mises Wire.

South Carolina Bills Would Take Steps Toward Treating Gold and Silver as Money

COLUMBIA, S.C. (Dec. 16, 2019) – Two bills prefiled in the South Carolina House would take important steps toward treating gold and silver as money instead of commodities and could undermine the Federal Reserves monopoly on money.

Rep. Stewart Jones (R-Laurens) filed both bills.

House Bill 4786 (H4786) would effectively exempt gold, silver and platinum bullion from state capital gains taxes. Passage of this legislation would eliminate a significant barrier to using gold and silver in everyday transactions, a foundational step for people to undermine the Federal Reserve’s monopoly on money.

IN PRACTICE

With the passage of H4786, South Carolina would take a step toward treating gold, silver and platinum as money instead of a commodity. As Sound Money Defense League policy director Jp Cortez testified during a committee hearing on a similar bill in Wyoming in 2018, charging taxes on money itself is beyond the pale.

“In effect, states that collect taxes on purchases of precious metals are inherently saying gold and silver are not money at all.”

Imagine if you asked a grocery clerk to break a $5 bill and he charged you a 35 cent tax. Silly, right? After all, you were only exchanging one form of money for another. But that’s essentially what South Carolina’s capital gains tax on gold and silver bullion does. By eliminating this tax on the exchange of gold and silver, South Carolina would treat specie as money instead of a commodity. This represents a small step toward reestablishing gold and silver as legal tender and breaking down the Fed’s monopoly on money.

“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” former U.S. Rep. Ron Paul said during testimony in support an Arizona bill that repealed capital gains taxes on gold and silver in that state. “Paper is not money, it’s fraud,” he continued.

GOLD BULLION DEPOSITORY

Stewart also prefiled House Bill 4787 (H4787). This joint resolution would create a study committee to determine the feasibility and efficacy of the establishment of a bullion repository in this state to store gold, silver, and other metals for the state’s reserves and for investments. The committee would be required to issue a report of its findings to the General Assembly by January 15, 2021.

South Carolina has a model it could follow. In the summer of 2015, Texas Gov. Doug Abbot signed a law creating a state gold bullion and precious metal depository in his state. The depository received its first deposits in the summer of 2018. The facility will not only provide a secure place for individuals, businesses, cities, counties, government agencies and even other countries to store gold and other precious metals, the law also creates a mechanism to facilitate the everyday use of gold and silver in transactions. In short, a person will eventually be able to deposit gold or silver – and pay other people through electronic means or checks – in sound money.

A state gold repository also creates an avenue toward financial independence. Countries around the world, including China, Russia and Turkey, have been buying gold to limit their dependence on the U.S. dollar. University of Houston political science professor Brandon Rottinghaus said a state depository can serve a similar function for Texas.

“This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government. The financial impact is small but the political impact is telling, Many conservatives are interested in returning to the gold standard and circumvent the Federal reserve in whatever small way they can.”

The Tennessee legislature passed a resolution declaring support for the creation of a gold bullion depository in the Volunteer State back in 2016, but never followed up with any legislation. If South Carolina does create a study committee, it would be imperative to follow up with further legislation to actually establish a repository once the report is issued.

Stewart has also prefiled a bill that would make gold and silver coins legal tender in the state.

Repealing taxes on gold and silver, and creating institutions that facilitate the use of sound money creates the possibility of currency competition and could ultimately undermine the Federal Reserve’s monopoly on money. Constitutional tender expert Professor William Greene wrote that when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it could create a “reverse Gresham’s effect,” drive out bad money, effectively nullify the Federal Reserve, and end the federal government’s monopoly on money.

“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”

Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state by state level is what will get us there.

WHAT’S NEXT

H4786 and 4787 will be officially introduced and referred to the House  Committee on Ways and Means when the regular session adjourns on Jan. 13, 2020. They will have to pass committee by a majority vote before moving forward in the legislative process.

Originally appeared in Tenth Amendment Center.

The Founders Warned Us About the Fed

Originally appeared in the Tenth Amendment Center on October 7th, 2019

The Federal Reserve just lowered interest rates for the second time this year and announced more quantitative easing by injecting even more U.S. dollars into the market. The days of cheap money will soon come to an end, and I fear that many people won’t realize what’s happening until the rug is pulled out from under them.

As economist Henry Hazlitt wrote, the practices of the Fed distort the real-world market indicators of cost, future prices, investments and production. A recent study from the National Association for Business Economics showed that 72 percent of economists now predict that a recession will occur between 2020 and the end of 2021. Some have even warned that the U.S. is on the brink of the biggest bubble in world history — not just a correction of a business cycle or another recession, but a complete collapse of the U.S. dollar.

Yet the dangers of centralized banking are not new knowledge. For centuries, people (including many of our founding fathers) have tried to warn us of the numerous threats posed by institutions like the Federal Reserve.

Today, it’s understood by many that the recklessness of the Fed allowed for the subprime mortgages that caused the Great Recession of 2008. With over $22 trillion in debt, $120 trillion in unfunded liabilities, and, soon, an all-time high debt-to-GDP ratio (comparable to World War II levels), however, it’s not overstating it to say that the Fed-facilitated out-of-control federal government spending constitutes the greatest threat to the American way of life in history.

To understand the full extent of the debt and the destruction of the dollar, it’s essential to realize that paper money has a history of being printed as bills of credit to finance runaway government. In 1775, the Founders attempted to use paper money without gold or silver backing, and they found that the inflation robbed them of any value. In 1788, Thomas Jefferson wrote, “Paper is poverty. It is only the ghost of money, and not money itself.”

The Coinage Act of 1792 then set specific ratios for gold and silver coinage, placing gold and silver in control rather than a central bank. This lasted until the passage of the Federal Reserve Act of 1913, which allowed for the formation of the Federal Reserve System just two decades before Pres. Franklin D. Roosevelt started to come after private ownership of gold and silver in the 1930s. In 1944, the Bretton Woods system made the U.S. dollar the reserve currency of the world, when it was still partially backed by gold and silver.

Finally, in 1971, the Nixon Administration suspended wages, issued price controls, and canceled dollar-to-gold convertibility, completing the final step in ending the “gold standard.” This gave the central government planners — and the federal reserve — the power to print money without restraint. This is how the national debt has been able to reach the levels that it has. The only thing backing the U.S. dollar today is public debt.

Remember when Coke was a nickel? In 1913 (the year the Fed was founded) a bottle of Coke cost five cents. Today, a bottle of Coca-Cola costs an average of $1.79. While there are many factors (like supply and demand, cost of goods, etc.) that help set prices, inflation plays a critical part. At an average inflation rate of 3.12 percent annually, inflation alone accounts for $1.30 of the actual cost of Coke.

The addition of more U.S. dollars doesn’t mean that anyone is more wealthy; in fact, it means that the dollars you have are worth less. You will need a higher amount of dollars to buy the same goods and services. Hence, saving inflated dollars, in many cases, is losing value. Those who save money are being robbed.

With the continued decline of the dollar, there could also be hyperinflation on an unprecedented scale. Both James Madison and Thomas Jefferson warned that “the greatest threat to be feared” was the “public curse” of “public debt”, and that “banking establishments are more dangerous than standing armies.” The founding fathers understood the dangers of centralized manipulation of the money supply, the hidden taxation of inflation, and the control of buying power. They understood that gold and silver are real money.

Furthermore, if we look at the history of money, we can see that precious metals, mainly gold and silver, have been used for coinage for over 2600 years; in one way or another, gold and silver have been used by people for over 6000 years.

American revolutionary leader Christopher Gadsden once said in Sept. 1764 that “The evils attending a wanton exercise of power, in some of the colonies, by issuing a redundancy of paper currency, has always been avoided by this province, by a proper attention to the dangerous consequences of such a practice, and the fatal influence it must have upon public credit.”

People across the U.S. should heed his warnings by allowing gold and silver to be used as legal tender once again. Some states like Utah have done just that. While this won’t stop the Federal Reserve’s destruction of the dollar, it will allow people to convert dollars to sound money before a collapse. Sound money, like gold and silver, acts as a check and balance on big government, a hedge against inflation, and a way to combat manipulation by the Fed.

This is exactly why, in my home state, I will soon be filing the “2020 South Carolina Sound Money Bill”, allowing South Carolinians to use gold and silver as legal tender. I will also introduce legislation to exempt gold and silver from capital gains tax, both of which are already exempt from sales tax in South Carolina. We the People can restore sound money by using the Ninth and Tenth Amendments to the U.S. Constitution.

It is my hope that, with the success of these bills, other policymakers elsewhere will become inspired to lead by example on this vital issue as well. The key to protecting the American way of life from the federal reserve’s obliteration of our currency rests with the legislatures, but we must heed the lessons of history now.

The World Isn’t Fiat Anymore

Just because Bitcoin is decentralized, that doesn’t mean it’s not regulated. It’s just not regulated by a central bank or government.

In 1788, Thomas Jefferson wrote in a letter that, “Paper is poverty. It is only the ghost of money, and not money itself.” Jefferson and the Founding Fathers understood the history and dangers of a government’s manipulation of money. They knew that kings and empires of the past had debased and devalued currencies, completely removing the accountability that precious metals enforced on governments.

While many items have served as mediums of exchange throughout history, governments and societies have consistently recognized gold and silver as legal tender. The problem is that governments and central banks have traditionally controlled currency in order to tax and control people. History shows that most governments had a gold and/or silver standard at its inception, but later deviated in order to impose complete tyranny on a society, the funding of war, and further taxation in general.

If Thomas Jefferson were here today, would he and other American revolutionaries support cryptocurrencies?

The Founders tried to hold government spending to sound money standards with Article 1, Sections 8 and 10 of the Constitution and the Coinage Act of 1792, which tied the dollar to a specific weight of gold and silver and recognized gold and silver as legal tender. However, these checks and balances were removed completely as time went on, which allowed for unprecedented levels of government debt and manipulation by the Federal Reserve.

If Thomas Jefferson were here today, would he and other American revolutionaries support digital cash and possibly even use cryptocurrencies?

In 1790, long before electronic computers were invented, Thomas Jefferson actually invented the first mechanical method to encode and decode secret messages, utilizing something called the Wheel Cipher. America’s third President understood and invented a secure way to utilize cryptography. Jefferson, Paine, Franklin, Washington, Madison, and others used cryptography to code messages for secrecy against the British.

Cryptocurrency utilizes cryptography in order to securely alter data on the blockchain, known as the ledger. Cryptography is also used to encrypt and secure data in many different ways and applications today. Modern day encryption was influenced by Thomas Jefferson’s Wheel Cipher invention, an that invention was way ahead of its time.

In October of 2008, the white paper by Satoshi Nakamoto put the pieces together and built a new protocol, a peer-to-peer system for digital cash known as Bitcoin. While this technology is still very new, cryptocurrency actually has many of the same sound money characteristics as gold and silver.

In this exciting time, there are many use cases for various blockchain protocols that are being tested; however, cryptocurrency is the initial primary use of the blockchain. With over 1,000 cryptocurrencies competing at this time, Bitcoin is currently the best store of value, and others like LitecoinBitcoin Cash, and Dash are better for mediums of exchange. With this in mind, not all cryptocurrencies are the same.

We know that Thomas Jefferson and the Founders used cryptography to encode messages to keep the British from stealing the secrets of the American revolution. We also know that, for the most part, the Founders had a strict adherence to gold and silver standards. So, how do Bitcoin and top altcoins compare to the sound money properties of gold and silver?

“Specie is the most perfect medium, because it will preserve its own level; because having intrinsic and universal value, it can never die in our hands.” — Thomas Jefferson

Scarcity is a natural control on inflation and runaway government. Blockchain technology (which cryptocurrencies utilize) brings a new level of accountability to money and smart contracts, but also to many applications and processes that are in development. For example, the mathematical algorithm that calculates and verifies Bitcoin is hard-coded with controlled supply. This makes it impossible for central banks and/or governments to inflate it via quantitative easing.

Just because Bitcoin is decentralized doesn’t mean that it’s not regulated. It’s just not regulated by a central bank or government. It’s regulated by a mathematical algorithm which is computed and verified by mining computers.

For the first time in history, we have a decentralized system that isn’t susceptible to human emotion or the intentions of the state. Blockchain technology ensures that more money can’t be created out of thin air. Thomas Jefferson would definitely appreciate that cryptocurrency can “preserve its own level; because having intrinsic and universal value” of the blockchain and that “it can’t die in our hands.”

Fungibility is the property of a medium of exchange whose individual units are essentially interchangeable. In other words, how divisible the medium of exchange may be makes it easier to trade for specific amounts of value or goods and services. As an example, each Bitcoin can be divided into 100,000,000 satoshi, which is equivalent to .00000001 BTC.

Cryptocurrency is very fungible. I would argue that it’s even more fungible than gold because it’s much easier to divide units of Bitcoin for payments using a digital wallet than to divide physical units of gold or silver. It’s also never been easier, faster, or cheaper to send payments for goods and services around the world. It’s not easy, fast, or cheap to ship gold or silver.

Cryptocurrency is definitely still a very new technology. However, 2017 has been a monumental year with updates, forks, and overall improvements. Various competing cryptocurrencies are simplifying usability and working on making blockchain easier for everyone to use. This is leading to wider adoption. To put it in perspective, in January 2017 the total market capitalization for all combined cryptocurrencies was only $18 billion. As I’m writing this, it’s currently at $585 billion.

How durable is cryptocurrency? You may be thinking, but it’s just data! And you’re correct, it’s data that is not kept in just one location. The decentralized ledger that is maintained in the peer-to-peer network is extremely durable because it’s not housed in just one place.

Think about it like a single server running a network or website. If this server goes down then the website or network is out. Peer-to-peer networks have thousands of nodes (that act like a server) that ensure the integrity, security, and durability of a cryptocurrency. In this sense, it’s extremely reliable.

Scarcity, fungibility, and durability are some of the main characteristics that Bitcoin shares with gold and silver.

So, how can cryptocurrency be durable if you can’t physically hold it? Let’s compare 1 BTC to a digital document on a computer. What if the document is a deed signifying ownership of 1,000 acres of land? Is this an important, valuable document? Absolutely! Well, digital money can be thought of the same way.

There are also many different ways that you can store or use digital money. Hot wallets (like Exodus) can be downloaded to a computer, and they make it easy to send or receive digital money. Cold storage wallets (like Ledger) are great for added security and storing cryptocurrency for the long-term offline. Digital wallets are deterministic, which means they have a seed phrase that allows for easy backup and restoration in the event a computer or device crashes. It’s always a great idea to keep good backups. You can even print a paper wallet. So, not only is it durable but also versatile in how you can store it. There are many types of wallets that work great for using cryptocurrency. It’s best to always read reviews and see what’s working best for the needed cryptocurrency.

Scarcity, fungibility, and durability are some of the main characteristics that Bitcoin (and some other cryptocurrencies) shares with gold and silver, which have stood the test of time as solid standards of value and exchange.

“The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” — Thomas Jefferson

While the concept of digital money can be hard to comprehend, the technology that utilizes blockchain for money like BitcoinBitcoin CashLitecoinDash, and many others is essentially creating stable, fungible sources for economic value and mediums of exchange. This recent and new-found technology is gaining traction, and it aims to achieve a greater level of economic freedom than the world has ever known.

2017 has been a truly revolutionary year for both money and technology.

Bitcoin, other cryptocurrencies, and technology that utilize blockchain are quickly revolutionizing not only how people can trade, but also who can trade. This money revolution will ultimately put greater freedom in the hands of consumers, removing the manipulation and coercion of governments and central banks. At the very heart of this matter, the market is solving an age-old problem of government controlling an individual’s property and resources.

Thomas Jefferson and the Founders did not have this blockchain technology and, therefore, tried to rely on strict standards of gold and silver as the basis for a medium of exchange and store of value. Nakamoto’s invention uses cryptography to ensure a secure, fast, universal, and decentralized medium of exchange that is also a store of value. Putting that in perspective really shows how magnificently important these new innovations with blockchain technology truly are.

While I can speculate about what Thomas Jefferson may have thought about cryptocurrency, one thing is for sure, and that is that 2017 has been a truly revolutionary year for both money and technology. I can’t help but think that, someday, people will look back and think of Satoshi Nakamoto and all the great innovators of the blockchain as the founders of this wonderful invention that allowed for a revolution of money and the advancement of the entire world.

Originally appeared in FEE.

Why My Grandpa Would Have Loved Bitcoin

Assets have actual value set by the market, not by government.

Bitcoin hit an all time high on Sunday, reaching $3,000 per Bitcoin. Ethereum also reached a record level, trading at $407. Since this time last year Bitcoin is up over 360%, Etherium is up over 2,000% and Litecoin is up over 480%. With bitcoin and other cryptocurrencies continuing to gain real and stable value, one can clearly see the benefits of market based currency vs government controlled currency.

The Beauty of Cryptocurrency

The amazing thing about decentralized digital currency is that governments and central planners do not have the ability to take advantage of it like they’ve done with paper money, which they can print and control at will. Cryptocurrency allows for individuals to control their own resources without government interference and theft.

Cryptocurrency eliminates the need for banks or credit card companies.

It’s generated digitally from proof of work (PoW) algorithms which solve mathematical equations to receive cryptocurrency as payment in the form of bitcoin, ethereum, litecoin and many others. Digital cryptocurrency allows for transactions of payments in a more secure way than any other form of web based payments by utilizing blockchain which is comprised of a highly secured public ledger.

Utilizing Bitcoin, Ethereum and other cryptocurrency eliminates the need for banks or credit card companies. Putting the power of market currency strictly in the hands of consumers and producers. I love it!

Market Standards vs. Government Manipulation

Unfortunately, some believe that only the government should be in charge of certain things whether it be the delivering of mail, putting out fires, sending an ambulance, producing currency, etc… however cryptocurrency offers an excellent free market medium of exchange. The free market can do all of these things better through spontaneous order.

Central control of a currency has always led to government abusing the currency to grow bureaucratic control.

I’ve always considered myself lucky to have grown up learning economic lessons and theories from my Grandpa. We spent lots of time metal detecting and searching pawn shops buying and selling gold and silver through the years. Along the way he taught me that gold and silver are real money and that the market is the best indicator of the cost of goods and services. The older I get the more I realize how right he was!

So, what would my Grandpa think about bitcoin, ethereum and other cryptocurrencies these days?

The basis for Grandpa’s lesson was that assets and commodities had actual value set by the market, not the government. While most governments have a history of using gold and silver for coinage and currency, at some point they always try to manipulate currency, inevitably converting to paper money, causing hardships on individuals, and eventually going bankrupt.

The bottom line is that central control of a currency has always led to government using and abusing the currency to grow government and bureaucratic control.

Gold and silver have withstood the test of time with the earliest gold coinage dating back to around 700 BC. Gold always serves as a great measure against the value of all currencies. Currently, 1 ounce of gold is equal to $1270 US dollars or .45 Bitcoin. When put in that perspective, we can see how well Bitcoin is actually doing.

Bitcoin has become digital gold.

Ludwig von Mises once wrote in the Theory of Money and Credit that the “phenomenon of money presupposes an economic order…” between production and consumption, not government. Through this spontaneous order the market is the best indicator of the value of goods and services. This is why Bitcoin and cryptocurrency in general is gaining more value.

What it comes down to is market standards versus government manipulation and control. Luckily, precious metals and cryptocurrency prove that the market will win and governments that print paper money will lose.

The Future of Money is Now

Bitcoin has become digital gold. In many ways it’s become better than gold, allowing for an easier way to make exchanges and transactions worldwide. Trading has never been easier than with cryptocurrency. We are living in an amazing time for currency and trade.

I believe it’s completely safe to say that the future of money is now.

In recent years, many have used and are familiar with web-based pay services like PayPal, which allows the use of many types of currencies including Bitcoin. Many stores are now accepting Bitcoin and very quickly it has become accepted worldwide.

While it’s hard to estimate just how well Bitcoin and other cryptocurrencies will do in coming years, I believe it’s completely safe to say that the future of money is now. Cryptocurrency has the ability to remove government’s manipulation of currency and interference in exchanges, allowing greater freedom of trade between individuals everywhere.

Originally appeared in FEE.

The Great Gold Racket

How could government be able to control buying power without the public knowing of a direct tax? Hm…

Murray Rothbard said it best when he said that “the threat of gold redeemability imposes a constant check and limit on inflationary issues of government paper. If the government can remove the threat, it can expand and inflate without cease. And so it begins to emit propaganda, trying to persuade the public not to use gold coins in their daily lives.”

Why does government hate the gold standard … or any real standard for that matter?

At the heart of government’s attack on gold, silver, bitcoin, and other commodity standards is an outright hatred for accountability and private property, and a real love for theft.

How It All Began

On April 5th, 1933, President Franklin D. Roosevelt forbade “the hoarding of gold coin, gold bullion, and gold certificates within the continental United States” by executive order 6102.

How could government be able to control buying power without the public knowing of a direct tax?

It had only been 20 years since Congress signed the Federal Reserve Act of 1913 into law in what would become the biggest act of theft and bamboozlement on the American people ever. How would government be able to control buying power without the public knowing of a direct tax? A fractional reserve system run by the power elite allowed for theft at an unprecedented level. It allowed for the manipulation of buying power and the control of all American’s real money and trade.

Then, on January 30th, 1934, the US Gold Reserve Act was signed into law demanding the rendering of gold and gold certificates to the Federal Reserve. The federal government traded paper fiat federal reserve notes at $20.67 per ounce of gold and managed to take more than 8000 tons of gold from the American people. Once the gold was off the market, the federal government raised the rate of gold to $35 per ounce in an attempt to inflate the value of the dollar.

Government then feared that, with the confiscation of gold, people would use silver as a way to curb the control of the Federal Reserve. This resulted to passing of the Silver Purchase Act of 1934 imposing a 50% tax on any transfer of silver and calling for the cease to any silver mining.

Power Moves

Taxation in its simplest form is theft, but government has also stolen by removing any real backing to the US dollar, allowing it the ability to temporarily spend without limit. This is purely an illusion. Making gold illegal gave the federal government unprecedented control over buying power and took real savings from Americans.

The fact is that with the passing of the Federal Reserve Act of 1913 and executive order 6102, the federal government started the disconnect from a gold standard and the confiscation of private gold ownership. This ushered in the printing of federal reserve notes which by 1971 were completely disconnected from any gold standard or any other real commodity backing.

It wasn’t until 1974 that the federal government would lift the ban on private ownership of gold.

Today and Tomorrow

In summary, the federal government created a central bank in 1913. Then it made the private ownership of gold illegal and attacked silver with a tax and control. Government then disconnected the US dollar from a gold standard in 1971 and lifted the ban on gold in 1974. The government literally stole the wealth and real money from the American people.

Gold has survived dictatorships and oligarchies, serving as a standard governments haven’t ignored.

With no standard or a check and balance on government debt, the federal government has been able to spend, temporarily, with no limit. I say temporarily because history shows us that governments have spent themselves into oblivion and eventually the market corrections will occur, reducing empires to rubble. The chains of economic sanity have been eroded by over 100 years of attacks on real market standards and actual money.

While gold has been attacked by governments throughout history, it has also stood the test of time, surviving many dictatorships and oligarchies, still serving as a market standard that governments haven’t ignored.

As the federal government quickly approaches $20 trillion in debt and over $100 trillion in unfunded liabilities, the US dollar will continue to grow as a note of debt. The government’s ability to print debt and spend without limit has only been possible with the Federal Reserve and the attack on real money. Gold, precious metals, and market-based currencies have the ability to outlast any government and give individuals the ability to control their own property.

Originally appeared in FEE.