06/14/10 Baltimore, Maryland – Culture, politics, and economic matters are always intertwined. The rise of relativism, secularism, and socialism will continue to shape the attitudes of central bankers, whether or not they as individuals subscribe to these modern liberal doctrines.
Pedigreed from the large institutions that they protect and manage, and ultimately exposed to a media that is also very influenced by shifting cultural values, tolerances for pain of any kind are so reduced that support for moving to any other system of money is nil.
Moreover, trading off some added inflation for maintaining high employment is a political winner, so hopes for heightened consideration of controlling monetary aggregates look dim.
Indeed, it took double digit readings in the CPI-U before Fed Chairman Volcker, appointed in August 1979, took strong action and abandoned interest rate targeting despite political attacks and protests such as the blockading of the Eccles building on C Street by indebted farmers.
In fact, as undersecretary of the Treasury for international monetary affairs, Volcker had played an important role in suspending gold convertibility in 1971.
There is a human and moral problem with operating a faulty system and legitimizing it at every turn. Academic studies embolden market participants to invest their life savings, only to see these vaporized either through a collapse of asset prices, inflation, or even more dangerously, through putting in place a cure that accomplishes both in sequence.
It is like imposing slavery — after the fact, because a life’s worth of labor is lost.
Inflation of the money supply is the electricity of relativism and this modern brand of socialist capitalism, for it courses through our circuitry and transfers the energy of producers and savers to consumers and borrowers, lights the darkness of business depressions, sparks bubbles and purportedly economic growth also, discounts looming entitlement liabilities through sleight-of-hand CPI measurement, and negates the theism of rewarding prudent institutions and citizens.
To move away from fiat currency is to reject socialism.
Like the mighty Mississippi River, which periodically through nature’s wrath breaks free of government’s dikes and levies, once again gold, the natural money of the millennium, might freely meander through commerce and stop the erosion of the rich delta soil lost each year to corrosive incursion of the salt water of socialism.
Regards,
Bill Baker,
for The Daily Reckoning
[Editor's note: This passage is reprinted from William W. Baker's book, Endless Money: The Moral Hazards of Socialism, with the permission of John Wiley & Sons, Inc (©2010). You can get your own copy here.]
Bill Baker
Bill Baker is author of Endless Money: The Moral Hazards of Socialism and founder of the Conservative Economist web site. He developed the firms GARP Research & Securities Co. and Gaineswood Investment Management. Before this he was at Reich & Tang, Oppenheimer Funds, and Van Kampen American Capital. An Oppenheimer fund he managed was awarded a Morningstar five-star rating. Baker received his MBA from Dartmouth College and his bachelor in economics from the University of Pennsylvania. He is vice president and a trustee of Baltimore's Harbour League.
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“To move away from fiat currency is to reject socialism.” I suspect that Mr. Baker is heavily invested in gold. This world will never move to a gold backed system. Everyone knows that. Ron Paul is a backer of a gold backed system. It turns out Mr. Paul is heavily invested in gold stocks to the tune of a million and a half. I would say Mr. Paul as a representative of the people has a conflict of interest. Where Mr. Baker is I really don’t know but fiat currency and socialism. Really? Very interesting.
like .99 cents is so much lower than $1.00. Pitiful
It’s possible that the world will never move back to a gold backed system. However how do you implement a NEW system if it’s not related to gold? Oh yeah the new “currency” will be worth 1/2000th of a typical bungalow. Doesn’t work. Eventually every fiat will go to zero. The new system will HAVE to be based on a fixed value of something. Then it will go back to being expanded and return to 0. Rinse and repeat like history has it.
Exactly, where commodity money is concerned, how much money can you print against a specified quantity of commodity?
In this respect, each and everyone has the liberty to set his own barometer. Arguably, paper money rests on relative strength, but then relationship more often than not results in rivers of token and paper litter.
Ultimately, gold is still in great respect for once again it restores human’s confidence in monetary affair.
Hoarding gold and silver is simply divine.
Don’t you see now what I have seen?
Don’t assume that all central banks’ planners are the most intelligent human beings around. Most of them resist to acquire gold as reserve.
What has happened to the Titanic? Everyone was so confident, so proud of that little technology… until awakening
by a piece of floating ice. And, a good swim in the icy water.
“Don’t you see now what I have seen?”
Mark Twain On Consensus
“Thirty-five years ago I was an expert precious-metal quartz-miner. There was an outcrop in my neighborhood that assayed $600 a ton—gold. But every fleck of gold in it was shut up tight and fast in an intractable and impersuadable base-metal shell. Acting as a Consensus, I delivered the finality verdict that no human ingenuity would ever be able to set free two dollars’ worth of gold out of a ton of that rock. The fact is, I did not foresee the cyanide process… These sorrows have made me suspicious of Consensuses… I sheer warily off and get behind something, saying to myself, ‘It looks innocent and all right, but no matter, ten to one there’s a cyanide process under that thing somewhere.”
like .99 cents is so much lower than $1.00. Pathetic
Of course, central planners reject gold as monetary reserve. Why? because they are manipulators of paper money issue. In another word they are paper money mongers. If you are a fish monger, would you accept dog flesh as your trading item?
Hiiiiiiii……
Common do not blame and do not load the burden of money printing to sole act of socialism.
Your great president, Richard Nixon, a confirmed capitalist who vigorously fought the anti communist war was the person who kicked away the GOLD STANDARD and embarked on a course of no return – voluminous fiduciary issue, free printing press. And, that had brought in initial sweetness. Also, that had reshaped the whole global economic basis and outlook.
To what I know, socialism is one of the main doctrine of the communist. As always, poverty has almost brought them down to earth. What’s on earth has this to do with paper money issue?