[MONEY] A Black Day in Monetary History

[Zenaan Harkness]

Search for the 3 blank lines to skip the prequel :)

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A Black Day in Monetary History

By Bill Bonner in Ouzilly, France

Last night, we tossed and turned in bed like a crazy person with a
fever.

Sunday was clear and hot. In the evening, we went to the 19 th -century
church in Montmorillon for a concert.

Bach, Schubert, Mozart — all were performed on the big organ in back of
the church, accompanied by a clarinettist.

Fortissimo thunder

The organ is about 30 feet off the ground.

It is set on a wooden platform, ornately carved, and cantilevered out
into the church so that it is over the heads of the people sitting in
the rearmost pews.

It is built of such sturdy, heavy wood that we thought for a moment the
entire ensemble might pitch over onto the crowd below.

That was after all the stops had been pulled out, and a fortissimo
thunder arose from the organ. It sounded like the advance of the Red
Army on Berlin in 1945. (Elizabeth noted that she thought the organist
was abusing the instrument.)

Classical music performed on a huge, old organ in a stone church is
always impressive.

But there were a couple of times when we thought that Bach was just
toying with us…or that he had lost the plot, wandering up and down the
scales with no clear destination.

Our favourite, ‘Concierto de Aranjuez,’ by Rodrigo, haunted our sleep.

It is a piece with an undercurrent of sweet melancholy such as what you
might find echoed in the Diary from time to time.

Yes, we laugh at economists, politicians, and popular myths. But beneath
it — like an unrelenting, dark accompaniment of ‘Concierto de Aranjuez’
— is the age-old lament that everything you care about inevitably comes
to an end.

New monetary era

The musical highlight of the evening was ‘Ave Maria’ by Franz Schubert.

It was, after all, Mary’s big night: the eve of her assumption into
Heaven.

Appropriately uplifting and bright, ‘Ave Maria’ was Schubert’s hit song
of 1825. It was composed as ‘The Lady of the Lake’ and adapted to the
Catholic prayer addressed to the mother of Jesus.

Schubert died three years later at the age of 31.

Returning home after the concert, the moon shone so bright we hardly
needed to turn on the lights. We could see perfectly well, but the
colours were washed out. It was as if everything had been painted in
shades of black and white while we were away.

Maybe it was the moonlight…maybe it was the sad music…something
disturbed our sleep.

We turned to the left. We turned to the right. We heard the melodies
from the concert so clearly, we went to the open, moonlit window to see
if someone were playing a radio outside…

But perhaps it was something else troubling our sleep…




Yes, today, we mark the beginning of a new era…and the end of the
American Dream — such as it was.

On this day in 1971, President Nixon defaulted on America’s promise to
its foreign creditors to convert its dollars to gold at the fixed rate
of $35 an ounce.

This ended the last vestiges of the gold standard. And it set world
currencies — which had been pegged to the gold-backed dollar —
‘floating’ against one another.

Neither Nixon, nor almost anyone else, had a clear idea of what the new
monetary era really meant.

No one — not even economist Milton Friedman, who advised the president —
had any idea what it would do to the world economy and to the American
system of government.

Friedman was right about most things. But he was disastrously wrong
about money.

Yet, so subtle was it…so clever…so unanticipated — like a sudden shift
to a minor scale or an unexpected major lift — it took 40 years for the
new refrain to become clear.

Maculate conception

Only now are we beginning to hear the full melody…and understand how
this new money corrupted the country and undermined its wealth.

For all its faults — and there were many — the US used to be a place
where hard work usually paid off.

People worked, saved, invested…and grew wealthier. Wealth followed work,
not the other way around.

There were always whiners and complainers — some with legitimate beefs
about the way the system worked. Still, there was a shared belief that
the system was fair…because there was a connection — real and
unforgiving — between money and the morality of the marketplace.

Generally, those with money got it by work, invention, innovation,
self-discipline, or luck. And generally, other people accepted the
outcome as fair.

But this new money changed everything. It turned an entire class of
people — the insiders, the elite, the establishment — into parasites
able only to get money unfairly.

The new money was the product of a very maculate conception — borrowed
into existence, not earned.

This put the cart of money manipulation in front of the horse of hard
work and innovation. If you had the right connections, you could conjure
up wealth…from the money itself.

‘ By the sweat of your brow you will earn your bread, ’ it was commanded
in the Bible.

So it had been — with brief interruptions of monetary experiments and
adventures — since the expulsion of Adam and Eve from Eden.

But now, with this new system created on this day 45 years ago, money is
gotten sweat-free, in the air-conditioned towers of the big banks…

…and used by the ‘Parasitocracy’ to rule the nation.

More to come…

Regards,

Bill Bonner,

For The Daily Reckoning, Australia