Cryptocurrency: It's Properties as Barbarous Relic Help Civilized World and Peace

grarpamp grarpamp at gmail.com
Thu Dec 15 21:30:42 PST 2022


https://mises.org/wire/barbarous-relic-helped-enable-world-more-civilized-todays

The "Barbarous Relic" Helped Enable A World More Civilized than Today's

https://www.ratical.org/ratville/CAH/warisaracket.pdf
https://www.owngoldandsilver.com/article/deposit-and-loan-banking.html
https://en.wikipedia.org/wiki/Bank_run
https://www.owngoldandsilver.com/article/fractional-reserve-banking.html
https://mises.org/books/economics_public_welfare_anderson.pdf
https://en.wikipedia.org/wiki/Reichsbank
https://www.garynorth.com/public/8372.cfm
https://www.gold-eagle.com/article/war-and-inflation
https://europevideoproductions.com/france-travel-photos/american-cemetery-argonne-forest-france/
https://www.ucs.mun.ca/~jmaclean/es.wwI.html
https://www.wanttoknow.info/warcoverup
https://www.econlib.org/library/YPDBooks/Keynes/kynsCP2.html

One of history’s greatest ironies is that gold detractors refer to the
metal as the barbarous relic. In fact, the abandonment of gold has put
civilization as we know it at risk of extinction.

The gold coin standard that had served Western economies so
brilliantly throughout most of the nineteenth century hit a brick wall
in 1914 and was never able to recover, or so the story goes. As the
Great War began, Europe turned from prosperity to destruction, or more
precisely, toward prosperity for some and destruction for the rest.
The gold coin standard had to be ditched for such a prodigious
undertaking.

If gold was money, and wars cost money, how was this even possible?

First, people were already in the habit of using money substitutes
instead of money itself—banknotes instead of the gold coins they
represented. People found it more convenient to carry paper around in
their pockets than gold coins. Over time the paper itself came to be
regarded as money, while gold became a clunky inconvenience from the
old days.

Second, banks had been in the habit of issuing more bank-notes and
deposits than the value of the gold in their vaults. On occasion, this
practice would arouse public suspicion that the notes were promises
the banks could not keep. The courts sided with the banks and allowed
them to suspend note redemption while staying in business, thus
strengthening the government-bank alliance. Since the courts ruled
that deposits belonged to the banks, bankers could not be accused of
embezzlement. The occasional bank runs that erupted were interpreted
as a self-fulfilling prophecy. If people lined up to withdraw their
money because they believed their bank was insolvent, the bank soon
would be. People had no idea their banks were loaning out most of
their deposits. They did not know fractional reserve banking, a form
of counterfeiting, was the norm.

Gold coin redemption requirements put limits on fractional reserve
banking. Such limits were not welcomed by banks. Since banks could
loan to the government, limitations also capped government spending,
so the government did not like the limitations of gold coin redemption
either.

Which brings us to the wall gold allegedly hit.
Preparing for War Means Preparing for Inflation

In his 1949 book, Economics and the Public Welfare, economist Benjamin
Anderson tells us, “the war [in 1914] came as a great shock, not only
to the masses of the American people, but also to most well-informed
Americans—and, for that matter, to most Europeans.” And yet, Germany,
Russia, and France began accumulating gold prior to the war (with
Germany starting first in 1912). Gold was taken “out of the hands of
the people” and carried to the reserves of the Reichsbank, the German
central bank. People were given paper notes “to take the place of gold
in circulation.”

When war broke out in August 1914, Gary North explains that the
pre–World War I policy of gold coin redemption was

    independently but almost simultaneously revoked by European
governments. . . . They all then resorted to monetary inflation. This
was a way to conceal from the public the true costs of the war. They
imposed an inflation tax, and could then blame any price hikes on
unpatriotic price gouging. This rested on widespread ignorance
regarding economic cause and effects regarding monetary inflation and
price inflation. They could not have done this if citizens had
possessed the pre-war right to demand payment in gold coins at a fixed
rate. They would have made a run on the banks. Governments could not
have inflated without reneging on their promises to redeem their
currencies for gold coins. So, they reneged while they still had the
gold. Better early contract-breaking than late, they concluded.

If governments had not broken their promise to redeem paper notes for
gold coins, they would have had to negotiate their differences rather
than engage in one of the deadliest wars in history. Abandoning the
gold coin standard, which had always been under government control,
was the deciding factor in going to war.

Though the US did not formally abandon gold during its late
participation in the war, it discouraged redemption while roughly
doubling the money supply. Blanchard Economic Research discusses the
situation in “War and Inflation”:

    War also causes the type of inflation that results from a rapid
expansion of money and credit. “In World War I, the American people
were characteristically unwilling to finance the total war effort out
of increased taxes. This had been true in the Civil War and would also
be so in World War II and the Vietnam War. Much of the expenditures in
World War I, were financed out of the inflationary increases in the
money supply.”

Governments had a choice to make: fight a long, bloody war for
specious reasons, or retain the gold coin standard. They chose war. US
leaders found their decision irresistible. It was not J.P. Morgan,
Woodrow Wilson, Edward Mandell House, or Benjamin Strong who would be
fighting in the trenches.

When we hear that “going off gold” was the prerequisite for global
peace and harmony, we should remember places such as the Meuse-Argonne
American Cemetery in France, where grave markers seemingly extend to
infinity. These are mostly the graves of young men who died for
nothing but the lies of politicians and the profits of the politically
connected. Gold wanted no part in the slaughter. But politicians and
bankers knew a paper fiat standard was the monetary prerequisite to
achieving their goals.
Conclusion

John Maynard Keynes, who coined the term “barbarous relic” in
reference to the gold standard, wrote about the world that was lost
when gold was abandoned:

    What an extraordinary episode in the economic progress of man that
age was which came to an end in August, 1914! . . . The inhabitant of
London could order by telephone, sipping his morning tea in bed, the
various products of the whole earth, in such quantity as he might see
fit, and reasonably expect their early delivery upon his doorstep. . .
. He could secure forthwith, if he wished it, cheap and comfortable
means of transit to any country or climate without passport or other
formality, could despatch his servant to the neighboring office of a
bank for such supply of the precious metals as might seem convenient,
and could then proceed abroad to foreign quarters, without knowledge
of their religion, language, or customs, bearing coined wealth upon
his person, and would consider himself greatly aggrieved and much
surprised at the least interference. But, most important of all, he
regarded this state of affairs as normal, certain, and permanent,
except in the direction of further improvement, and any deviation from
it as aberrant, scandalous, and avoidable.

If Keynes had read what he wrote, he might have been a better
economist. And we might be living in a better world today.


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