If you have read my last few articles, you may be starting to understand the full value of Honest Money to society and to you and ME… but we have barely scratched the surface. The well hidden ‘magic’ of Gold money emerges only once Gold is in free circulation.
To understand this Virtual Magician Hire and its effects on society, we need to look at a bit of history. Under the classical Gold standard, during ‘Peaceable Times’, major war was impossible. Not only that, but there was no such thing now known as ‘structural unemployment’.
Remember, the mandate of the Central Bank of the USA (the Fed) is to ‘fight inflation’ and to ‘fight unemployment’… but both inflation and unemployment do NOT exist under a Gold standard. The nineteenth century had neither inflation nor structural unemployment.
Both inflation (monetary debasement) and structural unemployment first have to be created… and then be seen as being ‘fought’ by our ‘Heroic Bankster’. Gradually dropping prices and full employment were the reality experienced under Gold. Inflation is the direct result of monetary debasement… and unemployment is the direct result of the destruction of the Gold Standard and its accompanying credit systems.
The Big Lie operating here is well entrenched in the collective; ‘it takes money to make money’. This statement is one that Mr. G’man and his corporate supporters want you to believe. After all, if it were true, then no one without any money could ever hope to make money… or could ever hope to compete with existing corporate players.
Furthermore, if it were true, then someone with no money but a desire to make money would be obliged to borrow… to the loud cheers of Mr. Bankster. If we choose to NOT believe this ‘Big Lie’, then we can easily see examples of people who make money… without money to start with.
Seemingly magically, it takes NO money to make money. Does this sound too good to be true? Sound like another Ponzi scheme? Well, no… in fact, using trust based ‘commercial credit’, it is laughably simple to make money with no money… small entrepreneurs in poorly ‘regulated’ i.e. uncontrolled, free and voluntary markets do so even today.
To bring this home, suppose you lose your job as the economy crashes, but you are ambitious and instead of begging for handouts, either on street corner or from the G’man ‘welfare’, you want to start a business and make a living without having a traditional ‘job’. If you believe the Big Lie… ‘It Takes Money to Make Money’… you will never even start. If you see through the lie, you can start a small business and succeed.
During the last session of the New Austrian School of Economics in Madrid, Spain, I was eye witness to just such entrepreneurial ‘magic’. With the financial crisis at hand, the streets of Madrid had many beggars clinking their cups for handouts, many homeless people sleeping on the streets, and many other signs of poverty. However, primal entrepreneurship also showed up.
Rain started to fall, and in a matter of seconds there were street vendors crying out, shouting ‘umbrellas for sale’… to an appreciative clientele. Now where did these entrepreneurs come from, and where did the umbrellas come from? Street vendors do not have money to buy and hold a stock of umbrellas; nor are they employees of conventional retail outlets; they are simply entrepreneurs, who disdain the dole… and who are eager to earn a profit.
How do they get inventory, if they have no money and are not store employees? Simple; through credit based in trust. The umbrellas are on consignment from the wholesaler; the street merchant will sell what he can, return the unsold units… and pay for what he sold. He will make a profit on umbrellas he sells. After all, his overhead and his costs are zero… except perhaps for some wear on his shoe soles!
Who benefits? Of course, the street vendor benefits; if he manages to sell umbrellas, and make a profit. Also the wholesaler benefits; he could not have made these sales without giving his umbrellas out on consignment… without giving his trust to the vendors. Finally, customers benefit; caught in a sudden rainfall, many people are glad to buy an umbrella just when they need one… without having to hunt for a retail store in the rain.
But what about our G’man and Bankster? Do they benefit? Mr. G’man does not; the vendor is not ‘licensed’ or ‘authorized’ to sell umbrellas… and thus pays no protection fees. Mr. Bankster does not; the vendor never borrows money, so pays no interest.
If selling umbrellas was not such a fringe activity, Mr. G’man would undoubtedly have set up the framework for ‘regulating’ the sale of umbrellas… and tapping into th