Goldbugs Vs. Greenbackers

In the debate about how to reverse the global financial meltdown, one has to deal with the issue of what kind of currency is needed. Does currency have to be backed by gold, or is fiat currency okay, or even preferred?

In her book Web of Debt, Ellen Brown has a chapter entitled "Goldbugs Vs. Greenbackers." She has posted this chapter on her website The Web of Debt Blog.

In this chapter, I hear Ellen saying the following:

1. The price of gold changes; therefore, it is not a stable basis for currency.
   
2. Gold's scarcity is a liability, not a virtue, because you need the amount of currency available to match the level of productivity of the people.
   
3. When gold-backed money is loaned at interest, there is no source of the additional currency needed to pay back principal plus interest. The currency needed to pay the interest in not accounted for.
   
4. Gold is a good thing to own as an investment.
   
5. The threat of depression in the economy due to a lack of funding for businesses is a greater risk than the risk of inflation.
   

I like Ellen's ideas, and I think it is important that people who are trying to counteract the purposeful financial meltdown tactic of the New World Order globalist controllers come to grips with the question of what what kind of currency will work for a turn-around.

reply to post by Mary Rose


1. As does fiat currency, so we cannot use this either, by this logic. However the only time the true value of gold as a currency changes, is with either the increase or decrease of it's physical scarcity.

2. Wrong, because this assumes that inflation is a good thing. To match the level of productivity of the people, the scarcity of your currency ensures that it will, over the course of time, be able to buy more and more goods, as opposed to inflation which ensures the opposite.

3. Again, this logic follows for fiat currency as well. This is why on a gold standard - loans with interest, also known as usury, are either non-existent, or the interest is minimal and not compounded.

4. Agreed. Let us not forget that any and all currencies are nothing more than the tangible representation of the product of your labor...in a truly Free Market (which we do not have) you and you alone decide what your work is worth. Now what you can sell it for, is another matter.

5. This statement is so wrong it borders on being an out-right lie. Capitol can ONLY come from savings, not a printing press. Savings by the common man can only be achieved when the free market sets the value of the currency, not a government. Despite the meticulous juggling act of Alan Greenspan, the fate of all fiat currencies is inflation or hyper-inflation......including ours.

Originally posted by blood0fheroes
1. As does fiat currency, so we cannot use this either, by this logic. However the only time the true value of gold as a currency changes, is with either the increase or decrease of it's physical scarcity.

Or, if bankers control the gold, and they want to have a period of withdrawing credit so that they can take physical possession of assets used as collateral.

2. Wrong, because this assumes that inflation is a good thing.

No, saying that scarcity does not allow for the availability of currency to match productivity does not assume that inflation is a good thing.

What it does suggest is that the goal for any monetary system is for the currency to grow in tandem with productivity. (It's when currency exceeds productivity that we get inflation.)

3. This is why on a gold standard - loans with interest, also known as usury, are either non-existent, or the interest is minimal and not compounded.

What do you base this assertion on? History?

5. This statement is so wrong it borders on being an out-right lie. Capitol can ONLY come from savings, not a printing press. Savings by the common man can only be achieved when the free market sets the value of the currency, not a government. Despite the meticulous juggling act of Alan Greenspan, the fate of all fiat currencies is inflation or hyper-inflation......including ours.

Ellen is proposing a new paradigm - inspired by colonial times in America - that the government issue fiat currency and loans in proportion to the productivity of the people, and use the interest generated in place of taxes.

~~~~~

What is your list of what needs to be done?

reply to post by Mary Rose

Ellen is proposing a new paradigm - inspired by colonial times in America - that the government issue fiat currency and loans in proportion to the productivity of the people, and use the interest generated in place of taxes. ~~~~~ What is your list of what needs to be done?

Understood, and it is commendable that someone who does not seem to know much about the basics of economics, nor the true nature and usage of currency would take it upon herself to attempt to effect change.

My list of appropriate changes will probably seem rather cliche, but it is, I believe the change we need.
1. Dissolve, disband, and disavow: The federal reserve, the IRS, DHS, CIA, FBI, NSA, DEA, etc. Bringing our government back down to it's intended size (this would do much to curb our spending habits). With this, though it may very well put me out of a job, re-evaluate the sustainment requirements for our armed forces, drawing down to a more appropriate level.

2. Return to sound monetary policy by breaking away from fractional reserve, fiat currency. I dont really care what the currency is backed by, so long as it is more than a piece of paper backed only by debt.
With this, we return to a system wherein banks (shock) do not make much of a profit, with exceptions.
We return to a system where if you want to use a bank, you pay the bank to store your money. If they want to loan that money out, this can only be accomplished wherein you and the bank make an agreement that you will leave a certain portion of you money in savings, for use as loans. Should you decide to renege on this, you face a penalty, plus a reasonable time frame for the bank to return your monies to you.

In return for this, which is admittedly just a start, you have a sound currency, very little government spending (because you have only as much as is needed, not how much the government thinks they need), no need for a usurious interest rate, nor the most insidious, sneaky, conniving of all taxes; Inflation!

Originally posted by blood0fheroes
Understood, and it is commendable that someone who does not seem to know much about the basics of economics, nor the true nature and usage of currency would take it upon herself to attempt to effect change.

Not so. Ellen has done extensive research and is very knowledgeable.

Originally posted by Mary Rose
What it does suggest is that the goal for any monetary system is for the currency to grow in tandem with productivity. (It's when currency exceeds productivity that we get inflation.)

And yet we have a fall in productivity almost globally. And currency is being debased in many debtor nations.

So if that is the goal for a monetary system. Ours is currently falling short. Hence the need for gold and other commodities as a "safe haven"

Or we could just let currency evolve naturally rather than trying to centrally manage it via the Soviet-style commissar known as the Fed chairman.

reply to post by Mary Rose


Admittedly im not very familiar with her work, which is why I said it "seems" that way. If it is true that she is very knowledgeable, then that certainly does not excuse "throwing the baby out with the bathwater". In the history of currency, there have been many sound principles. It is only when banks or the governments they control decide they want to buy things they cannot afford, that unsound policies come into play.

Recognizing unsound policy is good, wanting to get rid of the sound policy that led up to it; is not good.

Originally posted by belial259
And yet we have a fall in productivity almost globally.

I think this is due to a depression, caused by excessive debt, in a world with debt-based currency and workers handing over tax money as debt-slaves to criminal bankers.

Originally posted by blood0fheroes
2. Return to sound monetary policy by breaking away from fractional reserve, fiat currency.

You are lumping fractional reserve with fiat currency.

They're two different things.

Fiat currency simply means "by decree." It doesn't entail a fractional reserve system, which has its origin with the goldsmiths.

reply to post by Mary Rose


Uhg, I usually stay far far away from ATS "Gold" threads.. but what the hell..

In most if not all historical "Gold Currency" societies, Gold was very, very, very rare to see in the market. Commoners used silver, bronze, copper, other more easily mineable and readily available metals, as their currency. Most people would go their entire lives without seeing anything made of Gold, much less a coin, and usually the Gold they saw was on an alter at a Cathedral.

If there is one thing the "Fiat" currency has done, it has liberated the middle class from poverty, and allowed it to truly take off.. granted, we've only been using this type of currency for just under a hundred years, so it's hard to say how it ends.

But anyways, Gold supplies only effected the Sovereign and the Wealthy Lords. Oh look at that.... it still only effects the Soveriegn and the wealthy.

Originally posted by Rockpuck
If there is one thing the "Fiat" currency has done, it has liberated the middle class from poverty, and allowed it to truly take off.. granted, we've only been using this type of currency for just under a hundred years, so it's hard to say how it ends.

It's been done in the past, in ancient China and during the American Revolution to name a couple. To my knowledge all fiat currencies in history ended in inflationary ruin.

I'd be interested in hearing your reasoning about how fiat currency is what was responsible for creating the middle class.

I does not matter what we-the-people think is a better monetary system


the FED, the central banks, Wall Street, the USTreasury has already decided that the fiat currency system is the road to follow...

only a fiat system that can inflate by printing more treasury notes is capable of supporting the system as the bankers, & FMOC have arranged it... the trillion$ in derviative$--- of which the USTreasury can get a tax based recurring revenue source (at some predetermined rate that bankers find acceptable)
whenever a taxable event occurs is the working model of monetary velocity and money multiplying they have settled upon. (Keynesian)

any resource or asset backed money system could not leverage these huge ammounts of 'reserves' needed...
the leverage with a gold backed money system would require more than 10,000-to-one with gold or any other metal valued near the $1,300 plateau of present.

either Gold or other metals/ tangible assets woulf have to be near $11,000. oz for an asset backed money unit to generate the capital needed to have a free flowing regulated-or-unregulated derivatives market to sustain itself
which is no only improbable but impossible as the FED/Treas/WallStreet have a model & fiscal roadmap already in effect


the horse is already out of the barn !

edit on 4-10-2010 by St Udio because: (no reason given)

being a goldbug myself, i need to continually watch the geopolitical scene...for the potential 'nationalization' of many goldminers by governments that see the in ground precious metal as a 'strategic' resource..
and POOF i'm thrown under the bus--> unless i see the coming wave and ride it! by unloading my equity holdings fast-&-furious

edit on 4-10-2010 by St Udio because: (no reason given)

Originally posted by NewlyAwakened
To my knowledge all fiat currencies in history ended in inflationary ruin.

Not during the colonial time, before the Revolution. In fact, when the bankers in England saw how prosperous the colonies were by issuing their own currency they made up their minds to put a stop to it. Thus, the colonies had that right taken away and we had the Revolution.

The "Continental" did fail. My understanding is that this was caused by speculators convincing the public that it would be worthless after the war. The Continental had to compete with the States' paper notes and the British bankers' gold and silver coins.

reply to post by Mary Rose


Why yes I was lumping them together, as part of "my ideas to fix the system". I am well aware of the difference between the two, (thank you anyway) however I find them to be equally shady business.

Either I was not clear enough in my response, or you are being intentionally obtuse.

Either way, hopefully this is resolved now.

Originally posted by blood0fheroes
Either I was not clear enough in my response, or you are being intentionally obtuse.

Actually, neither.

Originally posted by NewlyAwakened

Originally posted by Rockpuck
If there is one thing the "Fiat" currency has done, it has liberated the middle class from poverty, and allowed it to truly take off.. granted, we've only been using this type of currency for just under a hundred years, so it's hard to say how it ends.

It's been done in the past, in ancient China and during the American Revolution to name a couple. To my knowledge all fiat currencies in history ended in inflationary ruin.

I'd be interested in hearing your reasoning about how fiat currency is what was responsible for creating the middle class.

edit on 4-10-2010 by NewlyAwakened because: (no reason given)

So have many Gold backed currencies.. I can have a Gold backed currency inflate to the moon ... or hell, I can have Gold inflate to the moon (See Greece, Rome, Britain, France, Russia etc)

And let us not forget, by value, the most precious mineral for an empire to date has been .... Salt. Yes, Salt.. it could buy everything from everyday items to an entire Legion in the Roman Army.

Originally posted by blood0fheroes
Dissolve, disband, and disavow: The federal reserve, the IRS, DHS, CIA, FBI, NSA, DEA, etc. Bringing our government back down to it's intended size (this would do much to curb our spending habits). With this, though it may very well put me out of a job, re-evaluate the sustainment requirements for our armed forces, drawing down to a more appropriate level.

I dont really care what the currency is backed by, so long as it is more than a piece of paper backed only by debt.

What Ellen is proposing in her book is fiat currency issued by the government, not by private banks, backed by the productivity of the people. Yes, loans would be issued at interest to facilitate that productivity, but if the interest paid is going to the government instead of private hands, it benefits all.

She offers the successful state owned Bank of North Dakota as a model. She has another blog, Public Banking.

It seems to me that money is a necessity of life and that it should fall into the same purview as public safety, which is the responsibility of the government.

There has been a critical article on LewRockwell.com entitled "Cheerleader for Hitler's Economics" written by Gary North about Ellen's book Web of Debt that has sparked a debate in the Comments section of Ellen's response to it on her blog, which can be found here.

And Max Keiser has issued a challenge to Mr. North that he come on his show to debate the issue. There is a post on Max's website indicating that Mr. North accepts, provided that Ellen Brown also come on the show to defend herself. I will be following Max's site to see whether this debate ever takes place. The post in question accepting the challenge can be found here. It was posted on Max's site on October 9. So far, I see no response to it from Keiser in the Comments section. But I hope the debate does take place.

reply to post by Mary Rose


I've come across a well-written article by a goldbug, G. Edward Griffin, author of The Creature from Jekyll Island, entitled "Meet Bill Still, Fiat Money Advocate."

He states:

. . . Still claims that it would be a mistake to return to a gold-backed monetary system because most of the world’s gold now is held by the bankers. This is a deceptively appealing argument. First, it is not true. Central banks do hold more gold than any other single entity; but the total inventory of gold in the hands of private citizens, as bullion or coins or jewelry or known deposits in working mines, is much larger. In addition to that is the vast reserve of gold in the earth and oceans that has not yet even been located or measured. If money were to be restored to a precious-metal base, this largely invisible reserve would be more than adequate to supply the demand. We must remember that the limited supply of gold as a monetary base is an advantage, not a disadvantage. If it were not scarce, it would not have utility as money. The smaller the supply, the more valuable it is. As pointed out in The Creature from Jekyll Island, any amount of gold or silver will work just as well as any other amount. The only difference is how valuable each unit of measure will be. The argument that “we don’t have enough gold in the world” is without foundation, and those who say this do not understand the fundamental mechanics of money. . . .