Why The Government Hates Gold

Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper.  – Ayn Rand, “Atlas Shrugged”

I don’t know about anyone else, but I find it ironic that Alan Greenspan, the guy who inflated the fiat currency and debt bubble – the Great U.S. Ponzi Scheme, was a disciple of Ayn Rand before Henry Kissinger got ahold of him and turned him inside-out.

I wanted to post an article that I read back in 2007 which shed even more light on the truth about what was unfolding economically in the United States:

There are few things that federal big spenders hate more than gold. Why? Because they know that, historically, gold has provided the best means by which people could protect themselves against the ravages of a rapidly depreciating currency.

The mainstream press often uses the term “inflation” to describe rising prices. That’s incorrect.  Actually, when the general price level is rising, that’s a result of inflation, not inflation itself. Inflation is the process by which governments print up the money to pay for ever-increasing expenditures.

The part about the nature of inflation was not the eye-opener.  Anyone who didn’t sleep through their 1st-level macro-economics course in college, assuming it was a bona fide economics course, knows the true definition of inflation.

The light on the truth become more bright for me when Jacob Hornberger laid out the historical evolution of fiat currency and the destruction of the Constitutional Amendment which mandated specie – physical gold and silver coins – as the only permissible legal tender in the United States.

So how did things change so dramatically? How did it come to be that the monetary system of the United States is now based on irredeemable paper money? Why are gold and silver coins and gold and silver certificates no longer used as our country’s money? Given that there was never a constitutional amendment changing America’s monetary system, how did things change so radically?

The answer lies with two presidents — Abraham Lincoln and Franklin D. Roosevelt. Their respective actions revolutionized our nation’s monetary system. Their actions culminated in a monetary system that has enabled federal authorities, decade after decade, to fraudulently plunder and loot the American people, even to the point of denying them the ideal means — ownership of gold — by which to protect themselves from the federal government’s immoral and insidious monetary behavior.

This is a MUST-READ documentation of the history of fiat currency and ultimate destruction of the gold standard in the United States:   The Federal War On Gold

This article is the foundation for understanding why I have stated since 2003 that the elitists running this country would be able to hold the system up with printed money and credit until they had swept every last crumb of citizenry wealth off the table into their pockets.  The lust for power and greed knows no bounds – history has already spoken on this human condition.

In the markets of today the gold price is being set by ‘synthetic gold’ and has no connection to the fundamental flows.  – “Jesse” of Jesse’s Cafe Americain in an email exchange with me

9 thoughts on “Why The Government Hates Gold

  1. The US is rapidly approaching the point where fiat USD is no longer reserve currency. Physical gold is moving W to E. Debts and deficits are piling up. Fiat is only Monopoly $ afterall. Physical gold trumps “full faith and credit”. The E will soon set the price of gold. “He that owns the gold makes the rules.” TPTB will fight this of course since the entire Progressive machine (aka big gov’t) is funded this way, but the end result is always the same throughout history. Right now gold price is in a tug-of-war between price discovery and obfuscation. Resolution of this is not far off, but timing is unknown.

  2. Dave,

    Here’s my problem. I agree with you. And many of the others who believe virtually everything is a charade. The problem (for me) is I bought into it exclusively for too long. There’s been similar gloom and doom on the economy, stocks, Amazon, Facebook, hyperinflation, etc. since 2008/2009. And how the real price of gold is disconnected from reality. Unfortunately, that has resulted in over 6 years of lost gains in many market areas and terrible losses in metals and miners.

    Certainly what you and other say will come to pass eventually. There will be a huge reset on a lot of things. But following that mantra exclusively for years has done nothing for me except leave gains on the table and gotten me a pile of shiny yellow and gray stuff, that, while I feel much more secure having, is currently, and has been, underwater for years.

    The answer for me was balance. It was so easy to buy into ZH, you, Jim Sinclair, TF, KWN, Jesse, etc. and lose perspective. So for the past couple years I have diversified away from the singlemindedness of everything is bad, everything is manipulated, the end is near thinking. It has done a lot for my mental well being and partially reversed the red on my accounts.

    As I said, someday what you say will come to pass, and the portion of my net worth in stocks and bonds will take a hit. Hopefully at that point in time gold will pick up the slack.

    Feel free to flame me!

    Happy New Year.

    1. Michael – I’m with you 100%. At the end of the day, the math simply does not work with our current system. We’re all rearranging deck chairs on the Titanic. However, while the ship is no doubt going down, it’s a very slow process. We should all be prepared for the worst, but continue to live in the here-and-now (balance as you say). I made that mental switch several months ago and it’s made all the difference in the world.

    2. Michael …

      If you are wondering when the gold price will be set free, or least price governed in a more organic sense of market reality (upward), I think you should look at the application for gold and not focus so much on the price. The truth of the application is key. Since the banking establishment is a powerful force, one must ask “what do they want” ?

      The answer might startle you, IMO, depending on your presupposition. If you really consider the professional mindset of CB’s , they are really about liquidity. They have proved this time and again. Liquidity is prime. Price is secondary.

      On the prospects of liquidity (debt based) drying up, bankers are likely concerned about the need for economic stimulation, but weighing the risks and costs with an ever increasing debt load on the whole world. I think we can agree that we are over-loaded ? If we don’t have liquidity, the economy (and banks) can fail. If we have too much unproductive debt, again, we risk systemic failure.

      Bankers fully know, IMO, (unless they are truly insane, which I just don’t buy) that the only form of liquidity that can salvage the marketplace and save their historical efforts of what’s been created, is for the addition of liquidity to take on a debt-free form. Bullion is an obvious choice. Don’t worry about them, they make plenty on the deals. They own the price measures.

      They cannot introduce this, however. It is likely against their “creed” so to speak and this can easily be interpreted as “bankers are out to get us”. That’s a perception, granted, and one that I personally had until I could admit that this was an exercise of just “filling in the blanks” for the sake of my need for human rationalization and understanding. In short, I laid blame as we all do at time.

      I needed a deeper truth. I decided to shift my gaze from bankers’ intentions to influences that created much more factual evidence that does not lie on the axiom of other people’s intentions which call for an assumption, but on the simpler axiom of capability versus incapability … a simple form of Occam’s razor.

      What bankers fear most right now, IMO, is a rising price of gold where there is no significant liquidity on the basis that people are stubborn creatures of habit.
      It may likely keep bankers awake at night to think of gold at $3000/USD/oz and the movement of bullion in a currency application as being totally insignificant.

      The ECONOMIC value of bullion is truly in its movement, not in its static applications like insurance, store of value or investment. We are , only now, looking for a vital “kickpoint” where the market wakes up and starts to circulate bullion in direct support of economic activity. It is only then that I suspect the gold market will see the “lid” being pulled off the gold price on the basis that a “kick-point” has been determined on the basis of how much gold is providing an impact in its support for economic liquidity, trade and prosperity.

      The addition of gold based currency could never be a top-down application for the sake of introduction. Think of the addition of bullion as just that, an addition, not a replacement for debt based currency. What emerges is a yin-yang of liquidity. A hybrid. Any introduction of debt-free liquidity from the apex of financial power and/or political power by decree or by fiat would be disastrous for the debt side of the emerging yin-yang. The market would likely rush to judgement and debt markets could conceivably crash.

      We need liquidity to show itself from the market. Just add assets and stir …..

      1. Dude, enough of these War and Peace length posts. I dont’ even read them and you always say the same
        damn thing. Go start your own blog. I’m not posting anymore of your Rise and Fall of the Roman Empire posts.

  3. This article looks at the relationship between gold and fiat currency as being polarized, IMO. I suppose their was good reason for that but only until such time that gold could take on real-time currency characteristics in its liquidity. That modern version of liquidity is a cooperative relationship between bullion’s mass and the floating price mechanism that is currently scalable and variable based on market conditions. The relationship grows toward symbiosis. What’s emerging is a yin-yang where we need to contribute the formation of the yang is all. I’d go so far as to say that without asset based liquidity to take away some of the economic burden from fiat currency, fiat is doomed to failure because of overextended debt loads. There’s a massive imbalance in the yin-yang. We need some yang with our existing yin.

    On the basis of adding debt-free gold into circulation, not only does bullion allow debt currency to survive and be properly managed, it helps support economic activity, while strengthening the fiat system and the banking system who own the intellectual measuring tools of the price model for determining settlement weights when using debt-free gold (or gold currency) as a medium of exchange.

    We all win.

  4. Alan Greenspan is Francisco d’Anconia. His career was simply one giant act of expediting the inevitable. If he hadn’t done what he did, we would have ended up where we are today anyway, except it would have taken until 2050 or later.

  5. I also tend to agree with Dave on virtually all his salient points. That said, I can empathize with those whose only fault was being “too early” and (more than likely) going too much towards the extreme of “all in”, a la Jim Sinclair’s exhortation to “Get of the System ……. Now!”

    I did not achieve any enlightenment on these matters until early 2015, when the bulb finally lit in my brain. And although I began to accumulate PMs in early March (a relatively good time), I have also come to better appreciate how these kinds of things really develop. I have come to see that the sheer mass and almost incomprehensible inertia of the greatest empire the world has ever known presupposes that, at least for a while, it will grind agonizingly slowly to its inevitable dissolution. This fact has no doubt been a frustrating reality to people who saw the proverbial “writing on the wall” as early as when Nixon ended the dollar’s convertibility to gold in 1971.

    We see, and we cannot understand why others do not. But even that frustration cannot forever arrest the consequences of the situation the United States (and the entire rest of the world, for that matter) has gotten itself into. It is now an intractable position. We are past the point of no return as surely as was the Titanic in the moments after it struck the iceberg. What MUST happen WILL happen. My overriding sense, as a “johnny-come-lately” to the question, is that we are now MUCH closer to the end of the current system than our individual preparations would suggest. Therefore we should hope the dying beast continues to stagger forward for another year or two as we all continue to “set our houses in order” against what promises to be a season of great tribulation on the earth.

    1. William …. why even look at the dollar as being a currency, post Bretton Woods ? There’s an option now. You can look at the dollar as a currency with gold as a store of value/investment and/or you can also look at gold as being the currency (unit of account as weight) where the dollar now plays a role role in measuring, since we still price things in fiat currency.

      Choice is a good thing. The combination supports liquidity while allowing debt to be withdrawn, safely.

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