Gold & Silver Money Has Devolved Into Debt and Plastic

Central banks will disagree;

Keynesian economists probably disagree;

Too-Big-To-Fail banks don’t care;

But I think the following is generally accurate regarding the devolution of gold and silver money.

IN THE BEGINNING:  Gold and silver coins were used as real money for several thousand years.  Gold and silver were universally recognized as a store of value.

140 YEARS AGO:  The $20 Gold Double Eagle Coin was globally recognized as money.  It contained 0.9675 ounces of gold and its purchasing power was unquestioned.

V-1875 double eagle obv

137 YEARS AGO:  The $1 Morgan Silver Dollar was universally appreciated and valued.  The silver dollars contained 0.77 ounces of silver, were pretty, used in daily commerce, and minted by the millions in the U.S.

V-Morgan Dollar

AND THEN CAME PAPER MONEY:

The U.S. government issued Gold Certificates and Silver Certificates that were officially exchangeable for gold and silver.  These intrinsically worthless pieces of paper were valuable because they were considered “as good as gold” or silver.

 

V-gold-certificate-image

 

V-Silver Certificate $1-xx

Eventually the gold and silver certificates disappeared and Federal Reserve Notes replaced them.  The Federal Reserve Notes looked similar to gold and silver certificates, but sadly, they were nothing more than a piece of paper that represented a loan from (hence the word “note”) or obligation of the United States, issued by the Federal Reserve.

These Federal Reserve Notes passed as money because the government decreed they were legal tender, and they were backed by “the full faith and credit” (confidence) of the U.S. government.  Unfortunately the notes are not money, have no intrinsic value, and are not backed by assets.  They are loans to the U.S. government backed by the debts of the United States and the future taxing power of the government.

Even if they weren’t real money, the Federal Reserve Notes did the job – commerce and business thrived, but money was no longer a store of value.  The Federal Reserve and government deficit spending created inflation, and a five cent cup of coffee inflated into $2 coffee along with higher prices for almost everything.

DEBT AND CREDIT CARDS:  Use your credit card, the vendor pays a fee to the bank, and you pay interest on the debt.  We use Federal Reserve Notes (debts) to pay our credit card bills (debt).  We “invest” excess dollars (debts) in bank accounts (debts the bank owes you), bonds (debts) or something else.  Gold and silver were supposedly no longer needed in the financial system, and gold has become a “legacy” or “traditional” asset, taxed like an investment, and is no longer considered an alternate currency.  The Chinese, Russians, Arabs, and Indians disagreed, but gold and silver prices have been “managed” so westerners would not lose confidence in the paper and digital replacements for real money.

Other replacements for real money:  Prepaid Visa Cards, Debit Cards, Cell Phone Charges, Bitcoin, and more.

WHAT HAVE WE DONE TO OUR MONEY IN THE NAME OF CONVENIENCE AND BANKER PROFITS?

 

CONFIDENCE:  Our financial system works because we have confidence that we can spend debt based currencies, with no intrinsic value, and the next person will exchange goods for those currencies.  He will make the exchange because he is confident he also can exchange currencies for other goods he needs.

The financial system is based on confidence in the ability to exchange debts for goods – you accept my IOU and I will accept your IOU.

WHAT HAPPENS WHEN THE CHAIN OF CONFIDENCE IN THE “FULL FAITH AND CREDIT” BREAKS?

Clearly, the financial elite can’t allow confidence in the system to slip away… but confidence weakens when (for example):

  • Global debt of $200 Trillion is increasing far more rapidly than the underlying economies which must support that debt.
  • Cyprus banks “bail-in” (confiscate) depositor money to cover bad bank investments.
  • Greek banks are closed and ATMs distribute only 60 euros per day.
  • Chinese stocks crash
  • $100 Trillion in bonds are recognized as unpayable and worth far less than face value.
  • S. pension plans are underfunded by $Trillions and retirees are worried.
  • Inflation in Argentina/Ukraine/wherever heats up and the governments prepare to drop more zeros off the new currency.
  • Gold prices rise for whatever reason.

Summary:

 

Years ago gold and silver were money.  Physical coins were replaced with gold and silver certificates.  Those certificates were replaced with “Notes” or debt of the U.S. government issued by the central bank.  Those notes have largely been replaced by more ephemeral digital debts in the form of credit card debt, debit accounts, checking accounts, short term debts (T-bills), longer term debt (such as 10 year notes) and derivatives of those debts.  The intrinsic value of those notes and debt instruments is minimal – they are accepted because they are accepted, UNTIL THEY AREN’T.

When that day arrives, we will wish we still used gold and silver as money.

 

Gary Christenson

The Deviant Investor

 

 

11 thoughts on “Gold & Silver Money Has Devolved Into Debt and Plastic

  1. THE “FULL FAITH AND CREDIT” that backs the Social Security “trust” fund?
    Social Security is the Private PROPERTY of the Workers that PAID for it.
    Social Security is a TONTINE, a TRUST FUND.. American workers pay into it their entire lives through payroll deductions. Social Security payments are supposed to come from that fund. So why is Social Security needing an increase in the debt ceiling? Where did our money go? Of course, this is a rhetorical question. Starting with the Clinton administration, the government “borrowed” the cash in the Social Security Trust Fund, replacing is with Treasury Bonds that the US Government is now unable to redeem. The implications are obvious. Because the US Government cannot redeem those Treasury Bonds in the Social Security Trust Fund, the US Government is already in default against the American workers. The American workers’ money is gone. The US Government has effectively embezzled the retirement money of American workers. So, in borrowing money to replace the looted cash, the US Government is expecting future workers to pay for Social Security benefits that were already paid for once before, effectively double-billing We The People. To put it another way, the US Government just sold us an apple, but is forcing us to pay for two, and trying to look like this is wise fiscal management of the peoples’ retirement funds!
    ————————————
    China and every other country should BEWARE …… the American Government is a DEADBEAT.
    The American Government DOES NOT PAY IT’S DEBTS.
    Loan America money, you will NEVER get paid back.


  2. IN THE BEGINNING: Horses were used as means of transportation.

    190 YEARS AGO: Trains were invented.

    And then came cars and airplanes.

    One day when the economy collapses, you’ll wish you still had horses. When, I don’t know, my crystal ball is out of commission.

    This, in a nutshell, is the gold promoters reasoning.



    • TO Vess ALL paper so called money In history always go’s to ZERO ! And your reasoning is the government is honest and has fixed paper money COME ON ! as they spend mega Trillions !


  3. Excellent article using superb logic. If this debt black hole keeps expanding the way it has the next step may be bail-ins, confiscation, endless fear, false flags, wars and internment camps when the system goes under. The military industrial complex must be fed as Dwight D. Eisenhower warned. Silver & gold will definitely help even if that happens. Thanks Gary!


  4. You could not have put it more simple. Most out there can not afford gold, and that’s where junk silver for the commoner comes into play. Better stock up now folks, before junk silver is confiscated. I notice you did not mention a very obvious and dangerous fact about the US debt. 18 T is just the surface number the gov shares with the public. From what I understand, the unfunded liabilities are well over 200T, just in the US. How does that factor in?


  5. I do not want to use federal reserve notes or plastic. I would not mind carrying silver or copper coins around. I already carry around quarters all the time. I pay in quarters because it keeps truer money alive and the quarters are backed by copper and nickel.
    And when I see someone paying with a phone I am like omg you stupid sheep.


  6. “WICKED DEBT FRAUD” (REVISED) The one and ONLY answer to the debt problem is to declare it null and void because of FRAUD! It is fraud because it is mathematically impossible to repay! It cannot be repaid because the interest is never created on the loan and that is fraud and fraud voids all! If we don’t void all out of thin air debt, the bankers will own almost EVERYTHING! We will be homeless slaves! They have a license to counterfeit! Can I counterfeit the money to repay the loan? Why not? They counterfeited it to lend it to me? If we even attempt to repay an impossible debt (All out of thin air debt) all we do is show our ignorance! The way to fix this mess is so simple a 3rd grader can figure it out! We void the fraudulent debt and everyone keeps ALL the items they have so called debt on! Then we can start to use a debt free currency and / or gold and silver! Then we will have a robust economy like never before — OR WE LET THE BANKERS STEAL EVERYTHING!
    I was in about the third grade when the news was talking about the national debt and I asked my dad “who do we owe money to? And who could possibly be richer than the United States? And where did they get the money?” And then my dad took a gulp off his beer and said “we owe it to ourselves!” I said “that’s the dumbest thing I’ve ever heard of!” That’s like me borrowing from my right pocket and setting fire to the interest and putting the rest in my left pocket! This was about 1972! But Dad was wrong! We owe it to international Bankers running the biggest Ponzi scheme on earth called The Federal Reserve System! And yes it really is this simple! The bankers have a shoe-in on ALL loans they make! All they have to do is stop lending and then start foreclosing on ALL debts! -meaning they now own everything that has a debt by having a license to counterfeit! So we #1 keep getting fleeced by continuing to pay this fraudulent scheme! OR #2 We declare ALL out of thin air debt NULL AND VOID because of FRAUD! And we keep everything we have so called debt on! MOST people don’t get this part! Every car, boat, house, machine, tool, farm,etc. has already been paid for by the fraudulent paper! So no one loses! (except the fraudsters) WE sure as hell can’t give it to the banksters! (let them steal it) AND IT DOESENT MATTER IF THE BANKERS FORGAVE THE DEBT BY 99% ITS STILL UNPAYABLE! (BECAUSE THE INTREST DOES NOT EXIST ) So when we void the FRAUD This will be the ultimate FRESH start for everyone! Share this if you want THE solution to the WORLD’S problems! If not, everything will continue to get worse until we have HONEST DEBT FREE MONEY and / or GOLD AND SILVER! And there is plenty of gold and silver! Just Divide the paper money (FRN) by the gold /silver and you have the value of them! NO MATTER WHAT IT COMES TO per OZ! Then we would be happy to work for SAY A ONE OZ. SILVER COIN A day ! Because a one OZ. silver coin (REAL MONEY) will buy what $100 – $200 or more did before the reset! THINK ABOUT IT! This is what Scripture calls the jubilee! “WICKED” Debt And the amount and size of the debt has nothing to do with it being mathematically impossible to pay! This fraud is so “WICKED” that even a $10 loan is a Ponzi scheme here’s how it works! I’m the new banks first customer, I borrow $10 @ 1% interest I now owe the bank $10.10 but ALL the money in the world is $10 the .10 cents doesn’t exist (BECAUSE THE INTREST IS NOT CREATED) so some one else has to borrow some so called money and I have to find a way to get .10 cents from them so I can repay my loan! Now say they borrowed $10 also now I somehow get .10 cents from them to pay my loan back! But now he is short .20 cents to pay his loan! Now you can see how a $100,000 house that will cost you $265,000 to pay off because you have to pay $165,000 in interest (THAT DOES NOT EXIST) is a GIGANTIC PONZI SCHEME! Now multiply that by millions of people in the U.S. and you can see how It turned into the monster debt we see today! And for the loans that do get repaid multiple people have to default on there loans for you to pay off your loan! NOW you can understand why we have a rapidly growing homeless problem! Now that is a WICKED debt money system that we must declare Void!


  7. very succinct gary. now all we need to know – is when WILL that day arrive? and, dumb thought, if we are all in debt,who is the lender of last resort? and when will he foreclose? answers on a postcard,please….

    ian


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