Can Gold Stop Wars?

By: Alex Wallenwein | Mon, Nov 1, 2004
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All wars are deficit-financed.

Please read that again:

All wars are deficit-financed!

This simple five-word sentence brings home a truth that is so profound, so revealing - and if correctly applied so devastating in its effect on illegitimate government power - that it has the potential of literally changing the world we live in.

But it can have that effect only if enough people are informed of it.

The good thing: it's very, very easy to understand how this is so - once somebody explains it to you in the right way. How so? A stringent "gold-only" payment and borrowing system would not allow governments to borrow unlimited amounts of money from their subjects and then proceed to print that money to "monetize" (pay back) that debt. The result: no more wars - because wars are always too expensive.

The bad thing: all it takes to utterly nullify the effect of these words is for politicians and bankers to lie to their subjects to make then believe that they are "in danger," that a war must be fought to "defend freedom" or whatever, and that people need to show their "patriotism" by buying government debt.

Not that freedom isn't worth fighting wars over. In my personal view, it's the only legitimate reason for fighting wars. But the problem arises when the political/banking/industrialist and media-complex honchos put their heads together and figure out a way to benefit from a war. Together, they have the power to lie to us and convince us that - just this once - we need to make an exception and support them in their efforts - or else we die.

In that way, credible threats are often artificially conjured up so the people, in a knee-jerk reaction, rally to support an otherwise unnecessary war. Once that happens, the re-ignition of the deficit-spending process is a forgone conclusion.

So, what does that five-word sentence above really mean?

It means that, as long as wars are fought, an official gold standard will never last.

Just take a look at the history of the gold standard:

Every time an existing gold standard period was interrupted in history, it was because somebody started a war and there wasn't enough money around for any of the participating nations to fight it to conclusion. Even a country that didn't want to go off the gold standard had no choice but to do so, once it got involved.

Therefore we know truth number one: no country can ever really afford a war.

From that arises truth number two: IF (and that's a big "if") you can find a way to keep governments from borrowing money, you can find a way to prevent wars!

There is a corollary to truth number two: truth number two proves that it is really the people who have the true political power in every single instance (if only they could remember that fact occasionally!). If people simply refused to loan their government money (by "investing" in government bonds, treasuries, etc.) their governments would have no choice but to quit that nonsense.

The other corollary to truth number two is this: other nations have the very same power!

Just look at China or the other Asian countries who continue to almost single-handedly prop up our fiat-paper so they can export more of their products to us. If they stopped buying our government debt, we would not be able to finance wars anymore. And it's the same with any other country.

Therefore, if the entire world were to go and stay on a gold standard, and if that could be effectively enforced, major and protracted wars would be a thing of the past - but there it is again: that big, humongous "if."

Unfortunately, that's where the problem comes in and "reality" starts to bite us in the rear again. These nations have a vested interest in buying our debt - so far at least. On top of that, they themselves want to have at least the possibility to raise money for future wars (defensive or otherwise). So, trying to stop wars by forcing governments to stay and operate exclusively on a gold standard is like saying: "Let's just all destroy our weapons, and we won't have wars anymore." Idle dreaming, nothing else.

Or is it?

Would a private, parallel precious metals-currency make a difference, maybe?

Let's see. An established, parallel, non-state-run precious metals currency would give people the power to decide to get off, or stay off, the government-run debt racket. Governments, on the other hand, would not be able to manipulate a currency that they did not establish. They could only outlaw it altogether. People who want to save money could simply save their metal currency. They could still decide to work for paper-money, of course, but in order to make them accept and trade in paper (or computer-blip) currency, their government of choice would have to offer gigantic interest-rates as an incentive to bridge the by then obvious risk-gap.

That would make government borrowing very, very expensive - to the government, of course. The only ways for the government to reduce that expenditure would be (a) to jack the tax rates up sky-high, or (b) to inflate its way out of the problem.

Inflating its way out would make their paper even less desirable (by reducing its purchasing power) and would force them to offer successively higher interest rate incentives to the point where they would price themselves out of the debt market.

Taxing their people at ever higher rates would make the people grumble and would cause their subjects' opinions to change and impel them to install a more user-friendly set of politicos.

(SIDEBAR):
Of course, governments always have the option to reveal their true face and become outright tyrants who simply don't care what people think. They can go back to ruling by force and make whatever fiscal extractions they deem necessary, impose price and wage controls, restrict movement, etc.

But history has shown that such nations or systems are never successful in the long run. These would-be tyrants have learned their lessons (or at least a part of it): that, ultimately, no forced economy can prosper! Just look at the lessons learned by China versus Soviet Russia. China is still with us - and is prospering indeed. To that extent, the "tyrant's option" always works against the tyrants in the long run - and they know it, trust me!

That's why Soviet-style communism has failed and was utterly abandoned by those who previously tried to implement it. A "gentler, kinder" version had to be installed. The politically free but economically stifling "social market" system of Europe is one exponent of this new trend. The politically repressive and economically free Chinese hybrid system is another.

And, don't think for a minute that we in the US live under true capitalism! We have not, for the longest time. We live under a system that relies on both political and economic outright deception. Witness the lie of debt-based paper-money - and the lie of a "two-party system" where both parties are pulling in the exact same direction, differing only in the political rhetoric and the emotional hot-buttons they have learned to push to keep their constituents fighting each other.

In short, would-be tyrants have learned to compromise somewhat with the forces of freedom. But they have not abandoned their exclusive purpose in life: to wrest more and more power from the people - under whatever guise necessary. That's their nature. They just can't help it.
(END SIDEBAR)

Anyway, a widely accepted and established parallel gold currency could force governments to live within their means more than any other thing on the face of this earth. Since governments will never subject themselves to such draconian restrictions voluntarily, and since even in "democratic" countries the electoral processes are so rigged that voters will never gang up in sufficient numbers to "throw the rascals out", a parallel gold currency would give people the chance to "vote with their wallets."

Unfortunately, all it takes for people to willingly give up such a system, or to support another war or another assault on Liberty before it is ever instituted, is a nuclear explosion inside the US that can be blamed on Al Queda, Iran, North Korea - or whomever.

Currently, with the recently revealed CIA-verified Al-Queda and Osama videos, the groundwork for that contingency has already been laid. Watch out!

Whatever happens, owning at least some gold will make most of these contingencies less devastating. No, gold will not deliver you from these dangers, but it will add an additional layer of protection you will otherwise not have. Gold is not just money, gold is also insurance. What's even better: it is insurance coverage under which you don't need to file a claim to get your pay-out -- because that underwriter will never go broke on you!

Got gold?


 

Author: Alex Wallenwein

Alex Wallenwein
Editor, Publisher
The Euro vs Dollar Monitor

Just like driving your car, investing only makes sense if you can see where you are going. The Euro vs Dollar Monitor is your golden windshield wiper that removes the media's greasy film of financial misinformation from your investment outlook. Don't drive your investment vehicle without it!

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