Posts Tagged ‘Great Depression’

Jeff RenseOn March 23, 2012, I noticed that Jeff Rense’s site had linked to the mass media article by Reuters, Bernanke says gold standard won’t solve problems, with the editorial title, Bernanke’s Idiotic Lies About A Gold Standard. It is still there as of April 1.

Here’s all the article says about Bernanke referencing the gold standard:

Since the gold standard determines the money supply, there is not much scope for the central bank to use monetary policy to stabilize the economy,” Bernanke said. “Under a gold standard, typically the money supply goes up and interest rates go down in a period of strong economic activity – so that’s the reverse of what a central bank would normally do today.

First of all, a government-guaranteed gold standard — which is what Bernanke is referring to — DOES determine the money supply, since a certain percentage of the money supply is backed by gold, by law, under such a standard. Bernanke is also right that under such a standard, “the money supply goes up and interest rates go down in a period of strong economic activity.”

The money supply goes up because it’s usually only partially backed by gold — up to 40% prior to the last gold exchange standard in the U.S. that ended in 1933. The Roaring Twenties followed by the Great Depression is the best example of this. It was the low interest rates that contributed to the easy-money situation that extended banks far beyond their ability to meet eventual customer demand for their money in cash or gold.

The implication of Rense’s link is that a government-guaranteed gold standard is somehow good, which is ironic, given that he considers the Protocols to be an authentic document, and in that document, it mentions using gold to control economies! (Note: I don’t regard the Protocols as authentic, despite its accurate statements about a gold standard — ┬ábut he does):


Was this simply a case of editorial license for the sake of getting thousands of cheap clicks, or does he really support a government-guaranteed gold standard?

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Thanks to my readers for making FauxCapitalist.com reach the 100,000 hits milestone since its inception in September 2008, which marked the start of the worst financial crisis since the Great Depression.

While some alternative media content farms reach this level of views in a single week or a month, I decided to provide a real solutions-oriented alternative for economic and political issues, with 100% original content, all without a single penny of advertising revenue.

I also wanted to provide a home for alternative Canadian content with an international perspective that I felt wasn’t being adequately provided anywhere else, as I think Canada has an important story to tell the world in charting a prosperous way forward in our increasingly globalized world, in the face of many organized threats to liberty and prosperity.

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A right of jurors in all common law jurisdictions (UK, U.S., Canada, Australia, …), regardless of whether the legal system allows jurors to be made aware of it or exercise their right, is jury nullification. That is, the right of juries to find the defendant not guilty of a crime if they feel that the charge or penalty is unjust.

Historical examples of the effective application of this right include U.S. jurors nullifying laws requiring escaped slaves to be returned to their “owners,” refusing to convict on prohibition charges in the U.S. during the Great Depression, and in Canada, a jury refusing to convict a father for murder, who killed his suffering daughter with cerebral palsy, arguing that it was a compassionate killing (R. v. Latimer).

I was aware of this right in the past few years, but particularly delved into it earlier this year, finding support for it at the Supreme Court level of Canada and the United States. The first Chief Justice of the Supreme Court of the United States, John Jay, wrote in his opinion in Georgia v. Brailsford (1794):

“[I]t is presumed, that juries are the best judges of facts; it is, on the other hand, presumbable, that the court are the best judges of the law. But still both objects are lawfully, within your power of decision.

Given that this statement was made by the first Chief Justice of the highest court in the United States, who was recognizing a common law principle of fundamental rights and justice, it is therefore precedent, which all subsequent Supreme Courts and all lowers courts are required to uphold.

The significance of jury nullification is that, in any case, a single juror can legitimately find the defendant not guilty based on the belief that the charge or penalty is unjust.

I therefore propose that this right be brought out of the shadows and into the minds of the wider community, and seriously pursued as a strategy in any current and future court cases involving unconstitutional, unlawful, and unjust acts of government against its citizens.

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Gold Bars

On liberty-themed radio shows and sites, one often hears the claim that fiat currencies don’t last long, and in some generous but inaccurate cases, that a fiat currency has never lasted more than a couple hundred years.

The English tally sticks were an example of a fiat currency that lasted more than 500 years. Before you say that it wasn’t a currency because it didn’t circulate widely, how is circulation between the citizens of England and the government not widespread circulation?

The gold double standard is this: pointing to examples of fiat currencies failing, and completely overlooking examples of failed gold standards. The argument is that it was government’s fault for historical instances of gold standards failing. Ah, but isn’t that the same blame foisted upon most fiat currencies as well?

One aspect of the gold double standard is the use of word association of fiat currency with fractional reserve banking. That is, the lending of more fiat currency than the fraction of reserves held. Where did fractional reserve banking originate? From goldsmiths, not fiat currency bankers.

One of the primary arguments against a fiat currency is that it is doomed to fail because governments will progressively issue more currency than is in productive demand, and that a gold standard is necessary to tie the government’s hands in limiting the increase in the money supply. But how did the gold standard prevent the Great Depression starting in 1929?

Some will argue that the gold standard in effect in 1929 only backed the currency by 35-40%, and that its failure resulted from less than 100% backing. However, with 100% backing, where does the money come to pay the compound interest demanded from bankers on their loans of gold?

An insidious consequence of a 100% gold reserve standard with compound interest is that those who own the gold will eventually control all the money supply.

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Lew Rockwell

Perhaps Gary North, the prolific and stalwart LewRockwell.com writer, should consider keeping his articles on his own site, if he hopes to retain any of his limited government credentials.

This week alone, LRC has published at least two pro-state articles.

Here’s one from yesterday, lamenting offshoring, the loss of American manufacturing jobs, and the removal of Depression-era Glass-Steagall banking regulations.

Here’s one today, calling for an increase from the current 435 elected Representatives in the House to 8200.

“anti-state” indeed!

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The U.S. real estate collapse continues

Financial analyst Al Martin gave a stark and timely presentation of the continuing economic collapse on his August 28, 2010 monthly appearance on Erskine Overnight.

First segment

  • Existing home sales have fallen to levels not seen since the Korean war.
  • Unsold inventories of existing homes, 12 1/2 months, is the highest on record, not even reached during the depths of the Great Depression in 1933.
  • 44 of the last 48 months have been negative for mutual funds.
  • $500 billion annual drawdown of common stock mutual funds.
  • He said gold is the ultimate hedge. (In contrast, in November 2009, he effectively told gold shills to take a chill pill).
  • He said gold has always risen in a deflationary environment.

Second segment

  • In 2005, 26% of U.S. debt was financed internally — now 33%.
  • $500,000 house in Stockton, California in 2005, has defaulted three times since then. It dropped to $400,000 in Q1 2007, $300,000 in Q2 2008, $200,000 in Q3 2009, now being sold by the bank for $185,000.
  • He said historically, a bottom in the U.S. real estate market comes as the percentage of cash buyers increases. Now, 33% of all housing units sold are paid in full with cash. When it reaches 50%, he says the market will have reached a bottom.
  • 25 to 30 year-old first time homebuyers have fallen 70% since 2005.

Third segment

  • Defense Secretary Robert Gates announced 150,000 U.S. troops to be redeployed to the U.S. by 2014.
  • He said there is record global inventory for oil and copper: a 2 million ton net surplus for copper at the end of the year, and copper is at least a dollar per pound overvalued, and oil is overvalued by at least $20 a barrel.
  • They figured the world economy would perpetually grow by at least 2.2% per year, but 1% is now the new target.

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A gold-standard 1928 one-dollar bill.

Last week, I heard a prominent alternative financial analyst say the U.S. dollar should be replaced with a new currency backed 15 to 20% by gold, or it wouldn’t fly.

However, prior to the 1933 gold confiscation, the U.S. dollar was backed 35 to 40% by gold, and that didn’t prevent the Great Depression, nor the 5000+ bank failures or one-third contraction of the money supply from 1929 to 1932.

Previously, I wrote the articles, Support for a gold-backed currency crosses the political divide and The gold standard loses its perceived lustre, with major media exposure.

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