A License to Print Money

In an article in the New York Times (August 2 2011) the question is asked: “Should central banks be buying gold?” The article goes on to discuss the latest upward trend of gold prices and raises the topic of a return to the gold standard as the backing for the value of our currency. Allan H. Meltzer is quoted as saying The unrestrained U.S. monetary policy since we abandoned gold has not provided stability which is a roundabout way of saying that the ever increasing reliance upon debt to generate money has been less than successful (for everybody except the banks of course). He also points out that historically we have turned to gold investment during times of depression and war in order to preserve wealth and it has always been a reliable hedge against the hard times. This raises a more interesting question about the central banks. Why are they investing so heavily in gold right now during the greatest fiscal depression in a century or longer?

One effect the higher demand for gold has had is to have inflated the price of gold to US$1,600 an ounce for the first time in history. This has made gold a less attractive investment now but if you had been holding gold for only a couple of years you would have seen a 60% increase or more on your original investment. Even accounting for inflation and the weakening spending power of most currencies this is a super return. But who has been holding the stockpiles of gold that have risen so sharply in value? The central banks who have been hoarding it for a century in general but who have been buying up big in the past decade in particular. The obvious objective of making such big investments is that the short-term increase in demand for gold (and other metals) causes a bubble in its value, just like any other commodity that is bought up by speculators for a short term buck. But even if the price holds relatively stable the only advantage to be had from holding large stocks of gold is that it is almost guaranteed to hold its value but it can hardly be expected to increase much in value beyond the amount that the cash that is used to buy it devalues through inflation. This would seem to make it a rather poor investment for the central banks that are in the business of earning much bigger returns. So why are they doing it really?

The only real threat to the current fiat currency system would be a return to using gold as currency. There is a lot of support in the USA for just such a radical change to the monetary system. Ron Paul said “There is no need for the government to hoard gold as backing for currency; gold itself should be the currency that circulates.” This would, no doubt, be a difficult and perhaps painful transition to make but it would eliminate debt as the basis for currency. One great obstacle to this happening would be if gold prices were over inflated and another would be if the supply of gold is limited in some way. By hoarding gold the central banks are maintaining their grip on the supply of fiat currency to the world- a very profitable business. It is obvious that there will be no one simple solution to our current fiscal problems but certainly ridding ourselves of the curse of debt based fiat money should be a significant part of the plan whatever it is.


About dgmattichakjr

D G Mattichak jr was born in 1963 in Syracuse New York and immigrated to Melbourne Australia with his family in 1972. He was educated in one of Melbourne’s exclusive private schools before studying art at Preston Technical College. D G Mattichak jr has been a student of the occult arts since the early 1980s and has become well known in Australian magickal circles and, in recent years, around the world due to a string of essays on a variety of occult subjects http://www.scribd.com/dmattichak/shelf . He discovered the “key to the order & value of the English alphabet” from Aleister Crowley’s Book of the Law in 1983 and has since used this English Qabalah to unlock the secrets of Thelemite magick. Success in these methods admitted him to the highest levels of attainment in various Hermetic disciplines and until recently he has been passing on his knowledge to private students, many of whom have gone on to become notable occultists in their own right. After almost three decades of study and development D G Mattichak jr has finally been able to distil his knowledge of magick and Thelema into a book- A Comment on the Verses of the Book of the Law, the first in a planned series of books on Hermeticism and Thelemite magick, revealing, for the first time in over a century, the secrets of magick that have been hidden in Crowley’s magnum opus, the Book of the Law. D G Mattichak jr currently lives in Melbourne Australia with his artist wife Michelle and their two cats. He has had a long career as an al a carte chef in Melbourne’s vibrant hospitality scene and now spends his time writing blogs on cooking, writing and, in the guise of Master Ankh af na Khonsu, about magick. He is also one of the founding members of the Mt Franklin Annual Pagan Gathering and regularly contributes to its official website http://mountfranklinannualpagangathering.blogspot.com/ as both an administrator and as an author. D G Mattichak jr’s first book Loot was released in 2009. His books are available through amazon.com at http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias=stripbooks&field-keywords=D G Mattichak&x=13&y=20 .
This entry was posted in Australia, Australian History, Banks, blogging, central banks, D G Mattichak jr, Economy, Fiat Money, gold, postaday 2011, Scumbags and tagged , , , , , , , , . Bookmark the permalink.

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