Let's Play "Who Said It?"

215
Wed, May 23, 2012 - 10:21am

As you've probably figured out, I recently received another shipment of hats, so we might as well give away another one.

So we begin today with a game of "Who Said It?" The first person to correctly identify the author of these thoughts will win a genuine, authentic and autographed Turd Ferguson hat. Of course, with google and the like, this contest may end fairly quickly but so be it. All I ask is that you read the entire passage before entering your guess.

"Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which - through a complex series of steps - the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss of value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

​In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its illegal, as was done in the case of gold (in the 1930s). If everyone decided, for example, to convert all of his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payments for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. Therefore, the financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

​This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

​OK, have at it. TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  215 Comments

fnord
May 23, 2012 - 10:32am

Rand

Ayn Rand

Edit: Aw rats! It was Greenspan, with a Rand quote in there. Should have known better.

May 23, 2012 - 10:33am
proton777
May 23, 2012 - 10:33am

Turd?

Any info from any of your contacts? Today's action is shocking (but then again, not)

RTMoney
May 23, 2012 - 10:34am

Speed readers

Wow you guys are fast! ;-)

JohnnyR
May 23, 2012 - 10:34am

Alan Greenspan - in 1966

Alan Greenspan - in 1966

Hard Rain
May 23, 2012 - 10:35am

You have and educated and well read ' readership

Make it more difficult next time.

Rain

Hammer
May 23, 2012 - 10:35am

Repeal snag nan.........oops.

Repeal snag nan.........oops. anagram Bit late trying to get a second hat :)

meanwhile, German bonds are as good as.......well 0% - safehaven apparently

https://www.cnbc.com/id/47531441

silverstax
May 23, 2012 - 10:39am

+1 for the Ayn Rand Guess

I thought it could have been her as well. I know that she and Greenspan were friends.

Here's my favorite quote from Rand (talk about being relevant today):

"When you see that trading is done, not by consent, but by compulsion -- when you see that in order to produce, you need to obtain permission from men who produce nothing -- when you see money flowing to those who deal, not in goods, but in favors -- when you see that men get richer by graft and pull than by work, and your laws don’t protect you against them, but protect them against you -- when you see corruption being rewarded and honesty becoming a self-sacrifice -- you may know that your society is doomed."

Ayn Rand (1905-1982) Author Source: Atlas Shrugged, p. 413

Basil
May 23, 2012 - 10:42am

Hey Groaner !!!

You said :

"The Cartel must be having an orgasim"

With a name like "Groaner" you really should be able to spell "orgasm" !!

onealpha
May 23, 2012 - 10:44am

What does the market know

What does the market know that is causing this action. It seems pretty significant doesnt it?

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