Gold isn’t money? How could America get to this point we asked in astonishment upon hearing the Chairman of the Federal Reserve proclaim, “Gold isn’t Money.”
No wonder our leaders in Washington misspend our money. They don’t even understand what it is.
For those of you without a dictionary nearby, let’s start with the Webster’s definition, which says money is “something generally accepted as a medium of exchange, a measure of value, or a means of payment.”
The Webster’s definition even though inadequate still captures the essence. Money is a store of value that was created to facilitate barter or trade. It was a store of value because a farmer would accept it in exchange for his potatoes today, and next week he could spend an equivalent value to buy a pair of overalls.
If anyone reading this column doesn’t believe that gold is a good store of value, we will happily exchange your gold for some of Ben Bernanke’s Federal Reserve Notes. And that is exactly what owners of Federal Reserve Notes have been doing the world over. As a result, since 2001 the cost of Gold in Federal Reserve Notes has exploded from 300 notes per ounce of Gold to 1500 notes per ounce of Gold. That is a five times increase in ten years.
This is a signal that people, businesses and governments now believe that the ounce of Gold is greatly preferred as a store of value to Federal Reserve Notes.
But the people’s preference for Gold and Silver over pieces of paper with a printed promise is, as Rep. Ron Paul told Ben Bernanke in the same hearing, "at least 5000 years old."
Money is an English word first used in the 14th Century. It has been in common usage since that time. The origins are relatively simple. Webster’s again tells us the word “is derived from the Middle English moneye, from Anglo-French moneie, from Latin moneta or mint… from Moneta, epithet of Juno; from the fact that the Romans coined money in the temple of Juno Moneta.”
Students of history can tell you that all along, the best money in history has been gold and silver. This is why the Founding Fathers expressly gave Congress the right to "coin money."
Since 1971 the link between Gold and the US Dollar has been broken. And since that time we have seen unprecedented destruction of the value of the dollar through inflation. We are old enough to remember penny candy and gasoline at 33 cent per gallon. In the 1970's, Publishers Clearing House gave away the "ultimate mansion" --and the value was $100,000 dollars.
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