Gold is Free Market Money | Walter Block

[centurion180ad]

I was with the professor, right up to his conclusions. He blames tariffs and organized labor for the closing of production facilities. Bollix. I liked his description of prevent value, but I disagree with his conclusion that lowering the rate produces a distortion in long term investment. Distortion occurs no matter the rate, because irredeemable debt currency sieved through a fractional reserves system has eviscerated the Wage, Pension & Clearing funds.

[doughtymqan]

@centurion180ad Tariffs & labor unions distort the figures GROSSLY.

[tomozope]

Check book money is free market money if it is anything at all, considering there is no law declaring that checkbook money is even money at all. It's just credit.....

[centurion180ad]

@tomozope checkbook federal reserve fraud currency is DEBT.

[gutsrace]

"Gold is Free Market Money" - Yes - BUT (And I'm asking not declaring) : If those bastards who are now in possession of the gold from both Fort Knox and the gold confiscated from the American public in years past, wouldn't they then have undue influence on the value of whatever money is backed by gold? I am under the impression that that gold found it's way to a small core of elites behind the Fed and the Bank of England.

[stealthswimmer]

gold didn't "find" its way there. The government wanted to control the money supply and therefore instituted a central bank. The reasoning behind it was that many banks would inflate more than a single bank....well it turns out to have been untrue. Central banks have often caused more inflation than many competing banks and caused bigger crises.

Secondly, there's nothing wrong with bigness. In the market, you get big by providing people with things they want, government does it by jailing ppl

[Hashishin13]

@gutsrace Well if you believe that the elites are already in control, gold is obviously better as they have less control potential over it. You could put your solid real gold into a private bank or hide it somewhere and they can't devalue it as low as they can paper. Also if they devalue gold it costs THEM real GOLD, instead of ink and paper. They could only devalue so much, which would leave us holding tons of gold!

[gunthaarz]

it is possible to have a FIAT currency. The crux of it is to have democratic control over its issuance and not having to pay the money "back" with interest to a FED that does not have any money in the first place.The main thing to realize is that every nation can be self sustainable. you dont somehow get your money from other countries. if that was the case where do they get _their_ money from? The more people that work, the more wealth is created, or more possibilities for exchange if youwill.

[AFRIKTODAY]

The current system is supposedly democratic with apparently the congress overseeing the FED. Replacing the Fed by the congress will not change anything since these institutions are at the hand of the same people and looking up for their own interest. Free market money is best because it is controlled by the market itself, the individuals whose work and creativity allow for the growth of the society.

[broeman]

I agree with Afriktoday, since you can see it in all the countries, who has direct government control over their central banks (even though they still claim that they are independent institutions). The gold standard is the best way to control the central bank, but even better, just abolish it and let banks choose their own insurances.

[centurion180ad]

@AFRIKTODAY The Federal Reserve System is a private //criminal// organization, wholly owned & operated by a mass murdering Debt Syndicate of offshore BANKERS. The Congress HAS NO POWER what-so-ever, until the power to repudiate fraudulent debt is seized upon, the MINT begins to coin money, and Congress performs its Constitutional duty of issuing the Nation’s currency & credit.

[DarthKazi]

In THEORY a real "fiat" could work, but you are trusting discretion from government guys who probably used to be Wall Street guys, who do things to enrich their buddies.

Unless we had AT LEAST 300 Ron Paul types in Congress, there's no way a "discretionary paper system" would work.

[phroto13]

@DarthKazi a paper systme is intrinsically flawed because it is based on confidence... whereas with gold or silver if ever they were to fall out of fashion as a money good, they still have a usefulness as a metal to conduct electricity, as a mirror, &c. however if confidence should ever fall from a fiat, the paper is already used as it is printed on and thus has no value as a piece of paper unless it were to be burned as a match which would defeat the "permanence" of the money unit

[DarthKazi]

@phroto13 I agreed with Dr. Block and the Austrians 100%... unfortunately, there's little chance the US has any gold and silver left to circulate. If there's anything left in Fort Knox, it's likely owned by foreign interests. The Fed has about 1/4th of the world gold reserves... but again, it's not owned by the Treasury. Maybe we can sell Utah?

[gunthaarz]

borrowing money from the FED means having to pay the FED interest on money the FED doesn't have, just prints. if gov spends

money to create something, they order a "chair" or a road from you. you make it, you get money from the gov. the gov gets a road it can

toll or give to you & business so wealth is CREATED. why would gov want to "borrow" money at interest from the FED, money the FED doesnt have, when money's supposed to reflect work thats being DONE, not numbers borrowed.

[gunthaarz]

Gold is not the answer. The bankers have already full control of the gold market, they have cornered the market, they have a monopoly and a cartel. Gold was the first scam the bankers created in the middle ages.

[kulza23]

Exactly. Free market money is the answer!

[NoCryingNowYes]

It's going to take time to start using another alternative currency, and time is something we don't have right now. If we don't start using gold and silver, what do you suggest?

[Aristotle100]

lol some Randian. "Ominous Parallels" is the title of a book written by Leonard Peikoff, Rand's legal heir. He would be pissed if he was called a Randian. Objectivists hate being labeled as Randians or whatever, drives them nuts. Rand is pretty spot on though, I think she offers a lot.

[swahili77]

When he approached the "60 year" example, I thought he might get to the important thing about exponential functions (like compound interest): they are all pyramid games that need the belief of suckers to work for the ones who harvest. "The good 4% triangle". Ideas of interest have been around for thousands of years as well as some people that had more than they need. So that 1 penny at 0 AD at 4% interest - what is that worth now? Many times the weight of the Earth in pure gold. Wake up!

[FoxPMcCloud]

no banker would let a debt accumulate for that long, so it's a moot point.

[swahili77]

Nobody (not even bankers backed up by police) COULD accumulate that! There have been people demanding interest for more than 2000 years and they still are. The interest rates have varied, but 4% has never been considered extreme. But the results are Extreme. The point is that even modest interest is a Pyramid game, it's just not as obvious as the ones where you are promised 10 times your input in a few months.

Interest leads to crash.

[soylentgreenb]

"The point is that even modest interest is a Pyramid game..."

Not in any respect.

"Interest leads to crash. "

The objective of the game is to lend to people who make capital investments and pay you back with interest from their increased earnings. A crash is what you pay for grossly misallocating resources; better luck next time.

Not investing leads to negative growth. All investment entails risk, whether or not any borrowing is involved.

[swahili77]

The important thing is to allocate resources to things that are "good" (sustainable, healthy, fair) rather than "good investment" (=giving back compound interest (which is exponential) or more).

It is important to see that "development" and "growth" are different, and that no matter what you invest in, that will lead to diminished growth in something else. But even "negative growth" doesn't rule out "positive development". In fact many things will NEED negative growth if we are to develop!

[centurion180ad]

@swahili77 Interest is INTRINSIC to production. A farmer producing wheat, expects INTEREST.

[fephisto]

This lecture in one paragraph:

FED manipulates interest rates. Interest rates are prices. Thus the FED is enacting price controls. Price controls creates misallocations. These misallocations induce the business cycle.

[fephisto]

Also, this is probably the most informative of all the seminars at this conference.

[Aristotle100]

haha excellent analysis! :D. I wouldn't even call that a paragraph my friend but hey it explained everything! Nice job

[justingaylor]

Wow! This is really interesting. He explains the problem of centrally managed interest rates in a way I've never heard it explained before.

The Austrian School of economics totally rocks!

[hugolp]

This video is great. I am not an ecomist and I had to watch some parts of the video twice, but it made me understand the problem of inflation, and that apart from stealing from savers, how it affects the economy and produces misalocations.

[return135]

i love the Ron Paul reference at the start.

[CurtHowland]

I was talking with someone last week, we were discussing inflation and such, and she said that "we" would need a universal currency eventually, just like the EU has the Euro.

I replied that we've always had a universal currency, GOLD. (until the 20th century, that is.)

It was interesting watching as her eyes lit up, as the realization hit. Very interesting.

[stealthswimmer]

He's exaggerating how similar Monetarism is to Keynesianism. Friedman was for stable monetary growth, not for using monetary policy to jump-start the economy or have highly fluctuating interest rates. Still, good vid.

=)

[CurtHowland]

Too bad that, once politicians have the keys to printing money, they use it.

Friedman's theory depended upon incorruptable politicians and perfectly honest bureaucrats.

Other than that, Friedman's theory was just fine. Commodity money works exactly as Friedman said the best money does, without the politicians or bureaucrats.

I know which system I trust more.

[stealthswimmer]

Friedman wasn't for politicians deciding the money supply though. He was for a constitutional limit on government spending and as for monetary policy he was for a computer grinding out stable monetary growth each year of 3-5% (he usually said 3% from what I understand) so that we had a rule of stable monetary growth.

But I agree that I'd go with a commodity money.

[CurtHowland]

Friedman supported a fiat currency, but one that (like a commodity currency) was outside the ability of politicians to manipulate.

In plainer words, he wanted what never was nor never shall be.

It's like saying that with negative matter, we could build warp-drive. Well, sure, but where's the negative matter Mr. Scott?

[stealthswimmer]

I suppose so. I guess we might never know, lol.

[CivysCare4Soldiers2]

Good luck guys get thoses gold paning dishes out, because at the moment the contradiction in the capitalist system is making wealth creation difficult. Capitalists nowadays have the strategic logic of yeast cells. Just acummulate as much as you can now, and consume all the value availible then let external others worry about the end of the value supply!

[kdawg860]

external others worry about the end of the value supply? try looking up the principle of comparative advantage. and also look at what the federal reserve is doing to our economy. it's the first video by misesmedia called "money, banking, and the federal reserve". i highly recommend it.

[CivysCare4Soldiers2]

By external others i mean people outside a partcular corporation or enterprise!

Comparitive advantage only applies to trade between different producers, i was just stating that we are seing that the 'free' market is not acting by itself to correct the current crisis!

[kdawg860]

the govt is bailing out the corporations at everyone else's expense. this is not capitalism at work. comparative advantage applies to every single person because we are all producers. when you are working, you are producing. it's not just the ceo's of corporations that are producers, it's everyone in the corporation.

[CivysCare4Soldiers2]

Yes i agree free market capitalism collapsed in the 1940's and the commanding heights were replaced with contractual monopolistic corporatism.

And yes i agree CEO's dont produce anything themselves, they just strategically invest to get themselves a good marginal return on a project of some sort, then keep some of this revenue for themselves and reinvest the rest!

Comparitive advantage is an ancient and only applies to trade between two different countries NEVER indivuals in one company

[kdawg860]

you're agreeing to things i never said.if we're going to argue the start of collapse of free market capitalism,we can argue it started with the corporate welfare that the interstate commerce act of 1887 began.capitalism is the free flowing of capital,ie the opposite of govt intervention.ever since 1887 weve had more govt intervention & a huge decline in capitalism.

comparative advantage applies to individuals as well as groups, including countries. i recommend studying it.

[CivysCare4Soldiers2]

I dont think what you have been studying is a real phenomena. But i guess its ok to believe in an official doctrin like comparitive advantage applied to indivuals.

Its ok to believe this but its not real!

If the public isnt interested enoth in the inefficiency of corporatism then things run into the ground, like the sub-prime symptom in the current debt crisis. Large corporations consentrate on their own indivual sphere and externalise problems to others then the whole system becomes moribund.

[Serge808]

the automakers are having this problem right now, they overproduced and have too much inventory...lack of consumption actually is the problem imo, consumption is low for autos because the prices are still to high in the market.the Fed is being stupid because they are trying to lower rates and liquidate the system from the top down and letting the treasury decide where to put the money and having banks keep it and do M&As. the $ should go straight to the people. NO INTEREST. END THE FED

[CivysCare4Soldiers2]

Yes this problem is caused because of the cut back in advertising!

If people see advert's saying how bad things are they will stop buying stuff.

But private companies own the tv stations and advertisers, so the only thing i know is the fincial elites want to cut consumption.

In todays retail economies advert's do persuade people to consume. If retail corporations show adverts saying how bad things are then a large group of the population will be persuaded to tank the economy.

[CurtHowland]

Civys, I must wonder, why haven't you noticed that every problem you've written about here was caused by government intervention?

The "free market" isn't fixing the present collapse of various financial firms, because the "free market" isn't being allowed to work.

Having them go bankrupt is exactly how the "free market" would deal with bad business decisions, but they're being Frankensteined by yet more government intervention!

Don't blame the "free market" for government intervention.

[CivysCare4Soldiers2]

I dont think governments in Europe or America control the Capitalist (stalinist control type) corporations.

From what ive experienced our governments are influenced by (Internally Marxist)+(Externally Capitalist) Corporations AND (Pro-Capitalist Marxoligist) Bureaucracies.

I dont blame the "free market", it dont really exist except for small grocery stalls in street markets :)

Your highly trained to promote free market dogma, try to expand your view leftward!

[CurtHowland]

"Your (sic) highly trained to promote free market dogma, try to expand your view leftward!"

Your error is in thinking that there is a difference between "big business" and "big government". Haven't you heard of the "revolving door"? Do a Google search.

I cannot move any further left than I already am, for I believe in complete individual freedom. But then, I cannot move any further right than I am, for exactly the same reason.

It is you that makes the "left, right" distinction, not I.

[82abhilash]

There is one aspect of the boom in the boom bust cycle that I wish the Austrians had gone into more detail. During the boom time people spend a lot of money on consumption goods, which are probably less and high priced anyway because of the misallocation into capital goods due to artificially low interest rates. But they do more than that, they buy beyond their means using the credit card. Why is that?

[82abhilash]

I guess the low interest rates encourages the entrepreneur and the consumer alike to spend beyond their means. Then the government comes with a bailout package making the thrifty person feel like a jackass.

[VANGUARD1944]

Block is epic. Really useful lecture for nubs.

[greywolf4744]

thank you. I took notes. That was great. Exactly the kind of lecture a noob like me needs.

[billyjoeallen]

Gold is only one of many commodities that could function as currency. I favor several competing at the same time. Still, a gold-standard would be much preferable to the current system.

[theoriginalanomaly]

He does drag it out though with technicalities. Which can be a good thing for people interested, but bad to get people interested. He is brilliant though.

[bighitter42]

Consider his audience...chances are they are interested.

[theoriginalanomaly]

I really like Block