Opponents of Real Bills have a dilemma. They can either oppose them by means of enacting a coercive law, or they can allow them because they will spring into existence and circulate in a free market under the gold standard. We can hope that the principle of freedom and free markets leads everyone to the latter.
Many people are angry about the outcome of the election. While there is some soul searching, there is also a large and growing disgust, not just with President Obama but with the electoral process and the country itself. Out of anger and frustration, some people are calling for secession, though it’s unclear how many.
The ESM is an 80 billion euro pool of capital that can be levered up to 700 billion euros by selling bonds. Supposedly, 200 billion has to be kept safe but that remains to be seen. The ESM is a mechanism to lend more money to insolvent governments whose problem is too much debt. These governments borrowed too much. Therefore someone lent them too much.
There has been much buzz in the past few days about a truly horrible idea. Instead of having to negotiate with Congress to raise the debt ceiling so the Treasury Department can sell more bonds to pay for more spending, why not just mint a trillion-dollar platinum coin? This coin would contain one ounce of platinum, worth about $1,500 in reality. By law, it would be magically assigned a value of one trillion dollars. Even at first glance, this is just a bad idea.
The problem is that the economy has become addicted to government spending. Withdrawal of this powerful drug will be painful. Right now there is approximately zero political will to make any cuts at all. For now, the government can get away with it. Just as in Greece, the government depends on the bond market. Whatever it cannot collect in taxes, it can make up by selling bonds, including the interest on outstanding bonds.
Everyone today is talking about the “Fiscal Cliff”. It is a small decrease in spending combined with a significant tax increase. Let’s put this in perspective. The budget for fiscal year 2012 was $3.8 trillion and the deficit (shortfall which had to borrowed) was $1.1 billion. If no deal is reached, and we go “over the cliff”, then spending will be automatically cut by $110B. This is less than 3% of the total budget and 10% of the deficit.
Under...proposed new regulations, gold is to have a zero risk weighting, like dollar cash and US Treasury bonds. This will allows banks to own gold on more advantageous terms, as they won’t need to tie up other capital just to support their gold position.
We face a serious crisis. While the banks have played their role and it may be tempting to wish ill upon them, causing a banking collapse is not a serious solution. Many of us are working to avoid collapse. Accelerating collapse does no good for anyone.
We propose the radical idea that one should not need permission to walk down the street, to open a bank, or to engage in any other activity. Without banking permits, licenses, charters, and franchises, the door is not open to the game played by many states in the 19th century.
Since [the end of the Gold Exchange Standard], it has become obvious that without the anchor of gold, the monetary system is un-tethered, unbounded, and unhinged. Capital is being destroyed at an exponentially accelerating rate, and this can be seen by exponentially rising debt that can never be repaid, a falling interest rate, and numerous other phenomena.
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