A Little Game of Old Maid, Part VII
Date: March 11th, 2009
Category: Ideology of Freedom
By Robert Ringer
(The content of this series of articles has been taken from my 1982 book “Civilization.” Today, we finally get to the most important kind of investment: Capital Guarantees. Following is what I had to say about that subject in 1982.)
Capital Guarantees
Contrary to what most people ─ particularly speculators – would like to believe, the only way to virtually guarantee the protection of your capital against the destruction of paper currency is to convert it to real money. That’s right, instead of fooling around with “investments,” just use your bogus paper money to buy the real thing.
What is “real money”? In theory, just about anything of value can be used as money. In today’s Poland, for example, tobacco and alcohol are readily accepted as money; i.e., you can buy other goods and services with them. They are accepted as a medium of exchange, whereas everyone knows that the zloty, the government’s mandated paper money, has no intrinsic value.
But tobacco and alcohol, while commanding a certain amount of respect as mediums of exchange, are far from the best forms of money. Tobacco can decompose, liquor bottles can break, and both of them are cumbersome to use when making purchases. These are just a few of the many reasons why tobacco and alcohol, while superior to paper, are vastly inferior to other kinds of money.
If you are at all tuned in to the so called hard money movement, you have heard many times that gold and silver are by far the best forms of money. In my opinion, they constitute the only true Capital Guarantees in existence. (For the sake of brevity, I will for the most part restrict my discussion to gold, but most of what I have to say is also applicable to silver. Gold is a slightly more desirable money than silver, one of the chief reasons being its greater scarcity.)
So much has been written about gold over the past several years that it might seem as though a discussion of it here would be unnecessary. I wish that were true, but, with all due respect to the many brilliant “hard money” writers who have covered gold extensively, I feel that their readers are still missing the most important point.
It’s not the technical information imparted by these writers that has been in error; rarely has that been the case. The error lies in their lack of emphasis on the crux of the issue. In fact, increasingly over the past couple of years, many of these newsletter writers have been totally ignoring the crux of the gold issue.
What particularly disturbs me is that many so called goldbugs of yesteryear have now deserted ship. It makes one wonder if they ever really understood the real reasons for buying gold in the first place.
It has become chic in hard money circles to say that gold was a good investment at $35 an ounce, but that the days of the big profits are long since gone. All I can tell you is that if you allow yourself to be influenced by such talk, you will greatly increase your chances of ending up holding the Old Maid.
If ever there was an area in which to do the exact opposite of that which government and the media urge you to do – if ever there was an area in which to do the opposite of that which causes failure – that area is the purchasing of gold. But first a little background:
The United States government, in an incredible display of stupidity, has seemingly found endless ways to squander its gold supplies. Back in 1949, the United States Treasury boasted an all time high of 700 million ounces of the yellow metal. As of the writing of this book, that figure is estimated to be down to 250 – 350 million ounces.
In the 1950s and 1960s, the government was losing gold to foreign countries by the carload – about 436 million ounces all told. The governments of those foreign countries, for some strange reason, wanted gold instead of paper dollars, so they rushed to redeem their U.S. currency at a furious pace.
That all ended on August 15, 1971, when President Nixon declared that the United States would no longer allow foreign governments to redeem their paper receipts (i.e., “dollars”) for real money (i.e., gold). In other words, the United States admitted (in doublespeak, of course) that it was bankrupt. Its actions announced to the world, once and for all, that its paper money was a lie.
In Part VIII, we’ll take a look at how the U.S. Government followed up this lie by violating the Rule of Holes, which says: If you’ve dug a deep hole for yourself, the first step toward getting out of it is to stop digging. Instead, as one would expect of any government, it just kept right on digging.
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Today’s Reflections:
Today, twenty-seven years later, I stand on everything I said above. Unbacked paper is still a lie, and gold and silver are still real money. I guess you could say they are fiscal axioms.
March 11th, 2009 at 7:19 pm
Here is my opinion: There are no “Capital Guarantees” in a situation of total nationwide and/or worldwide collapse. And even speaking in such absolute terms, like “guarantees” of any kind, makes me nervous. There are very few things that are truly guaranteed. Death. Taxes. Corruption. Things such as these are guaranteed.
In my view, the three most important things an individual can do to successfully compete and live a selfish and happy life before, during, and after a total or partial economic collapse is to understand 1) human nature, 2) the corrupt system of big business and 3) the corrupt system of big government that humans have built. If you accept the fact that corruption is indeed a viable way for humans to interact, do business, and run government, not fair or just, but viable from the standpoint of workable(like a jungle) than you’re on the right track. You have to know how the jungle works and how to move through the jungle if you want to live and exploit it for your own selfish benefit.
So here is the reality as I see it. (I may be wrong. And if I am, then I will suffer to the extent I’m wrong. If I’m right, then I will experience achievement.)
Yes, paper money is a lie, but it is a lie backed up by lead. Lead from the barrel of government guns. Gold can’t compete with lead under those conditions. FDR’s Executive Order 6102 trumps any who think gold will replace the almighty dollar. The new FDR (aka Barack Obama) will resort to 6102 if he decides it necessary. I believe in the reality of corruption and that in this case corruption can and will prevail. Yes that is right, I think government corruption and “the lie” will prevail over the honesty of gold just like the Serpent’s lie prevailed over Eve.
Now, if there is just a partial collapse, like what is currently happening with our economy, than gold or silver is a very good play. And let me tell you why. Massive inflation is on the way. Thus, gold and silver will hold up as long as the government doesn’t intervene with price controls. Why do I say massive inflation is on the way?
The federal reserve will continue to print paper money and create trillions of dollars electronically. I call this new money phenomena, Electronic Dollars( someone else also, must have used this term by now, so forgive me if I take credit that is not mine). Electronic Dollars or Electronic Money are the phenomenon by which no money is printed, it is created with a keyboard as fast as you can type $50,000,000,000.00……… and that is pretty fast. The Federal Reserve is creating this phony and counterfeit money over and over again as you read this very sentence.
In fact, governments around the world are now creating more fake money than any other time in history. That is why I own both gold and silver and I’m ready to trade that gold and silver away if the New FDR starts to make a move for it. More importantly, I don’t have all my investment eggs in one basket, because my parents and grandparents didn’t raise a fool. My grandparents lived through the Great Depression; and they not only survived, but they lived very well. Fortunately before they died, they taught me a thing or two about living through the 2nd Great Depression, which they were quite sure was coming. In the future, I will post some of that wisdom.
Incidentally, Mr. Ringer has repeatedly proven over and over again just how perceptive he is at making his way through the concrete jungle. Which leads me to my final point: If anybody wants to compete and earn a good life, then you had better understand something about the harsh realities of life and what you’re up against. I’ve never personally met Mr. Ringer, but I’ve read his books, and they have validated at least 80% of all that I ever believed in. So then, I can tell you this: If you want to acquire excellent information on human nature and jungle survival, then there is no better place to start than reading “Looking out for #1″ or “Winning Through Intimidation.” These books will prove to be timeless resources.
March 12th, 2009 at 9:39 am
Something that has been continually bugging me for the past few years since I started considering buying some gold was how it remains so valuable; you can’t eat it and it’s too soft to really make anything useful out of (eg, tools), so what keeps it so valuable and how do we know it won’t one day become as useless as paper money?
Also, I believe I asked this question once before, but it’s something I feel is of great importance; what steps can we take to prevent the government from confiscating our gold, silver, or other valuables (as FDR did during the Depression)?