Why Government May Ban Gold Ownership
To “pay” with freshly printed script is the same as borrowing more. The game, if you want to look at it that way, get’s more interesting when you begin to realize that the “interest” has to keep rising as well as the total amount owed. The measure of the value of interest is the sum of nominal interest added to the the percent loss of purchasing power.
There is NO GETTING OFF THIS TRAIN NOW. We are all unwitting passengers on the train to hell and gold is the only realistic respit. But wait! The wonks at the Fed and in Washington may all be fools, but they too understand where this is going and will take steps to stop the gold rush, draconian steps all dressed up in a new international calamity of some sort so they can declare a national emergency giving them total confiscatory powers. Now if the math works, I would say we are a hairs breath away from a “big event”.
From Wikipedia, the free encyclopedia:
The United States was still suffering the negative effects of the 1929 stock market crash in 1934 when the Gold Reserve Act was enacted. President Roosevelt was challenged with decreasing unemployment, raising wages and increasing the money supply, but was restricted by United States’ strict adherence to the gold standard. The Gold Reserve Act, which banned the export of gold, restricted the ownership of gold and halted the convertibility of gold into paper money helped him overcome this obstacle. This act ratified the previous Executive Order 6102 which required almost all gold to be exchanged for paper currency.
The Gold Reserve Act also revalued the price of gold to $35 per troy ounce. As a result, the Gold Reserve Act, an act of monetary policy, drastically increased the growth rate of the Gross National Product (GNP) from 1933 to 1941. Between 1933 and 1937 the GNP in the United States grew at an average rate of over 8 percent. This growth in real output is due primarily to a growth in the money supply M1, which grew at an average rate of 10 percent per year between 1933 and 1937. Traditional beliefs about the recovery from the Great Depression hold that the growth was due to fiscal policy and the United States’ participation in World War II. “Friedman and Schwartz stated that the ‘rapid rate [of growth of the money stock] in three successive years from June 1933 to June 1936… was a consequence of the gold inflow produced by the revaluation of gold plus the flight of capital to the United States’”. Treasury holdings of gold in the US tripled from 6,358 in 1930 to 8,998 in 1935 (after the Act) then to 19,543 metric tonnes of fine gold by 1940.
The revaluation of gold referenced was an active policy decision made by the Roosevelt administration in order to devalue the dollar. The largest inflow of gold during this period was in direct response to the revaluation of gold. An increase in M1, which is a result of an inflow of gold, would also lower real interest rates, thus stimulating the purchases of durable consumer goods by reducing the opportunity cost of spending. If the Gold Reserve Act had not been enacted, and money supply would have followed its historical trend, then real GNP would have been approximately 25 percent lower in 1937 and 50 percent lower in 1942.