The world is rushing headlong towards a return of the gold standard

While many alternative economists are split in their trust of someone of the likes of Jim Rickards, his newest book, The New Case for Gold, has come out at a near perfect time in history.  This is because after 100+ years of central bank monetary policies built upon fractional reserve banking, debt creation, and fiat currencies, the global demand for sound, asset backed money is rushing towards us at an accelerating rate.

When times are tough, new economic theories get a better hearing. Maybe some old ones, too.

The gold standard is one of the oldest ideas about money, but the hardest of hard-money hawks sense an opening to breathe new life into it. Decades ago, the amount of cash circulating in a country was often limited by the stash of bullion held in its coffers. Especially since 2008, developed-world policy has headed in the exact opposite direction, expanding the powers of central banks to stoke growth. Helicopter drops of money, potentially the next new thing, would be a giant leap further.

For those in the U.S. who see much risk and little benefit in the current course, gold is still a rallying point. And their audience may be growing.

“The fringe has become the mainstream,” said Jesse Hurwitz, a U.S. economist at Barclays Capital in New York. He sees the gold standard as a bad idea but “something we’ll increasingly talk about.”
— Bloomberg

Gold and Silver have been real money for over 5000 years, and it is only since 1971 that the precious metals changed in the vernacular from being money to instead becoming a commodity.  And in the 45 years since the world went off the gold standard, the ability to create paper out of thin air has morphed the global financial system into a quadrillion dollar behemoth that allowed greedy and corrupt men and women the opportunity to get rich without the limitations of fiscal responsibility.

But what this removal of a gold standard has also done is to destroy the fabric of local, national, and global economies, and to create environments where only those who have direct access to the printing presses can succeed.  In the 1960's, and just prior to end of the gold standard a decade later, monetary policies based on the checks and balances of gold allowed more people to move out of poverty than at anytime in history, and kept prices in check where someone working for a minimum wage ($1.60) could easily afford the basics in life such as housing, food, transportation, and even the ability to sustain a small family unit.  Yet in the 45 years since the world went off the gold standard, more people have been driven into poverty from the Middle Class despite the rise in annual incomes, and where it now requires both parents working at far above the minimum wage just to survive in a world of devalued currencies.

And the saddest part is that most people fail to even comprehend the problem, as it has never been about higher wages, but about stopping the central banks ability to devalue the currency and halt the unsustainable rise in prices that comes from these policies.

Yet even putting this comparable period of 65 years aside, what is even more dramatic are the changes in prices for these same items in just four years following the removal of the gold standard in 1971.



More than anything, the magic of the Gold Standard is in its intrinsic power to protect against inflation, to curb avarice and stupidity from those in power, and to ensure fiscal responsibility from those who use it.

As the United States sits in the twilight of its days of empire, those rising up to vie for supremacy are doing so with the intention for a return to gold backed money.  And it should come as no surprise that as countries like China, Russia, and India use their dollar reserves to accumulate the bulk of the world's physical gold, nations without a large store of the monetary metal are flocking to these economies under new trade agreements and economic unions that are openly conducting business outside the dollar and U.S. hegemony.

Yet for some states in the U.S., a return to gold backed money has become a priority.  In both Texas and Utah, government agencies under public and private facilities are opening depositories which will allow citizens to trade their fiat dollars for gold accounts, and be able to transact just as they would in a normal bank except for the fact that their wealth would be denominated in physical gold rather than federal reserve notes.

Last year, we covered a story coming out of Texas in which the state government was planning to institute a state-controlled “gold depository” that would allow individuals to store their gold in a presumably safe place outside the United States banking system.

This proposition was met with emotionally-charged denunciations from Americans in far away northeastern American states where it was claimed this measure was contrary to the “supremacy clause” and just a terrible idea in general because it undermined faith in the US’s central government and the Federal Reserve System.

Well, in spite of the disapproval of New Yorkers, the Texas legislature passed the bill, and the governor signed it into law last June.

”With the passage of this bill, the Texas Bullion Depository will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state,” Abbott said when he signed the bill.

The depository won’t just store state gold and other precious metals. The law requires that individual customers, and even school districts, be allowed to open accounts. Capriglione has described it as a bank that doesn’t do any lending,

The rising demand for gold backed money has also superseded local and sovereign governments.  In fact, there are at least two entities, Bitgold and Karatbars, which allow people to trade their fiat currencies for physical gold, and have access to it via electronic means through debit cards which function the same as cards issued by banks.

The bottom line is that the world has become tired of un-backed currencies that are controlled through monetary policies which aid a select few while impoverishing the vast majority.  And nearly all the financial problems of the past 50 years can be laid directly at the feet of money that is created solely from debt and nothing else.

Which makes a return to a gold standard not only crucial for saving what is left of the global financial system, but in also saving individuals who play the unwinnable game of wages verses inflation, and the destruction of their wealth under the auspices of monetary policy.