of GoldMoney's James
Turk responding to questions/comments from Principally Correct, a visitor to DollarCollapse.com:
Correct: An author wrote in the FAQ on "fiat currency":
example of a non-fiat currency would be the gold and silver coins that used
to circulate in much of the world. There was only so much of each metal, and
the supply only increased when some enterprising miner discovered and dug up
more. Governments were unable to create this kind of money out of thin
I want to
point out that our gold/ silver money issued by the gov't (especially from
1792 to 1964) IS fiat money. The following is an excerpt from an article
"Fools' Gold" by Robert Carroll:
Turk: While many of Mr. Carroll's observations and comments are
correct, his analysis is flawed because he conflates three very different
things: money, currency and credit. Their differences are explained in our
book, The Collapse of the Dollar.
Correct: When governments or private banks have attempted to use gold as
money, or for the last yea many centuries the fraud perpetrated as gold
"backing" or reserves, it has been necessary to establish a
monetary price of gold by fiat in an attempt to isolate money from inevitable
price fluctuations of commodity gold.
Turk: There is no difference between monetary gold and commodity gold.
Govt's just like to distinguish between the two to make people believe that
gold is not money.
Correct: The U. S. Constitution writers anticipated the instability of
commodity prices and included the phrase "regulate the value" in
the coinage clause. In 1792 after the ratification of the Constitution, the
Congress, consistent with the Constitutional mandate, defined specific
amounts of gold, silver, and copper as representing dollars. They regulated
the value and established a monetary price by fiat.
Turk: The entire phrase is relevant: "to coin money, and to
regulate the value thereof...". The framers meant that Congress could
fix the gold/silver ratio - that's all. For a more detailed discussion, see http://www.fgmr.com/pieces8.htm
Correct: I suggest you read the US monetary history
I used to
be a gold/silver bug until I read Stephen Zarlenga's landmark study of
monetary history (he studied monetary history from Greek/Roman times to
today) in his book "The Lost Science of Money". He initially
thought gold and silver was the answer when he first started researching the
subject. After 12 years of research, his findings show that money is defined
by LAW, not by nature.
Turk: He is incorrect. Money existed long before governments. I
haven't read Zarlenga, but his view is not new or original. Read for example,
Knapp (1842-1926) http://en.wikipedia.org/wiki/Georg_Friedrich_Knapp, a
German statist who contended the same thing. Neither Knapp or Zarlenga are
Correct: Did you know that in medieval England, they used wooden tally
sticks as money, for over 700+ years (until Bank of England came along in
1694)? During this time many beautiful cathedrals were built. Very little
gold/silver money were used.
Turk: Yes, I have seen surviving examples in London. These sticks
were a type of currency, not money. Just like paper Federal Reserve notes are
a type of currency, but not money.
suggest you visit http://www.webofdebt.com/, http://www.monetary.org/, http://www.wealthmoney.org/
Turk: My views above are consistent with the Austrian School of Economics and its leading proponent, Ludwig von Mises. See http://www.mises.org/
John Rubino is
co-author, with GoldMoneys James Turk, of The Coming Collapse of the Dollar
and How to Profit From It (Doubleday, December 2004), and author of How to
Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not
Wall Street (Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity
analyst and junk bond analyst. During the 1990s he was a featured columnist
with TheStreet.com and a frequent contributor to Individual Investor, Online
Investor, and Consumers Digest, among many other publications. He now writes
for Fidelity Magazine, CFA, and Proto.