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Arguments Against Freegold

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Published : December 13th, 2012
1190 words - Reading time : 2 - 4 minutes
( 9 votes, 3.6/5 ) , 8 commentaries
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Category : Gold and Silver




Someone suggested a post on arguments against Freegold. I thought it was a great idea, but then I couldn't think of any arguments that hadn't already failed. I've been at this task for four and a half years now, and I've read almost all of the 12 years' worth of archived debates and arguments (now missing) at USAGOLD as well as the random debates that pop up elsewhere and someone inevitably links them here or brings them to my attention via email. And yes, I feel like I've seen it all, but maybe I haven't. So here's your opportunity to present your best argument against Freegold.

A reader and supporter of mine, an American medical doctor and surgeon named Jeff Allen, once commented on his view of what it is that I do here and why this blog is "so striking to so many people." I wanted to mention this in the context of this post not only because I loved the way he explained my logical approach to Freegold and its necessary conclusions, but also because I think this is the only way you're likely to succeed at debunking Freegold if that's even possible—by presenting a competing premise through principles, expressed in precisely defined, non-contradictory concepts that are grounded in reality, which lead to inevitable conclusions that necessarily exclude those of Freegold even when viewed from a variety of perspectives.

So good luck with that!

I'm combining a couple of different comments here, but what Jeff Allen said was that "the defining attribute of an objective manner of thinking is the ability to--more deeply, the recognition of the necessity to--think in principles. To see reality as it is, then to grasp reality in non-contradictory conceptual form.

But thinking in principles will not succeed unless its elements--the conceptual terms in which the principles are expressed--are solidly grounded in reality. This is where the term "objectivity" arises. You best reveal your own appreciation for this fact by the manner in which you validate your unwinding of the concept "money."

This is not the way most people think, and this is why your blog is so striking to so many people. But it is only your fellow thinkers-in-principles who possess the capacity to respond in this way. Those who don't get it, including those commentators to which you refer, lack that capacity. Ayn Rand called these the "anti-conceptual mentalities." The anti-conceptual mentality has been fostered and nourished by Pragmatism, the philosophy which dominated U.S. academia the first half of the 20th century, and dominates our educational and political systems still today. We swim in a sea of Pragmatism.

All new knowledge is inductive. Deduction is secondary, and depends on the validity of one's prior inductions.

From whence comes your syllogism's major premise, "All fiat currencies are eventually worth no more than toilet paper?" Was it deduced from a prior generalization, or was it induced?

The answer, of course, is that it was induced. Your deduction merely applies that general knowledge to the specific case of the dollar. If your inductively generated major premise is not necessarily true, then neither is your deductively generated conclusion.

From what prior principle did Newton deduce universal gravitation? Newton's theory is the product of a grand induction, an integration of prior inductions made by Kepler and Galileo, based on observations of planetary orbits, and of the behavior of physical bodies on earth.

Freegold, too, is a grand induction. Your method of approaching the issue from a variety of perspectives, all leading to the same necessary conclusion, after precisely defining your concepts, is essential to a proper inductive process (which, by the way, the mere enumeration of swans is not)."

It occurs to me that TA-based and GSR-based gold and silver trading is probably an example of Pragmatism. I'm no expert on Pragmatism, but Wikipedia says it "describes a process where theory is extracted from practice, and applied back to practice to form what is called intelligent practice."

The "grand induction" (Jeff's term) that we like to call Freegold was not my grand induction. Nor do I think it was Another's. Another merely shared it with us along with some of its "necessary conclusions". Why did he do that? I don't know, but I have a few ideas.

As for the "grand induction" itself, I think it was a European group effort that teased it out in the 1960s and 70s leading up to and also following—and as a result of—the abrupt and predictable end to the Bretton Woods monetary system in 1971. I won't go into the details here because I want to keep this post under 100 pages, but the main point is that I didn't come up with it.

Freegold is just a name. I didn't come up with the name either. But if you don't understand what we're discussing and extrapolating upon here at a conceptual level, ignoring the convenient name, you're going to have a really hard time debunking it. In fact, I don't think you can, even if you do understand it. That's one of the most remarkable things I've observed about Freegold—that those who make the effort to really understand it on a conceptual level not only fall in love with its elegant simplicity and obvious inevitability, but they also start buying physical gold hand over fist. And again, that's only because of one of the "necessary conclusions" that are (IMO) irrefutably drawn from it.

I will temporarily and conditionally lift the ban on the five commenters that have been banished from this blog over the last four years so that anyone is free to take their best shot. But only for this one thread, and only if they behave. I will not put up with abuse, hate, spam or personal insults. In other words, Art, AD and anyone else are all welcome in this thread only, unless and until they abuse it.

But don't expect me to personally debate each and every argument. I'm not going to waste my time on arguments that miss the mark like poor Skippy, our "'A' for effort" dog at the top, or on those arguments that have already been dealt with. There is one argument, however, that I hope shows up to the party. And if anything worthy comes out of this thread, I'll add it below in the space between the lines for the permanent record.

Just beware that Freegold is much easier to dismiss on superficial grounds than to defeat on deep, logically-consistent conceptual ground. So if you really want to avoid becoming another evil gold hoarder, jerk, time misallocator and brainwashed cult member, you should consider simply dismissing Freegold on the surface-level ridiculousness of its necessary conclusions rather than taking up the challenge in this post. Forewarned is forearmed.

And finally, you can't judge the worthiness of your own argument. That judgment, like credibility, can only be made by others. As for what ends up below in the space between the lines, that judgment is reserved for me, but I will consider the opinions of others who I think understand what I think I understand in making any decision. ;D




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Although i feel (very) positive on your article. It is a bit funny to see how you question the fact of certain given information in such a broad manner.
And than suddenly (probably unintentional) in the same piece you start releing on the information as granted....?

Your wrote:
"From what prior principle did Newton deduce universal gravitation? Newton's theory is the product of a grand induction, an integration of prior inductions made by Kepler and Galileo, based on observations of planetary orbits, and of the behavior of physical bodies on earth."

I question that sentence !
To get some understanding i would sugest to read the following blog article

You maid be supprised !
Rate :   3  1Rating :   2
You had me right up until the author started using the word 'bullshit'. He/she totally destroyed any validity he/she might have and also jeopardized the truth that Indian Vedic’s were ahead of 'western' academia when resorting to vulgar language. Using vulgar language does not make anyone look smart or even dependable. They come off as a moron when they do so.
Rate :   4  3Rating :   1
Thanks for the comment.
Shooting the messenger is easy, especialy if the messenger is from another culture not speaking your mother laguage.
Anyway, i would sugest to bring up facts to counteract the statements. I searched for them, could not find them. All Knowledge
is written in the Rig-Vedas, dating back 11.000 BC. Remember our views are so far limited to what the masters wish you to know.
Rate :   3  1Rating :   2
I disagree with your statement that 'our views are limited to what the masters wish you to know'. You will find that in general, with the few very obvious exceptions, the people that frequent this and many other sites are very aware that we have been spoon fed misinformation and do not take what the elite tell us to hold as valid. As for the topic of the site you linked to, I can’t comment on the matter as I haven’t done any research in that area. I will however caution that it’s very easy to write a blog like the one we’re discussing and find that most people that will come across it wouldn’t know if what’s said is true or not. While the site claims to reference manuscripts that date back thousands of years it would be very difficult for the average person in the west to personally decipher the texts. This does not mean that I defend Isaac Newton or others mentioned in the blog, merely that the subject at hand requires too much effort for myself and most people to investigate and make an informed judgement on the matter.

I still maintain that the use of the word ‘bullshit’ causes one to immediately disregard the post. Vulgar language must be used on purpose when writing any article meaning that the author tried to use vulgarity as a means to slander the opposition, it’s not a ‘slip of the tongue’ and it has no place in any forum that aspires to educate. Please feel free to pass my sentiments along to the author.

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Please accept my apologies as the last sentence had some teasing qualities. Nevertheless your reply on this specific statement was received to me as the best answer, thank you. Next i would express my appreciation for your open mind to have this little conversation.

Further on the use of culture specific (perceptive) vulgar language i tend to agree with you, although not without finding a reason behind it. The reason to me seems clear to root in the emotional plane. (agree the passion on the subject of the author is indeed not hidden) Most of the Westerners have been learned (conditioned) in living in abstract/linear ways. Contrary to the East who are close to nature in a more dynamic way. Sometimes hard to grasp. Finally in my opinion it is still the message who needs attention not the form. We are not all geniuses are we.

Just curious, did you ever tried to explain the concept of value to a Westerner...? ANOTHER did, admit i had to go over it several times before i think i grasped it.
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Well, waded through this post and I thought I had a good command of the English language. Obviously not.

The concept of Freegold already exists. It is NOT money. However that is where the concept ends.

As a store of value, we once again tie gold to money; $/ozt. We might as well say Freewheat. Granted a bit more short term storage, but same concept. Buy wheat, store and resell (hopefully a profit).

Now if we consider that the value of the stored good must serve no utilitarian purpose beyond storage of value, we must accept pearl earrings, cancelled stamps, fine (and not-so fine) art and antique tractor seat collections.

I would tender the notion that value is in the eyes of the buyer. Popular or fiat declarations can never force confidence in valuations. However if history can be used as a guide to understanding the human condition, then with enough conditioning most bald monkeys can be trained to accept anything as so. By the use of government fiat, currency (cellulose) can be used to buy gold, food or Beany Babies.

The Freegold concept does not divorce gold from economics. Economics demands commerce. Widespread commerce demands a medium of exchange. The common medium of exchange is currency.

Everything is connected to everything.
Everything has to go somewhere.
There ain't no such thing as a free lunch.

There are only two concepts that need to be understood for the survival of the individual. Psychology and economics. Economics is the individual's profit/loss statement in the directed use of energy. You must produce more than you consume and don't make enemies. Commerce (the trade in the product of directed energy expenditures) is the tool for minimizing the number of enemies.

Tis my notion that the concept of Freegold is nonsense. I fail to see how something can be a store of value and not have monetary value. If one person exchanges a 1 gram gold bar for some other item, the gold bar has met the standard of currency. Function is, concept is just blowing smoke.

Freegold demands belief. Belief mandates no acceptance of contrary evidence. Beliefs are dangerous and always counter-productive in the end.

Gold can never be totally divorced from monetarism. Anything less than totality is failure.
For the sake of argument, let us assume things are just as they are. Gold bars are NOT currency. However to maintain that status, gold bars MUST be converted to the currency of the day. Gold bars already meet the standard as a store of value. Gov't fiat has declared that gold is NOT a medium of exchange. The only reason that Freegold does not exist today is the lack of gov't fiat declaring it so.

Once the gov't declares it as so, the bald monkeys can be conditioned to accept it.
It appears that concept realization demands fiat. Fiat has stated that unemployment is less than 8%, inflation under 3%, yada, yada, the economy is on the mend.

Fiat is just words. The fundamentals of Freegold already exist and have for a few thousand years. Silver and base metal coinage were the popular mediums of manufactured exchange. Barter was more popular. Gold is, was and will probably remain a store of value outside the general marketplace.

But Freegold demands gov't recognition and acceptance. Yah, and the mistaken belief that any store of value won't be taxed? Anything that gets taxed away is NOT a store of value.

There are all sorts of additional problems, supply/population ratio being one.
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Didn't understand anything of the article but would like to use the occasion to ask
"how is it still possible that one can buy gold with toilet paper ?"
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Please consider the benefits of both items. Some may even call TP a commodity and I believe we've passed the tipping point. I used a roll today to buy two loaves of bread, some lunchmeat and eight ounces of American cheese. Didn't have enough for a small jar of mayo; but the clerk assured me that by next week I'll be able to make complete sandwiches.
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Please accept my apologies as the last sentence had some teasing qualities. Nevertheless your reply on this specific statement was received to me as the best answer, thank you. Next i would express my appreciation for your open mind to have this little c  Read more
Marie-lor - 12/17/2012 at 9:35 AM GMT
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