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Speech given by Ferdinand Lips
at the University
of St. Gallen
on 24 June 2004 as part of
the International Finance & Security lecture series
I would like
to thank the organizers, Mr. Graf and Mr. Brunner, for inviting me here
today. It says a lot that you have chosen such a contentious topic as gold.
That shows courage. Indeed, until recently it was almost taboo to mention the
word gold. Anyone who did so risked being labeled eccentric.
But you were quite right in choosing this topic. You will soon see the
extent to which gold has played a central and positive role in human history
since the dawn of civilization.
I will
provide evidence that without a gold-backed currency we are destined to face
crises and military conflicts throughout the world. The best proof of this is
provided by the events of the 20th century and the dawning 21st century.
I will also
prove, or at least assert, that without a new gold standard the world will
descend into a new dark age. I don’t know what the significance is, but
the calendar of the ancient Mayan civilization ends in the year 2012. In my estimation, the current
financial system, or non-system as I call it, will no longer exist by that
time. As you know, it is based on deception and a mammoth debt burden that
can barely be serviced anymore. In all likelihood, this mountain of debt will
overwhelm the world someday.
I also want to give you hope, however, by describing to you how once upon a
time there were better financial systems than the one we have today. My
speech is also an appeal to you. I appeal to you young people to think of
gold as money. Engage in monetary archeology. Try
to devote some thought to the gold standard. It is up to you to save the
world. No one will do it for you.
My speech
will last 45 minutes. Afterwards, you will have to opportunity to ask
questions. For those of you who would like to buy my latest book Die
Gold-Verschwörung1) (Gold Wars), I will be happy to write a personal
inscription.
Introduction: today’s situation
stems from abandonment of the gold standard
All of the
bad things happening in the world today can be traced back to two specific
events. They have given rise to the most troubling issues of the 20th century
and now of the 21st century, including political dilemmas, wars, monetary
crises, economic emergencies, widespread poverty, racism, the Holocaust, mass
migration and terrorism. All of these things are overwhelmingly attributable
to these two developments.
The first
event is the abandonment of the gold standard at the beginning of World War
One in 1914, and the second event is the establishment of the Federal Reserve
System in the USA
in 1913. World history demonstrates that there is a close relationship
between monetary systems and war and peace.
And economic
history shows that financial markets only function smoothly under a gold
standard.
It is also
evident that there is a close relationship between monetary systems and
ethics and morality.
Unfortunately,
it is not widely known that the 19th century was a period of prosperity and
economic growth without inflation.
It seems like
a fairytale when we discover that in those days the world’s major
currencies remained stable over a long period. The French franc, for example,
remained solid for 100 years. It was the age of the gold standard.
The lifespan of currencies
French franc
1814 – 1914 100 years
Dutch guilder 1816 – 1914 98 years
Pound sterling 1821 – 1914 93 years
Swiss franc 1850 – 1936 86 years
Belgian franc 1832 – 1914 82 years
Swedish krona 1873 – 1931 58 years
German mark 1875 – 1914 39 years
Italian lira 1883 – 1914 31 years
(Source: Pick’s Currency Yearbook 1977 – 1979)
How the gold standard worked
The basic
rule of the gold standard was a fixed price for gold, i.e. each currency was
convertible into gold at a specified rate. The currencies were backed by gold
and redeemable in gold on demand. A nation’s monetary reserves
consisted of only gold. On an international level, importing and exporting
gold was unrestricted. All balance of payments deficits were settled in gold.
(Balance of payments: the sum of all transactions between the domestic economy
and the rest of the world.) Gold thus had a disciplining influence on a
national economy.
It limited
public spending. It provided citizens a currency that maintained its value
and was internationally recognized. In such a system, if a balance of
payments deficit develops because domestic prices go up, gold automatically
flows out of the country. This leaves less gold available for internal money
circulation, and prices will thus come under control or decline. Exports
become competitive again, and the balance of payments reverses. If, on the
other hand, a country has a balance of payments surplus, gold will flow in
and allow the economy to expand. Upward revaluations or devaluations were
unthinkable. The system maintained it stability automatically. This is one
reason why politicians do not like gold. Gold forces them to balance their
budget.
Stable currencies through the ages
History
offers many examples of monarchs and kings who exercised great discipline in
creating money. Ancient Greece,
where the first gold coins were minted, provides one such example. Due to its
gold content, the drachma in effect became the global currency of the
civilized world at the time. During this period, the Greek cities thrived.
And economic trade flourished.
The most impressive example of a nation with healthy money was Byzantium. In keeping
with the ancient tradition of stable money in Greece, Emperor Constantine
decreed the creation of a new coin named the solidus. For over 800 years, the
solidus served as a global currency, circulating from China to the British Isles and from the Baltic
Sea to Ethiopia.
Byzantine
laws regarding monetary matters were very strict. Before someone was accepted
into the bankers’ guild, the candidate needed sponsors. These people
had to provide a character reference. The authorities wanted to be certain
that the candidate would never counterfeit money. Anyone who violated these
rules had their hand cut off.
It is an amazing historical fact that the Byzantine
Empire flourished as the center of
global trade for 800 years. During this period, there was not a single
devaluation or any amassing of debts. Neither in antiquity nor in modern
times has anyone else set such an example. Through its money, Byzantium controlled
both the civilized and uncivilized world at the time. This outstanding
phenomenon came to an end when Emperor Alexius Comnenus,
who had high gambling debts, was forced to devalue. The Turks marched in 200
years later, and the splendor was over.
Another
outstanding example of the success of standardized gold coins was the gold
dinar of the Arabian Empire. At its peak, this empire extended from Bagdad to
Barcelona.
The rise of the Italian city-states like Florence,
Siena, Venice
and Genoa was
only made possible thanks to a new gold currency, the Florentine fiorino d’oro.
A stable, reliable gold currency spurred an upswing in trade and promoted
prosperity in the Italian city-states and broad areas of Western
Europe.
Gold as money formed the economic basis of the Renaissance. Cultures thrive
only when prosperity prevails, not when people are poverty stricken. The
power and the natural reliability of gold, in turn, brought mankind to a
higher level of civilization.
In their
great wisdom, the founding fathers of the USA stated in the American
constitution that only gold and silver should be considered legal tender. The
concept of paper money and a central bank were a horror for them. Today, all
of this is ignored and viewed as anachronistic.
The 19th century gold standard, the
highest monetary achievement of the civilized world
The gold
standard was neither conceived at a monetary conference nor the brainchild of
some genius. It was the result of centuries of experience. Great Britain
was the architect. At the height of the gold standard at the beginning of the
20th century, there were about 50 countries, all of them leading
industrialized nations, which participated in the gold standard. It was one
big clearance community, and it worked.
In his book Währungen am Scheideweg(3) (Managed Money at the Crossroads – The European
Experience), Professor Melchior Palyi wrote in
1960:
“For the first time since Rome’s
prime did the civilized world succeed in creating a monetary unit. The
commercial and financial integration of the world was achieved without the
help of a military empire or a dreamy utopia. In theory and in reality, this
monetary unit was accepted and recognized as the only rational currency
system. Due to the automatic mechanism and the discipline to which the
monetary institutions were tied, fluctuations in the exchange rates were very
limited if not altogether impossible. This was the incalculable advantage of
a gold currency.
Capital could
be used for short-term as well as long-term transactions. Trade and industry
were able to plan ahead. Especially the automatic mechanism and the rules of
decent behavior in monetary affairs observed at the
time liberated the value of money from the impact of governments’
whims. They substantially stabilized it on a worldwide basis. Despite all
assurances by the monetary reformers, no reasonably equivalent replacement
has been found in the meantime.”
Economist
Ludwig von Mises wrote in his book Human Action4):
“The gold standard was the world
standard of the age of capitalism, increasing welfare, liberty and democracy,
both political and economic. In the eyes of the free traders its main
eminence was precisely the fact that it was an international standard as
required by international trade and the transactions of the international
money and capital market. It was the medium of exchange by means of which
Western industrialism and Western capital had borne Western civilization into
the remotest parts of the earth’s surface… and creating riches
unheard of before. It accompanied the triumphal unprecedented progress of
Western liberalism ready to unite all nations into a community of free
nations peacefully cooperating with one another...
The gold
standard is certainly not a perfect or ideal standard. There is no such thing
as perfection in human things. But nobody is in a position to tell us how
something more satisfactory could be put in place of the gold
standard.”
Before Alan
Greenspan5) 6) sold his soul, he described the gold standard as promoting
prosperity and freedom.
According to
him at the time, only this monetary system could prevent the chronic deficit
spending of the welfare state and the recurrent speculative excesses of the
financial world that result in depressions. He believed that gold and economic
freedom are inseparable, that the gold standard is
an instrument of laissez-faire and that each implies and requires the other.
A true division of labor economy cannot exist
without gold.
The era of
the gold standard during the 19th century was the golden age of the white
man, as well as Japan.
During this period, after Napoleon, there were only seven wars of any
consequence.
Post-Napoleonic wars in the 19th century
1855 Crimean
War
1861-65 American Civil War
1866 Austro-Prussian War, North German Confederation
1870-71 Franco-German War
1877-78 Russian-Turkish War, Congress of Berlin
1894-95 Sino-Japanese War
1900 Anglo-Boer War in South Africa
And furthermore: There was no terrorism of the scope we know today.
Assertion
I assert that
if the gold standard had been maintained and if the warring nations had kept
on observing the rules of the gold standard, World War One would not have
lasted very long at all. Because of the automated mechanism and the
prevailing rules of decent behavior at the time,
financing the war on credit in a Keynesian fashion would not have been
possible. (Parenthetically, Swiss historian Jacob Burckhardt describes Keynes
as one of the great destructive forces in world history, along with Karl
Marx.) Soon after the onset of World War One, the moment came when the world
turned to monetary fraud. Political pressure to finance the war by issuing
bonds made it impossible to pursue a sane monetary policy and drove the
currencies to ruin. Without deficit financing, the war would have lasted for
6 months at the most. But without the discipline of a gold-backed currency,
it went on for 4 1/2 years. The world lay in ruins, and millions of young
people, indeed an entire generation, were lost on the battlefields.
The demise of the gold standard topples
the old world order
The
catastrophe of World War One also signified the passing of the old world
order. Stefan Zweig’s book Die Welt von Gestern7) (The World of
Yesterday) describes how comfortable the world was before the war. Financing
the war had a particularly ruinous effect on Germany, the country with the
most robust and thriving economy at the time. The Reichsbank
financed a large part of the war expenditures on a short-term basis, i.e. not
with long-term War Loans like the British. This fact, in addition to the
Treaty of Versailles and unreasonable reparation payments, led to
hyperinflation, to the destruction of the middle class and, finally, to
Hitler. It thus set the stage for World War Two. Look at what the shortsighted socialists have made out of the economic
miracle with their welfare state: a lamentable Germany.
The monetary tragedy of the 20th century
The return to
the gold standard after World War One was a fait accompli. But it lacked
wisdom and conviction on the part of those in charge. At the Conference of Genova in 1922, the gold exchange standard was
introduced.
Please note
that it was not the gold standard that was reestablished,
but rather the watered-down gold exchange standard that was launched. This
meant that, apart from gold, the central banks could also dollars and pounds
(i.e. the currencies of the triumphant nations) as reserves. Suddenly,
dollars and pounds were equivalent to gold. That was inflationary because
dollars and pounds were now accounted for twice: first in the country where
they were issued, and second in the country that held them in reserve.
Furthermore,
it should have been obvious that these paper currencies were in no way immune
to losses in purchasing power. Therefore, they could not be lasting and
generally valid yardsticks. Gold always retains its value – paper
currencies do not. One of the most catastrophic decisions in monetary history
also occurred when despite the emergence of inflation in the meantime,
Winston Churchill, as Britain’s
Chancellor of the Exchequer, chose to maintain the gold parity at the same
level as it had been in 1914 instead of devaluing the pound. The Fed, facing
a mild economic downturn in the USA in 1927, began providing
large amounts of liquidity to the banking system. Moreover, it wanted to help
out the Bank of England, which was losing a lot of money at the time because
fixed income investments in the USA were more attractive. In
order to lower the interest rate level, the Fed thus pumped even further
liquidity into the system. This money eventually made its way to the equity
markets, and the situation got out of hand in 1929. When the authorities
decided it was time to stop the boom, it was already too late. The USA’s
economy collapsed and dragged the world into the Great Depression of the
1930s. To this very day, the proponents of planned economies blame the gold
standard for this debacle. But there was no gold standard anymore. If there
had been, it would have worked at the time.
Central banks, banks and wars
When the gold
standard was abandoned, central banks were the last barrier to rampant money
creation, as long as they were able to maintain their independence. In the
meantime, however, we have learned from bitter experience just how
ineffective these so-called keepers of stability have been. Central bank
independence did not turn out how it was intended to be. Central banks became
compliant pawns of the governments. Indeed, it is precisely the central banks
and the banking system that, through their creation of credit, have made
deficit spending and war expenditures possible, and even promoted them in
many instances. In his book Debt and Delusion8), British economist Peter
Warburton places most of the blame for the deterioration of economic and
financial policy since the early 1980s on the central banks. There are no
golden brakes anymore.
The Federal Reserve System
The most
ominous and threatening event in central bank history was the establishment
of the Federal Reserve System in the USA in 1913. The Bank of England
and Germany’s
Reichsbank served as a model. If you do not
appreciate at the moment why I view the foundation of the Fed as ominous, I
advise you to read the book The Creature from Jekyll Island
– A Second Look at the Federal Reserve System by G. Edward Griffin9).
Under the pretext of protecting the public against bank crashes and
maintaining a stable value of money, the US Fed (which is not federal at all,
but rather very private) is a cartel that is designed to protect its members
against unwelcome competition and, in the event of losses, to pass these on
to taxpayers. Its foundation flies in the face of the American Constitution
envisioned by the founding fathers. Presidents like Thomas Jefferson and
Andrew Jackson were always against the establishment of a central bank. It
came into being in a very devious manner, as the Federal Reserve Act was
pushed through Congress just prior to Christmas of 1913, when most delegates
were already at home with their families. Its foundation violates the American
Constitution, which states that only gold and silver should be considered
legal tender.
Mr. Griffin
recommends abolishing the Federal Reserve System for the following reasons:
The Fed is
incapable of achieving the goals it has set for itself, namely maintaining a
stable value of money. Since its foundation, the value of the dollar has
fallen by more than 95%.
It is a cartel that violates the public interest.
It is an outstanding instrument for promoting exorbitant pricing by the
banking system.
It creates highly unfair taxation.
It encourages and abets wars.
It destabilizes the economy.
It is an instrument of Totalitarianism.
The state, or more precisely, the
welfare state
Economist
Wilhelm Röpke, one of the men behind Germany's
economic miracle10), once said: “One can venture the claim that
governments very rarely had complete control over their currency without
abusing it. In today’s age of the welfare state, the probability of
such abuse is greater than ever before.”
Today the
gold standard is needed more than ever, for we all know from bitter
experience that politicians cannot be trusted. The current political
establishment will therefore stubbornly resist any attempt to introduce a
gold-backed currency because such a currency would make it impossible to
maintain today’s welfare state. The welfare state’s existence is
predicated on government deceit of the citizens since it bears the most
responsibility for the eroding value of money.
The unfortunate decisions made at Bretton Woods in 1944
The world had
not learned anything at all. At the end of World War Two, it was decided to
introduce the gold-dollar standard. The USA was thus granted the
appalling monopoly to settle its debts with paper money it printed itself,
which Charles de Gaulle referred to as the exorbitant privilege. Nobody could
have resisted such temptation. A direct result of this was the inflation of
the 1970s.
I ask you to
consider the fine points: After World War One, we went from the gold standard
to the gold exchange standard with dollars and pounds. Then after World War
Two, we then proceeded to the gold-dollar standard. The pound had lost its
previous stature in the interim and was no longer suitable as a reserve
currency. As a sign of the USA’s
growing economic power, apart from gold the dollar remained the world’s
only valid reserve currency.
When
President Nixon unilaterally abandoned this arrangement on 15 August 1971, it
was tantamount to the bankruptcy of the USA. The era of floating exchange
rates began in 1973. That fully opened the floodgates for money creation,
credit expansion, deficit spending and speculation. As far as the ominous foundings of the IMF and the World Bank are concerned, we
don’t have time to discuss them in depth today. Suffice it to say that
there is no doubt that both institutions encouraged and supported Socialism
around the world.
Today’s international order as a
consequence
In a speech
on 7 August 2002, President George W. Bush said the following: “There
is no telling how many wars it will take to secure freedom in the
homeland.” With this comment, Mr. Bush announced that there might not
only be a war against Iraq,
but many wars around the globe. He did not define when a war would be
considered won or lost. This means these wars may continue indefinitely. Once
again, they will be financed by deficit spending and through the banking
system. This would not be possible under a gold standard.
I will now
take a closer look at how the USA
will be able to pay for these wars. In principle, the USA is
bankrupt. The trade balance deficit is approaching 600 billion dollars, the
budget deficit exceeds 500 billion dollars, and its foreign debt is enormous.
The USA has
indeed already been bankrupt since 15 August 1971. That was the day America escalated
its war on gold. Not unlike a banana republic, the USA defaulted on its obligation
to redeem dollars for gold. If you are bankrupt, you theoretically should not
be able to wage any wars. Under the discipline of the gold standard, it
certainly would not be possible. Despite this, however, the USA can wage
war and simply pay for it with its unbacked paper
money, with fake money so to speak.
Who, then,
actually pays for these wars? The answer is simple: We all do! It was the
same in the case of Kennedy’s and Johnson’s Vietnam War. The
world helps to finance the deficits, and the Americans wage the wars. That is
ultimately the disgraceful result of abandoning the gold standard. But nobody
notices, or is willing to admit it. That’s how it is: We are all partly
to blame.
The 20th century and the onset of the
21st century
Contrary to
the 19th century – with its solid and inflation-free growth, notable
currency stability and relatively small number of wars – the 20th
century was marked by inflation, hyperinflation, currency and trade wars,
waves of speculation and military conflicts. The 20th century also brought
two world wars, hundreds if not thousands of local wars, hundreds of millions
of casualties, wholesale genocide, mass migration, worldwide monetary
erosion, economic ruin, gigantic slums, the Aids epidemic and, ultimately,
the decline of civilization.
Why are there wars?
Among the
various motivations for international disputes that have ultimately led to
war, economic reasons have undoubtedly been the most significant – from
the primeval struggles for hunting territories, pastures, salt mines and
fertile valleys, to the predatory attacks and conquests of the seafaring and
trading nations, all the way to modern battles for living space, sales territories
and, the most important motivation of all, access to natural resources.
However, domestic political problems have also played a large role. Wars have
frequently been started to divert attention from problems on the home front.
In the Middle East, both aspects have been
important to the Americans, namely:
Control over
the oil resources of the Middle East
Distraction
from the disastrous condition of the US financial system
Saddam
Hussein was only a pretext. Let’s not forget that the USA had previously built him up and supported
him as a buffer against Iran.
There is one
more reason, however, and that is the unbelievable arrogance of the US
government. But now the arrogant leaders in the USA are feeling the backlash.
First this is a war that can’t be won, and second it is doing even more
damage to the dollar. Wars have always undermined the purchasing power of
currencies. Whereas a gold coin from the time of Alexander the Great still
shines as it did then, paper currencies are destined to revert eventually to
their intrinsic value, and that is nil.
The Germans
know a thing or two about that. They suffered a total loss after World War
One, another total loss after World War Two, and were ultimately admitted to
the European Monetary Union, thus accepting the euro as their currency. And
this all happened in less than a century.
Gold is freedom
Not only is
there a correlation between gold-backed currencies and war, but also between
gold-backed currencies and freedom. In a famous essay entitled Gold and
Economic Freedom5) that current US Fed Chairman Alan Greenspan wrote in 1966,
he said the gold standard promotes prosperity and freedom. When we recall
that one of the first official acts of Lenin, Mussolini and Hitler (and, by
the way, Franklin D. Roosevelt)
was to forbid the private ownership of gold, this relationship becomes clear.
Even now, the price of gold is still manipulated each day and kept
artificially low. Those in power want to maintain the fictitious status of
the dollar, at least for as long as possible. In my book Gold Wars11), I
described this manipulation.
Why is gold being manipulated?
Gold is
indeed being manipulated each day by a clique of reckless financial
wrongdoers. The following chart shows the gold price movements and manipulation
over a one-day period. You can clearly see what is happening here.
Normally, the
price of gold rises in Europe, but as soon as the COMEX opens in New York it is driven
downward – more on some days, less on others. And this takes place
without regard to the harm, and by that I mean the economic damage, that it
causes throughout the world.
Why are these financial wrongdoers
interested in manipulating gold?
In each and every discussion about
the future of gold and its price, one thing needs to be clearly understood:
GOLD IS A POLITICAL METAL.
And this is
so for the simple reason that given its historical role as money, gold just
isn’t compatible with the modern financial system. Up to 15 August
1971, there was never a period in history during which no currency was linked
to gold.
The
world’s history of currencies is full of examples of devaluations, coin
clipping and bankruptcies. Yet it was always possible to switch to other
currencies that were backed by gold. But if you disregard the Swiss franc,
this has no longer been possible since 1971.
All of the
economic, monetary and financial catastrophes of the past 30 years can be
traced back to this event.
Today’s
system of unbacked paper money is still very young.
It relies solely on faith – faith that the debts upon which it is based
will be repaid someday.
A single,
one-off event that could shake this faith, and thus the foundation of the
financial system, is a robust upsurge in the dollar price of gold.
That is the
entire reason why gold is manipulated each day.
But we know
from the history of the Gold Pool in the 1960s that gold cannot be
manipulated endlessly. At the time, the central banks tried to fix the price
of gold at 35 dollars an ounce. The Gold Pool fell apart on 17 March 1968,
and the entire pitiful experiment became the object of ridicule.
Gold is very
cheap today because the governments of the world tamper with its price on a
daily basis.
Where do we stand today? In a world at
war and in crisis
- We are in the midst of a global currency
and devaluation war.
- The world’s reserve currency, the
dollar, is weak because of the USA’s alarming
financial situation – more than 34 trillion dollars of debt, 200
trillion dollars of derivatives and some 10 trillion dollars of obligations
outside of the official government accounting. (And just think, in 1997
there were fears that the global financial structure would collapse due
to a single hedge fund, Long Term Capital Management, with total assets
of 3 billion dollars.)
- The money supply is increasing
dramatically in the USA
and worldwide.
- The stock markets currently resemble
casinos; they are overvalued and dangerous. The Dow Jones Index is
manipulated each day by the Working Group on Financial Markets
(established in 1987 by President Ronald Reagan). There are no free
markets anymore. The insiders are getting out.
- We face negative interest rates (i.e.
inflation exceeds interest income), which are bad for investment and the
economy.
- There is a deficit between gold
production and demand – central banks have loaned out 1/3 to 1/2
of their gold. The gold is gone. Panic could ensue if people realize
that gold is the only safeguard of monetary value and that a large
portion of the central banks’ gold has been sold.
- The mountainous debt has reached
historically high levels worldwide. This will place an onerous interest
burden on the young generation and may be impossible to finance. It
could result in panic or might be dealt with through inflation.
- The current erosion of money is catastrophic
for wage earners and retirees. The Middle Class is being squeezed. A
billion people around the world live in poverty stricken areas. Soon,
one out of every three city dwellers will live in slums. Such conditions
will promote the spread of radicalism. Hate is growing.
- The global economy will be in a
Kondratieff winter over the next 10 years. Humanity has managed to
overcome every crisis up to now, but given the current means of monetary
degradation, it will not get through this crisis without serious
consequences.
- Political confusion is on the rise. The
geopolitical situation has never been so bad. A coup in the Kingdom of Saudi Arabia could, by itself,
have a disastrous impact on the flow of oil and the global economy.
At this
point, allow me to provide a quote from a speech given in Washington D.C.
in 1948 by Congressman Howard Buffett, father of the most successful investor
of all times, Warren Buffett:
“Because of our economic strength,
the paper money disease here may take many years to run its course. But we
can be approaching the critical stage. When that day arrives, our political
rulers will probably find that foreign war and ruthless regimentation is the
cunning alternative to domestic strife. That was the way out for the paper-money
economy of Hitler and others... For if human liberty is to survive in America, we
must win the battle to restore honest money. There is no more important
challenge facing us than this issue – the restoration of your freedom
to secure gold in exchange for the fruits of your labors.”
Ladies and Gentlemen, these are the subtle relationships between freedom,
money, intellect, war, peace and gold.
Ladies and Gentlemen, I believe I have now provided sufficient reasons for
the necessity of a healthy, stable currency based on gold. It is the only
solution! We must go back to honest money, back to the gold standard.
Or as Otto
von Habsburg once said: “Ethics and morality are still the safest
approach to take in all fields
In
conclusion, I will therefore allow two other gentlemen with a renowned grasp
of world affairs to speak out on the topic of a gold-backed currency. The
internationally recognized investment consultant Harry Schultz has given us
one of the best definitions of the gold standard: Standards: (gold and other)
I have written several times in the last
36 years and I want to restate this principle with force: I am pro-gold
regardless of the price! I don’t fight for gold in order to make a
profit on gold shares, bars or coins! Gold is important for far more
important reasons and I would be embarrassed to promote gold only for
monetary gain. Gold is the essential linchpin for our individual (not group
or nation) freedom. Gold belongs to the monetary system as a governing
factor. We belong back on the gold standard. I used to compromise and say a
quasi-gold standard will probably do, a modified Bretton Woods version. And that may be what will evolve,
but in my view we should fight for a pure gold standard, the old-fashioned
form, because it worked! And not just for fiscal reasons! It forced nations
to limit their debt, spending and socialist schemes, which meant sound behavioral habits were formed
around those limitations, and those habits rubbed off on everyone. People
were more honest, moral, decent, kind, because the system was honest and
moral. Cause and effect. Today we have cause and effect of the opposite
standard: no limits on what governments can do, control, dictate;
no limit on government debt, welfare or socialist schemes. There is no
governor on the government.
This habit
rubbed off on the public, causing them to go into debt, lose respect for the
system and morality. The effect brings us more divorce, fraud, crime,
illegitimate births, broken homes. When the money of any country loses its base/backing
there is no standard for any behavior. Money sets a
standard that spreads into every area of human activity. No paper money
backing, no morality. That is why gold coin money worked so well and why the US moved into
paper money very slowly, carefully, keeping the paper dollars backed 100% by
gold. But slowly, like slicing a sausage, that backing was removed in stages,
‘til now there is none. The effect of this cause is all around us.
Violent films reflect violent society reflect no respect throughout society.
Layer by layer, we are corrupted when money loses certainty. Today’s
stock market bubble is part of the scene as will be tomorrow’s
mega-crash and mega-recession. Big Brother was made possible through the
absence of automatic controls and loss of individual freedom via
non-convertible currency. So, pass the word. Fight for gold. Not for profits,
though they are helpful and help us fight for individual freedom, but for a
future that returns to sanity in various standards. If we have a gold standard
we get a golden human standard! The two are intertwined. They are the
ultimate cause and effect. Gold blesses.”
Charles de
Gaulle, President of France, gave his country the greatest gift he could
offer: He restored France’s
confidence.
On 4 February
1965, he said::
“The time has come to establish
the international monetary system on an unquestionable basis that does not
bear the stamp of any country in particular. On what basis? Truly, it is hard
to imagine that it could be any other standard than gold. Yes, gold whose
nature does not alter, which may be formed equally into lingots,
bars or coins; which has no nationality and which has, eternally and
universally, been regarded as the unalterable currency par excellence.”
I thank you!
Ferdinand Lips
Bibliography:
1) Lips, Ferdinand, Die Gold-Verschwörung (Gold Wars), Rottenburg,
Kopp Verlag, 2003
2) Lips, Ferdinand: Das Buch der Geldanlage
(The Guide to Investments), Düsseldorf: Econ-Verlag,
1981
3) Palyi,
Melchior: Währungen am Scheideweg
(Managed Money at the Crossroads – The European Experience), Frankfurt
am Main, Fritz Knapp Verlag,
1960
4) Mises,
Ludwig von: Human Action, New Haven,
CT: Yale University Press, 1949
5) Greenspan, Alan: Gold and Economic
Freedom, reprinted in Ayn Rand’s Capitalism:
The Unknown Ideal, New York,
NY: New American Library, 1967
6) Parks, Lawrence: What does Mr.
Greenspan Really Think?, New York:
Foundation for the Advancement of Monetary Education FAME, 2001
7) Zweig, Stefan: Die Welt von Gestern (The World of Yesterday), Stockholm: Bermann-Fischer
Verlag, 1944
8) Warburton, Peter: Debt and
Delusion, Middlesex, England: Alan Lane The Penguin Press, 1999
9) Griffin,
G. Edward: The Creature From Jekyll Island – A Second Look at the Federal Reserve
System, Westlake Village,
California: American Media,
1994
10) Röpke,
Wilhelm, Jenseits von Angebot
und Nachfrage (Beyond Supply and Demand), Erlenbach/Zurich, Eugen Rentsch Verlag, 1961
11) Lips, Ferdinand: Gold Wars –
The Battle Against Sound Money as Seen From a Swiss Perspective, New York,
NY, Foundation for the Advancement of Monetary Education FAME, 2002
12) Habsburg, Otto von: Ethik und Moral des Geldes (The
Ethics and Morality of Money), Frankfurter Allgemeine
Zeitung, printed in the supplement Geist und Geld (Mind and Money) on 12 April 1988
13) Lips, Ferdinand, Die Gold-Verschwörung (Gold Wars), Rottenburg,
Kopp Verlag, 2003
14) Rueff,
Jacques, The Monetary Sin of the West, New
York, NY,
Macmillan, 1972
„Gold Wars: Military Conflicts, Gold and Currency Crises“, Speech
by F. Lips, University St. Gallen, 24 June, 2004
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