Gary North essay

Gary North excerpts:

Gold’s independence from the fate of governments points to a political truth that governments despise: governments are not the source of the value of gold. To the extent that gold is money, gold testifies against the sovereignty of the State in the realm of money. It testifies to the sovereignty of consumers in a free market. The free market, not the State, is the primary source of gold’s exchange value.

This means that consumers can escape from the State’s anti-consumer policies. They can buy gold. This provides them with international money, black market money, and “hoard it and spend it later” money. It provides one group of citizens with the personal escape hatch from the effects of government power-seeking. Which group? Political skeptics who do not trust the government’s money.

A rising price of gold is like a trip-wire alarm that announces: “The politicians are at it again. Bolt down the furniture.” It is a signal, published in the newspapers, that there is something untrustworthy about the central bank’s monetary policies.

Politicians are guided by the short run. Central bankers take a longer view than politicians, but ultimately, they are the handmaidens – if that’s the correct metaphor – of the politicians. They do what they are told during a political crisis.

Just a note if I may regarding the last excerpt posted above: I actually think it is the other way around. Just because politicians and policies are transitory whereas banks are permanent institutions and some banking families are timeless).

Other than for a few disagreement with Gary Norths assessment, I thoroughly agree that gold is a political metal. Gold is anathema to a Fiat monetary system as it imposes discipline on the authorities, constrains their actions and imposes accountability as, much to their regret, the USA found out at the end of the 60s.


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