09 August 2010

Why the Official Antipathy to Gold and Silver? The Second Oldest Profession

Every so often someone asks, 'Why do the government and the banks manipulate the price of gold and silver?'

There is a great deal of circumstantial evidence to support this, even some blatant quotes pertinent to the topic from the likes of Volcker, Greenspan, and Bank of England governor Eddie George. Of course it can all be denied. People can deny anything, even well known historical events with many witnesses, if it suits their bias and purposes.

But putting aside the operational aspects, what is the motive?

Most recently a correspondent from India asked the question 'why do the banks wish to control silver from the short side? Why would they not blow it into a bubble like they do with stocks and make their profit there? Why do the banks wish to hold these prices down and make people think badly of silver and gold which we here value so much?'

When asked this, I will usually attempt some explanation that begins with the fact that the banks involved are the Primary Dealers for the most part, and very involved with the Federal Reserve and the government on a variety of levels in the issuance and arbitrage of official US debt.

The motive therefore involves aspects from an 'official' monetary perspective. It will often include a reference to Gibson's Paradox, a paper by Larry Summers involving the price of gold and its perceptual relationship with the long end of the curve. It might include Volcker's and Greenspan's comments about the price of gold casting a negative light on the stability of the currency if it rises too high or too quickly. I may even get into the Second Bank of the United States, and Andrew Jackson's populist role in exposing its frauds, and refusing to renew its Charter in favor of constitutional money.

But if I am ever asked about this in the future, I can think of no better, no more concise statement of a possible motive for the manipulation of gold and silver than this:

“The central economic problem plaguing this country since 1913 has been the presence of the Federal Reserve System. Without the Federal Reserve System’s debt-currency scheme having effectively supplanted the constitutional monetary system based upon silver and gold, it would have been impossible - not simply improbable, or difficult, but impossible - for politicians in the public sector and speculators in the private sector to have amassed the staggering level of unpayable, unconstitutional, and unconscionable debt that now bears down upon this country.”

Dr. Edwin Vieira, Jr., Going to the Roots of the Problem

It's enabling the fraud, always and everywhere, and the power obtained in controlling the supply and issuance of money. As Lord Acton noted,
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the Banks."

There are those who are involved in productive labor, and those who wish to unproductively tax it. It is an old story with deep roots in history.

And once again, the government and the financiers seem to have formed an unholy alliance to harness the real economy with excessive, unjust, and unproductive taxes for the private benefit of a privileged few, protecting and promoting their schemes when they win, and covering and subsidizing their losses when they do not. In either case the money is coming out of the real economy, and like a paraiste is starving it of its vitality.

So there is your motive, from what might be called the second oldest profession. Find out what people need to have, and then seek to control it to obtain your wealth by exacting a tax on it, but without having to deliver anything for it, a mere exploitation of informational and procedural advantage.

There is a difference between amassing capital, building a business, and assuming the risks for its success and failure, and this modern form of banking which is nothing more than an enormous tax on the productive economy granted by a corrupted government that turns a blind eye to fraud and abuses. And when its schemes go wrong, it obtains subsidies and relief from its partners in government.

As Andrew Jackson noted of the Second Bank of the United States, the predecessor to the Fed which came back into being 80 years after:
"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out."