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A Response To
Pegging to Gold and a 100% Gold Standard

Douglas V. Gnazzo
Jun 21, 2005

Introduction

Steve Saville, in his weekly market update [for his subscribers] offered some commentary on Paul Kasriel's remarks recommending that the Chinese should peg their currency to gold, rather than to the United States Dollar. According to Mr. Kasriel, China would achieve better long-term price stability or what he calls purchasing power, if the Chinese renminbi was pegged to gold rather than the U.S.$.

Mr. Saville's basic commentary is that Mr. Kasriel's gold pegging idea is a very bad idea. Mr. Saville states that over very long periods of time, gold does retain its purchasing power, "but over shorter time frames it experiences enormous swings in its purchasing power based on worldwide swings in confidence in financial assets." He then offers,

"For example, gold's purchasing power increased by around 1000% during the 1970s and then fell by more than 80% between 1980 and 2001. Also, a currency that was pegged to gold would experience wild swings in its exchange rate over short periods of time in response to any news that caused the gold price to spike higher or lower."

With all due respect to Mr. Saville, I don't think he understands what the gold standard was and wasn't, what the gold exchange system was and wasn't, the differences between the two, and even more importantly that neither the gold standard nor the gold exchange standard were the same as the original hard money system of the Constitution.

Why do I say that. Well, for one, what does the gold price mean or refer to? Priced in or by what?

Hard Money of the Constitution

The original hard money system of the Constitution was one where a defined weight of silver was the standard, and the monetary system was silver and gold coins, that were exchanged one for the other at the rate of 15 to 1. There was no paper money in the original Coinage Act of 1792 [click to view the Act - NESARA-The Coinage Act of 1792.

The definition of a dollar was clearly expressed in the Coinage Act of 1792, it being:

"DOLLARS OR UNITS - each to be of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver." [coinage act of 1792]

This is the critical point that all who speak on monetary matters do not seem to get. They define the dollar as being equivalent to the present dollar bill or Federal Reserve Note. A dollar bill and the dollar of the Constitution are two entirely different entities.

One is the original hard money silver standard of a specific weight of silver, the other is a piece of paper, a bill of credit, an i.o.u. or promise to pay, an obligation. A silver dollar was not a promise to pay or an obligation, it was the means of making payment, it was payment of the obligation, not a receipt for it.

The Fraud

If one follows the various coinage acts of our monetary history in a chronological order, one will find that our monetary system did not evolve, it devolved. It went from honest weights and measures of real silver and gold coins, to eventually paper money that was backed or pegged to silver and gold.

At no time in our history was the backing of paper money greater than 40%. Which meant what, that 40% of the money was legitimate and that the other 60% wasn't backed and thus was a fraud? Which 40% was real and which wasn't real? Or was and is the whole thing a fraud?

Fractional Reserves

This is what is called fractional reserve backing, which in turn allows for fractional reserve lending, the lending of that which isn't on reserve, that the banker doesn't really have on deposit.

This allows for a dishonest monetary system. This is why the dollar has lost 95% of its purchasing power since 1913. If I were Mr. Saville, I would be a bit concerned with that loss of purchasing power.

To take a piece of paper and print numbers on it and to say, look, this dollar bill is now our money, it was once backed by gold and silver, but that is not necessary any more, just accept it at face value and all will be find, is to completely turn the original monetary system of our country upside down.

Now black is white and white is black. And furthermore, even to have a paper currency backed by gold, was a far cry from the original hard money system of silver and gold coin.

What Is a Dollar

Now we price gold in "dollar bills", it takes x amount of dollar bills to buy an ounce of gold. Gold is "worth" $450 an ounce - what rubbish, what double-speak, what Keynesian brainwashing.

The constitutional definition of a dollar is a weight of silver, the Silver Dollar. There has never been a constitutional amendment to change it, thus it still stands, it is the Supreme Law of The Land, regardless if the government and people follow it or not.

Gold and silver were not originally "priced" in dollar bills of paper money. The dollar was a weight of silver that could be exchanged for a weight of gold, at the ratio of 15 to 1.

The moneychangers have done just what there name says - they have changed the definition and meaning of money, without a constitutional amendment, which means that any such changes are unlawful, as they are not in pursuance of the Constitution.

To price gold and silver according to so many paper fiat dollar bills is to accept the unacceptable, it makes a mockery out of our Constitution, and assumes that all the people are stupid and do not see the crooks that are transferring wealth from the people to themselves.

Stop Accepting the Unacceptable

Even when Roosevelt blatantly confiscated all the people's gold, they obeyed like sheep. That was without a doubt against the Constitution, as it was the confiscation of private property without due process. We The People must stop accepting the unacceptable.

The Constitution should either be adhered to, or amended by due process of law. It should not be ignored and just forgot about.

So I agree with Mr. Saville that pegging the Chinese renminbi to gold might not be the best of ideas, but not for the exact reasons that Mr. Saville states.

This whole backing ideology is completely wrong and alien to honest money. Perhaps this is what he was alluding to when he said,

"One of the most important things to realize is that any half-baked attempt to have an official link between a national currency and gold will be doomed to fail because sound money and fractional reserve banking are incompatible."

Why does one want to back a paper currency with silver or gold? Isn't it because the silver and gold provides some type of backing or stability? Isn't it because the silver and gold make the paper dollar appear to be more sound, as silver and gold are sound? Hard money is sound. Paper fiat is not.

If the silver and gold is good enough to back the money, why not simply make it the money, as the Constitution did. Anything else is a half-baked attempt.

Anything else is second best, at best, and as our current dollar exemplifies, perhaps much, much less.
But does this mean we should just throw in the towel, and accept the unacceptable like sheep? I think not.

Honest Money

The reason gold and silver has been placed under attack is that they are afraid of silver and gold. Who is they? The banksters. The elite international collectivists.

Why? Because it is honest money. It cannot just be created out of thin air. It must be mined by hard labor from the bowels of the earth. It is dangerous back-breaking work, it's called labor. It's real. It's honest.

Only real gold that exists can be leant out, which means it first must be saved and be on deposit. This destroys the banksters fractional reserve game of lending that which they do not have or have earned.

There is nothing wrong with lending honest money that has been saved and is in the savings pool. What is wrong is to lend money that does not exist, that has not been saved, that only comes into existence by the very act of lending it. This is a vile and despicable thing. This is wealth transference by the elite few.

I have a novel idea for both Mr. Kasriel and Mr. Saville, do some reading and studying of our monetary history. Discover the difference between the original hard money system of the Constitution and the gold standard and the gold exchange standard.

Learn why both the gold standard system and the gold exchanged system were doomed to fail, on purpose - to tarnish the reputation of gold and silver so that people would come to accept the unacceptable, so that the experts such as yourselves not only accept the unacceptable, you pontificate and push the moneychangers exact ruse upon the people. You have become their spokesperson, unknowingly, but that does not change what is.

We have been fooled - deluded. Wake up. Smell the roses. Return to honest money - to Silver and Gold, not to paper money backed by it. Do not accept the unacceptable. Knowledge is power - if used correctly.

Act accordingly. Vote accordingly.

Jun 21, 2005
Douglas V. Gnazzo

Jun 28, 2005 Response To Pegging to Gold and a 100% Gold Standard - Part II Douglas V. Gnazzo
Jun 24, 2005 Response To Pegging to Gold and a 100% Gold Standard Steve Saville
Jun 21, 2005 Response To Pegging to Gold & a 100% Gold Standard Douglas V. Gnazzo

©2005 Douglas V. Gnazzo. All rights reserved.

All other views and comments are invited.

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