Congress, Remonetize Gold (and Silver) NOW and Save America From a Terrible Fate

I would like to try a little thought experiment. Let's ignore the reasons why they won't do this, instead, let's focus on the “what if”.

The theory my thought experiment will test is that all Congress would have to do is remonetize “the metals” and the forces of the market place would begin to fix all of our problems through a cascade of events. So let's walk through the beginnings of this experiment together.

All I would ask of Congress is to do the minimum, and NOT to worry about the details. Let the free market work out all the details. All Congress needs to do is to pass a law that makes gold and silver legal tender. They do not need to denominate it, they do not need to mint new coins (at least not for a while), and they do not need to tell the market what to do with this new law. It can be as simple as this:

Gold and silver are now legal tender. Gold and silver are currencies and therefore cannot be taxed. Contracts written to be settled in full or in part in “the metals” will be upheld in a court of law. Banks can take in deposits of “the metals”. Labor can be paid for in full or in part by “the metals”. And dual retail pricing shall be allowed.

And then we let the market run with it. What would happen?

Banks: Banks could take in a deposits of physical gold. Let's say I deposit 5 ounces. It doesn't matter where the price of gold goes. Because later, when I go in to withdraw my deposit, I still get back 5 ounces of gold. All of a sudden I have a secure way to store my wealth.

Stores: A store could put dual pricing on items. They will likely be changing the dollar price a lot during the coming inflation, but the “metals price” will remain the same once the metals have found their value. Let's say a flat screen TV costs $2,000, or 1 gram of gold. Or even $1,000 AND .5 grams of gold. (I have been told that dual pricing appeared at gas stations in Las Vegas during the 70's gas shortage. Two prices would be listed on the sign, one for pre-1965 coins and a different one for modern and paper currency!)

Labor: Let's say I'm being hired on during a time of high inflation. My employer probably doesn't have a large stockpile of gold, so I will negotiate a salary of $30,000 + 2 ounces of gold per year. The gold portion of my salary actually acts as a hedge against the dollar portion.

Credit Cards: American Express will have offices in cities where I can go in and deposit a couple ounces of gold with them. It's kind of like a prepaid credit card, but now I can use it on the gold pricing in stores if I want.

Price of Gold: Immediately after the passing of this new law by Congress, the currency arbitrage would begin and gold (and silver) would seek out it's true value with regard to all other currencies. This profit seeking arbitrage would very efficiently find “the price”.

Coins: There are a lot of gold and old silver coins in “the hands of the people” already. And since gold would now be functioning along side all other currencies, it doesn't really matter if you have some before the law or you get yours after the law passes. All things will level out over time. (There will be great benefit if you have some ahead of time, of course.) Eventually, after gold has found it's price and the market has worked out the details, new coins can be minted containing appropriate amounts of gold. Of course there is enough gold in the world to power the currencies of a thousand worlds once it finds it's price. It would be possible to mint a coin containing one atom of gold.

Denomination: This would be for the market to work out. At first there would be issues with grams versus ounces and troy ounces, but that will all be worked out very efficiently.

The point of this exercise is that if a thought can be simple enough for the common man to grasp, it can grow exponentially. I would like to carry this thought experiment into the world of international investment banking and find the benefits therein. But perhaps you can help me with that. For now I want to keep this post short and readable, so I am going to jump right to the articles that lead me to this (THOUGHT!)

The monetization of gold is bound to happen sooner or later. If it happens later, then society will have to be rebuilt from scratch. If it happens now on the other hand, existing wealth can find it's way to a safe haven and society will survive the coming tsunami.

The people need real money. They need a place to store their hard earned wealth where it cannot be eroded away.

All the “fixes” that our leaders are doing now are creating huge problems for the future, they are extremely expensive, they are NOT going to work anyway, and they are simply propping up a bogus system. Here's what I mean:

(High concept alert!) Our system is based on economic abuses that hurt the common man. These abuses fall under a concept that has been around since the Old Testament was written. It is called “usury”. These are the articles that got me rolling on this post.

If Pigs Could Fly – by Rob Kirby (about “The Strong Dollar Policy”)
http://www.financialsense.com/Market/wrapup.htm

The Invisible Hand and the Pox Known as Usury – by Rob Kirby (about usury)
http://www.financialsense.com/fsu/editorials/kirby/2008/1003.html

And those articles reminded me of some I had read a while ago by Jason Hommel. Love him or hate him, he gets the subject of “usury”!

On this one from last June, scroll down to “Why Banning Usury Won't Work” The first part which is a debate with A. E. Fekete is also good and applicable to usury if you are in the mood to read.
http://www.silverstockreport.com/2008/fekete.html

Also from Hommel, Freedom from Usury:
http://www.silverstockreport.com/essays/Freedom_from_Usury.html

And Usury Enslaves:
http://www.silverstockreport.com/essays/Usury_Enslaves.html

(At least read the Rob Kirby articles, even if you skip the Hommel ones.)

So usury is a big part of the problem for the common man. And gold is the solution. The remonetization of “the metals” will curb the abuses of usury and at the same time it will insulate those among the common that would like to be insulated from this MADNESS!

Please help me with this one. I think there is much more to it.

Thanks,
FOFOA