Back to Quack Off
The blind leading the blind
(Oct 6, 2008)
we don’t loosen up some money into the system, this sucker could go down,”
– President Bush, White House Summit
DC – Whoa, girl friends, listen up, gather round, shut up, and pour
yourselves another hot cup of Rocket Java. Something’s wrong with our
money, the U.S. Dollar. Something about the definition of our paper money
(and coinage for that matter) is not quite right; something is
What’s missing in the definition of our money, the
Dollar is not “capital.” The U.S. Dollar is not “liquidity.” The U.S.
Dollar is not a redeemable promissory note. The U.S. Dollar is not backed
by gold -- or our GDP, as some economists erroneously argue. The U.S.
Dollar is just a piece of paper with green ink and a picture of a dead
president. You know what: the U.S. Dollar, by
all definitions, is not money. So what is it? What’s missing?
missing is a clear definition for the Dollar. Prior to going off the gold
and silver standard, the U.S. Dollar was defined as X-grains of silver or
Y-troy ounces of gold at a specific purity, say .995 pure. Today, having
gone off the gold standard, the Dollar is not defined, which means that
what’s missing is: the U.S. Dollar has no real
stated value. As soon as the U.S. Dollar was disconnected from
gold or silver and from gold or silver certificates (redeemability as a
promissory note), to being simply a piece of non-backed paper, it lost its
meaning, it lost its definition, its value.
this transformation of our money take place?
Keynesian economists, those who changed the definition of the U.S. Dollar
from being a redeemable promissory note backed by gold to just a piece of
paper, have offered up the erroneous excuse that the U.S. Dollar is backed
by America’s Gross Domestic Product (GDP).
inferring that our GDP can act as backing for the U.S. Dollar is not a
legitimate concept, so let’s examine this lame definition.
promissory note qua “money” is defined as a legal promise to redeem
something, some type of collateral. (Technically, paper money is a
mercantile receipt for a stored good in a warehouse, or a bank.) But
neither the Federal Reserve, the U.S. Treasury, or the U.S. Government owns
America’s GDP, its cars, houses, TVs, or any of your or your neighbors’
private property and, therefore, the Fed cannot print U.S. Dollars for
collateral that it doesn’t own. Let me say that again: you cannot print
promissory notes for items that you don’t own. America’s GDP cannot serve
as collateral for the U.S. Dollar.
attempting to define the U.S. Dollar as a legal piece of paper backed by our
GDP (the sum of everybody’s private property valuation) is an oxymoronic
concept. It is a circular argument, since the concept of GDP – the supposed
Dollar value of America’s commodities and services – already presumes the
existence and, thus, a definition of the Dollar in order to calculate the
GDP in the first place. Think about it. This is an illogical and circular
argument. One cannot define one term, the U.S. Dollar, with another term,
GDP, the latter of which already includes the definition of the first term
that one is trying to define in the first place, i.e., the U.S. Dollar. To
say that the value of the U.S. Dollar is defined as America’s GDP is a
tautological argument because the definition of GDP already presumes
(includes) the definition of what a Dollar is, the very thing you are trying
to define. Once again, the U.S. Dollar cannot be defined as “being backed
by” our GDP.
even if America’s GDP could act as backing for the U.S. Dollar -- which it
can’t, for all the above reasons -- the current U.S. GDP is $15 trillion and
there are some $500 trillion in toxic derivatives floating around in the
market today (thanks to the Fed Reserve central bankers and their Wall
Street buddies). That means the Federal Reserve has issued (or allowed to
expand) U.S. Dollars to the tune of 33 times the level of our current U.S.
GDP, that is, 33 times $15 trillion equals $500 trillion or $485 trillion
more than our current GDP. So the Big Question
is: for what purpose did the Federal Reserve issue (or allow) paper money
and credit that is 33 times the level of our current GDP? Better yet, if
the GDP backs the U.S. Dollar, then what’s backing the extra $485 trillion
floating around in the economy and how does that affect the Fed’s definition
of the Dollar? Why did the Federal Reserve issue (or allow Wall Street
Bankers to create) $485 trillion MORE in U.S. Dollars if U.S. Dollars are
supposedly backed by a $15 trillion GDP?
obvious answer is: so the central bankers, politicians, and their Wall
Street buddies could counterfeit (counterfeit the value of, i.e., inflate)
our non-backed, non-defined U.S. Dollar and enrich themselves through all
sorts of various monetary schemes by which they exchanged newly created
Dollars (since they receive them first) for everybody else’s real goods and
services: e.g., million dollar salaries, bonuses, cars, yachts, multiple
houses (mansions), private jets, vacations, etc. Twenty-five percent of the
richest Billionaires in last year’s Forbes’ Fortune 400 Club were Wall
Street bankers and it took a minimum of $1 Billion to join the Club.
is that the U.S. Dollar is not backed by our GDP, neither in concept nor
reality. The entire concept is false and serves only as a ridiculous excuse
by pseudo-academics in nearly all the Economics Departments of America (and
abroad) to provide themselves with a job in their Fascist Business Model for
So, now we
have answered our initial question regarding,
“What’s missing in the definition of our money, the U.S. Dollar?”
The answer – and, therefore, the problem -- is, as it has been all along: since
the central bankers and Congress have stripped away all gold and silver
backing, the U.S. Dollar has no real defined value. It has no
redeemable backing. It is not “capital.” It is not “liquidity.”
The U.S. Dollar, in concept and reality, is not
real money and has no logical definition as a true medium of economic
exchange. It is simply a piece of paper masquerading as money. It is
nothing but Pulp Fiction.
important. Especially in economics. Note that once you believe the concept
that the U.S. Dollar does not have to be backed by a tangible commodity such
as gold or silver, it is just a short corollary step to the same idea that
subprime mortgages do not have to be backed by a tangible house, or at least
the true value (not 150% of a false market value) of a house. After that,
it’s just another short conceptual step to claim that all kinds of
commercial paper, Treasury Notes, Bonds, structured investment vehicles,
hedge fund derivatives, credit default swaps (insurance on the non-backed
toxic derivatives), and hundreds of other types of cleverly created Wall
Street “investments” also do not have to be backed by anything tangible.
the mistaken idea of the Keynesian Econometricians that the U.S. Dollar does
not have to be backed by gold has inexorably led to the same concept that no
investment paper on Wall Street needs to be backed by anything tangible.
That’s how a $15 trillion GDP economy can balloon (hyper-inflate) into a
$500 trillion (and climbing) economy full of toxic paper trash.
The lack of a gold standard, a real definition for the U.S. Dollar and
all other global currencies, has led to today’s financial market meltdown.
That’s why the 2008 Recession is global.
the gold standard has caused all the following Effects we recognize as
Inflation, Recession, Depression, and Stagflation. More specifically, these
Effects inexorably led to further symptoms including price inflation, high
unemployment, trade deficits and surpluses, a boom-bust business cycle,
large gyrations of stock prices on every global stock exchange, the
reluctance of banks to loan money and other commercial paper to each other
because nobody knows how toxic everybody else’s inflated derivatives may be
(including the holders themselves), and ad economic infinitum.
Dollar is not defined, neither are the toxic derivatives. Non-backed paper
can never be a substitute for gold.
world has mistakenly adopted the concept that paper money does not have to
be a receipt for a tangible commodity, such as gold. One cannot disregard
the laws of Cause and Effect. The Cause of our economic problems -- the
lack of a defined Dollar, i.e., paper backed by gold, and, thus, the lack of
any meaningful measuring stick by which businessmen and everybody else can
logically measure, forecast, and calculate the future prices for commodities
and services according to subjective evaluations of supply and demand in a
free market economy, have been completely wrecked, subverted, and totally
screwed up by the central bankers of every nation who have stripped the
world of a 100% (non-fractional reserve) gold standard.
wild-ass attempt to transform economics into the science of physics by
erroneously applying differential calculus to human actions, the Keynesian
Econometricians with their “targeted inflation” of non-defined paper money
and credit have bankrupted both the science of economics and the U.S. and
our Treasury Secretary Hank Paulson and Federal Reserve Chief Ben Bernanke
and all of their Keynesian Econometricians have defaulted on the basic
concept of “What is the definition of money, the U.S. Dollar,” they are
erroneously trying to “save” the nation and the global economy by exactly
the wrong method: namely, printing up and injecting more non-backed,
irredeemable, non-defined money into the market. They erroneously think
that the reason banks refuse to lend to each other is because there is a
shortage of money, or “capital,” or “liquidity.” Nothing could be further
from the truth. Once again, the reason banks are refusing to lend to each
other and to businesses and individuals is because there is too much
non-defined money, too much non-defined “capital,” too much non-defined
“liquidity” in the market.
more non-defined paper and credit into the market – as every central bank
and government in the world is now doing – is exactly the WRONG action to
take and will create Super Hyper-Inflation of everybody’s currency until
finally, the entire global monetary system must come crashing down.
again, the U.S. Dollar is not “capital.” The U.S. Dollar is not
“liquidity.” The U.S. Dollar is not a redeemable promissory note. The U.S.
Dollar is not backed by gold -- or our GDP, as some economists erroneously
argue. The U.S. Dollar is just a piece of paper with green ink and a
picture of a dead president. The U.S. Dollar,
by all definitions, is not money.
missing is that the U.S. Dollar has no real
value. As soon as the U.S. Dollar was redefined from being a
redeemable gold or silver certificate, to being simply a piece of paper, it
lost its meaning, its definition, its value.
And so have all the toxic derivatives floating around in today’s markets.
since we know The Cause, the solution is very simple: (1) Create a new
U.S. Dollar that is backed 100% by American’s 216 million ounces of gold,
(2) Allow the new gold-backed U.S. Dollar to float alongside the current
Federal Reserve Note until everybody finally dumps the non-backed Federal
Reserve Note – give it a week or two, seriously a year or two, (3) Eliminate
the private Federal Reserve central bank, and (4) Congress should do their
job of re-setting the value of the new U.S. gold Dollar to whatever the free
market says it is and delegate the minting and printing of gold and silver
coins and gold and silver certificates to the Bureau of Engraving and
Printing in the Treasury Department. All U.S. paper money should be 100%
backed and redeemable. Period.
postscript, please note that none of our current market and financial crises
– or Congressional deficits, earmarks, and outrageous future entitlements
that America will never be able to pay -- could have happened if the U.S. had
been on a free market gold standard with a defined tangible value for the
the uncontrolled expenditure of trillions of non-defined Dollars to the discretion of the Secretary of the
Treasury and the private Federal Reserve is criminal. Allowing these
two institutions the authority to
increase America’s national debt by purchasing the toxic trash of Wall Street
is not only NOT the answer to our financial meltdown,
it sets an extremely
dangerous political precedent vis a vis erasing checks and balances between
our branches of government. In fact, the recent authority granted to
the Treasury and Fed Reserve under the $700 Billion Wall Street Bailout Law
is essentially a coup d’etat of the U.S. Constitution and
Bill of Rights, with a concomitant erosion of every individual’s social and
all nations to get back to a real monetary system, gold and silver, and dump
all their non-backed, non-defined Pulp Fiction. It’s not nice to try and
fool Mother Nature. – FM Duck
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