In January of 2009, when The Gold Standard Institute was founded, there were very few individuals who truly understood the need for a return to monetary basics, and even fewer who understood what those basics were and the urgent need for their application. For a large part of the 20th Century central bankers had succeeded in giving the appearance to the uninformed of having banished the need for gold forever. Ignorance, myths and misunderstandings with regard to the Gold Standard were, and still are, widespread.
The Institute was founded in the certain knowledge that a change was coming, not only a change of circumstance due to the increasingly untenable status of irredeemable paper currency, but, as importantly, a change in the public perception of the validity of the right of governments to be the sole authorized issuers of money. It should come as no surprise that a monopoly of the money supply inevitably, eventually leads to Monopoly money.
Now, just three years after TGSI’s inception, the demand for knowledge of the unadulterated Gold Standard has increased exponentially. From that inception, to writing Economic Policy in the political realm has come quickly, but then it needed to. The world is fast running out of time.
The purpose of the Institute is very simple: to educate and disseminate the virtues of the unadulterated gold standard. What does the unadulterated gold standard mean? It means either circulating gold (or silver) coins, or that circulating banknotes are redeemable for gold (or silver) coin upon demand – 100% backing. It is only the unadulterated Gold Standard that can permanently constrain the excesses of government. With gold in use as money, the government loses its most coveted yet destructive tool – the ability to inflate away the value of the people’s money. The unadulterated Gold Standard means that all government expenditure has to come out of taxation.
Paper money that is not wholly backed by gold allows politicians to inflate the money supply and, by this means, covertly pay for their vote-buying largesse. This encourages people to vote for the politicians who promise to spend the most. Inflation is not possible under the unadulterated Gold Standard, and people understand that all government expenditure can only be funded by an increase in their own personal taxation. This encourages the far healthier reverse vector of people voting for the politicians who promise to spend the least. The revenue raising limitations of the unadulterated gold standard also ensures that it is very difficult for governments to put the country into debt by borrowing.
“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.” – John Adams
Until 2009 the world had wandered complacently down the path of monetary degradation, seemingly oblivious to the lessons of history. Since the first experiment with paper money was imposed on the people of China in 1024 A.D., the world has witnessed consistent failures. Their collapse reliably leads to wars, sovereign and social failure, wealth destruction and the impoverishment of the middleclass. The grim saying is that there are only two sorts of paper money: those that have collapsed and those that are about to.
The ability to print paper representations of money and to extend artificial credit has seen purchasing power fall precipitously. People who have worked and saved hard all their lives have reached their retirement years only to find that the value of their savings has been eviscerated.
It is no longer possible to exit the current situation without immense pain and suffering, but the longer the inevitable is put off, the worse it will become.
No matter how bad the prognosis, there are still solutions that will allow the ships of state to alter course before their Flat Earth economic policies send civilization sailing over the edge. As politicians become ever more dubious about the wisdom and effectiveness of the strategies of their central banks, so the Institute will become even busier.
We will continue speaking with not only political leaders, but also bankers; we will also continue to encourage laypeople to read and study the articles at the Institute website. Gold is the money of the future; it is also the money of the people and needs to be understood by the people.
Whilst others can offer partial understanding and partial solutions, at this crucial juncture near enough is not good enough. The Gold Standard Institute is the only organization that is able to offer not only a precise diagnosis of the problem, but also workable solutions.
President – The Gold Standard Institute
12th August 2012