Bill and Friends,

This article appears to address the current system - not a new system. The only material change that you are suggesting is that the government no longer hold precious metals and instead distribute those throughout the private sector via a market mechanism.

The significant change would be to create a level playing field for both sides and a credible threat against excessive money printing or leveraged speculation in metals. Either side would possess the tools to burn the other so similar to detente (military analogy) both sides would be forced to behave themselves.

Example - if the government chose to debase the currency by massive money printing, citizens would rush to get into real assets such as real property or commodities. Vice versa - if the citizens chose to over speculate in the precious metals, by managing a tight monetary policy and conservative budget low inflation rates could flush out the speculators within a relative short period of time as the economic return on paper assets would be much higher.

This approach contrasts with the current system where the Central Banks control both monetary policy and have a lock on a sizeable portion of the world's precious metals supply. Under this scenario there is no party to challenge them. As they over print paper currency they can send false signals into the currency and metals markets by selling massive quantities of gold and silver. The mechanism for the sales is completely NOT transparent so there is no way to even track what the hell they are up to. Thus, they can in the short to intermediate term inflate but curb a speculative metals market and negative market psychology by maintaining a vestige of legitimacy.

I read a great book a while back entitled "The Mechanics of Money" - it was written buy Jacques Riboud and translated to English from French. The author's book was unique in that it discussed how a system of money works - instead of defining what it is. The book was not reduced to describing one certain governmental or banking system but instead described in broader terms the different types of currency schemes and what the real purpose of money was.

I may be way off here but I have always taken money to have two main uses:

1) Efficient medium of exchange and
2) Store of Value

I have never considered it to be a healthy long term tool for use in manipulating the economy. Huge gains in net worth or monetary value thus, should not come from speculation, but instead from savings and investment, or true wealth creation by building a business.

Any other system where the currency is manipulated can result in a horrible misallocation of resources in the republic. I have had several arugments with close friends over the past months because I believe that a huge misallocation of economic resources has occurred over the past five years into the creation of housing in the USA.

Trillions that could have been invested in new biotech startups or advanced technologies have instead been squandered on granite countertops and swimming pools. Having a great place to live is tops, but I find it hard to believe personally that nicer houses create real wealth in our country over the long haul or that the average joe is entitled to that type of lodging. I fear that this huge misallocation of capital and energy may result in a 10-year readjustment cycle - which may never even be purged of the previous excesses, if the Fed continues to manipulate our money system and inflate their way out of another problem.

Sorry for dragging on - but I think it is best to address this one straight on.

Best regards,

BG

BG -

Misallocation of resources into granite countertops and cathedral ceilings isn't the worst of it. Soon, the largest sector of US employment will be healthcare = repairing the health impact of the US style of life, meaning lousy food and lazy living!

I can't imagine the politicians giving up its ability to manipulate the gold, bond, and stock markets. I think the best realistic goal is simply disclosure of government actions in these areas. It's harder for politicians to oppose a grassroots push for transparency ...

Sooo, let me see if I got this right for the near term until all these issues are resolved about Bill‘s Gold Standard.

It's best to have something of real value, like a case of 10w-40 oil out in the garage (better get some now while it's on sale ;) instead of a debit card to try and purchase it later

How about cords of seasoned wood stacked up out on the west-40 and a fireplace to burn it in when winter comes, instead of writing a check for the ever escalating price of natural gas after you use it.

Having several pounds of ground beef in the freezer @$1.99# as opposed to the $8 or $10 BigMac next spring.

Better yet, going to the local money changer (not a bank, think of something like a pawn shop, just close your eyes and imagine a long haired sandaled guy outside on the steps of a temple ;) and exchanging a 1-oz Buffalo GOLD coin for $1,022.00 crisp new U$D's ( this amount is a WAG ;) so you can go to the mall.

Is this what were talking about?

You could have taken the easy way out and told whoever sent that letter that 1/10 oz or even smaller gold coins exist. Otherwise, silver coins work for even the smallest of transactions. Instead, you climbed into the gold standard. I admire your courage.

I see bimetallism as the best option; it's explicitly mentioned in the US Constitution, Art I, Sec. 10, Cl. 1. Yet, politicians know the potential votes to be gained from a welfare state – ‘bring home the bacon.' The support for government money is Big. Big banks don't fear runs with little capital reserves, which means big businesses can always find excess capital. Everybody's happy except for the constant inflation and periodic shifts in the entire US economy.

The worst, and likely thing to happen, is Americans will realize their purchasing power is shrinking and really do nothing. The game continues until people are really afraid, and leave the USD. Politicians, bankers, and managers will do their part to stem the tide.