A Plan to Convert the US Dollar to Gold as Money

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David Redick 

Why Gold?

All forms of money serve as a ‘medium of exchange’, and ‘unit of account’, which is convenient and flexible compared to barter. Key Point: Note that when a valuable commodity (such as gold) is used as money (‘monetization of gold’), the money is worth as much as the goods or services in the transaction. It is not just a ‘symbol’ or ‘measuring device’. This is also true of barter, but with gold’s high value per weight and volume, etc., using gold is more convenient, and thus helps improve commerce.

Two more benefits of using commodity money are to; 1. Limit excessive expansion of the money supply (inflation; loss of value) by the government, and 2. Provide a market-based, and stable, store and measure of value, with coins and paper notes produced by private mints (including banks). Mints would not require a license, and there would be no legal tender laws, since that would put the government in control. The only government function would be inspections (which could also be done by a private org) to verify that the mints indeed have the gold reserves they claim to have for redeeming paper notes. The commodity used as money could be (and has been) wheat, iron, diamonds, notched sticks, or pearls, but the market (users of money) usually chooses gold because it works best. 

The Key Factors in a Sustainable Gold Standard for Money

David Redick

Introduction 

I have been keenly interested in the nature of money since 2009 and have read many books and articles about it, and have heard discussions from forums and conferences. I have studied its origins and changes. This revealed the broad array of different plans for monetary systems as to who creates and controls it, and the role of commodities such as gold. In this article I will review basic issues and comment on some of the recently proposed plans. I use the word ‘Sustainable’ in the title because ALL money in the past has eventually been abused and ruined by greedy and desperate politicians and bankers. Of course, this applies to today’s failing US Dollar (USD) which has lost over 95% of its value (purchasing power) since the Federal Reserve System was founded in 1913. 

Announcing a Project to Modify or Replace the US Monetary System

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David Redick

The US Dollar (USD) has been the world’s primary reserve currency (used for most international transactions, even when the US is not a party, and for bank reserves in all nations) since 1920, which has helped support its value due to high demand. The use of the USD for most oil sales since 1973 (the ‘Petrodollar’) has also brought helpful demand, but that is fading.

Due to excessive creation of new money (‘traditional’ monetary inflation, plus the Bernanke ‘spike’ in 2008 and recent QE activity), the USD has lost over 95% of its purchasing power (PP) since the Federal Reserve System (the ‘Fed’, our central bank) was created in 1913.

The rate of decline worsened with the end of gold ‘backing’ in 1971. To prevent losses, many nations now avoid owning or using the USD (or other assets denominated in USD), and instead trade with each other using their own currencies (led by the BRICS – Brazil, Russia, India, China, and S. Africa, plus Japan and Australia). This could lead to a major reduction in the USD role as a world reserve currency, and cause a 50% to 90% crash in value (PP) due to reduced demand. Such a crash could happen soon, and would cause; 1) Large losses for all holders (persons, firms, governments) of dollar-denominated assets (cash, CDs, bonds, annuities, life insurance, equities, real estate, etc.), and 2) A major increase in interest rates, which would blow-up the US budget and business loan rates! Thus, we must consider changes that will prevent the crash. 

I hereby volunteer to be the collector of ideas, and use this input to write a draft plan, seek approval from contributors, then publish a comprehensive final plan for a modification of the current US Monetary System. The system includes the Fed and its ‘Fed Notes’, Treasury Dept. bonds and policies, legal tender laws, the FDIC, mints, banks and various banking laws and regulations.

New Factors in Personal Financial Planning

David Redick

Personal Financial Planning is one of the most important things you should do, but it is often overlooked. Today's world has financial risks that have never existed before, so much of the "traditional" planning logic is wrong or has voids. For example, most (over 95%) of investors assume it is appropriate to have their assets denominated in US Dollars (USD) if they are a US citizen. After all, the USD is the world's primary reserve currency (banks hold it as reserves - good as gold -, and any Seller will accept it; when India buys coffee from Brazil, they use USD), and the US is the world’s largest economy (and military power), so it must be safe. Wrong! The USD’s value has been falling for over 100 years, and is now heading toward a crash in value because other nations are starting to avoid using it, thus reducing the demand that has kept it propped-up before.

Why the US Dollar is Declining in Value and May Crash

Here are the two major reasons the USD is dropping in value (purchasing power; example, how much bread would $1 buy in 1913, 1950, and 2013? Answer, 62% less in 1950, and 95% less in 2013!).

Germany Should Quit the Euro and Use Gold As Money

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David Redick

Germany is facing an historic decision of whether to stick with the Euro and more bailouts of other Eurozone nations, or withdraw and establish its own strong currency. Their Constitutional Court will decide on September 6 whether it is legal for the European Central Bank (ECB) to buy sovereign bonds to fund further bailouts of Greece, Spain, and others.

On August 24, Bloomberg.com wrote; "European Central Bank President Mario Draghi may wait until Germany’s Constitutional Court rules on the legality of Europe’s permanent bailout fund (the ‘European Stability Mechanism - ESM) before unveiling full details of his plan to buy government bonds."

Time is short for German leaders to decide! The USA and other nations like to ‘kick the can down the road’ and continue hopeless ‘propping’ of their failing fiat currencies, but Germany must decide now. To stimulate their thinking about using gold as money, I sent the letter below to Chancellor Angela Merkel, with copies to her Finance Minister W. Schaeuble, and Frank Schaeffler, a member of parliament and the finance leader of the ‘Free Democratic Party’. He has been a strong opponent of ‘using’ Germany to bailout other nations. I also sent them a copy of my book Monetary Revolution USA (it includes a plan to convert the US monetary system to gold as money), and my November 30, 2011 essay "A Three Step Plan to Save the Euro with Gold."

The situation has gotten so much worse since my Nov-2011 essay, I now recommend that Germany quit the Euro and take the lead by using gold as money (with weight of gold as the ‘unit of account’ for pricing and payments).

Save the USA by Restoring Government to Its Proper Role

Dees Illustration

David Redick
Activist Post

The USA is at a tipping point where spending reductions and legal reforms must be made or we will have a more severe economic crash than the one we have experienced since 2008. The US Dollar has lost over 95% of its purchasing power since 1913, and faces further losses if we don’t make changes soon. The GOP ‘Path to Prosperity’ sounds good, but only asks for minor spending cuts while saying nothing about our failing monetary system and costly military bases and wars. The world views us as a failing empire, and other major nations are making preparations to replace our dominance in financial and political matters. This article shows how we can reduce our arrogant excesses and avoid an economic and political crash. 

Should Government Manage the Economy?

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David Redick
Activist Post

There is a Great Divide between economists, politicians and citizen activists about the proper role of government in a nation (the land and people).

On the so-called Left side we find the Liberals, Progressives, Marxists, Communists, Fascists, Socialists and Neo-Conservatives who support a paternalistic role of government as Mother-Boss-Owner, using laws, fiscal and monetary policy, and ample fiat money from a central bank in their attempt to produce the ideal society concerning social and economic issues. They all want big government, but have a different list of priorities as to what is right and proper.

On the Right side, we now only have the Libertarians and Anarchists (and a few traditional ‘Taft-Goldwater’ Republicans), who want limited or zero government. Libertarians only want the government to protect our personal and property rights, and not manage our lives, the economy, or the world. The debate among these groups has been active since democratic governments started to replace absolute monarchies in the 1600s.