Wikinvest Wire

Richard Russell looks at gold

Thursday, October 30, 2008

From 321Gold come these musings on paper money and precious metals by Richard Russell of Dow Theory Letters notoriety. It seems that the financial media has left out one key element in attempting to understand the recent crisis - money itself.

The one area that no one touches, that no politician will mention, that no investigative journalist will dare discuss is the value and viability of fiat money. Yet, we know that throughout history, no fiat currency has ever survived. My thinking is that fiat money was expressly forbidden in the US Constitution. The Founding Fathers in their wisdom expressly stated that the US was not to resort to fiat money. Today, the US government can "print" Federal Reserve Notes and decree by law or fiat that what they are printing or creating by computer is legal for the payment of all debt. In other words, fiat money is indeed money by government proclamation. It's as if the US government proclaimed by fiat that "all cats are now dogs." It makes that much sense. Since money is wealth or payment for work done, the question is -- is fiat money really wealth? To ask that question today is almost treasonous.
Every central bank on the planet is now grinding out their brand of fiat currency -- and in large quantities. I believe that somewhere ahead doubt will rise as to the validity and logic of fiat money. Fiat money has existed and been accepted for recent decades. My belief is that ultimately this bear market is going to expose the great fraud of fiat money. Right now, for some reason, gold and gold bars are being swept off the market. Call up any coin dealer and ask about his inventory of gold coins. He'll tell you he has none. Why? What's happening? I think this is the first stirring of distrust in fiat money. The little cloud, now no bigger than a fist, is growing. The little dark cloud is distrust in fiat money. And it's growing.
There are a few who speak of fiat money as one of the prime culprits in the current mess, notably Representative Ron Paul (R-Texas) who has been a staunch supporter of sound money for many years, but this topic does seem to be off-limits for the mainstream media.

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Anonymous said...

In God we trust, all others pay cash :-)

Nostradamus, apparently said...

As you say, Mr. Russell seems completely unaware of the constant rantings and ravings of Ron Paul for the last decade or so.

Either Mr. Russell is woefully uninformed or he's intentionally ignoring this fact for some strange reason. Either way, it's hard to give any credence to the musings of someone like that.

Dr. Paul WAS a presidential candidate so it's simply staggering how almost no one manages to mention his name and give him proper credit in all the hand-wringing economic articles written for the mainstream media.

We are on the verge of electing a new president and the two pathetic choices were are offered are BOTH part of the problem they now claim to be uniquely qualified to fix.

It's a sad day for America. As a representative democracy, though, we get exactly what we deserve.

Anonymous said...

Now we have the proof that there is a conspiracy. The Media Owners are part of this and they forbid any talking about this major problem. We are a society of media manipulated herd. They know that only a few people search the internet and can read and understand what is happening, but this small numbers is not important for them. How surprised was Greenspan that is happening this major crisis when I knew two years ago what is coming thanks to Mr. Richard Russel and others. How come the guys who knew what is going to happen are not there to fix the problem? How come the guys who created the mess are asked to fix the problem?

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