Fighting Counterparty Risk with Gold
The following is an excerpt from Jim Clark’s important book REAL MONEY FOR FREE PEOPLE: The American Gold Story.
Gold and silver are the only monetary assets that are not someone else’s liability. They are not dependent on someone else’s solvency, promises to perform, or honesty. Their value does not depend on the endorsement, propriety, or honesty of any State or institution. They have no counterparty risk, no risk of rule changes, nonpayment, default, or bankruptcy by individuals, companies, financial exchanges, institutions, and banks—quite apart from being insulated from the risks of the Fed’s fiat dollar as well.
It is a wonderful thing for people’s promises to be reliable, and for institutions to be vigorous fiduciaries of their clients’ interests. The modern world with all its miracles is built on the assurance that people will meet their obligations, fulfill their contracts, and respect others’ property.
When this environment of trust begins to fray, sophisticated civilization itself is at risk.
Counterparty risk can pop up anywhere and at any time. Proliferating counterparty risks lead wise investors to the safe haven of gold and silver. But their unique advantage only applies to physical precious metals, the gold and silver coins, and bullion that you own outright and have taken into your own possession. It does not extend to paper gold, stocks, and other representations of gold ownership, commodity contracts, ETFs, or precious metals controlled by a fund, bank, or exchange. Or any other investment vehicle in which State cronies can change the rules in the middle of the game.
In this book we have chronicled the American founders’ wise constitutional provision of real money for free people, its contribution to American prosperity, and how it has been undone, both with the elimination of gold from our monetary system at the hands of Franklin Roosevelt and Richard Nixon, along with the abandonment of silver.
The US dollar has remained unmoored, unanchored, untied to anything real ever since. Unlike fiat currencies that have gone before, the dollar is the ultimate fiat currency. It is global in scope because it is the world’s reserve currency. At the same time, the United States is the biggest debtor in history.
By now you should have realized that central banks and fiat money are managed for the greater glory of the State and for the special advantage of the State’s cronies, and not for the benefit of the people. Inflation is the means by which the State enriches itself by subterfuge, quietly eroding the purchasing power of the currency for its own benefit. And while inflation itself is actually the State’s increase of the supply of money and credit, it is the effects of that increase—higher prices because of the currency’s failing purchasing power—that people call inflation.
The destruction of a currency’s purchasing power is evidence of the currency system’s failure. It remains only to describe where we are today and how it all ends.
REAL MONEY FOR FREE PEOPLE tells the entire American gold story in a clear and easy-to-understand way! And because it is information you need for the challenging times coming our way, we want you to have a copy absolutely free!
Learn why the Founding Fathers, to assure a free and prosperous America, built the new republic on a solid monetary foundation of gold and silver. Learn how later politicians, those of lesser character, have abandoned that foresight by handing America’s future and prosperity over to self-serving bankers and money manipulators.
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