The Next Attack on Gold Has Begun

Gary North said:

The development of the credit card was the culmination of a dream of every fractional reserve banker. Bankers in a fractional reserve system have always feared the withdrawal of currency by depositors. This reverses the fractional reserve process. It shrinks the money supply.

By substituting digits for currency, bankers have solved this problem. A depositor can move digital money out of his account, but it is transferred to another digital account. The system does not lose deposits. When someone withdraws currency and does not redeposit it, the money supply declines. So, credit cards are a banker's dream come true. The threat of bank runs by depositors has ended.

But now a handful of small companies have offered depositors a way to substitute digital money for gold stored in a vault. This gold can now be spent digitally. This creates the threat of a rival form of money.

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There is moral cause and effect in society. Because counterfeiting by any agency is immoral, because it deliberately forces the redistribution of wealth from those who spend the money late in the process, after prices have risen, society suffers. An assault on the integrity of contracts undermines cooperative ventures.

Whenever the government or its licensed monopoly, the national central bank, spearheads this assault, the public is unable to defend itself. It does not even suspect there is a problem until the rate of price inflation is widespread. Even then, the government and its spokesmen blame speculators for rising prices.

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