Gold All the gold in California / Is in a bank in the
middle of Beverly Hills in somebody else's name. / So if
you're dreaming about California, / It don't matter at
all where you played before, / California's a brand new
game. By Tom Kelly I am often bemused during the strange economic times which are now afoot, by the likes of Gordon Liddy and his counterparts on cable TV ads, urging me to "Buy Gooooold! It's never been worth zero . . . " as a backstop against whatever the financial catastrophe of the day happens to be, or better yet, may become. Such ads often run in tandem with Ron Paul clones who make a living bashing "The Fed!" for their/its efforts to stabilize the national economy by "printing money," doing whatever that does - and I'm never sure exactly what it is. As mathematically and economically challenged as I am, I keep thinking back to days of childhood when a bunch of us would drag out the Monopoly set and spend a summer afternoon rolling dice (!) and moving our tokens around the board, dreaming of acquiring Park Place and Boardwalk with two hotels apiece, and all the railroads, so as to bankrupt all the other players by collecting premium rents and fees, thereby winding up with all the money in the bank, thus ending the game. (We never even thought of using gold, otherwise our Mamas' jewelry could have been put into play. That, of course, would not have been wise, but not because of the play-like economy of the board game.) Way back when, when the country was on the Gold Standard, I'm told that there was a stash of gold in a cave-like vault up in Fort Knox, Kentucky, that stood good for all the U.S. dollars in circulation. Although I never saw the gold, I accepted that it was there. And, there are those today who believe that all the gold--in spite of Larry Gatlin--is not in a bank in Beverly Hills, but remains in the supervault at Fort Knox. Of course, there are also today conspiracy theorists who, like me have never seen the gold, therefore do not believe it's there. But that's a whole 'nother can of worms, like UFOs, the Yeti, and the Mars colony on the dark side of the moon. And for those theorists, some believe that our entire economic and financial systems are kept afloat by nothing more than confidence that the dollar will hold some future value--confidence that would likely be shattered if it were revealed that the United States was not the largest holder of gold in the world. Really? With apologies to the economists in the room, let's see if I've got this straight: The American economy, not to mention the world, is held afloat because there are umpty-million ounces of .999999 percent pure gold in a secure vault up in Appalachia? And if it should turn out that the gold is not there, then the world will go up in flames, economically if not in fact, when the rioting hordes of what? Tea Partiers? Wall Street Sit-in'ers? Arabic Springers? begin banging our doors down and demanding Our Gold or Our Lives? (Gimme three more cases of that .45 caliber, and a case of 12 gauge double-aught magnum.) Come on. I have made a commitment, sort of, to sit down, some day, and figure out just what the heck The Fed does. Pursuant to that objective, I casually opened my Internet web page the other day and indexed "Federal Reserve," expecting to find a quick and easy explanation of how and why it what it does. The official U.S. government brochure on the subject is 30 some-odd tightly written pages long, in language that only a bureaucrat could appreciate. Like, on Page 28: "A predetermined target path for nonborrowed reserves was based on the FOMC's objectives for M1. If M1 grew faster than the objective, required reserves, which were linked to M1 through the required reserve ratios . . . " Of course, that's it! I always knew it had to be that way! Would the American economy be any better if we had more gold, but produced less, or any worse if there were less gold and our people produced and sent more goods and services to market? And is there any real connection between the amount of gold in Fort Knox, and the productivity of Americans? Answer me that, Mike Dunn! There may not be any gold at Fort Knox, but what does that mean to anyone, except to the people who have jobs running the place and keeping the myth alive. In the old Monopoly game, the game ended when one player owned everything and the bank stopped issuing money. Where was the Fed in those old days to keep issuing money and keep the game going? I like Ron Paul. He's an entertaining old curmudgeon who belongs in a museum someplace, but is interesting and probably does a good job for his Piney Woods district over in East Texas. The Monopoly game called America doesn't need an artificial cut-off of money in circulation based on the myth of Gooooold! The next time I'm confronted with Gordon Liddy saying, "Buy Goooold!" I'll say, "Gimme turnip greeeeens!" Monetize deer corn; it's renewable, and useful. |