Just posted an excellent article by J.S. Kim in regards to golds role as a monetary balancer.

In this article, Mr. Kim goes back through Greenspans famous essay and shows clearly why gold is the only means of counterbalancing what governmental and banking oligarchies do with fiat currency systems.

An excerpt:

Today, due to the proliferation of fragile and confusing financial instruments called derivatives and the fraudulent nature of our fractional reserve banking system, hundreds of billions, and more likely, trillions of more dollars exist than claims on real assets and goods.

The comparable analogy would be if, as an Apple (AAPL) store owner, I sold the same 100 Apple desktop computers to 10,000 clients. As long as no more than 10 of my customers required delivery in any given year, then my business could operate for many years without this fraudulent scheme ever being exposed. However, the instant my clients collectively decided they wanted to take delivery of all 10,000 computers in the same month, my ruse would be exposed and my business sentenced to a fate of bankruptcy.

Almost all of us would agree that this would be an insane way to run a business, yet we readily accept the fact that all major banks in every modern, developed nation run their businesses in this very manner. However, the development of such a situation would be next to impossible with the institution of a true gold standard and this is why Alan Greenspan once made the timeless statement that economic freedom and gold are inseparable.

The full article is here: Gold is the balance to fiat currency

This entry was posted on Sunday, May 10th, 2009 at 9:33 pm and is filed under 1 - Gold, 3 - Understanding The Economy, Currencies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.