Cryptocurrencies vs. Bullion - Jeff Nielson

by Jeff Nielson, Sprott Money: Bitcoin and ethereum. By now, at least one of these names will be familiar to readers. These are “crypto-currencies”.

What is a crypto-currency? In general terms, a crypto-currency is a digital currency where the value/exchange rate of that currency is the product of a complex mathematical formula.

Proponents of these crypto-currencies are adamant that these formulae are valid and therefore this ensures the integrity of these new currencies. That point will be briefly addressed later in this article. For now the focus will be not on what crypto-currencies are, but rather what they are not.

This brings us to precious metals. One of the main reasons for the invention of crypto-currencies is the realization (by smart people) of the need to have a medium of exchange outside of our fraudulent, corrupted monetary system.

The perversion of our once-legitimate monetary system has been the topic of many previous commentaries . However, perhaps no one has expressed that corruption more succinctly than one of the principal architects of this fraud.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.

- Alan Greenspan ( 1966)

Even back in 1966, Greenspan spoke euphemistically. When Greenspan used the phrase “confiscation through inflation”, what he really meant was theft-by-money-printing.

A gold standard limits the creation of new currency (by central banks) to what can be officially backed by existing gold reserves. The infamous economic charlatan, John Maynard Keynes, referred to the gold standard as “the Golden Handcuffs” largely for this reason.

Keynes despised those Handcuffs. What happens when the Handcuffs are removed? There is no longer any limit on how much new currency can be conjured into existence by corrupt central banks: theft-by-money-printing. The concept is monstrously simple – dilution.

What happens when a corporation prints up a significant quantity of new shares? This dilutes the existing share structure and the value of the shares falls. The drop in value of these shares represents the “confiscation” of the wealth of existing shareholders: their shares are now worth less.

To where did that wealth disappear? Who confiscated that wealth? The recipients of the new shares.

The concept is identical with respect to our fraudulent “fiat currency” monetary system. The central bank conjures new currency into existence. The value of all existing currency declines. The central bank calls this decline in wealth (i.e. theft of wealth) “inflation”, and the criminal central bankers feign almost complete ignorance as to the source of this “inflation” – for obvious reasons.

Who effectively steals our wealth as the central banks create more of their funny-money? The recipients of this new funny-money: the Big Banks. The more funny-money the central banks create, the faster the Big Banks steal all of the wealth of existing currency holders. It is literally the world’s largest organized crime.

Why is a gold standard different? A gold standard is an Honest Money system. As previously noted, the fact that all currency must be backed by gold precludes the central banks from engaging in their theft-by-money-printing crime of dilution.

Another way of describing the gold standard is to refer to it as a real money system. Having a paper currency backed directly by gold is little different from simply using gold coins as currency directly. And gold itself is real money.

This brings us to an elementary definition of which many readers will not be familiar. What is money? While the expression of this definition varies slightly from source to source, the elements of the definition of good money are consistent.

1) It must be uniform

2) It must be evenly divisible

3) It must be rare or precious

4) It must be a store of value

Good money must be uniform: each unit of currency must be identical to all other units. It must be evenly divisible. We must be able to create various denominations.

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