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Anti-Capitalist Meetup: Gold-Buggery & the GOP's Goldfingered Mini-Me
“Trump’s suicide mission is ultimately about something much larger than his own presidential campaign, and also much larger than demographic clichés about the declining white majority.”
So what does he do with all his dough? Known for opulent and garish taste, candidate Trump has embraced conspicuous consumption. And boy, does he like gold. Indeed, he has shown enthusiasm for returning to the gold standard. “There is something very nice,” he said, “about the concept” of having a “solid” country filled with money backed by bullion.
Donald Trump really does have a thing for gold, and if everything weren’t in 24 karat gold plating, we’d even think that things around him were actually cast in the metal, raising an interesting question about how the periodic table itself is an interesting map of monetary values corresponding to extraction and synthesis. Midas and Gold Star families aside, The GOP platform and Trump trying to restore the gold standard for US monetary policy is anachronistic at best and foolish at worst, considering that such a modification to policy would create a massive global economic shock. But the craziness of land, gold, and tiny manual labor is conjoined in the GOP’s political appeals to class hatred.
STEVE INSKEEP: And Trump recently told the website thescene.com that he would like to return U.S. currency to the gold standard. NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: Trump said he wants to see the United States do something it hasn't done since the Great Depression - tie the value of the dollar to the price of gold.
Because gold is highly valued and in very limited supply it has long been used as a medium of exchange or money. The first known use of gold in transactions dates back over 6000 years. Early transactions were done using pieces of gold or pieces of silver. The rarity, usefulness and desirability of gold make it a substance of long term value. Gold works well for this purpose because it has a high value, is durable, portable and easily divisible.
Landownership and real estate development are not that apart, especially since late night television has so many informercials that tout get-rich schemes. Landlordism is simply another division of labor in the extraction of resources and rent because the power of private property allows the appropriation of total surplus value produced. The alliance of capitalists and landlords centers on finance capital and of course the fictional capital of long-term contracts.
The more basic of this is a deduction from total social value that is a monopoly over a natural resource when minerals are extracted from land which in the orthodox context might have no value even though it has a price. Land in its history has the capacity to be monopolized and alienated, and ground rent is surplus value. Rent as the landlord’s income, does represent the portion of the surplus value produced by labor in the absence of landlord’s private ownership, would have been directly appropriated by capitalists as excess profits.
As such, and not unlike the difference between ground rent and structure rents, there are perhaps three kinds: differential, absolute and monopoly rents. These rents occur in the political economy of mineral rents where while not determining but is a basis for the production price of commodities. (Nwoke 1983). There are in that context not only monopoly but oligopoly rents. Despite a lower organic composition, perhaps that explains the greater value in all of the infrastructure and transaction costs which are more important to the commodity interaction of capital and labor.
Without going to the math of this (but hoping you’ll trust this as a heuristic), especially extractable gold (think gold mining in the US 19th C. or still — South Africa) has a location (think of the plot of Goldfinger) even these 1,810 folks have location, albeit multiple residences, And even supervillain Goldfinger could make superprofits.
Goldfinger hints he does not intend to steal the gold, and James Bond deduces that Goldfinger will detonate an atomic device containing cobalt and iodine inside the vault, which would supposedly render the gold useless for 58 years. This will increase the value of Goldfinger's own gold and give the Chinese an advantage from the potential economic chaos. Should the authorities be alerted, he would simply detonate the bomb in a major city or target.
A gold standard does not ensure stable prices. True, a gold standard prevents hyperinflation, as a government can only print new money when it is backed by gold. But that by no means protects against significant inflation or deflation.
In 2012 a poll of 40 U.S. economists in the IGM Economic Experts Panel found that none of them agreed with a claim that a return to the gold standard would result in "price-stability and employment outcomes [that] would be better for the average American."
If gold discoveries outpace growth in the supply of other goods and services, prices will rise (as they did relentlessly in Europe when gold and silver were discovered in the Americas), because there is more gold chasing the same quantity of other goods and services. If gold discoveries lag behind growth in the broader economy, the opposite happens, causing deflation and a rise in the real value of outstanding debt. Remember William Jennings Bryan from your U.S. history class and his famous 1896 "Cross of Gold" speech? Bryan was speaking on behalf of Western farmers (and other debtors) who were being crushed by falling prices brought on by the gold standard…
Ron Paul: George Soros is no dumbbell and he is no libertarian. His goal was not liberty, his goal is to take his 24 billion dollars and turn it into 34 billion dollars. He is smart and shrewd, he understands the gold and doesn’t care about gold standard restraining big government, because of his own personal belief.
Yes, we could set the price of gold so high that it could technically back all the money in circulation – say every ounce of was worth $10,000. But that defeats the purpose of having a gold standard. No sane person would give up $10,000 in current purchasing power for an ounce of gold. We don't like jewelry that much. The dollar would still effectively be backed by nothing.
Here is a bonus reason: The gold standard contributed significantly to the Great Depression, while the paper money that Trump (and Cruz) find so dubious made it possible for the Fed to battle the 2008 financial crisis.
In a financial panic, the central bank needs to do two things: 1) support the banks (so that bank failures do not compound the economy's broader problems, as they did in the 1930s); and 2) fight economic weakness with lower interest rates to induce purchases and investment. After 1929, policymakers in the U.S. failed on both accounts, in large part because the gold standard made those tasks much harder.
Trumpian economic advice short of actual economists (save one) now represents the most extreme difference between Heterodox versus Orthodox Economics (there is a sub argument between Orthodox and Heterodox Marxism that is not identical).
Marx held that metallic money, such as gold, is a commodity, and its value is the labour time necessary to produce it (mine it, smelt it, etc.). Marx argued that gold and silver are conventionally used as money because they embody a large amount of labour in a small, durable, form, which is convenient. Paper money is, in this model, a representation of gold or silver, almost without value of its own but held in circulation by state decree.
In the case of extractive commodities the real costs are in the infrastructure.
But the plunging price of oil, currently hovering around $40 a barrel, has turned this strength into a source of economic pain as rig builders have been forced to slash jobs while smaller oil services providers face bankruptcy.
The latest company to get into difficulty is Swiber, a Singapore-listed marine engineering company that has been placed under a court-supervised rescue plan.
Some would profit from gold standards but the reality is that inequality would increase perhaps exponentially in terms of crisis production.
Under our hypothetical new gold standard, central banks would buy gold from private hoarders who would as their “confidence” in the new gold standard increases be willing to sell their hoarded gold, which of course bears no interest, and use the proceeds to invest in interest-bearing securities at lower and lower rates of interest. Our money capitalists-turned misers would again be willing to function as money capitalists.
On the other side, the rate of surplus value would rise to all-time highs as the wages of the workers are depressed to the lowest levels by the preceding terrible inflation and unprecedented unemployment that would follow. After a perhaps prolonged “liquidity trap,” a combination of low interest rates, a very high rate of profit and a deflated credit system—the old debts having been wiped out through a combination of inflation and bankruptcies—would appear.
Then the new gold standard would be off and running.
In addition, if the new gold standard is to last for any period of time, avoiding the fate of the Bretton Woods system, the general price level in currency as well as gold terms would have to be allowed to fall as well as rise.
The Marikana Massacre of August 16, 2012, in which policemen opened fire on striking miners outside a South African mine in Rustenburg killing 34. Photo: AFP Photo/Str
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Mechanisms such as poll and hut taxes, pass laws, Masters and Servants Acts and grinding rural poverty were all integral in ensuring a cheap and uninterrupted supply of labour for the mines. Pass laws were created in order to forge a society in which farm work or mining was the only viable employment options for the black population. And yet the low wages and dangerous work conditions kept many within the country away, forcing the Chamber of Mines to recruit labour from as far afield as Malawi and China throughout the nineteenth and twentieth centuries. Sordid deals between Portuguese East Africa and Apartheid South Africa ensured forced labour to be recruited for the mines and by 1929 there were 115,000 Mozambicans working underground. “It has been said,” wrote First in her study of migrant Mozambican miners, “that the wealth of Reef gold mines lies not in the richness of the strike but in the low costs of production kept down by cheap labour.”www.globalresearch.ca/...
Gold mine depletion would likely mean that there would be a stronger deflationary bias than was the case under the old gold standard—barring unexpected gold finds or some revolutionary technological breakthrough such as the ability to mine asteroids for gold relatively cheaply.
If these considerable, to say the least, barriers to a new gold standard can be overcome, perhaps a few happy “golden decades” of stabilized capitalism will be achieved—before a new era of crises begins.
Even the most “sound” fiscal and monetary polices—such as a solid gold standard—cannot prevent the inevitable return of crises of overproduction with all their consequences.
All this is very speculative, of course. The future like the past will be full of surprises. The important point to grasp is that neither a return to gold or a continuation of the system of paper money can eliminate capitalism’s fundamental and growing contradiction that breeds the periodic crises of overproduction.
That is the contradiction between the ever-greater socialization of the productive process and labor, on the one hand, and the continued private appropriation of the product of increasingly socialized labor, on the other.
(1) How does (the substance of) rent emerge? (2) Who or what are its agents, what are their behavioural patterns and mutual social relations, for example, who receives rent? (3) What is the economic role of rent, for example, what is its role in accumulation and coordination (Haila, 1990: 276)?...
Third, ‘absolute rent’ has been rejected in the literature but should be the basis of a critical theory of monopolies. Indeed, as the form of rent that arises only through the violence of asserting property rights or class position, this category should not only be rehabilitated but requires extension beyond land to an increasingly extractive financialised capitalism rife with distributional conflicts…
Further, if the challenge of the last century was to apply land rent theory to the urban context, the challenge of this looks to be to take the categories of rent beyond land in the analysis of a capitalism increasingly reliant on flows of rentier income through financial instruments (recently theorised in the context of real estate by Haila, 2015, as ‘derivative rents’), immaterial commodities enforced by property rights such as in the case of carbon trading (Felli, 2014) and so-called ‘sharing economies’ on digital platforms; while, correspondingly, contemporary social struggles increasingly centre upon the existence and distribution of these new and old forms of rent.
A gold reserve is the gold held by a national central bank, intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, or to secure a currency.
It has been estimated that all the gold mined by the end of 2011 totalled 171,300 tonnes. At a price of US$1,500 per troy ounce, reached on 12 April 2013, one tonne of gold has a value of approximately US$48.2 million. The total value of all gold ever mined would exceed US$8.2 trillion at that valuation.
However, there are varying estimates of the total amount of gold mined to date, mainly because gold has been mined for thousands of years around the world. Another reason is that some countries are not particularly open about how much gold they are mining. In addition, it is difficult to account for gold output in illegal mining activities. en.wikipedia.org/...
The paper money debate was concerned with symbolization in general, and hence not only with money but also with aesthetics. Symbolization in this context concerns the relationship between the substantial thing and its sign. Solid gold (from which the ingots of gold coin were made) was associated with the substance of value. Whether one regarded paper as an appropriate symbol (as did "paper money men") or as an inappropriate and downright misleading one (as did "goldbugs'), that sign was "insubstantial" insofar as the paper counted for nothing as a commodity and was thus "insensible" in the economic system of exchange…
Poe's contemporaries, as we have suggested, called for a new study of the connections between ontology and political economy. Such a study would shed light on the connection in "The Gold-Bug" between species in the physical world (including entomological ones) and species in the internal world of the mind (including psychological ones), a connection that links nature with the psyche, or things with our ideas of them…
The distinction between substance and shadow in monetary and aesthetic theory affects the understanding of symbolization in general' and of linguistic representation in particular. With the advent of paper money certain analogies, such as "paper is to gold as word is to meaning," came to exemplify and to inform logically the discourse about language. For example, critics called for a return to gold not only in money but also in aesthetics and language…
For the same reason as Wittgenstein, Marx distinguishes the disassociation of symbol from commodity that seems to occur in the minting of metal ingots into coin, from the less apparent and ideologically more subversive disassociation of symbol from commodity that occurs in printing money.
As Marx argues, credit money (the extreme form of paper money) divorces the name entirely from what it is supposed to represent and so seems to allow an idealist transcendence, or conceptual annihilation, of commodities.
In the institution of paper money, sign and substance-paper and gold-are clearly disassociated, much as word is disassociated from meaning in punning…
Aristotle argues that of all forms of generation usury is the most unnatural, and theorists since the medieval era have argued that punning is its linguistic counterpart, since punning makes an unnatural, even a diabolical, supplement of meaning from a sound that is properly attached to only one (if any) meaning.
Marc Shell Money, Language, and Thought 1993 Chapter 1
The most recent offering arrived earlier this year, before his decision to go after the Republican presidential nomination. Like the other packages, this one included a circled hand and the words, also written in gold Sharpie: “See, not so short!” I sent the picture back by return mail with a note attached, saying, “Actually, quite short.” Which I can only assume gave him fits.
when reading something on money. So much to discuss on this issue, but want to start with this point. Many MMT people were over the moon when Trump pointed out that the budget deficit was not a problem thinking that he understood the fact that with a sovereign currency and unemployment this was not something to fear as printing money when there was no threat of inflationary pressure could be used for investment and fiscal policy. Little did they realise that this idjit and whomever is informing the GOP platform would be arguing this because they were arguing for a return to the gold standard of all things which would effectively end any opportunity of the use of fiscal policy by money creation ... what people do not understand is that this argument and the positive money nonsense comes straight out of the Austrian and Chicago schools through Von Hayek and Milton Friedman. great piece, you made me laugh! Thank you!
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"Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte."
Money as unit of exchange or unit of account serves the role of intermediary between equal exchanges. C - M - C
Commodity - Money - Commodity
The value of the goods exchanged are equal; this is a reciprocal relationship and has existed since human beings have traded surplus goods between each other (surplus over their own needs). You can think of this as the value of goods traded between each other. No one will participate in an exchange in which there is an inequality; they may do it once, but never twice. If you think this is not so, you are viewing the exchange relationship between parties inaccurately. People sell goods to a middleman who then pays them money, this money is then used to buy other commodities. There is essentially an equal exchange between participants; this is Aristotle's reciprocal justice.
Money as Capital
This is the one specific that drives the capitalist system but existed before it in in mercantile economies:
M - C - M'
Money is invested to make commodities which are then sold for more than the initial investment (or this is not a successful cycle). M' > M M' = M + change in M
This increased money is then reinvested to make more money and more capital (if it is hoarded, the circuit of capital is broken) ... however as stated above, it is not money making money as all trades are equal (or people will not trade; this is already noted in Aristotle), so where does the change in M come from? It is not trade as that is always equal; increase in capital and money as capital comes about because what is produced is worth more than what the costs of production of the producer are. This is where exploitation comes from and it does not derive from trade.
Money is not power; capital is power, ownership of means of production and distribution is power; power comes from class relations.
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"Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte."
The total value of all gold ever mined would exceed US$8.2 trillion at that valuation.
I once heard that all the gold on the planet would fit in a rectangular box under the first floor of the Eiffel Tower. Was this grossly off?
And the global economy is much bigger than $ 8.2 trillion, right? So this means a planetary lack of gold would cause deflation?
Apparently, Roosevelt partially backed the dollar with developed real estate. Do you know if this is true? By that logic, punching in zeroes and ones to pay for wholesale reinvestment in US infrastructure would be creating value with which to back the dollar?
In any case, I am for creating those zeroes and ones because investing in everything from bridges and roads to education to medical discoveries creates real wealth.
The discussion needs to address how to identify tangible wealth, not socially constructed notions of value.
A room full of gold might only buy a person one meal under the direst of circumstances.
I am searching for good ways to express these concepts which I only partially understand to begin with.
The plot of Jupiter Ascending gives Mila Kunis' character, Jupiter, theoretical ownership of Earth. She realizes this is a ridiculous idea but uses her inheritance to protect Earth's humans from harvest. Is it possible to discuss wealth in different terms?
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May the dolphins, whales and furry things inherit the world. Humans, unless we do an about face, have just about proven we don't deserve this beautiful planet.
The GDP of the entire world was about $78 trillion in 2014, so that amount of gold would only cover about 11%. A better measure than GDP, though, would be broad money, and that's about $81 trillion. It includes coins, banknotes, money market accounts, checking and savings, etc.
But when you look at other measures, you see just how foolish gold buggery is. Total global debt equals $199 trillion. And there is $1.2 quadrillion (thousand trillion) invested in derivatives.
Comments
This is the first time I have ever laughed
when reading something on money. So much to discuss on this issue, but want to start with this point. Many MMT people were over the moon when Trump pointed out that the budget deficit was not a problem thinking that he understood the fact that with a sovereign currency and unemployment this was not something to fear as printing money when there was no threat of inflationary pressure could be used for investment and fiscal policy. Little did they realise that this idjit and whomever is informing the GOP platform would be arguing this because they were arguing for a return to the gold standard of all things which would effectively end any opportunity of the use of fiscal policy by money creation ... what people do not understand is that this argument and the positive money nonsense comes straight out of the Austrian and Chicago schools through Von Hayek and Milton Friedman. great piece, you made me laugh! Thank you!
"Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte."
Money Isn't The Hoarded Currency
It's power. Currency is but the point-keeping system to know who is winning the game of being able to deny the most to more people than anyone else.
Vowing To Oppose Everything Trump Attempts.
Money has different functions
Money as unit of exchange or unit of account serves the role of intermediary between equal exchanges.
C - M - C
Commodity - Money - Commodity
The value of the goods exchanged are equal; this is a reciprocal relationship and has existed since human beings have traded surplus goods between each other (surplus over their own needs). You can think of this as the value of goods traded between each other. No one will participate in an exchange in which there is an inequality; they may do it once, but never twice. If you think this is not so, you are viewing the exchange relationship between parties inaccurately. People sell goods to a middleman who then pays them money, this money is then used to buy other commodities. There is essentially an equal exchange between participants; this is Aristotle's reciprocal justice.
Money as Capital
This is the one specific that drives the capitalist system but existed before it in in mercantile economies:
M - C - M'
Money is invested to make commodities which are then sold for more than the initial investment (or this is not a successful cycle). M' > M M' = M + change in M
This increased money is then reinvested to make more money and more capital (if it is hoarded, the circuit of capital is broken) ... however as stated above, it is not money making money as all trades are equal (or people will not trade; this is already noted in Aristotle), so where does the change in M come from? It is not trade as that is always equal; increase in capital and money as capital comes about because what is produced is worth more than what the costs of production of the producer are. This is where exploitation comes from and it does not derive from trade.
Money is not power; capital is power, ownership of means of production and distribution is power; power comes from class relations.
"Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte."
Okay...
I guess I should now be afraid of Donald Trump because something something. Gotcha.
what is the most realistic estimate of gold on this planet?
I once heard that all the gold on the planet would fit in a rectangular box under the first floor of the Eiffel Tower. Was this grossly off?
And the global economy is much bigger than $ 8.2 trillion, right? So this means a planetary lack of gold would cause deflation?
Apparently, Roosevelt partially backed the dollar with developed real estate. Do you know if this is true? By that logic, punching in zeroes and ones to pay for wholesale reinvestment in US infrastructure would be creating value with which to back the dollar?
In any case, I am for creating those zeroes and ones because investing in everything from bridges and roads to education to medical discoveries creates real wealth.
The discussion needs to address how to identify tangible wealth, not socially constructed notions of value.
A room full of gold might only buy a person one meal under the direst of circumstances.
I am searching for good ways to express these concepts which I only partially understand to begin with.
The plot of Jupiter Ascending gives Mila Kunis' character, Jupiter, theoretical ownership of Earth. She realizes this is a ridiculous idea but uses her inheritance to protect Earth's humans from harvest. Is it possible to discuss wealth in different terms?
May the dolphins, whales and furry things inherit the world. Humans, unless we do an about face, have just about proven we don't deserve this beautiful planet.
Global GDP
The GDP of the entire world was about $78 trillion in 2014, so that amount of gold would only cover about 11%. A better measure than GDP, though, would be broad money, and that's about $81 trillion. It includes coins, banknotes, money market accounts, checking and savings, etc.
But when you look at other measures, you see just how foolish gold buggery is. Total global debt equals $199 trillion. And there is $1.2 quadrillion (thousand trillion) invested in derivatives.
References: Global GDP; World Money