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Back to Basics Again!
by Professor von Braun

May 26th, 2008

Is there such a thing as a code of society? How does a society value values? What happens when no value is placed on values? Is it a bit like a quality product? Does the quality of a society reflect the quality of their values?

And if there are no values, what happens then? Does society break down?

Quality and integrity go together, so what happens when both integrity and quality decline. What is left? What happens when consumption exceeds production? Normally one would answer famine, shortages, rising prices, riots, a redistribution of wealth and a decay in values as each tries to support his own situation. That's what's happening now!

People today are not taught to be productive, nor do they understand and appreciate a quality product -- which may well be why Wal-Mart and McDonalds are so successful. Instead, people are taught to consume, to obtain "things" that are not supportive of productivity, but instead support and maintain the habit of consumption.

At the core of the issue of over consumption is the banking system and the fact that it contributes no real value to society; rather the banking system as it is today needs and encourages consumption to produce "profits" -- by putting people in debt.

It's the beggar-thy-neighbor approach, coupled with the often promoted idea that the banking system is in control. But where is the value? Great societies are built upon honest money and the underlying absence of greed, coupled with a balance between productivity and consumption.

To talk about people being hard working and prudent with their earnings seems to be a thing of the past. We are exhorted to consume, to buy more, eat more, watch more TV, to be anything but productive. But where is the value in that?

This collection of consumers that passes for a society is a sorry mass that has lost its way. The presence of quality has been trampled over and replaced by the bankers ongoing, seemingly never ending need for the ever-expansion of debt, in part because the banking industry, as it is currently structured, can not settle their transactions.

An essential aspect of a quality society is the ability of its members to settle their transactions and pay their bills when and as needed. To do this, honest and impartial money is required, which we do not have. Now this is not entirely true, as honest money is present but it is not recognized by the majority for what it is, nor is it favored or promoted within the current banking system.

So how long can the game of consumption go on? Are we seeing the first serious signs of decay with rising commodity prices beginning to eat into the average consumers ability to consume and repay, coupled with diminishing productivity.

Could it not be that falling house prices and rising commodity prices are connected? The fraudulent money has to go somewhere and it is not going into real estate, not any more.

What does that mean? Is there a shift taking place into productive assets, away from unproductive ones? Could there be a scramble for ownership of the basic necessities of life taking place now that the pseudo "ownership" of the contaminated campsites is out of favor?

We hear the word "resources" bandied about on the money stations, but do people understand what resources actually are?  Resources are a form of unused energy, something that should be used wisely to support the ongoing endeavors of productive people. They are not something that should be used to promote and publicize the one-way street called consumption.

The banking system is, essentially in the business of stealing resources from both their customers and their clients, predominately to maintain the life styles of the bankers themselves who are of course the least productive people on the planet.

Unfortunately society as a whole has imitated them, buying into the idea of wealth being created by the debasement of honest money, via its replacement with paper promises that can never be honored and commitments made that can never be met.

Consumption is the foundation upon which the fiat banking system is built and this involves credit expansion, which requires people to service the debts, slaves to till the banker's fields, while the bankers enjoy the fruits of these labors.

But who settles the banker's liabilities when things go wrong? Currently it's the Central Bankers who have taken on this role. But how long can they keep up this unnatural activity? How long can they continue to create "debt" when there is no recognizable means of repayment? You can only shear a dead sheep once!

The bankers have been feeding their servants with toxic waste and now they wonder why they are sick. The Central Bankers are now feeding these bankers with the same toxic waste expecting them to recover from the effects of their redistribution of their own toxic waste to the unproductive consumers, the very same consumers that, along with the bankers, ate the fruits of 200 years of productivity, which the Central Bankers allowed to happen.

The acceleration of this nefarious activity began the day President Nixon closed the gold window on August 15, 1971 and has multiplied to the degree that it is now no longer viable as an ongoing activity.

It's not that the value of productive assets is going up, rather it's the recognition that the paper currency is worth less, less than the actual value of the productive assets, especially now that unproductive assets are being repriced by the marketplace to reflect their unproductive qualities.

How long can the Central Bankers continue to hold hands while their respective economies deflate? Have they not recognized that their respective balloons are all leaking the same necessary substance that keeps them afloat?

Will they finally wake up to the fact that bigger is not better? What is that foul odor that permeates the corridors of the headquarters of these practitioners of monetary imprisonment? Where will they find new consumers, ones who have some ability to take on liabilities by way of new debts, new mortgages, new credit cards and new student loans? Where is the capital required to continue this credit/debit game?

How long can the fiat monetary system avoid the inherent issue of settlement by replacing its member's debt with its own worthless debt? Debt which can never be redeemed?

One thing is for sure and that is that we all are about to find out what happens when a non-redeemable currency meets a real demand for redeemability.

The Prof can be contacted by email at

Copyright by Professor von Braun. All Rights Reserved. Reprinted at USAGOLD by permission.

Return to the The Gilded Opinion Index Page

The Rocket School of Economics -- The Lecture Series Index

  • 22 May 2009 -- An Often Overlooked Issue!
  • 28 Mar 2009 -- Problematic Banking Systems!
  • 14 Nov 2008 -- What Exactly is an Asset?
  • 23 Aug 2008 -- Through the Looking Glass?
  • 02 Aug 2008 -- Compounding to the Downside!
  • 26 May 2008 -- Back to Basics Again!
  • 31 Mar 2008 -- The Broken Watch -- Part 2.
  • 27 Mar 2008 -- The Broken Watch -- Part 1.
  • 06 Feb 2008 -- The Financial Equivalent of Faulty Towers.
  • 10 Dec 2007 -- Monetary Systems & Productive Assets.
  • 14 Feb 2007 -- Divorced from Reality
  • 06 Sep 2006 -- Gold, Bankers, the Trade Deficit and Unsettled Transactions
  • 19 Jun 2006 -- When is a Reserve Not a Reserve?
  • 31 May 2006 -- The significance of August 15, 1971.
  • 08 Apr 2006 -- Keep Your Eye on the Ball!
  • 30 Mar 2006 -- What came first?
  • 11 Mar 2006 -- An Unanswered Question.
  • 08 Jan 2006 -- Where have all the projects gone!
  • 11 Dec 2005 -- Gorillas, Rising Gold Prices and Depreciating Paper Currencies!
  • 23 Oct 2005 -- Custodial Risk.
  • 16 Sep 2005 -- An Inherent Flaw.
  • 08 Aug 2005 -- Central Banks and 'Reserves'.
  • 31 Jul 2005 -- Central Bankers, Actors and 'We'.
  • 17 Jul 2005 -- Unintended Consequences! -- Part 3.
  • 07 Jul 2005 -- Unintended Consequences! -- Part 2.
  • 25 Jun 2005 -- Unintended Consequences! -- Part 1.
  • 14 Jun 2005 -- The Two Greater Fools Theory.
  • 03 Jun 2005 -- Real Money, Funny Money and YOU -- Part 4.
  • 30 May 2005 -- Real Money, Funny Money and YOU -- Part 3.
  • 26 May 2005 -- Real Money, Funny Money and YOU -- Part 2.
  • 21 May 2005 -- Real Money, Funny Money and YOU -- Part 1.
  • 09 Nov 2002 -- Carrying a Big Stick.
  • 17 Sep 2002 -- Wishful Thinking!
  • 27 Jul 2002 -- Gold Bugs Beware -- part 2.
  • 10 Jun 2002 -- Gold Bugs Beware!
  • 06 Apr 2002 -- Currencies versus Gold.
  • 26 Jan 2002 -- Bear Market Strategies.
  • 01 Jan 2002 -- 2002 -- A Perspective.
  • 20 Oct 2001 -- The Storm Clouds are Gathering.
  • 30 Sep 2001 -- What to Say?
  • 01 Jul 2001 -- ...Said the Fly to the Spider.
  • 14 Jun 2001 -- Upward and Downward!
  • 28 May 2001 -- Volatility Time, Again!
  • 14 May 2001 -- The Coming Bull Market in Gold Stocks?
  • 24 Feb 2001 -- High Hopes, Wishful Thinking & The Absurd
  • 20 Feb 2001 -- Who Put the Holes in the Swiss Cheese?
  • 22 Jan 2001 -- US Dollar Admits Identity Crisis!
  • 16 Jan 2001 -- Dear George W.
  • 24 Nov 2000 -- The Bubble Has Burst
  • 11 Nov 2000 -- The Media, Bull Markets & the Gold Price
  • 02 Nov 2000 -- Gold Stocks
  • 29 Oct 2000 -- Oh The Tangled Web We Weave ...When We Set Out to Deceive
  • 24 Oct 2000 -- A Mystery!
  • 16 Oct 2000 -- A Peso Here ...and a Few Thousand Pesos There
  • 10 Oct 2000 -- The Unfolding
  • 30 Sep 2000 -- What's Wrong with THIS Picture?
  • 25 Sep 2000 -- Buy Gold Now!!
  • 23 Sep 2000 -- The Times, They Are a' Changing
  • 15 Sep 2000 -- Time WILL Tell!
  • 27 Aug 2000 -- SS "Paper Assets" Begins to Take on Water
  • 06 Aug 2000 -- The Indian Summer
  • 26 Jun 2000 -- A Yellow Brick Wall
  • 22 May 2000 -- The King IS Naked
  • 30 Apr 2000 -- Goodbye Yellow Brick Road
  • 18 Apr 2000 -- Beware the Ides of March, April and May
  • 08 Apr 2000 -- Really, Sir Aldot!
  • 25 Mar 2000 -- Where To From Here?
  • 18 Mar 2000 -- The Gnomes of Zurich
  • 12 Mar 2000 -- The "New" Economy??
  • 06 Mar 2000 -- Two Questions
  • 04 Mar 2000 -- Iceberg Dead Ahead!
  • 28 Feb 2000 -- The Wizard of Oz
  • 06 Feb 2000 -- Here We Go Again!!
  • 15 Jan 2000 -- Comments on the Gold Market
  • 29 Dec 1999 -- No Raw Ingredients Required
  • 28 Dec 1999 -- No Way Out
  • 14 Dec 1999 -- Ho, Ho, Ho!
  • 07 Dec 1999 -- Greenspan's Bubble
  • 03 Dec 1999 -- Early Warning Signs

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