Posted Sep 14, 2015 by Martin Armstrong
COMMENT: Good Evening Martin,
Great blog on the Gold Martin. Don’t bother with the nay -sayers. Most probably he got stock with too much gold and silver. Most people have bias thinking because they hold certain assets. In my country currently, most people are holding minimum 2 to 4 houses. Some are even promoting people to buy 20 houses at least. These are the people that believe that property are forever. When the time comes for reckoning, these people will face their own undoing. We can only advise them, but somehow, their ears and mind will shut out any logical or reasons. I myself often get ridicule by relatives and friends when I warn them of them property issues that are coming. They will say that I like the chicken little, shouting that the sky is falling.
… Sincerely, Jim
REPLY: Your point is well taken. The majority of people are so biased toward a particular view that they provide the very fuel for the panics. Some reasoning is just utterly hopeless.
Here’s another example:“Since USA government debt is now money, this is simply a bubble in the DOLLAR Which is only logical because every USA dollar is a Federal Reserve NOTE. WHENEVER YOU HAVE A PIECE OF PAPER WITH THE WORD NOTE ON THE TOP, AN AMOUNT, AND A SIGNATURE ON THE BOTTOM, YOU HAVE DEBT. The question you fail to answer. I have all the money in the world. I loan you $100 at 10%. At the end of the year, where does the 10% come from to pay me interest.”
They are just lost in the bias of their own minds. If someone had all the so-called “money” then it wouldn’t be money for it could not be used as a medium of exchange without having a sufficient quantity for transactions. Anyone can create “dollars” insofar as we can enter into an agreement where I buy your house and you express in the terms that I must pay you in dollars. I hate to point out, but before 1934 there was a vast amount of “paper gold” for contracts were expressed in terms of gold. The Supreme Court nullified all private contracts by stating that a gold clause could not be enforced. (see: PERRY v. UNITED STATES, 294 U.S. 330 (1935))
It is amazing that people think that under a gold standard there had to be actual physical gold. Contracts simply expressed in terms of gold to be paid in the future did not require gold to exist. There were no differences between debt denominated in gold before 1934 or dollar denominated debt post-1934.