In Search of Honest Money

Free Baron von NotHaus!

Free our money!

Poor Mr. NotHaus. He thought he was doing something good…something that needed to be done. His idea was to mint silver coins, which he called Liberty Dollars, or simply Liberties.

These were real coins, with real value. In fact, their value has been going up. Silver has been the big star of the latest hard money drama; compared to gold – which has also gone up nicely – silver is at its highest level since 1984. And compared to itself, it is as high as it has been in 30 years.

Silver has now gone mainstream. Even Jim Cramer advises listeners to buy the physical metal. They would be glad if they had. Almost nothing has outperformed it.

Compare Mr. von NotHaus’s money to the money issued by the US Treasury Department. The Treasury’s dollars have no precious metal content – none. At best, their content comes from trees and cotton plants, with a scrap value that is probably negative. Meaning, if it loses its value as money, you’ll have to pay someone to haul it away.

The record on that point is clear. Go back to when the Fed was set up to protect the value of the dollar in 1913. If you want to buy the same things, you’ll need 50 times as many dollars today as you have back then. Since 1971, when the last traces of gold were removed from the dollar-based monetary system, the feds’ money has lost value even faster.

The past is prelude. The feds are working hard to make the dollar worth even less in the future. Given the Fed’s current enthusiasm for debasing it, in a few years, the dollar may have no value left.

Even state governments – hardly visionaries – are looking for ways to protect their citizens from the feds’ fast-disappearing cash. A dozen are considering measures to coin their own money. Smart families are setting up their own reserves of real money – gold. Nobody trusts the dollar over the long term.

So, who do the authorities haul to the hoosegow? The guy who mints honest money in tiny quantities…or the guy who puts out $2.2 trillion in “paper” money that is sure to lose its value quickly?

Go ahead…take a guess.

Poor Mr. von NotHaus got taken to court…and may be taken to prison…for competing with the feds’ monopoly on issuing money. The Constitution – Article 1, Section 8, Clause 5 – gives Congress the power to issue money. Apparently, it makes it a federal offense to compete.

According to the Wall Street Journal report, that provision was cited in paragraph 33 of the indictment against Mr. von NotHaus and then later removed from the charges against him. What was left to convict the man on, we don’t know. But the court did so. And now he must appeal…or face penalties, possibly time in jail…and possibly a long time.

But what about the rest of us? Are we sentenced too? Will we be forced to pay the price for the feds’ goofy monetary policies?

Your editor is now flying back from California. He has no Internet connection, but he has a copy of Barron’s and The Wall Street Journal with him. Alas, he will have to read them.

Among the ideas we found in Barron’s was an article on gold. As background information, throughout the entire 11-year bull market, as far as we know, Barron’s never counseled its readers to buy gold. On the contrary, it generally discouraged them. Whenever it mentions gold, it talks about it as though it were some sort of crank market phenomenon…a marginal investment for the marginally insane.

As Michael Santoli put it in this week’s issue – gold is “not terribly useful.” He quotes a fellow named Jeffrey Christian who believes gold buyers are in for a “gut check” – a drop in the price of 15% to 20%.

He may be right about that. Every bull market has its countertrends and back-stepping. We’d be delighted to see the price 20% lower. “Buy the dip,” we’d tell you.

But as to the usefulness of gold, Mr. Santoli is dead wrong. Yes, gold is useless – most of the time. And, as anything but money and jewelry (a form of money in many countries), it is useless all the time.

But sometimes it is almost essential. When the other money – the feds’ money – goes bad, you need some good money to protect yourself. That’s the role gold has always played; it is natural, uncompromised money.

It does nothing – but it hides no mistakes.

It holds no press conferences – but it tells no lies.

It makes no promises – and never delivers less.

And anyone who bothers to mint coins of gold or silver is doing the world a favor.

Free Baron von NotHaus!

And more thoughts…

Here’s a shocking disclosure. Somehow, WikiLeaks got a copy of private memos – diary entries, really – written by David Sokol. As you know, Sokol was the man who was the front-runner to replace Warren Buffett at Berkshire Hathaway. He was also the man who made $3 million by front running Berkshire’s latest purchase. Both Sokol and Buffett denied that the purchase of Lubrizol shares had anything to do with the former’s departure. The diaries confirm the claim.

“I’m leaving. I’ve had it. I just can’t stand the guy’s folksy wisdom,” wrote Sokol to himself. “Yes, the decision will probably cost me some money. But it’s worth it not to have to spend another day in Omaha listening to the so-called ‘Sage of the Plains.’ Sage? The guy is a boring, old finger-wagger. And if he had dumped all those value stocks and bought gold when I told him to, we’d be a lot richer now.”

*** And here’s another shocker. Ireland’s premier, Enda Kenny, has appeared to break down under the strain of trying to avoid bankruptcy. He called a press conference yesterday, after Anglo-Irish Bank announced losses of more than 17 billion euros – the largest corporate loss in Irish history.

“I think this has gone on long enough. We tried in good faith to save the system from default and to avoid national humiliation. Instead, the situation just grows more humiliating with each passing week.

“It’s time we called a spade a spade…and be done with it. We all know the banks are controlled by the English. And we all know English speculators were behind all of Ireland’s recent property problems. They drove up prices. They lent money to Irish people. They built houses that were both ugly and unaffordable. And then, when the bottom fell out of the market, they expected Irish taxpayers to make up their losses.

“Well, that’s it. That’s the end. Henceforth, all banks and all bank assets are to become the property of the Republic of Ireland. Bank premises will be turned into useful resources for the people, such as pubs or pizza parlors.

“If a bank owes you money…you are out of luck. You should have known better than to put your money in a bank anyway. Everyone knows you can’t trust them. Especially when the English are involved with them.

“And don’t come running to me telling me that Ireland’s default will trigger a wave of defaults across Europe…and possibly bring down the euro and the European Union. I don’t want to hear it. It was the European Union that got us into this mess. The frogs and the krauts can go f*** themselves.”


Bill Bonner
for Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.
Bill Bonner

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3 Comments on "In Search of Honest Money"

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As they say on the Keiser Report – “Buy silver sink JP Morgan” :)


Your extra thoughts were a bit late for the April 1st noon cutoff. You had me going for a moment though…..

Leo Menkens

Can you provide the details of the press release by Edna Kenny referred to in the article by Bill Bonner 4th April please?
Has this been published in any press in Australia?

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