Real Growth Requires Real Money

Government Money Must Go Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] Real Growth Requires Real Money - “I am more convinced than ever that if we ever again are going to have sound money it will not come from government. It will be issued by private enterprise”… - Hatred for gold is a bipartisan affair… - Then George Gilder shows you why sound money is the key to restoring economic growth… Recommended Link [You’re Invited! (RSVP Required)]( [Read more here...]( On [Thursday October 14th at 1 pm ET]( our publishing company will be hosting its biggest event yet, The Six Predictions Summit. During this LIVE virtual summit, you’ll hear predictions and receive recommendations from some of the heaviest hitting financial editors in the industry… This is a once-in-a-lifetime opportunity to join these Editors on a private Zoom and hear from each of them LIVE, as they talk about their best investments and recommendations for the coming year. In the past, admission to conferences like this have cost as much as $2,000 - $5,000. But as a subscriber to the Daily Reckoning you’ll get in completely FREE. Join our editors live on [October 14th at 1pm ET.]( [Click Here To Register]( Somewhere in the Berkshire Mountains October 13, 2021 Editor’s note: The Federal Reserve has inflated bubble after bubble without producing much bounce for the general economy. Today, futurist George Gilder shows you why sound money is the way out — and why it will have to come from private enterprise. [George Gilder]Dear Reader, “I am more convinced than ever that if we ever again are going to have sound money it will not come from government. It will be issued by private enterprise.” Liberal (in the classical sense) economist Friedrich Hayek said that in 1977. Yet it rings more true today than ever before. Anyone serious about the reform of money must start by eliminating government obstruction of actual money. Our monetary system is broken. It’s given us low growth, a shrinking job force, inequality beyond what a healthy economy would produce, inefficiency and the unhealthy explosion of the financial industry. It has transformed Wall Street from an engine of innovation into a servant of government power. Fed policy translates into zero-interest-rate loans for the government and its nonproductive cronies and little or nothing for savers or small businesses, which live on financial leftovers. The system actually depletes wealth. It only enables grasping politicians and toady central banks to steal from the future — your kids and grandkids — in order to pay off favored constituents and politically correct causes in the present. It’s what I call the “scandal of money” — this dramatic and unhealthy growth of finance. Economic growth stagnates, inequality mounts and capitalism becomes a scandal of money. Essentially, banks can take as much as 40% of all the profits in the economy while the rest of the economy shrinks — crippled by government guarantees and money. Needless to say, this is not real economic growth. Given this reality, the idea of sound money is all but dead in official circles. After all, didn’t John Maynard Keynes, the hallowed English macroeconomist, call gold a “barbarous relic”? To Paul Krugman, Nobel Prize-winning macroeconomist, the gold standard is a “mystical” repetition of the “sin of Midas.” Worshipping a shiny metal. Let’s be clear — this is not a partisan issue. Krugman, a self-described liberal, though definitely not in the classical sense, often cites Milton Friedman, a Republican, who as early as 1951 made the case for banishing gold in favor of a free competitive float of currencies rather than a flat rate. Friedman also fatefully counseled Richard Nixon to remove gold backing from the dollar in 1971. Warren Buffett summed up the conventional view with his usual pith: Gold gets dug out of the ground... We melt it down, dig another hole, bury it again and pay people to stand around guarding it... Anyone watching from Mars would be scratching their head. A bipartisan University of Chicago Business School poll for a Wall Street Journal blog in 2012 found zero support for the gold standard. Forty-three percent of the surveyed economists “disagreed” with returning to gold and an additional 57% “strongly disagreed.” That adds up to 100% — a “consensus” that might spark envy even in such airtight circles of “settled science” as a U.N. seance on climate change or a Tony Fauci-led public health agency. With a limited total tonnage, which could be stored in a single small room, gold is seen to suffer from an acute deflationary bias. That is, since the basic money supply cannot expand significantly, it is believed that money prices, including wages and salaries, have to shrink. But that’s a simplistic view of how money works. In a free economy, wages and money prices would fall roughly into equilibrium. Not perfect equilibrium, because the economy is messy and there’s really no such thing. But if you believe in free markets for everything from coffee, sneakers and computers to underwear, why wouldn’t you believe in free markets for money? Is there hope for the idea of sound money today? I think so. And I believe America can be set on the right path again. Below, I show you why sound money is the key to growth. But as you’ll see, sound money is not limited to gold. Read on. Regards, George Gilder for The Daily Reckoning P.S. I’ve been called America’s No. 1 futurist because of the many accurate predictions I’ve made over the years, including the advent of the smartphone. And [tomorrow, Oct. 14, at 1 p.m. Eastern Time…]( I’ll be joining five brilliant financial minds in the biggest event in the history of this company… It’s called [“The Six Predictions Summit.”]( At this LIVE event, each of us is going to release a major prediction that could affect your financial future starting immediately. We’ll also talk about our best investments and recommendations for the coming year. Here’s just a sample of what you’ll hear: [Why the global financial system is facing a meltdown that is rapidly approaching…]( [The No. 1 reason that most tech stocks will FAIL in the coming years (and the one trend that will replace them all)...]( [The REAL reason stores are having trouble stocking their shelves (and what that means for your investment during Q4).]( There’s much, much more. This is your chance to prepare yourself for what’s coming in the year ahead. What’s my major prediction for the coming year? Tune in tomorrow to find out. But in order to make sure you don’t miss out on this urgent information, you must register for tomorrow’s event. It’s 100% FREE. [Go here now to register.]( Recommended Link [Billionaire Leaves Crowd In Shock]( [Read more here...]( An audience of a few hundred (including myself) quietly gathered in Washington D.C. a few months back. That’s when the world’s richest man, Elon Musk, took the stage… and shocked the entire room. It all has to do with this image you see on your screen… showing a surprising new discovery he’s made. Not only will this blow you away… it could also transform the American economy forever. See Elon’s shocking reveal (plus see what it means for you)… [Click Here To Learn More]( The Daily Reckoning Presents: “A gold standard complemented by Bitcoin-related technologies on the internet would provide a supply of real money for the first time since 1971”… ****************************** Real Money Is the Key to Growth By George Gilder [George Gilder]It might be hard to believe, but the government monopoly on money can be overthrown tomorrow. We, the people, can master it and make it our servant. How? Mainly because we live in an information economy, which is an economy of mind. Meaning it can be changed as fast as minds can change. Money is not a mystery. And a reversal of policy can affect massive improvements in very little time. In the same way that existing policies suppress growth, a change in policy can bring about an instant and sharp enhancement of all economic activity. How do we make that change? To answer that question, let’s review prior economic transformations and how we can learn from them… After World War II, when 10 million demobilized servicemen returned from the front to an economy that had to be converted from a garrison state to meet civilian needs, economists steeled themselves for a renewed Great Depression. But a big congressional Republican victory in the elections of 1946 propelled a drastic turn away from the government-planning regime of the war. Government spending plummeted by no less than 61% between 1945 and 1947. The economist Arnold Kling of the Cato Institute observes that “as a percentage of GDP the decrease in government purchases was larger than would result from the total elimination of government today.” Some 150,000 government regulators were laid off, along with perhaps a million other civilian employees of government. Disbanded were such managerial agencies as the War Production Board, the War Labor Board and the Office of Price Administration, beloved of John Kenneth Galbraith. Every Keynesian and socialist economist confidently predicted doom. In 1945, Paul Samuelson prophesied “the greatest period of unemployment and dislocation which any economy has ever faced.” There was no new depression, though. In fact, the historic ascent of America saved the world economy from socialism. Economic growth surged by 10% over two years... The civilian labor force expanded by 7 million workers... Released from wartime controls, the private sector launched a 10-year boom despite tax rates on investors as high as 91%. Compensating for the high top rates was an effective 50% tax cut through the enactment of the joint return for households. Freed from regulations and tax burdens and relieved of wartime stresses, large manufacturing corporations emerged as spearheads of global capitalism. Crucially complementing these deregulatory policies was an era of relatively sound and reliable money. Of course, this worldwide ascent from depression and war was built around a simple framework that we no longer have: the gold exchange standard... Negotiated in 1944 among all the Allied powers at Bretton Woods, it made currencies convertible into dollars, which in turn were convertible into gold at $35 an ounce. The fixed exchange rates of Bretton Woods provided the stability that lengthened the horizons of global investment and enterprise. Remaining in place throughout the postwar boom, they provided the monetary backing for global growth that averaged 2.8% per year for 25 years, a level unequaled before or since and almost double the growth rate since 1971. There were few defaults, no banking crises and an efflorescence of innovation and progress in what even current prophets of “secular stagnation” regard as a golden age. Then it all changed. After the end of Bretton Woods, in 1971, the monetary regime became mostly dependent on the politics of central banking, chiefly the U.S. Federal Reserve and the European Central Bank. Yes, the dollar provided an adequate haven for extended periods. But reliable money became increasingly scarce. Recommended Link [04ghd74j - 3b95 - dt38 - 43vg - g7sp38gt]( [Read more here...]( See this 32-digit code? While it’s just for illustrative purposes, it’s the prototype for a brand-new digital infrastructure that is set to replace the “old internet” as we know it. Act now to be early on the “new internet”… [Click Here To Read More]( With the central banks’ ability to easily manipulate money, anyone with a long-term investment or asset, a fixed goal or visionary cause, deep pockets or commitments, a family or a career or even an enduring job becomes a gull for the government. What people call money is actually mere credit and debt with no reliable unit of account. The thing is money is not a mere manifestation of economic power; it is a crucial source of information. Only to the extent that its signals of value are reliable and true can it guide the learning curves of wealth creation. In the past, the critique of monopoly money has taken the form of proposals for conferences, balanced budget amendments to the Constitution, audits of the Federal Reserve and calls for a new Bretton Woods agreement. Yet at a time of crisis, these ideas, however appealing, seem either trivial or implausible. A return to the gold standard, however, could put us on the path to actually restoring real money. A new gold standard will emerge when governments end their monopoly and remove obstructive taxes on alternative currencies. Allowed to move experimentally toward the time constraints of real money, digital payment systems will evolve with gold into a new information system for the global economy. Critics of a gold standard fear it would restrict the money supply. But a gold standard does not fix the amount of money; it defines its value. Thus gold does not reduce the supply of real money. It increases the demand for it. Under the gold standard in the United States between 1775 and 1900, the money supply rose faster than at any time before or since — by a factor of 160 — while the population rose by a factor of 25 and the nation forged its Industrial Revolution. This 160-fold rise in the real money supply, moreover, produced almost no inflation. A gold standard complemented by Bitcoin-related technologies on the internet would provide a supply of real money for the first time since 1971. Gold enables real money by fixing its value to the passage of time. The supply is then determined by us, by private economic activity and by learning based on the informative webs of authentic price signals. Gold already serves as a monetary metric for millions of people around the globe: - From China and India to the Middle Eastern oil kingdoms, many nations are increasing their stores of gold - Scores of entrepreneurs and venture capitalists are tapping gold’s potential in international commerce - The Gold Standard Clearing House has experimentally reduced transaction times to under a hundred milliseconds. From Anthem Vault to bit gold, entrepreneurs have been developing ingenious combinations of the Bitcoin blockchain with gold backing. As the prices of gold and digital currencies converge, these real monies could ultimately redeem the dollar and the global economy. New systems based on gold and blockchain innovations can evolve into a new world monetary infrastructure. The new global money could extend the American dream of stability and futurity. Restoring real money, we can recapture the future from both Silicon Valley and Wall Street. Opening up the horizons of opportunity again, we can save Main Street from the menace of monopoly money, transcending the dismal science of stagnation and decline and regaining the American mission and dream. Granted, with a buildup of mountains of debt and contingent liabilities across the globe under the management of central banks, there seems to be no direct legislative path to a gold standard today. But even if the nation cannot forcibly impose a new gold standard on the world, real money should not be seen as an arbitrary legal structure or policy. It is an expression of the natural order of the economy — the system of the world. And restoring sound money could work miracles of growth almost overnight. Regards, George Gilder for The Daily Reckoning P.S. I’ve been called America’s No. 1 futurist because of the many accurate predictions I’ve made over the years, including the advent of the smartphone. And [tomorrow, Oct. 14, at 1 p.m. Eastern Time…]( I’ll be joining five brilliant financial minds in the biggest event in the history of this company… It’s called [“The Six Predictions Summit.”]( At this LIVE event, each of us is going to release a major prediction that could affect your financial future starting immediately. We’ll also talk about our best investments and recommendations for the coming year. Here’s just a sample of what you’ll hear: [Why the global financial system is facing a meltdown that is rapidly approaching…]( [The No. 1 reason that most tech stocks will FAIL in the coming years (and the one trend that will replace them all)...]( [The REAL reason stores are having trouble stocking their shelves (and what that means for your investment during Q4).]( There’s much, much more. This is your chance to prepare yourself for what’s coming in the year ahead. What’s my major prediction for the coming year? Tune in tomorrow to find out. But in order to make sure you don’t miss out on this urgent information, you must register for tomorrow’s event. It’s 100% FREE. [Go here now to register.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [George Gilder][George Gilder]( is a world-renowned investor, writer, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance. During America's last big tech boom of the late-1990s, Gilder was widely considered the best stock picker in the world. George also pioneered the formulation of supply-side economics when he served as Chairman of the Lehrman Institute's Economic Roundtable, as Program Director for the Manhattan Institute, and as a frequent contributor to A.B. Laffer's economic reports and the editorial page of the Wall Street Journal. Throughout his career, he’s been profiled in People, Wired, Forbes, Fox News, the Wall Street Journal, The Economist, Harvard Business Review, the American Spectator, and more. 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