10 Apr 2013

The Argument of Bitcoins v. Gold Laid to Rest, Part II

JS Kim: In part 2 of my Bitcoins v. Gold thesis, I am going to address the curious need of bitcoin fanatics to state that bitcoins are the best currency in the world and their attempts to point out “supposed flaws” of the only true sound money in the world, gold and silver. I wouldn’t have embarked on this exercise were it not for the fact that BTC fanatics shockingly embrace a lot of Central Banking anti-gold propaganda in their defense of BTCs. Again, I’m distinguishing between BTC fanatics and advocates as I label as fanatics those that believe BTCs are the alpha and omega when it comes to real money. Consequently, I want to ensure that the majority of the rational BTC community does not let the propaganda of a few bitcoin fanatics pollute their minds about the true value of a BTC.

I still include myself among those that believe that BTCs should be allowed to persist as an alternative currency as long as the people are allowed to bring back gold and silver as competing currencies, so the people can choose which currency they believe to be best, as should be the case in a free society. If the global banking cartel allows BTCs to persist while at the same time shutting out a return to gold and silver money, this would be a development that would be very worrisome to me if I were a BTC owner. Again, I actually like BTCs because they are a means to fight against bankster corruption. I also consider myself a physical gold and silver advocate (not a fanatic), and one that can also see flaws in gold/silver as money as well. I don’t believe that there is any “perfect” form of money. However, gold and silver fit the bill of having the most desirable qualities of sound money, and yes, even more so than BTCs.
I quite enjoy speaking to BTC advocates. I only have serious problems with the blind, biased bitcoin fanatics. So let’s take a look at a recent article I encountered titled “Why Bitcoins are Just Like Gold”, by Alec Liu. By analytically dissecting this article, I can explain why BTCs are most definitely NOT just like gold, and expose how the author has co-opted the same false arguments bankers have disseminated for decades to denigrate gold to build his own false case for the equality of BTC and gold as sound money.

Let’s start with disinformation piece #1. Mr. Liu states: “The only reason gold has value is because one day, way back when, long before recorded history, society simply decided that this yellowish precious metal should represent ‘money’.” First of all, this sounds exactly like something US Federal Reserve Chairman Ben Bernanke or IMF head Christine Lagarde would say. I can’t tell you how many ways this statement illustrates the ignorance of the author. Gold has about 10 qualities I can think of that make it a better form of money than anything else including homogeneity, durability, rarity and ease of divisibility. These are just a few of the qualities that make gold a far superior form of money than other commodities and qualities that precluded other commodities from serving as money over centuries of time. By the way, BTC’s ease of divisibility into very small units is what makes BTC so appealing as well. However, the fact that gold has been coined as money for nearly 3,000 years was due to gold’s possession of these ideal monetary qualities and not simply an arbitrary decision as Mr. Liu foolishly avers. For example, though diamonds are also beautiful, diamonds’ supposed “rarity” is just another banker lie, (see this article),they are neither homogeneous in clarity or quality, and they are not easily divisible. Consequently, because diamonds lack these ideal monetary characteristics, no civilization has ever adopted diamonds for widespread use as money over long periods of time.
The second lie Mr Liu attributes to gold, again copied straight out of the Central Banker propaganda playbook, is the following: gold’s “limited quantities were never able to keep up with demand”. This statement, one that was also erroneously presented as fact in the Goldman Sach’s book of the year, The Lords of Finance, by Liaquat Ahamed, is even more foolish than Mr. Liu’s first statement that gold was simply plucked out of the air like a rabbit out of a hat in a decision to deem it as the best commodity suitable as money. Bitcoin fanatics do not realize that their arguments for bitcoins simultaneously destroy their arguments against gold because of the indefensible contradictory logic they apply when making many of their arguments. For example, I’ve often heard bitcoin fanatics state that that bitcoin’s appreciation upside is unlimited and better than that of gold’s. However, gold is a hard asset and rare while BTCs , while also rare, are backed by the most abundant element in the earth’s crust and third most abundant element in the universe – oxygen. Would it not make more sense for a rare form of money backed by a rare hard asset to have a much better chance to appreciate to a much higher price than a rare form of money backed by the most abundant element in the earth’s crust? Actually if BTCs can survive an inevitable attempt of the Central Bank, Government, Commercial Bank troika’s attempt to shut them down as a legitimate form of money, I don’t really see why BTCs can’t keep rising in value. I just don’t believe that its final price point can rise higher than that of gold due to the important distinction I’ve laid out. And this is why I also continually distinguish between bitcoin fanatics and rational bitcoin advocates. Often the fanatics dominate the online discussion forums and spread harmful disinformation.
But let’s return to the Central Bankers’ claim that gold’s “limited quantities were never able to keep up with demand” that some BTC fanatics seem so fond of parroting. Gold’s rarity was never a problem in its use as money in the past. This was just a false myth spread and propagated by bankers that have now been taken up BTC fanatics. Central Bankers and their puppets have always claimed that gold’s rarity limited economic growth in the 1920s and that the bottleneck of gold’s rarity greatly constricted economic growth during this time period and caused the Great Depression. That is as revisionist a retelling of history as a Keynesian economist can possibly conjure up. The Great Depression resulted from bankers at the Bank of England counterfeiting of the Pound Sterling during WWI, their subsequent refusal to revalue their counterfeited Pound at a lesser gold exchange rate after the war, the consequent loss of massive gold reserves due to this fraud, and their lobbying of the US Federal Reserve to start counterfeiting US dollars to stop their gold loss. The consequent massive price distortions, aka stock market bubble, that resulted as a result of these counterfeiting efforts is what caused the crash in the 1920s and consequent global economic crisis. Though every global economic crisis is deliberately “manufactured” by Central Bankers and their Commercial Banker puppets, bankers try to deceive the masses by blaming past historical economic crashes on gold. It is truly unfortunate that some fanatics (again, not the advocates) among the BTC community help Central Bankers propagate these egregious lies.
When the bankers ended the Gold Standard in 1933 due to gold’s so-called “handcuffing” of the economy, the price of gold was only $20.67 per ounce! By simply allowing the price of gold rise to $300 an ounce, bankers could have expanded monetary supply by nearly 15 times. However, bankers were too interested in artificially suppressing the price of gold so that the serfs would not discover that the true intrinsic worth of their fiat currency, as Cypriots are now discovering today, was zero. Why? A rising gold price always reveals the dirty secret that bankers are devaluing fiat currency and stealing purchasing power from the citizens. Rarity is an element to be desired, not feared, in a commodity that backs sound money. If it were not, then BTCs founders would have capped BTCs supply at 1 quadrillion instead of slightly under 21 billion. Thus, the problem with the global economy during the Great Depression was without a doubt, NOT the gold standard nor a lack of gold.
The problem arose due to:
(1) bankers’ abandonment of the gold standard for the world’s reserve currency (British Pound) due to war;
(2) the bankers’ decision to deliberately counterfeit a second world’s reserve currency (the USD) to aid the problem that resulted from (1); and
(3) an improper valuation of gold by bankers to preserve their global banking system of fraud and fractional reserve banking.

It is absolutely feasible today to have not a 20% backed, not a 30% backed, but a 100% gold backed system, whether or not we forgive all criminally- imposed banker debt in this world, as we should. We would need to scrap all fiat currencies in use and form a new currency to replace all fiat currencies, and then revalue gold to a significantly higher price, the exact price which would be determined by whether or not we enact jubilee or not. Again, I explain the mechanisms of how this can be accomplished in my book The Golden Gift, an excerpt of which can be found here at Scribd.
Today, the same people that buy diamond engagement rings and have no problem paying the equivalent of several million dollars per troy ounce for a flawless one-carat diamond are the same people with zero logic that say a mere $10,000 per ounce of gold is “too expensive”. Do you know how dumb this sounds from people that just paid between $2.5MM to $6MM dollars per troy ounce for their diamond engagement ring? Yes, the price of flawless one carat diamonds when you convert the price from carats to a single troy ounce is in the millions of dollars per one troy ounce.
Finally, the last utterly wrong statement Mr. Liu makes about gold is the following: “[Gold is] backed by no one…Your gold coins [ ] won’t do much good at the grocery store [because it] lack[s] intrinsic value.” Again, another foolish argument taken straight out of the Central Banker propaganda playbook. Ask Zimbabweans and Germans living during the Weimar Republic if they were able to buy food with their gold? In fact, to give you a contemporary example, go to Cyprus, and see if Cypriots that had no access to cash for about two weeks were able to buy food and other services with gold during the time bankers blocked all access to their digital bytes of air known as fiat currency. I guarantee you that Cypriots that had gold reserves and no cash were glad they did. In Zimbabwe and Weimar Germany, gold was universally accepted as money to buy nearly anything, including food. And this is why I am careful to distinguish between BTC fanatics and BTC advocates. BTC advocates that I’ve met are rational people capable of critical independent thought that understand all banker lies about gold and monetary history. On the other hand, many BTC fanatics parrot every single piece of disinformation spread by Central Bankers about gold throughout history and serve, much to the delight of bankers, as conduits to pollinate banker lies about gold and silver among the masses. Central Bankers could not have been happier with articles like “Why Bitcoins Are Just Like Gold”, because articles like these help spread banker-originated disinformation that helps keep humanity in slavery.
The characteristics that grant gold great intrinsic value are its beauty and rarity. Thus gold doesn’t need anyone to back it because its rarity AND utility grant it its value. BTC fanatics perpetually discount the fact that gold’s uses as jewelry and money, two of gold’s primary, but not only uses, grant it intrinsic value. If jewelry did not grant a commodity intrinsic value, then diamonds, rubies and sapphires should all be free like air. However, this obviously is not the case. Secondly, the fact that gold is the best commodity in the world that can serve as a medium of exchange AND as a store of value, gives it great intrinsic value. Thirdly, gold is a great conductor of electricity, and the reason we only find gold used in this capacity in very high-end, expensive electronics, is due to its rarity. If gold were as abundant as copper, gold would be used widespread in the electronics industry as a conductor.
So while BTC fanatics seem to not have any knowledge of monetary history, BTC advocates, are on the contrary, very well versed in the value of BTCs today. BTC advocates understand its great value as a medium of exchange but also understand its limitations in that they do not fit sound money’s need to be backed by a commodity that is a stable and consistent store of value. Trust me, if bankers can figure out a way to convince investors to trust in a bitcoin ETF, they will invent a bitcoin ETF to fraudulently manipulate bitcoin valuations in the same manner they have used the GLD and SLV ETFs to fraudulently manipulate gold and silver prices. People can fight back against this fraud in gold and silver by dumping or refusing to buy the GLD and SLV ETFs and buying physical precious metals, as illustrated by the University of Texas Investment Management Company, who bought $1 billion of physical gold bars in 2011. If bankers invented a bitcoin ETF, there would be no way to fight against the price manipulation executed by the banker management of this ETF because buying physical bitcoins that have no intrinsic worth cannot succeed in stopping manipulation. I know that BTC owners will think that this is a ludicrous idea and that anyone that understands how BTC works will never in a million years buy a bitcoin ETF. However, owners of physical gold and physical silver that understand why only physical gold and silver are real and sound money also believe that only a fool would buy the GLD and SLV ETFs as well. But this hasn’t stopped bankers from deceiving people into dumping billions of dollars into the GLD and SLV ETFs. As long as there are people to be fooled, the bankers will use them to manipulate the currency at hand. That is why, in the end, intrinsic value is a vital, necessary trait that all sound money must possess so that the people have a means to effectively fight back against fraud that bankers inevitably will inject into the system.
Read “The Argument of Bitcoins Laid to Rest, Part I” here.



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