• Category Archives History
  • Chapter 43: Medicine

    Christian Economics: Teacher’s Edition
    And the Lord will take away from you all sickness, and none of the evil diseases of Egypt, which you knew, will he inflict on you, but he will lay them on all who hate you (Deuteronomy 7:15).
    AnalysisHealing is an aspect of covenantal ethics, according to the Bible. Health is a blessing of God; sickness is a curse. This is why the early church in the New Testament used healing as a way to demonstrate God’s new work of redemption, which was evidence of the church as God’s ecclesiastical representative in history, the replacement of Israel.
    Now Peter and John were going up to the temple at the hour of prayer, the ninth hour. And a man lame from birth was being carried, whom they laid daily at the gate of the temple that is called the Beautiful Gate to ask alms of those entering the temple. Seeing Peter and John about to go into the temple, he asked to receive alms. And Peter directed his gaze at him, as did John, and said, ‘Look at us.’ And he fixed his attention on them, expecting to receive something from them. But Peter said, ‘I have no silver and gold, but what I do have I give to you. In the name of Jesus Christ of Nazareth, rise up and walk!’ And he took him by the right hand and raised him up, and immediately his feet and ankles were made strong. And leaping up, he stood and began to walk, and entered the temple with them, walking and leaping and praising God (Acts 3:1 – 8).
    The ability to heal miraculously has always been regarded by the masses as evidence of a person’s special relation to God. This same attitude prevails today in an era of scientific medicine. Medical missionaries are granted access into nations that are otherwise closed to missionaries. Political leaders regard the benefits of healing as outweighing the negatives of evangelism. Jews understood this principle in the Middle Ages. They became physicians to gain acceptance in the gentile world. Moses Maimonides, the Rambam, was the most famous Jewish theologian and philosopher of the Middle Ages. He was also the senior physician of the sultan of Cairo in the late twelfth century. Christian hospitals in the later Middle Ages were ministries of churches and ecclesiastical orders. Then there is the remarkable account written by lvar Nez Cabeza de Vaca of his eight-year trek from Florida through Texas into Mexico, 1528 – 1536. He describes the strange fact that he and his companions gained the power of healing halfway through their journey. They were welcomed by Indian tribes from Texas country to Mexico because of this. Word spread in advance that they were coming, tribe by tribe. They would probably have been killed had they not possessed this power. Instead, they were supported with food and water.

    This post was published at Gary North on July 22, 2017.

  • You Can Always Hide in Kazakhstan — Nick Giambruno/Doug Casey

    Kazakhstan is gigantic. Over a million square miles – the size of Western Europe, or the U.S. east of the Mississippi – but with only 17 million people. In the east, on its 2,000-mile-long border with China, the Himalayas rise up out of the plains, but most of the country is just vast, desolate grasslands, or steppe. Two-thirds of the people are central Asians – tall, rangy looking Orientals who speak languages in the Turkic group; one third are Russians.
    That’s information you can get out of any world atlas, and it’s not worth much, because nothing that everyone knows is worth much. What I want to do is tell you what I think it means. What’s going to happen in Central Asia in the near term and long term, and what you may want to do about it.
    My friend Rick Maybury coined the term “Chaostan” for this whole part of the world. It’s populated by dozens of tribes and ethnic groups, most of them ex-nomads speaking different languages.
    Perversely, the main things tying them together are a veneer of Soviet culture and the Russian language. And one other thing: an ingrained dislike of Russians. These folks have just never learned to appreciate the Russians conquering them, purging them, taxing them, destroying their indigenous cultures, and drafting them for their armies. They rather resent having been used as pawns in what used to be known as “The Great Game,” which was largely played between the Russians and the British in the 19th century.

    This post was published at International Man

  • The Death Of Facts

    Needless to say, none of this is true. Nowhere has Heather Mac Donald suggested that black people or any other type of person has “no right to exist”. The accusation is levelled without evidence. But as with all anti-free-speech activists today, the line is blurred not merely between actual words and violence, but between wholly imagined words and violence. Every week in America brings another spate of defeats for freedom of speech. This past week it was Ann Coulter’s turn (yet again) to be banned from speaking at Berkeley for what the university authorities purport to be “health and safety” reasons — meaning the health and safety of the speaker.
    Each time this happens, there are similar responses. Those who broadly agree with the views of the speaker complain about the loss of one of the fundamental rights which the Founding Fathers bestowed on the American people. Those who may be on the same political side but find the speaker somewhat distasteful find a way to be slightly muted or silent. Those who disagree with the speaker’s views applaud the banning as an appropriate response to apparently imminent incitement.
    The problem throughout all of this is that the reasons why people should be supporting freedom of speech (to correct themselves where they are in error, and strengthen their arguments where they are not) are actually becoming lost in America.
    No greater demonstration of this muddle exists than a letter put together by a group of students at Claremont McKenna College earlier this month to protest the appearance on their campus of a speaker with whom they disagreed.

    This post was published at Zero Hedge on May 4, 2017.

  • The Main Highlights In Trump’s Sweeping Tax Reform Proposal

    In brief, the tax reform was largely in line with what was leaked and what was expected. Small surprises: the tax bracket for high income earners was 2% more (at 35%) than what Trump campaigned on, and the standard deduction has been doubled so that no married couple pays tax on their first 24k earned, Citi notes.
    As expected, no mention of border adjustment taxes. The plan also looks to repeal real estate taxes, alternative minimum tax and the death tax. Territorial taxes are also included. As we type, Mnuchin and Cohn are answering their last question.
    Below is the actual tax from the White House:
    2017 Tax Reform for Economic Growth and American Jobs
    The Biggest Individual And Business Tax Cut in American History
    Goals For Tax Reform
    Grow the economy and create millions of jobs Simplify our burdensome tax code Provide tax relief to American families – especially middle-income families Lower the business tax rate from one of the highest in the world to one of the lowest

    This post was published at Zero Hedge on Apr 26, 2017.

  • Money In America

    In 1830, France was once more swept up in revolution, only this time at the end of it was installed one king to replace another. Louis-Phillipe became, in fact, France’s last king as a result of that July Revolution. The country was trying to make sense of its imperial past with the growing democratic sentiments of the 19th century. Despite being one of the richest men in all Europe and aligned with the Bourbons, he was Duke of Orleans and married to a Neapolitan princess, the reign of Louis-Phillipe I was supposed to be a milder form of dominion, the so-called citizen king or bourgeois monarch.
    Caught up in the upheaval of 1830 were many who had been aligned with the deposed Charles X. Because the citizen king was viewed as a usurper throughout much of France, his time on the throne tended to be more repressive, particularly toward those who had at least been in the Charles court and government. Among them was a Versailles lawyer named Gustave de Beaumont, who, sensing that the political winds had shifted despite the grand upheaval toward (outwardly, at least) more liberal sentiments, gained permission to get out of the country.
    Beaumont would travel to the United States ostensibly to study in grand and comprehensive detail its penal system. He set out in April 1831 taking with him a young 25-year old friend, a former magistrate who had similarly found himself of disfavor under the bourgeois monarch. The two landed in Rhode Island and traveled all over the country doing quite a bit more investigation than strictly prison life in the United States. It was, in fact, an examination of this country’s political soul.

    This post was published at Wall Street Examiner on April 21, 2017.

  • The Tax Man Is Every Company’s Customer

    Today is Tax Day in America. When April 15th happens to fall on a weekend, the IRS generously permits us to extend the filing ritual until the following Monday. But since Monday was a holiday in the District of Columbia known (without irony) as Emancipation Day, we all enjoyed an extra bonus day to comply. And for the most part, comply we do: the voluntary compliance rate, defined by the IRS as taxes timely paid as a percentage of taxes owed in aggregate, is nearly 82%. Compare this with Italy, for example, where tax evasion is a national pastime. For a nation born out of tax resistance, we Americans tend to grumble but not revolt.
    We also tend to view taxes only in terms of personal pain: the financial costs of paying, the compliance costs of dealing with the paperwork, and the psychic costs of worrying about it all. It is precisely this pain, experienced only by individuals, that upends the left-wing rationale for imposing taxes on business entities, estates, and all manner of transactions. Only people pay taxes. When someone talks about raising taxes on ‘greedy corporations,’ they’re really calling for higher consumer prices for those corporations’ goods and services.
    But the larger impact of taxation is found in the countless and profound ways it changes human activity. Charles Adams, the great tax historian, devoted his career to examining the enormous sociological and cultural impacts resulting from how states raise revenue. Adams called taxes a ‘prime mover of history,’ from ancient Egypt through the Middle Ages, from Enlightenment Europe to Colonial America and all the way up to our present world of offshore tax havens. Taxes, Adams maintained, are far from the price we pay for civilization. Instead they are mean, petty, and arbitrary, causing existential struggles for the poorest people in societies across history. Taxes not only fund wars and enrich unworthy rulers, but also create crippling distortions in every economy the world has ever known.

    This post was published at Ludwig von Mises Institute on April 18, 2017.

  • Taxation is Theft

    With a tax code that exceeds 72,000 pages in length and consumes more than six billion person hours per year to determine taxpayers’ taxable income, with an IRS that has become a feared law unto itself, and with a government that continues to extract more wealth from every taxpaying American every year, is it any wonder that April 15th is a day of dread in America? Social Security taxes and income taxes have dogged us all since their institution during the last century, and few politicians have been willing to address these ploys for what they are: theft.
    During the 2012 election, then-Texas Gov. Rick Perry caused a firestorm among big-government types during the Republican presidential primaries last year when he called Social Security a Ponzi scheme. He was right. It’s been a scam from its inception, and it’s still a scam today.
    When Social Security was established in 1935, it was intended to provide minimal financial assistance to those too old to work. It was also intended to cause voters to become dependent on Franklin Delano Roosevelt’s Democrats. FDR copied the idea from a system established in Italy by Mussolini. The plan was to have certain workers and their employers make small contributions to a fund that would be held in trust for the workers by the government. At the time, the average life expectancy of Americans was 61 years of age, but Social Security didn’t kick in until age 65. Thus, the system was geared to take money from the average American worker that he would never see returned.

    This post was published at Ludwig von Mises Institute on April 13, 2017.

  • Stocks and Precious Metals Charts – I See Them Long Hard Times To Come

    “Governments can err, Presidents do make mistakes, but the immortal Dante tells us that divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted on different scales. Better the occasional faults of a Government that lives in a spirit of charity, than the constant omission of a Government frozen in the ice of its own indifference.”
    Franklin D. Roosevelt
    Today was a ‘risk off’ day, although stocks managed to take back much of their losses after the European close.
    Gold and silver went out near their highs.
    The precious metals are jammed up against overhead resistance.

    This post was published at Jesses Crossroads Cafe on 11 APRIL 2017.

  • The War on Cash: Old and New

    Before the United States ran aground on the dangerous reefs of State interventionism and centralism, the dollar was not only a sign of stability, but also a symbol of human freedom. A dollar was a means to express your wants and commands to the business class. The consumer, for the most part, was sovereign. Any American could save, consume, and invest his money whose value was not debauched by a government in lack of resources. To this day, and despite the evils of inflationism and central banking, the dollar remains an instrument of freedom and independence for many Americans. There are those, however, who would like to change that. They are the Wall Street financiers, politicians, annointed intellectuals, and central bankers for whom a centralized control of the money supply is not enough. To them, not only the supply of money but also the free and innocent use of money should be strictly limited and regulated by the State. Their new enemy is the banknote and their new war is the war on cash.
    It is said of Heraclitus that he wrote that ‘no man ever steps in the same river twice, for it is not the same river and he is not the same man.’ The river has changed indeed, and so has changed the war on cash. It is an irony of American history that in the 1830s and 1840s, the war on cash meant something totally different than today. In the middle of the 19th century, the circulation of banknotes was synonymous with the excesses of fractional reserve banking and the debasement of the currency. At the time, the war on cash was a war for sound money.

    This post was published at Ludwig von Mises Institute on March 30, 2017.

  • Massive 100 Kilogram Gold Coin Worth $4.5 Million Stolen From German Museum

    Perhaps even more brazen than the infamous theft of a bucket full of gold woth $1.6 million from an armored truck in broad daylight in Midtown Manhattan last September 29, moments ago local German press has reported that thieves broke into Berlin’s Bode Museum and made off with a massive 100-kilogram (221-pound) gold coin worth millions.
    According to German media, the stolen coin is the “Big Maple Leaf”, a commemorative piece issued by the Royal Canadian Mint in 2007. The three-centimeter (1.18-inch) thick coin, with a diameter of 53 centimeters (20.9 inches), has a face value of $1 million. By weight alone, however, it would be worth almost $4.5 million at market prices.
    The Bode Museum, located on the German capital’s UNESCO-listed Museum Island, houses one of the world’s biggest coin collections. The holding includes 102,000 coins from ancient Greece and about 50,000 Roman coins.

    This post was published at Zero Hedge on Mar 27, 2017.

  • Are America And China Destined For War?

    In his recent book The Improbable War, professor Christopher Coker explains that it is ‘of vital importance that the possibility of a conflict between China and the United States continues to be discussed.’ Coker’s rationale for this is simple: ‘If the United States and China continue to convince themselves that war is too ‘improbable’ to take seriously, it is not they but the rest of the world that may ultimately pay the price.’
    It would seem the good professor’s wish is about to be granted. We are about to be treated to what surely will be a media blitz over what can only be described as the most comprehensive book to ever tackle the question of not only whether a US-China war is possible, but what steps Washington and Beijing can take to avoid such a calamity.
    Written by one of the world’s most prominent political scientists and strategic thinkers of the day, director of Harvard University’s Belfer Center, Graham Allison, anyone who has been following China in recent years likely guessed such an effort was in the works. The book is hooked on Allison’s popular ‘Thucydides Trap’ concept. The trap, as Allison described in a prominent piece for the Atlantic in 2015, is ‘the attendant dangers when a rising power rivals a ruling power – as Athens challenged Sparta in ancient Greece, or as Germany did Britain a century ago.’ Allison goes on to warn that in 12 of 16 cases he has studied throughout history, when such a situation takes place, war has been the result.

    This post was published at Zero Hedge on Mar 27, 2017.

  • Why Obamacare is the Biggest Fraud in American History & Was Designed to Be Exactly That!

    When we look at the markets and try to ascertain the long-term direction, we must look at politics closely, for this holds the key. First, this is a Private Wave and that means the confidence in government is collapsing. Hence, the question for the direction of stocks, gold, interest rates, and the world economy, all hinges on how fast the perception of government collapsed on a global scale. Both sides of the aisle are corrupt and rotten to the core. Republican or Democrat, they are all in this for what they personally can grab and they are incapable of doing anything right for society because power corrupts.
    It was the Democrats who came up with the Social Security scheme and designed it to be exactly as a fraud that anyone in the private sector would do to jail for. They used the Ponzi Scheme model where you take money from one person and pay another so they think they have a profit and more and more people come to invest. Here they would impose a tax upon the younger generation to pay for the older generation while telling people they were paying into a retirement fund. Of course, Congress used the money to fund spending for other things and stuffed the fund with government bonds preventing it from ever investing.

    This post was published at Armstrong Economics on Mar 21, 2017.

  • Donald Trump Owns the Fed, the Dollar & Gold

    Donald Trump has the opportunity to appoint a higher percentage of the Board of Governors of the Federal Reserve system at one time than any President since Woodrow Wilson.
    President Wilson signed the Federal Reserve Act during the creation of the Fed in 1913 when they had a vacant board. At that time the law said the Secretary of the Treasury and the Comptroller of the Currency were automatically on the Fed’s board of governors. But besides that, President Wilson selected all five of the other participating members.
    Now, Trump has the opportunity to fill more of seats on the Fed’s board of Governors than any president since then.
    To review, the Federal Reserve’s Board of Governors is made up of seven appointees. That means that they can make a majority decision with four votes. If you’re reading about the Fed, you might also see reference to ‘regional reserve bank presidents.’ These are roles within the Federal Reserve System, but the real power is found on seven member Board of Governors. (Here’s a little bit more on the Federal Reserve, if you’re interested.)
    Right now, there are two vacancies on the board.

    This post was published at Wall Street Examiner on March 17, 2017.

  • What Went Wrong in Wall Street Reform: Obama Versus FDR

    Following the Wall Street crash of 1929, thousands of banks failed in the United States. More than 3,000 banks went under in 1931 followed by more than 1400 the following year. There was no Federal insurance on bank deposits in those days so both depositors and shareholders were wiped out or received pennies on the dollar when the banks went bust. This deepened the panic and deepened the Great Depression.
    Many of the bank failures stemmed from the banks using depositors’ money to speculate in the stock market, sometimes to manipulate the price of their own stock.
    Franklin Delano Roosevelt was sworn in as President of the United States on March 4, 1933. Two days later he declared a national banking holiday, meaning that he closed all the banks and sent in the examiners to determine which ones were sound and which ones were insolvent. The banking holiday lasted to March 13. Just three months later, on June 16, 1933, FDR and Congress enacted the Glass-Steagall Act also known as the Banking Act of 1933.
    The Glass-Steagall Act created Federal deposit insurance at commercial banks while simultaneously restricting their ability to act as Wall Street casinos and speculate in stocks or risky debt securities. The legislation required that commercial banks had to be separate from investment banks and brokerage firms.
    That legislation protected America’s banking system from the hubris of Wall Street traders for the next 66 years until its repeal on November 12, 1999 during the Clinton administration.
    It took just 9 years after the lifting of the Glass-Steagall Act for Wall Street to once again crash in epic fashion. But this time, instead of having thousands of insolvent small and medium size banks going belly up around the country, we had behemoth banks like Citigroup, Wachovia, Washington Mutual, Lehman Brothers and Merrill Lynch either going belly up or being propped up through secret funding from the Federal Reserve.

    This post was published at Wall Street On Parade on March 15, 2017.

  • Silver Very Undervalued from Historical Perpective of Ancient Greece

    – What wages in ancient Athens can tell us about the silver price today
    – Wages paid in silver in ancient Athens compared to wages today
    – Silver massively undervalued compared to the past few thousand years
    Today we look at the wages paid to oarsmen on warships in ancient Athens in 450BC.
    I bet you’ve never read a Money Morning that began like that before.
    Why on earth would I want to do such a thing?
    Because it tells us a great deal about the silver price today…
    How wages in ancient Athens compare to today
    In The Economy of Ancient Greece, historian Darel Engen describes how the Athenian unit of money – the talent (about 26kg of silver) – could purchase nine years of a skilled man’s labour. If we assume 250 working days in a year, that works out at about 11.5g of silver per day – a little under 0.3 of a troy ounce.

    This post was published at Gold Core on March 9, 2017.

  • Tax Reform: The Good, the Bad, and the Really Ugly – Part Five

    The Super-Trend Puzzle
    Washington DC: Debt Conduit
    Growing Debt and Slowing GDP
    How Much Government Do You Want?
    You Can’t Cut Spending to Get a Balanced Budget
    Incoherent Contradictory Dysfunctional Voters
    Changing and Incentivizing the Corporate Tax System
    Moving to a Consumption Tax Revenue Source
    What True Tax Reform Could Look Like
    New Jersey and New Launches
    ‘A tax loophole is something that benefits the other guy. If it benefits you, it is tax reform’
    – Russell B. Long
    ‘Corporate tax reform is nice in theory but tough in practice.’
    – Andrew Ross Sorkin
    ‘I hold it that a little rebellion, now and then, is a good thing, and as necessary in the political world as storms in the physical. Unsuccessful rebellions, indeed, generally establish the encroachments on the rights of the people, which have produced them. An observation of this truth should render honest republican governors so mild in their punishment of rebellions, as not to discourage them too much. It is a medicine necessary for the sound health of government.’
    – Thomas Jefferson, in a letter to James Madison. January 30, 1787 (230 years ago)
    ‘You say you want a revolution
    Well, you know we all want to change the world
    You tell me that it’s evolution
    Well, you know
    We all want to change the world…
    You say you got a real solution
    Well, you know we’d all love to see the plan
    You ask me for a contribution
    Well you know we’re doing what we can.
    But it’s gonna be all right!’
    – John Lennon/Paul McCartney, the Beatles, 1968

    This post was published at Mauldin Economics on MARCH 7, 2017.

  • POWERFUL GOLD & SILVER COILED SPRINGS: Important Charts You Have To See

    According to the fundamentals, gold and silver are severely compressed coiled springs looking for an opportunity to release their tremendous power. Yes, it is true, the precious metals still hold a great deal of power. Which is why their prices are constantly controlled by market intervention.
    Of course, the market intervention of gold and silver didn’t start recently. Oh no, this has been going on for quite some time. Even though the Central Banks and Gadflies on the financial networks have been able to BAMBOOZLE the public into believing gold is a ‘Barbarous relic’, fundamentals and the laws of nature can’t be broken forever… as serious consequences normally follow.
    When I read comments from supposedly intelligent people who believe gold is nothing more than a ’13th century Middle Ages relic’, and ‘that digital currency is the new future’, what in the hell happened to IQ levels recently???
    There seems to be this notion put forth by many in the Mainstream and Alternative media that ‘TECHNOLOGY’ is going to save us all and be the new religion of the future. While I have nothing against technology per say, it will not be the solution to our extremely serious energy predicament we are about to face head on.
    For example, there are several voices out in the Alternative media suggesting that ‘Alien technology’ will be finally released into the world, thus allowing our ADVANCED EMPIRE to continue indefinitely. This of course would be a great benefit for Americans as it would allow them to continue filling their homes and rental storage units with all sorts crappy consumer products.
    According to the supposed history of Alien encounters on the earth, they have been toying with humans for quite some time. So, the idea that they will allow us to use some of their technology to save a species that shows such a high degree of IGNORANCE, STUPIDITY, CRUELTY & GREED, doesn’t pass the smell test to me.

    This post was published at SRSrocco Report on February 23, 2017.

  • The Three Seasons Of Greenspan – And Why The Third Won’t Redeem The Second

    When the history of these times is written, former Fed Chair Alan Greenspan will be one of the major villains, but also one of the greatest mysteries. This is so because he has, in effect, been three different people.
    He began public life brilliantly, as a libertarian thinker who said some compelling and accurate things about gold and its role in the world. An example from 1966:
    An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other…
    … In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in 1934 under FDR]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

    This post was published at DollarCollapse on FEBRUARY 18, 2017.

  • The origin of cycles

    It was Karl Marx who was among the first believers that cyclical behaviour was endemic to free markets.
    He lived through a time when there was a regular cycle of boom and bust, with phases of economic expansion followed by contraction. Workers were employed and then unemployed, and the only way this could be stopped, in Marxian economics, was for the workers to acquire the means of production, or more correctly, the state to do so on their behalf.
    Other economists, such as Jevons and Wicksell, recognised the possibility of long-term fluctuations in commodity prices, but they did not formalise them into cyclical behaviour. Since Marx’s vision, several cycles have been identified, some of which go in and out of fashion. Groundwork on long-term cycles was conducted by the Russian-Marxist Nikolai Kondratiev, who identified a long wave cycle of 45 – 60 years, and by Joseph Schumpeter, an economist of the Austrian school, who identified several overlapping cycles, drawing on the work of others, such as Juglar (7-11 years fixed investment) and Kitchen (3-7 years fixed inventory)i. The American economist and father of gross domestic product, Simon Kuznets, reckoned there was a 15-20 year cycle of infrastructure investment.
    Additionally, and more recently, cycles in human behaviour have been attributed to sunspots and other phenomena. Since the 1980s, computer aggregation of data has allowed technical analysts to devise proprietary systems for forecasting cycle-driven price events. Cycles are big business today, fuelling an unprecedented public participation in securities markets, today’s destination for savings, and the media for wealth management.
    Accurate price data are not generally available from the time before commodity markets were properly established in the nineteenth century. Reliable data on commodities only really dates from about 1865, some time after global commodity trading had become established and people began to record historic prices. Modern data collection, the basis of GDP and consumer price indices, dates from the 1930s with the commencement of national accounting. Therefore, extrapolation back in time, particularly for evidence of long-wave cycles, requires a leap of faith to replace hard evidence. Therefore, the only way to identify their origin and validity is to consider the subject on a sound aprioristic basis. The intent of this article is to explain the phenomena that give rise to business and economic cycles, demonstrating they can only be the result of unsound money.
    The sound money hypothesis
    Sound money is defined as physical gold, or fully-backed substitutes redeemable in total for physical bullion. It is a condition that has never occurred with fractional reserve banking, which formally dates from Peel’s Bank Charter Act of 1844, because that legislation permitted banks to create credit money not backed by bullion. Furthermore, a note issue monopoly was granted to the Bank of England, partially backed by government debt, though subsequent note issues had to be gold-backed. Therefore, money and credit in issue were far from sound.
    Before 1844, sound money was also compromised, with gold convertibility of banknotes suspended by the Bank of England in February 1797, and only resumed in 1821. Between 1821 – 1844, country banks issued their own bank notes, and there were periodic failures, the result of over-issuance of these liabilities relative to bullion and genuine claims on bullion in the banks’ possession.

    This post was published at GoldMoney on FEBRUARY 16, 2017.