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He does not promise wealth, but safety. He does not guarantee prosperity, but survival.<\/p>\n
Gold, whose ounce was flirting with $2,000 as recently as March 2024, is now on the verge of crossing the $4,400 mark. Up more than 55% over one year, and 16% this month alone, its acceleration is spectacular.<\/p>\n
Perfectly proportional to the near-irreversible distrust toward the global financial order revealed by the surge of this \u201cbarbarous relic\u201d (to use Keynes\u2019s words), dethroned on August 15, 1971, by Richard Nixon, who \u201ctemporarily\u201d suspended the dollar\u2019s convertibility into gold.<\/p>\n
Probably inspired by Clemenceau, who once said that \u201cnothing lasts longer than the temporary,\u201d President Nixon was already perfectly aware\u2014even then\u2014that there were far more dollars in circulation than gold in reserve<\/strong>.<\/p>\n Sixty-four years later, we are witnessing in real time the application of what could be called \u201cThiers\u2019s Law,\u201d named after one of France\u2019s great statesmen, Adolphe Thiers, the first President of the Third Republic.<\/p>\n Excerpt from his address to the National Assembly on September 16, 1848, during the debate on the Constitution, in which he tackled the question of paper money:<\/p>\n \u201cPaper money \u2014 this currency whose value depends solely on public confidence \u2014 when that confidence fails, what becomes of it? It depreciates. It loses its guarantees. And then, the worker, the craftsman, the merchant refuse to accept it, or do so at a lower price.<\/em> Isn\u2019t this speech eerily modern and suited to our current circumstances, 177 years later?<\/p>\n His principle, set forth in 1848 but studied in economics departments around the world, explains how economic agents hoard the \u201cgood\u201d money and spend the \u201cbad,\u201d of lesser value.<\/p>\n Thiers knew his history: that of ancient empires which, in times of hardship, diluted the concentration of gold and silver in their coins!<\/p>\n This is precisely the phenomenon analyzed by a counselor to Queen Elizabeth I of England in the 16th century, Thomas Gresham, who observed (after Aristophanes and Copernicus) that \u201cbad\u201d money is systematically used for transactions, while \u201cgood\u201d money (the one with higher intrinsic value) is hoarded.<\/p>\n Gresham\u2019s Law demonstrates how high-quality money\u2014whatever its form\u2014tends to become scarce, even to vanish from circulation, locked away in vaults \u2014 today in metal accounts or even on the blockchain for cryptocurrencies \u2014 while the depreciated money floods the markets.<\/p>\n These principles apply today with chilling accuracy.<\/p>\n Fiat currencies \u2014 the dollar, euro, and yen \u2014 seem like empty shells, sustained only by a fading confidence in faltering institutions and exhausted central banks.<\/p>\n Visible symptoms of the system\u2019s loss of credibility and of the failure of those in power: the U.S. Federal Reserve brought to its knees by a reality in which the cost of food and housing is soaring by 20\u201330% in real annual terms; a politically fractured Europe whose only escape forward is to rearm massively and rekindle its old demons; a Japan that no longer counts.<\/p>\n The laws of Thiers and Gresham are not dusty theories. They dissect the relentless mechanics of our implosion.<\/p>\n At $4,400 an ounce, the Western monetary empire no longer decays slowly \u2014 it convulses.<\/strong><\/p>\n The United States of America now bears a debt easier to state as 40 trillion dollars than as forty thousand billion. For the first time in its history, its annual debt service ($1.16 trillion) exceeds its military spending ($1.13 trillion).<\/p>\n The payment of interest on its debt now surpasses the cost of maintaining and expanding its empire.<\/em><\/p>\n I wonder what Nixon would do today, in this situation, as all the tricks seem to have run out.<\/p>\n After all \u2014 true wealth may not be printable.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" He does not promise wealth, but safety. He does not guarantee prosperity, but survival. Gold, whose ounce was flirting with $2,000 as recently as March 2024, is now on the verge of crossing the $4,400 mark. Up more than 55% over one year, and 16% this month alone, its acceleration is spectacular. Perfectly proportional to…<\/p>\n","protected":false},"author":4,"featured_media":30453,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"give_campaign_id":0,"_crdt_document":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"mc4wp_mailchimp_campaign":[],"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[648941282,648942748,648941306,648942282],"tags":[],"class_list":["post-30456","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-capitalism","category-currency-manipulation","category-default","category-financial-crisis"],"yoast_head":"\n
\n\ud83c\udfdb\ufe0f Thiers\u2019s Visionary Speech of 1848<\/h3>\n
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It is not enough to decree that this paper shall be worth a certain amount; someone must be willing to exchange it for that amount. If such exchange does not occur, money remains foreign to the real economy, and society suffers.<\/em>
Money is not an arbitrary creation of the law; it is a commodity \u2014 a precious one \u2014 chosen by the universal consent of peoples.<\/em>
When the State seeks to substitute its credit for that of metal, it attempts something that social nature does not permit. Paper money, gentlemen, is an illusion of wealth. It creates no real value; it merely shifts existing wealth. It is dangerous, for it can be issued in excessive quantities, thereby depreciating its own value.<\/em>\u201d<\/p>\n<\/blockquote>\n
\n\ud83d\udca1 An Economic Lesson Still Relevant Today<\/h3>\n
If given the freedom, Thiers affirmed, people will naturally choose the best currency \u2014 the one in which they have confidence<\/strong>.<\/p>\n
\n\u2696\ufe0f From Thiers to Gresham: The Mechanics of Money<\/h3>\n
\n\ud83d\udca3 The Foretold Implosion of the Fiat System<\/h3>\n
\n\u2696\ufe0f Thiers and Gresham: More Relevant Than Ever<\/h3>\n