The Fate of Fiat

April 18, 2013

I have come across the above item on eBay. It is selling at $60 for a 2 pound bag. It is not an illegal drug and it would not be much good for smoking either. It is simply shredded US currency and this lot is advertised as containing approximately $10,000 of US shredded currency.

That is correct, with shredding, 94% of the original value is gone and that is based on the presumption that these packets are keenly sought after at $60, which I somehow doubt.

And then I thought about gold and silver. You can cut them into little pieces, ground them to dust, beat them to the thinness of a leaf, stretch them, melt them and soak them and yet they are still worth the same. They are time's immortal travelling companions.

Many hoards of gold and silver lie buried in unknown locations, but they are not in a hurry to be found nor will they grow old or weary. Sometimes they even get lost on the bottom of the sea and crews spend millions searching for them.

But these two pound bags are a problem. Perhaps they could make a nice cushion or a conversation piece at dinner parties. Or how about the contents of a number of these bags forming the contents of a mattress so that thieves looking for money under your mattress will be fooled right under their noses?

If $60 for $10,000 of shredded currency is highway robbery, then how much more of a rip off is it to give around 7oz of gold or 560oz of silver for the un-shredded version. This is what I call conditioning. We have all been dumbed down into believing that pieces of paper with dead presidents represent value.

This is what I would also call a paradox. Americans have armed themselves to the teeth as part of their Second Amendment right to keep and bear arms. And they probably also have enough ammunition to fight all the previous wars ever waged. Yet they have somehow forgotten to hold sacred another part of their constitution which states:

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

I am of the view that had the good people of the US been able to hold onto their gold and silver coinage, they may not have felt such a strong need to keep and bear so many arms. The fiat based system of banking and commerce has stripped them of jobs, manufacturing capacity, privacy, homes and wealth and one wonders what exactly is left for them to protect (with the exception of their lives of course).

Perhaps the people of the US should have been buying silver bullets both as a store of value and as an antidote against the FED vampires that are slowly teaching them to accept 0% interest on their savings despite an inflation rate well in excess of the official statistics.

Perhaps the Government will decide that the right to keep and bear arms does not imply the right to buy and keep ammunition, thus rendering the ownership of guns largely obsolete. This sounds crazy of course until we remember that the Federal Government with the stroke of a pen decided back in the 1930's to vacuum the gold of its citizens from their pockets and to then add insult to injury by revaluing that gold by 69%. Think about that act of thievery and then link it to what has happened in Cyprus. Think about Cyprus and link that act of thievery to the "confiscation" of social security contributions by the Government in return for IOU's.

Banks and governments are the wolves and the hapless citizen who saves his "money" is the sheep. The sheep does not realize it is on the menu. In fact it is the ONLY item on the menu now, as governments slowly realize that QE and all the other mechanisms are just financial origami that are destined to fail.

Yes, those 2 pound bags are a cogent reminder of the fate that awaits fiat or as Voltaire once said, "all fiat currency returns to its intrinsic value — zero!

In the end it will not only be fiat money that is shredded. Government will also shred the promises it has made to its citizens and in the process the lives of citizens will also be shredded unless they have protected themselves with gold and silver. Anyone who doubts this, simply has to look at how many US cities and other nations are going broke as they are faced with the impossibility of funding pensions and so many other promises.

There is only one way to keep a promise from being bent or broken and that is by demanding payment in gold and silver. All else is a shameful scam and a blight on the face of humanity. Time to start waking up.

Peter Souleles

Sydney Australia

China is poised to become world's biggest gold consumer.