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Power Corrupts

October 2, 2003

"… orthodox economists, as well as Marx, who in this respect agreed with them, were mistaken in supposing that economic self-interest could be taken as the fundamental motive in the social sciences. ……. When a moderate degree of comfort is assured, both individuals and communities will pursue power rather than wealth; they may seek wealth as a means of power, or they may forego an increase of wealth in order to secure an increase of power, but in the former case as in the latter their fundamental motive is not economic" (Source: Power, Bertrand Russell, 1938)

If Bertrand Russell was correct (and from my own lifetime observation I have come to believe that he was), then it follows that the most important driver of social behaviour in the "civilised" world is the striving for power - by one (or one group) of individual/s over another.

In essence, in the economic Colosseum where the battle for ultimate power is waged, there are two camps:

  • Those who view Precious Metals as the ultimate store of wealth and who seek to accumulate as much of it as possible. Under this scenario, "he who owns the gold (or holds the certificate of entitlement to it) makes the rules".
  • Those who seek to leapfrog Precious Metals as the ultimate store of wealth, and to create their own (much larger and more geographically influential) power base by means of money that has been created by Government fiat. Under this scenario, "credit" is used as a tool for manipulating the behaviour of others over whom power is to be wielded.

The chart below provides clear evidence that - over the past 600 years - power has been devolving from the Gladiators in the Precious Metals camp to the Gladiators in Credit camp.

This is a 600-year graph of silver prices and silver/gold ratio from 1344 to 1998 as shown in 1998 dollars.


First, we should ask ourselves: Where does the idea come from that silver and gold are the ultimate store of wealth (power)?

The answer is: From what is now known as the Middle East, approximately 3,500 years B.C.E. However, a secondary source was the Far East - in particular China - at around the same time. Gold has also played an important role in Indianculture, and continues to do so to this day.

Next, we should ask: When did modern day banking and credit first begin to manifest?

The answer: "… Venice, …… is considered the cradle of banking as we know it today. … By the year 1361, there already had been sufficient abuse in banking that the Venetian Senate passed a law forbidding bankers to engage in any other commercial pursuit, thus removing the temptation to use their depositor's funds to finance their own enterprises. They were also required to open their books for public inspection and to keep their stockpile of coins available for viewing at all reasonable times. In 1524, a board of bank examiners was created and, two years later, all banks were required to settle accounts between themselves in coin rather than check.

In spite of these precautions, however, the largest bank at the time, the house of Pisano and Tieplo, had been active in lending against reserves and, in 1584, was forced to close its doors because of inability to refund depositors. The government picked up the pieces at that point and a state bank was established, the Banco della Piazza del Rialto. Having learned from the recent experience with bankruptcy, the new bank was not allowed to make any loans. There could be no profit from the issuance of credit. The bank was required to sustain itself solely from fees for coin storage, exchanging currencies, handling the transfer of payments between customers, and notary services." (Source: The Creature from Jekyll Island, A second look at the Federal Reserve System. Griffin, 1994):

Now, let's look at the above dates in the context of the Silver Price Chart:

The Silver Price peaked in 1477 - roughly midway between 1361 and 1524.

By 1524, the Ultra Long Term "Primary Uptrend" had been penetrated on the downside.

By 1584, the Silver Price had fallen from its peak of $806 (in 1998 dollars) to around $150 an ounce.

Today, it stands at around $4 - $5/oz in 1998 terms, having fallen from around $40 at the time that the US Federal Reserve Board was established in 1917.

So, for around 600 - 650 years, the battle for ultimate power has been raging and, until recently the bankers, their backers and a privileged few Captains of Commerce and Industry in their orbit have been winning the battle.

In the book The Modern Corporation and Private Property, by Berle and Means (1932) the authors "contend[ed] that although ownership is centrifugal, economic power is centripetal; by a very careful and exhaustive investigation they arrive at the conclusion that two thousand individuals control half the industry of the United States (page 33)" … "The concentration of power in these vast economic organisations is analogous - so they argue - to that in the mediaeval Church or in the National State, and is such as to enable corporations to compete with States on equal terms." (Source: Bertrand Russell, ibid)

Let us now turn our attention to where the challenge to the power of modern day Western "Establishment" is coming from.

  • 25% of the world's population is rooted in the Middle East (but now mostly live in Asia) in the form of the Muslim Nations of the world which, in 1998, numbered approximately 1.6 billion ( (Oil)
  • Another 1.26 billion (20%) live in China. (Low cost wage infrastructure)
  • Another 846 million (13%) live in India (Low cost wage infrastructure)

It follows that a total of around 58% of the world's population live in countries which have, from the dawn of recorded time, regarded "power" to flow ultimately from the wealth that is stored in Precious Metals.

There are those who would wish to see the price of Gold rise to $3,000 per ounce and higher. Understand from all of the above the implications and consequences of what you are wishing for. You are wishing for a collapse of the power base of the ruling Establishment Elite within the West, a probable accompanying destruction of the Western way of life, and a devolution of power from the West to the East.

Dispassionately, one can argue that the writing is on the wall: Unless Humanity brings its primal instincts under control, we may be facing a possible epic crescendo in the ongoing "battle".

How are we in the West positioning for this possibility? Here is a clue:

"Whenever there is acute danger, the impulse of most people is to seek out Authority and submit to it; at such moments, few would dream of revolution. When war breaks out, people have similar feelings towards the Government" (Bertrand Russell, ibid)

There is evidence that the US population is beginning to willingly submit itself to Authority. From an article in yesterday's New York Times:

U.S. Uses Terror Law to Pursue Crimes From Drugs to Swindling


Published: September 28, 2003

WASHINGTON, Sept. 27 - The Bush administration, which calls the USA Patriot Act perhaps its most essential tool in fighting terrorists, has begun using the law with increasing frequency in many criminal investigations that have little or no connection to terrorism.


Here is another clue:

"The man who has vast mechanical power at his command is likely, if uncontrolled, to feel himself a god - not a Christian God of Love, but a pagan Thor or Vulcan." (Bertrand Russell, ibid);

Witness the (ill advised) adventure in Afghanistan, and the (as yet un-validated) attack on Iraq.

In simple terms, in the World today the protagonists of gold as the ultimate store of wealth (and power) - in particular those amongst Islamic Nations such as Indonesia and Malaysia, and also those who control the oil deposits in the Middle East - have come to believe that the power that has been accumulated by Western Civilisation over hundreds of years has given rise to corruption. To put it in the words of Sir J.E.E. Dalberg, the First Baron Acton: "Power tends to corrupt, and absolute power corrupts absolutely" (Letter in Life of Mandell Creighton). That, in essence, is why the forces of Terrorism have been stirring. That, in essence, is why Prime Minister Mohamad Mahathir of Malaysia is moving to establish the gold Dinar as a medium of exchange.


"KUALA LUMPUR: Prime Minister Mahathir Mohamad proposed Tuesday that the gold dinar be used for international trade to prevent a repeat of the currency crisis which devastated Asia in 1997-98. The Malaysian premier, who blames greedy currency traders for Asia's downfall in the crisis, said paper currency had no intrinsic value, making the exchange rate "arbitrary and subject to manipulation as we saw during the Asian financial crisis."

In comparison, the gold dinar had a definite value based on world demand for gold and any fluctuations were minimal, he said. According to Islamic law, the dinar is a specific weight of gold equivalent to 4.3 grams. "The proposal is to make this dinar a currency for international trade only. It is not meant to replace the currency of any country," he said when launching a two-day conference on Islamic capital markets."

Aligned against the "forces" of Terrorism (and also of the emerging low wage production/service powerhouses of China and India), are the vested interests of Western Civilisation, whose power has been delegated, ultimately, to a single relatively pedestrian individual who has a predisposition to dress in fancy dress, and who also has vast mechanical power at his command.

Let us not be too partisan in our viewpoints here. It is equally clear that the uprising of Terrorism and the move by some Muslim Nations to confront the fiat currency power base are not actions which have been motivated by seraphic indignation or outrage. The outrage is what is being used to "sell" the idea of confrontation to the masses in those countries. Russell also argues that the accumulation of power can be accelerated by means of the use of propaganda and, if we use this logic as a point of departure, we come to the inevitable conclusion that what is really happening is that the organisers of the Terrorist uprisings (Osama Bin Ladin et al) and the move to establish the gold Dinar as an exchange medium (Mahathir et al) are more than likely being motivated by the desire of the Gladiators in the Precious Metals camp to establish and/or increase their own power base.

All of which begs the question: "So what do we ordinary citizens - who represent the overwhelming majority of humankind, and who would like nothing other than to live out our lives in peace and tranquillity - DO about all this?"

Another clue from Russell: "the chief cause of change in the modern world is the increased power over matter that we owe to science".

There is a way out of this powder keg, and that way is to get both camps to relinquish their flintstones. It seems to me that the solution lies in a "sharing" of power, in a manner which can be facilitated without damaging any egos. In turn, this can be achieved by shifting the emphasis away from Fiat Money and/or Precious Metals - which is a battleground for the opposing forces - and by turning our collective attention towards placing an emphasis on science (which is everyone's domain) as a means of improving the general quality of life on earth.

It also seems to me that if mankind is to survive this looming naked confrontation of power, the solution, as always, lies in the Middle Ground of compromise.

In the context of a willing submission by BOTH camps to reach a middle ground:

  • Precious Metals need to take centre stage - in order to exert an external discipline on all Governments of the world.
  • All Nations should embrace the significant "clean" technologies (science) which now exist and which can be harnessed to improve the general quality of life which, in turn, has been steadily deteriorating as a result of fossil fuel energy based industrialisation in the past 100 years or so.
  • A new political system - founded on Meritocracy - should be developed, with sufficient checks and balances to ensure that the modern day Genghis Khans are rendered impotent in their rabid grab for power.

There are many who will be arguing that the above approach - whilst perhaps theoretically valid - is pure fantasy. It will never happen. To those I respond with the following:

On October 6th, Jews world-wide will endure a day of fasting in atonement for sins committed in the past year. The following is a translation of one of the opening prayers:

"May all the people of Israel be forgiven, including all the strangers who live in their midst, for all the people are at fault" (My emphasis).

Whatever your views on religion in general, one fact is unassailable: There is much wisdom that lies between the pages of those dusty old books.

May we all live to enjoy Peace in year ahead. When all is said and done, that objective is at the bedrock of all the world's religions.

The King James Bible mentions gold 417 times. Not once does it mention a paper currency.
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