August 1, 2005

The left hemisphere of the human brain is where all the logical and sequential thought processes take place, whereas the right hemisphere of the brain is where the aha!! moments of inspired discovery come from.

In this analyst's view, there is too much "irrationality" surrounding the argument for gold and silver to once again be incorporated into our coinage system. Perhaps its time to focus more intently on pure logic; so let's switch off the right brain for a few moments and concentrate on some mathematical facts.

The world population was 6,446,131,400 as at July 1 st 2005, according to

World GDP in 2003 was US$36.4 Trillion (source:

It follows that the average per capita annual income using these two numbers was

$36,460,632,000,000 / 6,446,131,400

= $5,656 for each individual on the planet. (of course this will be slightly understated since GDP in 2005 will be greater than in 2003)

Now, lets look at how much (say) silver would be available - assuming 100% of mine production was used for silver coinage (totally unrealistic, but it makes the point)

Mine production of silver for the 2004 year according to was 634,400,000 ounces which, when divided by world population, translates to 0.098 ounces per person per year.

If the average human worker were to be paid in silver - i.e. if 0.098 ounces were to equal $5,656 - then the price of silver would need to rise to $57,470 per ounce for the value of annually available silver to be sufficient to cover the annual per capita income.

OK, so let's assume now that the smallest practical size of any coin would be (say) 1/10th of one ounce, a silver coin would have a face value of $5,747.

How do the people who are lobbying for a precious metals based coinage system propose that the average person will pay for a loaf of bread, which costs (say) $2?

Sure, I can mix it up with the best of the right brain dominant people - to the point that left brain dominant people will accuse me of being "off with the pixies", but c'mon guys, to argue that the world will be better off if we move back to a precious metal coinage system is nothing short of screwball thinking. You have to be slightly out of your mind to even contemplate such a concept.

The best one can hope for would be some form of fractional reserve system - which would be a hybrid system of fiat currency backed by precious metals in some predetermined (fiat?) ratio. (Who would decide the ratio and on what basis?)

Ultimately, the question at hand revolves around "integrity". Whatever system a creative right brain can concoct, a logical left brain that is predisposed to focus on how to "beat the system" will figure out some way to do this.

Those of us wishing for a return to a gold standard are really wishing for some form of external discipline to be superimposed on governments which are no longer focussing with integrity of on the will of the people. In the British and American Empire on which the sun never sets, these governments "appear" to have been appointed through a form of democracy - where each citizen is entitled to vote for his/her choice of a candidate who has been nominated to represent vested interests of some lobby group or another. We need to see this for what it is: A dishonest sham.

Do we think that a "gold standard" is going to stop this dishonesty? Are we that naïve that we are pinning our hopes for the future of mankind on a gold standard?

The other day, on my way to the dentist, I stopped to have a cup of coffee at a Food Court in the city and watched a telecast of Mr Bush's speech, wherein he attempted to justify a continuing presence in Iraq.

After five minutes I chose the dentist in preference to wasting any more of my valuable mind space. The problem is not the absence of a gold standard. The problem is that our political leaders have lost the plot. Let's try to put this in the simplest terms possible: If that man worked for me, I would have fired him on the spot.

Post Script:

I have spent nearly 40 years of my life with my mind in "problem solving" mode.

If I have learned one thing it is this: You cannot solve a problem by treating the symptoms. The solution to any problem lies in addressing its root cause.

The root cause of many of the problems in the World's economy is that "banking" is a "for profit" enterprise. Our current problems date back to 1913, when a group of private bankers met to work out a way of protecting their gravy train from outside threat.

The solution to the problem is simplicity personified:

Legislation should be passed to the effect than "Banking" is to be an enterprise which is for the benefit of the community at large. Banking should either be a not-for-profit enterprise subject to strict external Corporate Governance checks and balances; or the profits of all banks should be subject to 100% tax. (i.e. The income should flow back to the people).

A one-ounce gold nugget is rarer than a five-carat diamond.

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