Sound Money Makes For Short Wars
One of the longest and most stable monetary regimes from the Early Modern Era onward was the British Pound on the classical gold standard. It lasted about 250 years, from mid-17th century up until the outbreak of WWI. According to the late Ferdinand Lips, in his seminal work Gold Wars, if you index the purchasing power of the British pound vs gold starting at a value of 100 in 1664 , the reading would have been 92 by 1914. (There was one period, during the Napoleonic Wars when the Bank of England suspended convertibility, and that index would have blown out to 180, and then reverted after the BoE went back onto the gold standard in 1821).
In other words, over 250 years, the purchasing power of the British pound was not only stable, it had actually increased a little on the eve of The Great War.
The Classical Gold Standard Lasted 250 Years. So what happened?
Lips goes on to note:
By 1900, approximately fifty countries were on a gold standard. including all industrialized nations. The interesting fact is that the modern gold standard was not planned at an international conference, nor was it invented by some genius. It came by itself, naturally and based on experience. The United Kingdom went on a gold standard against the intention of its government. Only much later did laws turn an operative gold standard into an officially sanctioned gold standard.
We would do well to remember this, whenever pundits and the financial clerisy deigns to inform us that monetary systems must be dictated from above and governed from the center. Not so, in fact when that happens, society puts itself at the mercy of a technocratic central planners who are largely detached reality and insulated from the consequences of their actions.
“In 1914, at the beginning of World War 1, the gold standard was thrown overboard within a few weekends. In order to finance wars, the world resorted to deficit spending and paper money. Had the gold standard not been given up, the war would not have lasted more than a few months. Instead, it lasted more than four years and ruined most of the major economies in the world and left millions dead in its wake.”
Aside from making the case for sound money which I’m sure many of us reading have already internalized, Gold Wars lays out, era by era, the machinations of central banks, governments, even bullion banks and forward selling miners who were waging open, and covert war against sound money.
However it would be a mistake to assume that the Gold Wars were confined to monetary matters.
The Gold Wars, were everything.
Not Three World Wars: Just One Forever War
We all know the conspiracy theory around Albert Pike and his coven of Freemasons who meticulously plotted and planned Three World Wars that would ravage humanity throughout the twentieth and twenty-first centuries before culminating in a one world government of Luciferian Marxism (except that it probably isn’t really true).
Since the Russian invasion of the Ukraine in early 2022, it’s been speculated that future historians may look back on that event as the beginning of WWIII.
I have privately wondered (wrote it up in the latest Bitcoin Capitalist), whether the cascading military coups throughout the Central African Franc nations were the slow opening of a second front in what is becoming a global conflict. As the ruling, French-aligned governments are being deposed, in Niger, Ghana, Central African Republic and Burkina Faso (eight coups in the past two years, so far), Russian military advisors are appearing on scene, coaching the generals. Meanwhile China is ready with infrastructure incentives and loans.
That front isn’t hot – yet – but it’s, “War By Other Means”, to quote the Robert Blackwell & Jennifer Harris book by that title…
“Today, nations increasingly carry out geopolitical combat through economic means. Policies governing everything from trade and investment to energy and exchange rates are wielded as tools to win diplomatic allies, punish adversaries, and coerce those in between.”
Now with this mess in the Middle East, it feels like we’re at that point where this could escalate, draw in the great powers and then we will unambiguously be embroiled in another global conflict.
David Stockman once told me that he viewed World War 1 and World War 2 as the same contiguous war. Could this be seen as a continuation? (At the time, some realized that the Treaty of Versailles had baked in “another war within 20 years”, and William Guy Carr’s channeling of the ole Pike “Three World Wars” conspiracy theory may have been a simple realization that putting Israel where they did would invariably lead to problems).
The common thread from a sound money perspective is that none of it would be possible without the ability to print value ex nihilo. Fiat currency is a monumental fiction, one that can asset strip the productive segments of the economy, hollow out the middle class, while enriching the Cantillionaire class, the military-industrial complex and the Deep State.
Reading Gold Wars provides clarity around the role of sound money: in rational governance and in providing the basis for harmonious relations among humanity.
Where sound money makes for short wars, fiat money makes for a Forever War, which Lips calls, “The Gold War”.
That war, until now, has been a most effective and ruthless manner of enslaving whole populations while enriching the elite. If there is a far-reaching, multi-generational global conspiracy – it is one that brainwashes the masses into trading their time, wealth and property for meaningless chits backed by nothing. Who needs global Communism?
Lips cites, anonymously, “a former Private Banker, Security Analyst, Director of Gold Mining Companies” (Lips was rumoured to be the cryptic gold commentor “Friend of Another”, and here he may be citing the equally mysterious “Another” – somewhat presaging the anonymity of Satoshi Nakamoto in the coming era)
“The Gold War is nothing else than a Third World War. It is not only a most unnecessary but the most destructive of all wars.
World War III may have begun with the demise of the classic gold standard of the 19th century.
I contend that WWI lasted as long as it did because the gold standard was abandoned. Deficit financing made it possible for it to last over four years, destroying capital wealth, a rich cultural heritage and unnecessarily killing millions of young soldiers and innocent people.
It goes beyond unnecessary carnage and destruction in The Great War:
If WWI had lasted only six months, currencies would not have been destroyed. There would have been no Versailles Treaty and no German hyperinflation. The little understood Genoa Convention of 1922 was largely responsible for the boom of the 1920s and the crash of 1929 leading to the crisis of the 1930s.
Without the mishandling of gold, there would never have been a Hitler. Neither would there have been a Bolshevik take-over by the likes of a Lenin, nor would Russia have had to endure a Stalin with even more millions of innocents killed. There would never have been a WWII.
Whoever this guy is, he continued to connect the dots from abandoning the gold standard in 1914, to the inflationary 70’s the oil crisis that happened at the same time and into the future:
“[The] approaching oil and energy crises of the twenty-first century, and the future derivatives crisis..are all primarily monetary crises… because the world disregarded gold money”
In the Epilogue to Gold Wars, Lips takes stock, remarking that despite all the misery the fiat system and the unrestrained expansion of paper money wrought, there would be a generational opportunity to amass near-dynastic wealth when the world – much like Great Britain in the seventeenth century, reverts to a sound-money system over the objections of the world’s governments.
“It has happened any number of times in history that the gold price took off: never ever to come down to the level it has started from.”
Gold was trading at $270/oz when Gold Wars was published. It has since posted an all-time-high near 10X that amount, and people still look upon it with derision.
One thing is for certain: if we were on a gold (or Bitcoin) standard today, or in the future: we would not be able to go on funding a hot wars on open-ended terms, and we wouldn’t be in such a rush to ignite a few more flashpoints around the world.
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You can pick up a copy of Gold Wars on Amazon (affiliate link).