If I compare my efforts to understand MMT with those I've just expended struggling with free gold, the overriding impression is that the MMT promoters do their best to make a difficult subject accessible to the layman (see my first post on MMT), whereas the free gold promoters do their best to confuse what should be an easy enough concept. Indeed, the main proponent of free gold seems not to have written one article laying out, in introductory form, what free gold is about. I am not alone with this impression:
FOFOA’s blog consists of many extremely long and erudite posts that keep referring — often tangentially — to Freegold theory. This is a brief explanation of Freegold theory as I currently understand it, for those who are flummoxed by the enormous quantity of information on FOFOA’s outstanding blog. Source.
Goldsubject, the author of the above, says, "often tangentially". "Often" is not always. And yet even he fails to refer the interested to any article which explains free gold. I am forced to conclude there is none. My efforts yielded only tangential references, even in FOA's article entitled "Freegold":
the coming revaluation that I call Freegold. [... snip ...] But what is most significant about this ongoing redistribution of gold, the "important element of global monetary reserves", in preparation for the Freegold value reset, is that in countries like India, China and in the Eurozone this redistribution is even inclusive of us little people, not just the central banks, elites and giants! [... snip ...] I read where some of you say I am wrong about Freegold. That it won't or can't happen because country A isn't ready for it, or country B doesn't want it. Or that "the elite" will never allow it. Etc... etc... Blah blah blah... [... snip ...] Well, Freegold, or whatever you want to call it, is kind of like a runaway freight train coming right at us. It is not stoppable and it is not controllable. It has a mind of its own and too much momentum to do anything but prepare for its arrival. It is not for any elite or any country to decide when and if it happens. It is only for them and us to be as prepared as possible when it does. [... snip ...] This striking paradox WILL be corrected, by the way, through Freegold.
Sadly, the one article I found which should have been, as its title suggests, directly about it, mentions free gold five times, claiming it will cure all sorts of ills and even that it is unstoppable, yet it signally fails to explain how it will have these effects. The bold claims smack, to this reader, of salesmanship, an impression bolstered elsewhere:
Some day in the future we will know what that magic number was on October 10th, 2009. And anyone who went double that number, doubled their savings... and so on. Imagine if you put 20% of your savings into gold coins! Or 40%! How about 80%? Or even 90%! Or, God-forbid... 100%. So grab your calculator and have some fun with numbers!
I looked elsewhere for some clue about how free gold would function, what it actually is, and found Goldsubject's article quoted from above. His brief take looks like this:
Money, stocks, bonds etc. represent more wealth than really exists –> massive default inevitable –> paper no longer trusted to store value –> only gold is trusted to store value –> buying power of gold massively increases. Value of gold set by free market; money used for transactions; gold used to store value. The biggest and most dramatic revaluation in history.
Again I get the impression of snake oil and 'no way this can fail' type of thinking. A supporter of the idea trying to set it out for newcomers fails to explain how it would actually work.
But what really stuck in my craw was the anti-collective, anti-socialist slant that comes through very strong on multiple occasions:
If you would like to be an activist for a better world, this may not be the blog for you. But if you are a hard working producer and a saver worried about how to protect your purchasing power from the hungry collective, this blog may be just what you are looking for!
In other words, gold only gets in the way of man's socialist credit expansions.
Gold can still be held as a wealth reserve by the money-diluting collective
"socialist credit expansions"!? The vast majority of money in existence is created by privately owned companies whose profit-maximising business it is to loan money into existence. No collective here, no socialist programme to build schools for the nation, just good old capitalist money-making, in more ways than one. The resultant flavour of all this is very confusing; free gold is for the little guy, to protect him from the collective, a wisdom offered for free by someone working hard to make the world a better place for those who listen to him. Gold is set to increase in 'value' to some figure like $50,000 per ounce — whatever that really means — and then somehow be there for us all as a store of value while we use paper money for the day-to-day. The collective is served by this of course — even though they are greedy and grasping — because it will be the best system ever. It sounds to me like nothing other than the invisible hand, an untestable claim made centuries ago in the context of international trade, by a man who signally failed to explain value in the first and longest volume of his Magnus Opus, "The Wealth of Nations". Read his weird contortions and twists of logic if you don't believe me.
I've come away from my swim in free gold's waters suspicious about its purpose. The author FOA is anonymous, highly intelligent, well read, and fixed of purpose, and yet, to me, he 'smells' like a salesman. For all the interesting insights into many aspects of the global economy and finance and history, his message boils down to this; invest in gold and you'll make a killing, guaranteed. Maybe I've not invested enough time into his work, maybe I've missed something obvious, nevertheless I'll not do as he advises and continue with my own efforts to remove value from money and place it, notionally, where it has always been, in the networks that enable ecosystems and society to operate healthily.
For me, Soddy (and others) have the best idea about money:
Money now is the NOTHING you get for SOMETHING before you can get ANYTHING. "The Role of Money", p24.
Money exists not by nature but by law.
Observe well these rules: It is a very common mistake to say that money is a commodity ... Bullion is valued by its weight ... money is valued by its stamp.
Jerry Kohlberg on value and ethics:
Around us there is a breakdown of ... values in business and government... It is not just the overweening, overpowering greed that pervades our business life. It is the fact that we are not willing to sacrifice for the ethics and values we profess. For an ethic is not an ethic, and a value is not a value, without some sacrifice for it, something given up, something not taken, something not gained. We do it in exchange for a greater good, for something worth more than just money and power and position.
In my notes I wrote the following paragraph, and still think it sums up my feelings on this matter well:
If my father had purchased for me 100 ounces of gold 44 years ago, I would today have access to quite a lot of money. But in that time the quality of food has declined, crime has risen, literacy decreased, water tables have fallen, communities have fragmented, geopolitical tensions have increased, and so on. What then is the good of that increase in monetary wealth? What exactly has been stored?
It may well be that gold increases in monetary value through times of economic uncertainty, but that is not the issue here. The danger I fight, of seeing wealth stored in money while ecosystems and society rot, lies at the heart of the breakdown investing in gold is supposed to protect us from. It no longer can. The breakdown is now too wide and deep, and getting worse.
On that note, and as Bill Mitchell would say, that is enough for today!