February 27, 2008
Elaine Meinel Supkis
A very, very kind reader from the US West sent me a real $5 gold coin from the US mint as a gift. Aside from the wonderful generosity of this gift, it is a good springboard for talking about gold and money which are intertwined like the winged staff of Mercury. Understanding money and gold means understanding old religions and belief systems that come from the dawn of minting coins and even earlier when gold was used nearly only for religious purposes. This is a fascinating topic and one that goes deep into that dark, dank cave we call 'the Human Psyche'. Why have humans chosen gold as a mirror for wealth? Why does it retain this even today to some degree? Why does money hark back to its darker roots? Why can't the magicians control the paper representation for wealth? Dark, dark parts of the brain are at work here. We must always end up talking to the Gods, living and dead.
First, an email exchange I had recently with one of my readers. Even as I throw very strong hints about the Truth about Gold, it is very, very hard for people to understand how this works. This is due to the very nature of where the concept of gold as money lies: in our emotional parts of our minds where we made our gods. The place where the dream world and the waking world make their interchanges is where the belief in the power of gold as well as the power of magic lies. This particular part of the mind is also where our sexual desires live. Explaining this is difficult without going into neuroscience so I go back to Dr. Freud. His entire opus was tossed out recklessly by modern people who resent his talk about women wanting to be men, for example. But his musings about mythology are very useful. And his attempt at explaining the Dream World is useful as a guide when unentangling the skein of dreams.
Here is the email exchange:
On Feb 26, 2008, at 11:27 AM, R. wrote:
What is money? If gold is not money, who do Reserve banks hold it? Why do they still treat it as money?
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Sent: Tuesday, February 26, 2008 3:08 PM
To: R.
Subject: Re: money
They [the Fed] don't hold anywhere near the reserves they had in 1964.
And it is like the oil reserve: it is a reserve to be used in the future....namely, during wars.
Wars and gold go hand in glove. Why? This is because MERCENARIES AND ALLIES demand it. For inside stuff, governments always print IOUs which we call money.
Elaine
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On Feb 27, 2008, at 7:22 AM, R. wrote:
Currency is OK as a medium of exchange but is not money. That is why the governments have less gold than they did in 1964 as it is being used by many as a store of value and as a medium of exchange in some places and by many as stored wealth waiting for the time when it will become recognized as money again in the west. In the not too distant future the world will finally come round to the realization that currencies are useful but must be backed by real money in order to control the inate urge by governments to expand currency and credit beyond the growth in production in the real economy. Certainly governments will fight it but China or Russia will implement the change if things lag action-wise as they tire of uncollectable paper IOU’s from deadbeats like the US and to signal that they have assumed the mantle as the new world money center.
I am reminded of the scene from Lawrence of Arabia when the money box in Akaba turns out to contain only paper money, which the Bedouins throw in the fire and complain bitterly about there being no real money as Lawrence promised. Even brigands know what wealth looks like!
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From: Elaine Supkis [mailto:emeinel@fairpoint.net]
On Feb 27, 2008, at 8:20 AM, Elaine Supkis wrote:
The history of gold is one of depressions. They lasted for many years, sometimes, centuries.
It bought poverty. Note what I said about mercenaries. The Saudis were 'mercenaries'. See? City people prefer paper money because it is easier to control and use. This is why paper money always drives out the use of gold. Gold is held for emergencies. But if you have gold and then USE it, you lose money. It is a very odd glitch in the human psyche.
This is why gold can't be used in any modern system and always ends up sidelined.
Elaine
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I used this example of the typical emails I get. Intelligent questions that make me think about things. I really do enjoy getting these emails and am happy people take time out of they busy days to write about these matters. The puzzle about money, gold and sex is of great importance. Pretending these are not connected is part of the problems we are dealing with today in the economic realm. Many modern economists don't even want to be bothered with this topic and one of the few last great minds to wrestle with the Angel of Wealth was Dr. Freud. He accurately located the nexus for all this as being part of the Dream World. The roots of Indoeuropean languages has a lot to say about brilliant light, gold and the soul. They intersect in the language and this means they intersect in our mental picture of the world. Non-gold based cultures have a different visual image of the soul, wealth and power. For example, the Polynesian People looked to the glittering stars or the flashing brilliance of sea creatures for this sense of divinity and power, there being virtually no gold on the many Pacific Islands they colonized. In Australia, the natives there had no concept of gold, not value for it and their dream world was ruled by the Sun.
This is also true of the European Ice Age people who left us marvelous cave paintings and various carvings and models. CS Lewis, with his Narnia series, chose the tawny gold of the lion as his emblem of godhood. As many people who watched these mighty hunters come dashing out of the tall grasses to panic huge herds of Ice Age grazing beasts. The lion was, from the very start of our ability to rationalize things, the emblem of power, glory, godhood and fear. To this day, the top representation of this powerful force is still the lion. Back at the dawn of civilization, gold and copper could be picked up easily from the surface of the earth where it had lain scattered over the billion years or more as the earth underwent many changes and upheavals. The softness of gold meant it didn't need to be melted or require many tools to manipulate. Its weakness in this regard meant the earliest stone age people, admiring and fearing the Lion could hammer this with rocks and turn it into icons representing the power of the Lion.
Gold, due to its malleability, was easy to shape but useless as a tool. There is an old Russian story, very old, about a lumberjack who is blessed with great wealth. The dwarf turned his axe into gold. The man went back to work and swung his axe. Instead of biting into the tree, it bent! He was enraged and went to the merchant to exchange it for a real axe. The merchant was pleased and tried to cheat the man by lying about the value of the gold. When the exchange was made, the man went off, happy to be able to work and the merchant took out his gold axe only to find, it was steel again.
This is a marvelous story, by the way. If we want to understand gold, we go to myths and fairy tales which give an honest representation of what gold really is. It is one of our oldest magical systems! The natural wisdom of these stories should alert us to the reality that we are not talking about 'wealth' or 'money' but about a deeper matter. Let's go back into the dim beginnings of civilization. How did people do business? Did they use money the minute they began to build cities? If so, what exactly did this money buy?
Barter is the oldest method of trade. Everything from food, sea shells, knapped rocks that were turned into tools, furs, horns and of course, art works were exchanged at various levels of values and needs. If there was a shortage of something important, the 'price' it commanded would rise. Food is often the source of these ups and downs in value. Naturally, when food is scarce, its value soars above all other things large or small. This is because it is how we stay alive. Next to this, using things to buy females or slaves is a very common form of commerce. War does this, too. Either one trades or one raids.
Gold has not been central to trade but it is very much central to wars. Even in ancient times, traders would make clay objects representing barter items like sheep skins, sheep, wheat [bread] or other objects. These were used with doing long distance deals. The representation of these objects would be used to make deals before delivery, for example.
The Larry Gonick cartoon book has a lot of funny things to say about all this. On page 100 of this terrific book [I highly recommend it for all sorts of reasons!] Larry explains how merchants developed records for barter trade rather than direct bartering. Many of the clay tablets and other 'documents' from the era before the explosion of the Tera volcano wiped out the thriving Mediterranean trade empires in 1,600 BC were not stories but tallies of trades. The earliest written records were 'money': bills of lading, so to speak.
Indeed, I suspect the leap in the mind that turned barter into symbols which were then traded as proxies preceded the concept of 'coins'. Gold, as well as grain, had value, of course. It was traded and weighed on scales just like gems or grain or anything that was weighable. They didn't weigh sheep or cows or pigs. But as a farmer, I know that we can judge weight by eye and feeling the animal to see how fat they are. Just looking at the flesh above the eyes tells us how fat they are. But gold was a raw material that was weighed, like grain. And if it was turned, via human labor, into a work of art, this was judged by its beauty and form, not the value of the gold, itself. A cunningly crafted gold object was obviously worth more than a simple lump of gold.
Bast, Perfumed Protector, Cat Goddess...
Her name has the hieroglyph of a 'bas'-jar with the feminine ending of 't'. These jars were heavy perfume jars, often filled with expensive perfumes - they were very valuable in Egypt, considering the Egyptian need (with the hot weather) of makeup, bathing, hygiene and (of course) perfume. Bast, by her name, seems to be related to perfumes in some way. Her son Nefertem, a solar god, was a god of perfumes and alchemy, which supports the theory.
*snip*
Even from very old times, as protector, Bast was seen as the fierce flame of the sun who burned the deceased should they fail one of the many tests in the underworld.
One of the very earliest trade objects that were easy to carry and could not be produced just anywhere were the perfume concentrates from beyond Upper Egypt and other distant lands like beyond India. To barter for these was very difficult. The traders had to travel far and thus, perfume was very precious. One way to bargain for this was to trade gold objects which were small, too. The volume of trade versus size matters. Today, we see all sorts of nearly useless cheap stuff travel long distances and the cost per item it vanishingly small thanks to the use of fossil fuels and huge ships. The smaller the craft, the more people it takes to move it and the higher the chances of being accosted by pirates or sunk in storms, the more one has to carry smaller and smaller items of greater and greater value. Thus, early trade over great distances were in the form of perfumes, fine art work, silk and spices. And gold objects were a useful barter item, it being small and heavy as well as lasting a long time.
Unlike silk, perfume, fine wines and spices, gold doesn't deteriorate over long voyages. Unlike all the other items, it doesn't break, have to be sealed or protected from weather. It doesn't rust or lose its beauty. Since gold is often NOT where civilizations are---those being where there is good food growing opportunities---it had to be traded or discovered or stolen via armies. And since all cities used this in trading for the fine, civilized stuff, they had to have gold and gold was often in the hinterlands, thus the need to conquer 'savages' who tend to be where the gold is.
Bast is the goddess of perfumes and it the jar it comes in. The fact that She also is part of the Gates of Death complex is a strong hint to us that the golden shining lioness is part of the mirror of life and death that is shining in our eyes. The languages we use consider shimmering light to be synonymous with eternal life, the word 'miracles' comes from 'shining light.' And in CS Lewis' 'Narnia' stories, the Lion, Aslan, always has a sweet-smelling breath. Which is directly related to the belief of Bast, the Goddess of Perfume, Wealth and Death. People die, trying to bring perfume to Egypt. And it is used in the embalming process, too. So the rich needed it badly, to clear away the smell of rotting flesh.
Statues of Bast and other top gods in the pantheon were cast and used as trade objects. These were bartered for perfumes, etc. And from them, these small icons, came the concept of coinage, of royal money.
In this recent exchange which I had with a reader, note how it goes: he tells the truth when he said the Saudi raiders of the Turkish port were angry when they found only paper money. I pointed out that gold has traditionally been used to buy mercenaries. And he didn't realize the Saudis were mercenaries being lured into attacking this port the Brits wanted for other reasons, the lure being the gold. Right now, Spain is fighting this deep sea explorer in court over who gets the gold from a British ship sunk 200 years ago, carrying gold to a king Britain wanted as an ally.
Spain wants this gold not so they can park it in a vault and use it to buy allies or mercenaries. They want it because these coins can be resold for much greater value than their gold content! They are icons for collectors who want the feelings gold coins rouse. I collect things like this and know the feelings well. I vividly remember many dreams over the course of my life where I dig up precious gold coins of ancient provenance. Farmers do this all the time in Europe. There are many grave robbers, since the dawn of grave making, who seek to dig up or find the buried treasures. For many burials of kings and lords are with their gold.
Why is this? If gold were used strictly for trade, why would they bury it so often? The history of humanity burying gold is quite striking. Throwing it into deep wells, into volcanoes, even, the Venetians throwing a gold ring annually into the Adriatic Ocean comes to mind! Why dig up gold, form it into cunning shapes and then throw it back into the earth again? This makes no sense!
Except to the Gods. Gold is shining, it is eternal. It doesn't age or go bad. Gods are supposed to do all this, too. Except the Gods die! Since the beginning of religion, people have had these Gods all die. And so the gold of the Gods goes with them into various graves or places where the Gods dwell or return to. So humans, for many thousands of years, have sought out gold, made it into shapes and forms most cunning, done various magical tricks and incantations with it and on it and around it and then CAST IT ASIDE! Over and over again. Think of Frodo and the Ring of Doom: it must be destroyed! Returned to the Gods of Fire!
Let us visit the Chinese who are the cunning inventors of many financial systems we take for granted today. The brilliant minds of ancient China thought long and hard about all this. They invented paper money, after all. Before paper money, gold and jade were used as grave offerings to the Guardians at the Gates of Death. Then, when paper money was invented, the Chinese had a brilliant idea.
Why not burn this money and the smoke would rise to the stars where these mysterious beings dwell? Then, they would let the dead enter unmolested! This meant losing the value of the printed money but it also prevented inflation. Burning the money meant it didn't recirculate! Then the crafty minds of the people losing the value of this paper went into high gear. 'If the money is burned, the Gods can't see if it is fake or real! So why not have our bean curd bun and eat it too?' they thought. So, to this day, the Chinese use counterfeit money at funerals. And have inflation, of course.
Back to the gold $5 coin sent by a reader: the history of money in the US is always a fascinating topic. Unlike most other systems on earth, the US is full of people who debate the meaning of money and how to make it. We argue about the relative merits of paper, gold, silver and simple writing of numbers in a book to make money. We are enmeshed often in these debates. During the entire 19th Century, these debates raged and they affected our politics to a very high degree.
This is from the US Mint's homepage. Note how the $5 gold coin as well as the others are fluctuating in price. Also note their value: it isn't the number stamped on the coins. It is now based on the weight of the coin, in the case of my coin, it is now over $150 for just one tenth an ounce. The change in value from 1900 till today is striking, isn't it? The paper dollar is 30X cheaper than the gold dollar.
Today, the debate about our currencies and our monies has been revived thanks to the Internet. Starting with the collapse of the currency during the Vietnam War, there was little debate in the mass of people due to the media muffling it all. I remember how the value of the silver coinage was so far ahead of its face value, it paid to melt the coins. I remember being rather angry when I noticed that our quarters and dimes suddenly had a thin sliver of copper/zinc in the middle. These 'sandwich' coins were a harbinger of the collapse of the dollar. I remember the fury of travelers and traders when the dollar suddenly changed value due to the Bretton Woods II Accords. New York City, where I lived and where my husband and I worked in the foreign trade sector, was thrown into chaos and had great financial troubles due to this.
NYC has always, since Colonial times, been pro-gold. This is due to foreign trade. As we see, trade has always used various forms of gold icons, coins and art objects as trade items for other, more perishable goods. Even in 1900, trade was in fairly small ships compared to today's super-tankers and super-container ships! Another facet I forgot to mention concerning gold is how it doesn't have to be traded like FX markets today. One didn't have to know the relative value of currencies. People simply weighed the coins and did their own transcriptions as to its value. Indeed, any trading nation that protected its currency and didn't debase it with other metals often became the rulers of the Seven Seas which were the main route for most of the exotic trade.
Farmers and others selling large-load, perishable items preferred, since the founding of Ur back 8,000 years ago, to use non-gold pictures or numbers to denote value. This is because the trade was close at hand. The temple priests could hold the grain or count the cows and then keep this on record as these were consumed while the farmers knew they could 'bank' on the value with the temple who would dole out what they needed later, say, for the spring sowing.
Here is a good web page about the US Mint and how it came into being:
The United States Begins Minting Coins
Not until three years after the Constitution was put into effect in 1789 did the newly seated Congress again take up the coinage issue. Finally, on April 2, 1792, Congress approved an Act requiring coins to be minted bearing the words "United States of America" and "an impression emblematic of liberty, with an inscription of the word Liberty, and the year of the coinage...". This was the first major step in establishing our national coinage system.
The Act authorized the salary of the Director of the Mint, who was to receive two thousand dollars annually, and other mint officials. President Washington appointed a famous scientist and philosopher named David Rittenhouse to be the first Director, a man widely respected for his professionalism and integrity.
A self-educated genius, Rittenhouse constructed America's first astronomical observatory with telescope, helped arbitrate the famous Mason-Dixon line, invented the metallic thermometer, advanced the field of mathematics, and was a master clockmaker. So highly regarded was Rittenhouse, that along with Washington, Thomas Jefferson and Alexander Hamilton both urged him to accept the Director's position.
Note how the founder of our mint is an astronomer. I often teased my grandparents, all of whom were astronomers, and my mom and dad who are also astronomers, about religion and how they were really priests. Money and astronomy go hand in hand. For the first astronomers were also the first to understand the Gods. And they were the guides for fellow humans to the Gates of Death. Since one cannot understand the stars unless one also figures out how numbers work as representations for the stars and their movements relative to the earth, so it is with money: the mysteries of money, numbers and the stars were the province of the astronomers. Even in the Enlightenment, this was true. The lead thinkers of the 18th century were rationalists and they liked to think they could think and therefore, not have their heads chopped off afterwards. Alas, this was a mistake. The guillotine still went to work. Thinking or not.
The US started a Mint and instantly, a huge row began over the concept of a central bank and what was money in the first place. Banks rose and fell, the US wavered between imitating the British Empire which was going increasingly for the strictly gold standard and the defects of the gold standard. This all came to a head in that great emergency, the Civil War. There was a gold panic in 1864 due to the government refusing to accept papers it issued for supplies and then repay it with gold. The collapse of the gold certificates caused riots in NYC and drove many a speculator into bankruptcy. This chaos even hit London. British trade with NYC came under great pressure due to a crisis in currency trade due to the dropping of the gold promises in the US.
From then until 1873, the US wrestled with this mess. Then, Britain and the biggest maritime banks in NYC managed to rush through Congress the Gold Act of 1873. This coincided with a terrible disaster far off in Austria: the stock market panic of 1873. The whole world slid into a great depression. The US went to the gold standard. This was very bad timing, of course.
Here is Mr. Loud's take on all this:
The result was that the dollar (and so the American monetary mass and ultimately output and employment) was linked to a metal that was getting scarcer and scarcer, because between 1879 and 1897 the rate of increase in gold output slowed, and the demand increased at the same time. The monetary mass could not keep pace with the strongly expanding economy, and price measured in gold declined strongly. This deflationary effect was hindered to some extent by the spreading monetization of the American economy and a more efficient banking system that allowed to pile up more paper money on a given currency base (that is, gold). (more on this)
We see between 1875 and 1896 a deflation of about 1% a year in the general CPI. A the same time the output rose by 6 % a year. Economists reader should not say, <>. It's precisely this growth that made the prices go down. With a fixed quantity of money if the number of transactions rises and the velocity cannot rise sufficiently, then prices have to fall.
All this led to a depression so great that you would have to wait for 1932 to see the same again. Unemployment peaked at 18 % in 1894. But some people suffered more than others
This was called, in England, the Long Depression. Millions of peasants in Europe were displaced and had to flee their homes. Many came to America. They needed money. Gold was limited. Popular support for government-issued paper is strongest at the bottom of society. Gold-backed wealth is strongest at the top. And paper is popular with landlords and owners of great estates that produce food. Gold is very popular with sailors and international traders. The tension between these forces is what keeps money on an even keel.
FOR WE NEED BOTH.
The Bryan/McKinley debate is important and I shall tackle that later. The 'Crown of Thorns' was a tremendously popular speech back then. And if we went to a gold standard, it would be popular again for the same reasons.
Coin Composition
Minting from gold and silver continued well into this century. It was not until 1933, during the Great Depression, that the Mint ceased producing gold coins. A silver crisis caused the replacement of silver in 1966 in quarters and dimes; however, the half-dollar was composed of 40 percent silver from 1965 to 1970. The Bicentennial Kennedy Half Dollar contained 80 percent silver and 20 percent copper. But today these coins are now composed of cupro-nickel clad, with a pure copper core, and an outer layer of a 75 percent copper, 25 percent nickel alloy.
Nickels are made from the same 75-25 alloy, and the cent, once a copper coin, is now composed of copper plated zinc. The cents are less expensive for the Mint to manufacture, and at 2.5 grams each weight about 20 percent less than cent previously minted of 95 percent copper and 5 percent zinc, which weighed 3.11 grams. The cent's composition was changed in 1982, and cents, and both copper and copper-plated zinc cents were produced that year.
Note how this debasement is worsening. I included, at the very top of this story, pictures of very old pennies along with the old dimes. Humans can never go to a pure-magic number financial system nor can we go to a pure-gold system. One is too loose and the other, too tight. We need a balance here.
I will be tracking the value of the precious gold coin a reader sent. I will periodically put the tally up on this blog for all to see. And we can discuss inflation more. Note how inflation has settled upon the world like a vulture on a starving cow. Food, energy and debt for farmers, peasants and traders are all rising like crazy across the entire planet now. And the grim bankers causing this refuse to take responsibility. ALL of them, outside of the obviously frightened Chinese who have long memories of famine, all the others are minimizing this. All, outside of the Chinese, are pretending we do NOT have to pay attention to this. That food and fuel are optional and subject to sudden rises and falls. Well, so do equities, trade goods and lots of other things! Such as real estate, just for an obvious example!
And inflation caused by paper money always ends up on the farm. And then flies to the cities. Where we have riots and revolutions! Duh! Ask Marie Antoinette or the Romanovs about that! Unhappy peasants, unhappy proletariat=guillotines.
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