above, for articles in
The Yellow Brick Road of Gold, Peace and
Darryl Robert Schoon
Antal E. Fekete’s paper, The Marginal Productivity of Debt – Why
Obama’s Stimulus Package Is Doomed to Failure, ends with the
the financial and economic collapse of the last two years must be seen as part
of the progressive disintegration of Western civilization that started with
government sabotage of the gold standard early in the twentieth century. Ben
Bernanke, who should have been fired by the new president on the day after
Inauguration for his part in causing irreparable damage to the American
republic may, in the end, have the honor to administer the coup
de grâce to our civilization."
Fekete’s observation that Western civilization is disintegrating is true. The
process was set in motion one century ago when Western governments abandoned the
gold standard as they prepared to enter the First World
are expensive and paper money is not. In the West, the history of paper money is
bound with the financing of war; and, now, its cumulative costs and the cost of
government are about to destroy paper money and the world paper money
announced U.S. stimulus of trillions of yet unprinted and unborrowed dollars
will, in fact, administer the final coup de grâce to our present world, a
world built on debt issued in the form of credit, a foundation as flimsy as the
proverbial foundation of sand.
“Helicopter Ben Bernanke”, true to his threat, unleashes America’s last and
final flood of paper money, a stimulus akin to a junkie’s final injection, the
U.S. economy already excessively burdened by debt and bloated by credit will
collapse, as will the U.S. dollar.
since the Federal Reserve began issuing America’s money in 1913, the US dollar
has lost 95 % of its value; and, now, President Obama’s stimulus package
composed of trillions of dollars of more debt and more credit is about to
destroy the remaining 5 %.
London, G-20 and the Wicked Wizard of Oz
speaking at Professor Fekete’s encore session of Gold Standard University Live
Martha and I stopped in London where the G-20 summit was being hosted. It is an
extraordinary city even in these uncertain times, times which will mark the end
of central banking and the world it created.
arrived on April 3rd
day after the G-20 protests and, again, we made a pilgrimage to the headquarters
of the Bank of England, the cistern of credit-based paper money that fueled
England’s empire and its debt-based capital markets known as capitalism for
three hundred years.
to the Bank in eight months, our serial visits reflecting our fascination with
an institution that has left an indelible mark on history, a mark that will
someday be seen as a stain when the world created by paper money has finally
London, we attended the stage production of Wicked, Gregory Maguire’s
retelling of Frank Baum’s The Wizard of Oz. After the G-20 summit—another
staged event designed to give the impression of global unity—Wicked is an
for our times when as Maguire writes, “trust in government leadership is
questioned more often than not”.
1900, when The Wizard of Oz was published, the free coinage of gold and
silver was a hotly debated issue. It has been conjectured that “the yellow brick
road” in The Wizard of Oz represents the gold standard, that The
Wizard of Oz was a political allegory designed to address the pressing
issues of the day.
interpretations of The Wonderful Wizard of Oz
is swept away to a colorful land of unlimited resources that nevertheless has
serious political problems. This utopia is ruled in part by wicked witches.
Dorothy and her house are swept up by the tornado and upon landing in Oz, the
house falls on the Wicked Witch of the East, destroying the tyrant and freeing
the ordinary people--little people or Munchkins. The Witch had previously
controlled the all-powerful silver slippers (which were changed to ruby in the
1939 film). The slippers will in the end liberate Dorothy but first she must
walk in them down the golden yellow brick road, i.e. she must take silver down
the path of gold, the path of free coinage. Following the road of gold leads
eventually only to the Emerald City, which may symbolize the fraudulent world
of greenback paper money that only pretends to have value, or may symbolize
the greenback value that is placed on gold (and for silver,
Frank Baum and W. W. Denslow, the illustrator of The Wizard of Oz, could
not have imagined in 1900 was the greenback paper money that only pretends to
have value would in thirteen years be issued by a private central bank in
America and paper money, not gold and silver, would someday become America’s
1913, the Federal Reserve Act unconstitutionally transferred the power to issue
America’s money to a consortium of private banks called the Federal Reserve, a
carbon copy of the Bank of England; and, ever since then, the destruction of
America’s independent economy and the economic enslavement of its citizenry
would be only a matter of time, a time that has now arrived.
The Unraveling of Paper Money
Gold and the Cancerous Growth of Debt
use of paper money eventually destroys whoever succumbs to its promises, to wit
that you can spend more money than you actually have and that compounding
debts accrued from today’s expenditures can always be paid off
experiment with paper money begins well and ends badly. In the beginning,
excessive issuance of paper money gives a sense of economic security and
expansion, albeit a security and expansion as false as the value of paper money
itself. That this experiment lasted three hundred years did not mean it would
last forever Eventually over time, the issuance of more and more paper money
sets in motion a final reckoning, a collective summation of previous monetary
excesses, and the longer and more “successful” the issuance of paper money has
been, the greater and more destructive the subsequent
and inevitable final collapse will be.
is where we are today. The central bank model based on the Bank of England
spread not only to the U.S. but to the rest of the world; and, as central
banking spread, so, too, did its credit based paper money which turns into
trillions of credit-based paper dollars have now replaced the billions which
before had replaced millions. The issuance of paper money is infinite because
its issuance is not constrained by anything of value; and, because infinitely
expanding credit turns into infinitely compounding debt, trillions of dollars of
debt are now defaulting and collapsing upon us as the global economy
The Disassembling of the Yellow Brick
process was set in motion when the world went off the gold standard before World
War I. Only in the absence of what was before do certain consequences become
known. In 1900 it was not foreseen that unsustainable levels of debt would
result from abandoning the gold standard. Nevertheless, one hundred years later,
the unforeseen has now become the clearly apparent.
future, who won the great conflicts of the 20th
will be only a footnote in history’s ledgers; because, in the end, all of us
will be buried deep beneath an avalanche of debt caused by the sabotage of the
the absence of the gold standard and the creation of fiat paper money allowed
governments to spend vast sums of money they did not possess. Central bank paper
money gave governments the means to expand military and, eventually, social
programs with complete disregard for fiscal limitations, leading to the
extraordinary growth of government and government debt in the
the 20th century, central bankers’ credit-based paper money indebted not only
but businesses, investors, families and workers; and, now, all sectors of
society, find themselves being bankrupted in an increasingly crowded global
was the single constraint on the growth of paper money which is why bankers and
conspired to sabotage the gold standard. Both benefited from the ability to
issue paper money and spend what did not exist. Everyone, however, will now lose
because of what bankers and governments have done.
From Crisis to
breakdown of the monetary system began with the abandonment of the gold
standard. The next critical step, however, happened in 1973 when the U.S.
announced that the U.S. dollar, the world reserve currency, would no longer be
backed by and/or convertible to gold.
had never before happened. World reserve currencies had always been convertible
to gold or silver and because all currencies under the 1944 Bretton-Woods
Agreement were tied to the U.S. dollar, when the U.S. dollar became fiat in
1973, so, too, did all currencies. When the U.S. dollar lost all intrinsic
value, the global monetary system was fatally wounded. Money functions both as a
store of value and as a unit of exchange; and, when money no longer serves both
functions, ultimately, in time, it will serve neither.
that day comes, when paper money can no longer be trusted as a unit of exchange,
global trade and the global monetary system will collapse. When that will happen
is not known, but that it will happen is certain.
China's Reoccuring Currency
country’s history is as long as China’s, the odds of history repeating itself
greater. The dilemma China is currently facing with the US paper dollar
before with England and the Bank of England’s paper notes in the 19th
Wikipedia, Opium Wars:
Chinese demand for European goods, and high European demand for Chinese goods,
including tea, silk, and porcelain, forced European merchants to purchase
these goods with silver, the only commodity the Chinese would accept. From the
mid-17th century around 28 million kilograms of silver was imported to China.
This was not a viable long term trading dynamic. Britain had been using the
gold standard from the mid 18th Century and therefore had to purchase silver
from other European countries.
the 18th century, despite ardent protest from the Qing government, British
traders began importing opium from India. Because of its strong mass appeal
and addictive nature, opium was an effective solution to the trade problem. An
instant consumer market for the drug was secured, and the flow of silver into
China that had threatened to cripple British and other European economies was
reversed. Recognizing the growing number of addicts, the Yongzheng Emperor
prohibited the sale and smoking of opium in 1729, and only allowed a small
amount of opium imports for medicinal
the refusal of China to accept England’s paper money that caused England to go
to war with China. The Opium Wars (1839-1842, 1856-1860) were fought to force
China to accept British opium so England could balance its trade deficit without
buying additional silver.
in the 21st
China is facing the same dilemma with another Western power, the U.S. China is
again confronted with the problem of selling its goods to the West in return for
the West’s questionable paper script.
truth, China has greatly benefited from the bubble-driven U.S. economy and its
fiat paper dollar. But those benefits are not without considerable risks because
the paper money China has accepted may soon lose its
to 1971, China could have exchanged its excess U.S. dollars for gold when the
U.S. dollar was convertible to gold. Now, in 2009, it cannot do so. Today, the
East and West are joined in an increasingly fragile world held together by
credit, debt, paper money and distrust.
Rebuilding the Yellow Brick
President Obama’s fiscal stimulus will direct some funds to the rebuilding of
America’s aging infrastructure, unfortunately none will go to fixing the real
cause of the problem, to wit rebuilding the yellow brick road, i.e.
reinstating the gold standard, whose dismantling is directly responsible for the
the power and wealth of private bankers and public government derives from the
ability to issue credit and spend money that does not, in fact, exist, we cannot
expect a solution to be implemented by those benefiting from the present
and money are not easily come by and neither bankers nor politicians will
willingly relinquish the source of their fraudulent and considerable power, no
matter how destructive the consequences are to others.
is why the rising price of gold is opposed by central banks. Governments and
central banks are colluding to extend the life span of their faltering
institutions by furthering the illusion that government IOUs, i.e. paper money,
printed in exponentially increasing numbers are, in fact, valuable like gold and
advantage offered to those invested in paper assets, e.g. cash, stocks, bonds,
etc., is the possibility of paper returns in paper based markets. When such
returns prove increasingly illusory as markets collapse, the flight from paper
money will begin and the demand for gold and silver will
is what governments and bankers fear. Unfortunately for them and fortunately for
us, the efforts of bankers and politicians to extend their own power at the
expense of others will soon end. Soon, like the rest of us, they will be only
concerned with saving themselves.
End of an Era
in an unprecedented situation in unprecedented times. The process of monetary
has now entered the realm of the unimaginable as a result of President Obama’s
historic multi-trillion dollar fiscal stimulus, a stimulus requiring the
printing of so much money it will make obvious the fact that fiat money has no
value at all.
change will come, but not until an economic collapse has destroyed the system by
which government and bankers prey on society. Today, government leadership is an
oxymoron designed to perpetuate the present system under the guise of change or
any other buzzword that will give those in power continued access to the
era, as with all such eras, according to Professor David Hackett Fisher
(The Great Wave: Price Revolutions and the Rhythm of
History, 2000, Oxford University Press), will end in economic
collapse; and, out of that collapse, another era will
to the past in such times is reflexive and dangerous; and, attachment to the
of that era, i.e. paper money and credit, is the most dangerous of all. The old
is being swept away and all those attached to its foundation will be swept away
communism mistakenly believed the state could create sustainable economic
capitalism made the mistake of believing credit-based paper money could do the
same. These are two of the great lessons of this age.
the two ideologies, capitalism was closer to the truth, for human endeavor and
human desire are the basis of economic prosperity and capitalism fueled and
indebted both in order to profit. For three hundred years, the banker’s gambit
worked. It does no longer.
after debt-based capital markets have collapsed and paper currencies are
worthless will another more equitable and sustainable model emerge. Then, it
will not be a choice between central bank credit-based paper money and gold and
silver. In the end, only gold and silver will be left.
in the end days of paper’s fraudulent reign. A behemoth fed by credit but now
fettered by debt, its days are numbered. But those who created the beast will
not give up easily. They will be forced to do so.
end, the markets will have their way; and, instead of government plunge
protection teams and central banks colluding with investment banks manipulating
markets higher and gold and silver lower, the towering and faltering edifice of
debt will collapse on all who invested in paper assets. In the dust of that
collapse, gold and silver will triumph.
and at long last, Dorothy in her silver slippers will follow the yellow brick
road back home to an eventually more peaceful, free and prosperous
gold, buy silver, have faith.
Robert Schoon has written and lectured on economic issues. His recent
analysis 'How to Survive the Crisis and Profit in the Process'
is available at www.survivethecrisis.com
AUDIO LECTURE: Humanity & Crisis: Until Humanity
Changes History Will Not: a speech given to the Positive Deviant
Network (February 2008)
Reprinted with the author's
Posted April 23,
You are here: HOME page-SPRING 2009 Issue-Yellow Brick Road
Previous : MLK Assassination Next : What is the FED