A Golden Foot in the Door

In my last article, I asked ‘Is a New Gold Swiss Franc in the Cards?’ If yes, the consequences are awesome. Of course, there is a tremendous amount of pressure being exerted by ‘The Powers That Be’ to prevent the Gold Swiss Franc from happening;  these ‘powers’ being greedy bankers yearning after ever more profits through issuing ever more credit, and corrupt politicians yearning just as strongly after cash. Cash to pay the exorbitant costs of the welfare/warfare state … cash to buy votes for their own reelection. Under irredeemable paper greedy bankers continue to lend ever more ‘money’ to the corrupt politicos… and the poor citizens of the world get stuck paying interest on these loans… for ever! A new Gold Franc would put a sudden end to the deadly game of endlessly growing debt by putting the skids to the corrupt and precarious paper money system the world is currently suffering under.

Switzerland is unique in being perhaps the only truly democratic country in the world; if Swiss citizens decide  to, they can originate a petition for a referendum on any issue… including the issue of the new Gold Franc. If such a referendum passes, then the politicos and bankers are subject to a democratic end run. Such an end run would be sweet revenge for the disgraceful way the very same politicos caved to pressure from Washington, and re-wrote the Swiss constitution to remove the Gold backing of the (paper) Swiss Franc… without honest consultation with or input from Swiss citizens.

Once the Gold Franc is in circulation, amazing consequences start to fall into place. By ‘opening the Swiss Mint to Gold’, which is what the circulation of a Swiss Gold coin implies, and by charging a nominal 5% seignorage for striking coins from raw Gold bullion, the Swiss government will be assured of an income in Gold. This income will support the issue of Gold Bonds! The world needs Gold Bonds in a most desperate manner, even if this need is not generally recognized. Gold bonds are denominated in Gold units, mature into Gold, and pay interest in Gold.

Holders of Gold bonds know exactly what the value of their bonds will be upon maturity; the very same amount of physical Gold that they paid to buy the bonds. This is very far from the fortunes of paper bond holders… who will get back pennies on the Dollar cost of their paper denominated bonds… if they are ‘lucky’ and the Sovereign paper bond issuer does not default outright.

Bond issuers like the Swiss government will also come to love Gold bonds. Gold bonds carry the very lowest interest rates possible, because of the certainty that Gold will hold its value… and the certainty that paper will not. The current long term ‘lease rate’ for Gold is under 0.5% per annum. Lease rate means interest rate… the name ‘lease rate’ is simply an attempt to hide the fact that yes Virginia, Gold DOES indeed earn interest!

By comparison, even with Helicopter Ben and Tricky Trichet doing their best to hold rates down, USD and Euro long bond rates are around 3 ½ %. Of course, once Switzerland breaks the Gold Bond ice, other countries will follow; imagine if Greece were to refinance its sovereign debt at 0.5%… instead of 8% or more… with no German… er European… bail out needed? After all, Greek Gold -unlike Greek debt- is just as good as Swiss Gold.

Gold is the very best money ever used by Humanity. I quote Austrian economist Hans Sennholz;

“Sound money and free banking are not impossible, they are merely
That is why money must be deregulated. The Gold standard will return
as soon as people realize that honesty is the best policy.
As hope of ill gain is the beginning of the fiat standard, so is
honesty the mother of the Gold standard. The Gold standard is as old
as civilization.
Throughout the ages, the Gold standard has emerged again and again
because man needed a dependable medium of exchange.”

With Gold coins and Gold bonds in circulation, the world economy is well on its way to recovery, and the world financial system is well on its way to economic Nirvana.  The Unadulterated Gold Standard as the foundation of the new financial order is but one step away.

About Rudy Fritsch

I was born in Hungary in 1947, and fled Socialist tyranny during the Hungarian Revolution of 1956. My family had lived through WWII and the consequent Hungarian hyperinflation, thus I have intimate experience with financial destruction. My Dad used Gold to buy our way out of Hungary. Paper money was as good as toilet paper. Later in life, during my studies of Austrian economics, I came to realize that only Gold could solve the Global Financial Crisis (which should be called the Global Monetary Crisis), just as Gold solved our otherwise insoluble problem of getting out of Communist Hungary.
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