Ron Paul on "Gold is Good Money"

Ron Paul continues his decades-long assault on the Federal Reserve creating money out of thin air, saying on his congressional website that gold is in fact, "good money," against the anemic quality of paper or digital money.

According to Paul, "Fiat money is not good money because it can be issued without limit and therefore cannot act as a stable store of value."

Also of significance is Paul's exposure of the central banks, government/media axis, which continues to speak badly of gold because the "defamation of gold wrought by central banks and governments is because gold exposes the devaluation of fiat currencies and the flawed policies of government. Governments hate gold because the people cannot be fooled by it."

Paul has had other allies for years, including those associated with the Austrian school of economics, but he cites others who are apparently starting to get the message, such as the Bundesbank president, who recently stated that gold is "a timeless classic."

Also noted are a couple of analysts at Deutsche Bank (DB), which also said gold is good money.

According to Paul, gold should be considered good money because it offers everything the market (people) demand, "it is divisible, portable, recognizable and, most importantly, scarce - making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history," says Paul.

Contrary to the assertions of central banks around the world concerning gold not being real money, they continue to acquire more gold holdings in response to the outrageous boost in fiat money into the global economy.

Ron Paul concludes this on the evil of fiat money: "A fiat monetary system gives complete discretion to those who run the printing press, allowing governments to spend money without having to suffer the political consequences of raising taxes. Fiat money benefits those who create it and receive it first, enriching government and its cronies. And the negative effects of fiat money are disguised so that people do not realize that money the Fed creates today is the reason for the busts, rising prices and unemployment, and diminished standard of living tomorrow."

He is right. Among other things, as mentioned above, inflation is always the hidden tax associated with the creation of money out of thin air.

It has already been shown to be ineffective to boost the economy, as evidenced by the anemic results of QE1 and QE2, and will be the same results of QE3 and beyond.

People should have the option to choose what money they want to use for transactions, savings and investing, and the central banks and governments around the world fight this because it knows if that were to happen, it would expose the negative effects of fiat money, as those holding gold would wildly prosper in contrast to those using paper and digital funny money.

Bernanke Defends QE3 in Washington

Talking to reporters in Washington, Federal Reserve Chairman Ben Bernanke attempted to defend the latest round of stimulus, dubbed QE3, which will acquire $40 billion in mortgaged-backed securities on a monthly basis, until the Fed is satisfied the economy can sustain growth on its own.

Never mind that the economy got no help for QE1 and QE2, and it is highly unlikely QE3 will do anything but boost inflation over the long term.

Strangely, Bernanke asserted the Fed isn't an enabler of the government in allowing it to continue to operate gigantic budget deficits. It does all of that and more, and is part of the problem and not the solution.

Bernanke stated this as the goal of the latest stimulus: "... we would like to see as many Americans as possible who want jobs to have jobs, and that we aim to keep the rate of increase in consumer prices low and stable."

The Fed has also stated the other goal is to provide price stability in the markets, something that can't happen when pouring money created from nothing into it.

Concerning monetizing government debt, Bernanke said, "That's not what's happening, and that will not happen. We are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates."

That's a bizarre statement targeting those who are clueless as to how the monetary system works. To buy Treasury securities is to monetize the government. That's why there are growing concerns over how much U.S. debt China owns, which have been propping up the U.S. government in order to sell inexpensive products to Americans.

To say that creating money out of thin air and acquiring Treasure securities isn't monetizing government debt, isn't even true. That's exactly Bernanke and the Federal Reserve are doing.

Where is the government getting its money from if that's not the case?

Also, incredibly, Bernanke claims the implementation of QE1, QE2 and QE3 hasn't hurt savers. You mean people not being able to buy into a money market fund or other safe investment because interest rates are almost zero hasn't hurt them? Does he actually think any of us believe that?

Even in an inflationary environment of about 2 percent people are losing money and buying power in low-risk accounts. How does that not hurt savers?

Part of the reason this is done is to pressure consumers to spend rather than save. At best, they may plow their money into much riskier assets; assets they don't understand and stand to lose a lot of money in as a result. That's not hurting savers?

Bernanke Initiates Endless QE

Ben Bernanke and the Federal Reserve put into place a policy whereby there will be the acquisition of $40 billion in mortgage-backed securities on a monthly basis until there is a sustainable improvement in the labor market. At least that's the theory behind the action.

The FOMC said in a statement:

"If the outlook for the labor market does not improve substantially, the committee will continue its purchase of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability."

Also announced was the Fed would continue to have Operation Twist in effect until the end of 2012, as well as keep interest rates low through the middle of 2015.

After all of this is said and done, the most likely and predictable outcome will be an astounding and growing national debt which is already beyond the ability of Americans to pay.

And with no real positive impact on the economy coming from QE1 and QE2, there is no reason to believe anything different will come about from this latest round, which is likely to go on for years, as there's little hope of the economy rebounding in any significant manner, which means little in the way of new and sustainable job creation.

What will benefit is a number of commodities and some of the miners accompanying the sector. The U.S. dollar will now start to plunge in value against some of the major currencies.

As for the effect on the euro zone, it could get even worse there with the U.S. dollar falling, as they couldn't even do well on exports when the euro was weak against the dollar.

In reality, this is a disastrous decision, although investors rightly positioning themselves will do very well in the months ahead.head.

Peter Schiff Is Right on Gold, QE

Peter Schiff has been mocked by the clueless pundits at CNBC and other financial media outlets for his consistent opposition to the Federal Reserve inflating and the need to acquire gold for investors to protect themselves from the Fed's disastrous policies, but he's getting the last laugh.

Although the stated reason by the Federal Reserve to is to jump-start the economy, Schiff believes the motives of the Fed aren't as altruistic as that.

Schiff states, “The true purpose of QE2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem.”

If that is true, it would make sense as to why the Fed and Bernanke are introducing another round of quantitative easing when their last one failed miserably.

Of course there is absolutely nothing else the Fed can do, as printing money is pretty much their major economic weapon, along with controlling interest rats.

Schiff concludes: “If the truth were known, a real panic would ensue. So, the Fed pretends buying treasuries is simply part of its master plan to boost the economy, even though, in reality, it is simply acting as the buyer of last resort."

For years Schiff has said the Fed doesn't have the will or nerve to raise interest rates, as it would result in the collapse of the stock market, the bond market, and burst the real estate bubble, even though the latter already happened in spite of low interest rates.

He also said bankruptcies would ensure in a big way, even though, again, it happened in a low interest rate environment.

Schiff's conclusion is that easy money policies of the Fed hide the true weakness of the economy, and that has proven correct as the trillion plus in spending has resulted in little effect, and once removed, showed the economy to be in the anemic state it really is.

Endeavour Silver, (AMEX:EXK), Fortuna Silver (TSE:FR), FIRST MAJESTIC (TSE:FR) Rise on Fed Inflation Measures

Endeavour Silver Corp., (AMEX:EXK), Fortuna Silver Mines Inc. (TSE:FR), FIRST Majestic Silver Corp(TSE:FR) all rose Thursday on the inflationary measures of QE2 by the Federal Reserve, which pushed up the overall commodity market, along with companies within each sector, including the silver miners.

Commodity prices in general increased, including silver, which increased to over $26 an ounce. Gold prices soared to all-time record highs again, reaching close to $1,400 an ounce. Aluminum moved up to its highest levels since April.

Endeavour Silver closed at $5.25 Thursday, rising $0.41, or 8.47 percent. Fortuna Silver surged to close at $4.12, gaining $0.21, or 5.37 percent. First Majectic was up $9.66 at the end of the day, increasing by $0.86, or 9.77 percent.

Silver Standard Resources Nasdaq:SSRI), Minefinders (AMEX:MFN), Silvercorp (NYSE:SVM) Soar on Fed's QE2

Silver Standard Resources Inc. Nasdaq:SSRI), Minefinders Corp. Ltd. (AMEX:MFN), Silvercorp Metals Inc. (NYSE: SVM) all soared Thursday on the implemention of QE2 by the Federal Reserve which will inflate the economy going forward, which pushed up the broader commodity market, along with individual companies within each sector, including silver miners.

The majority commodity prices increased, including silver, which rose to over $26 an ounce. Gold prices rose to all-time records again, closing in on the $1,400 an ounce mark, while aluminum increased to its highest levels since April.

Silver Standard closed at $25.95 Thursday, rising $1.81, or 7.50 percent. Minefinders surged to close at $9.32, gaining $0.57, or 6.51 percent. Silvercorp was up $11.57 at the end of the day, increasing by $1.55, or 15.47 percent.