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Debt-Free Money or Resource-Based Economy Superior to Gold Standard

Until recently, I was in full support of a return to the gold standard. After all, backing money by a finite resource that can not be printed out of thin air would be vastly superior to the fiat money system we have today. It would take power away from the money creators, limit government spending and demand some degree of fiscal restraint on a political class that has been spending recklessly.

However, the more studying that I’ve done, the less inclined I am to believe that the gold standard is the optimal solution. Gold-backed money still creates conditions whereby a small group can concentrate resources and create artificial scarcity where is otherwise would not exist. Besides, the banking elite already own a good majority of the world’s gold. Even in the U.S., many believe the FED has long ago taken control of U.S. gold reserves, the largest in the world. Plus, upon any hint of a move towards a gold standard, the richest in society will simply use their fiat wealth to purchase most of the available gold and leave little for the rest of society. While gold investors with foresight will be rewarded, by and large a gold standard will do nothing to address the concentration of wealth and resources that currently plague society.

While many also clamor for ending the FED, we should remember that it is not just the Federal Reserve, but the model of fractional-reserve banking that is the problem. The concern with implementing a gold standard is the potential for fractional-reserve gold backing, either from the onset or over time. We must keep in mind that it is not solely what is backing the money that matters, but to what extent. Of course we should support the elimination of a group of private bankers that have stolen the money-printing power from the people, but let’s keep in mind that we can’t allow another entity, public or private, to institute the same type of fractional-reserve banking in its place.

In our current monetary and banking system, all money is created out of thin air by a private banking cartel and then loaned into circulation at interest. This is done first by the Federal Reserve, via its purchase of government bonds; and second by commercial banks, via fractional reserve lending. Most loans secured from a bank are nothing more than a computer entry and in return, the banks can demand that you pay them back interest that often exceeds the original loan amount. No wonder the banks tried so hard for so long to usurp the money creation from the government.

There are critical flaws inherent in this system, which are only now beginning to be exposed on the world stage.

When the banking cartel loans money, only the principal gets created, not the interest. This is why the overall indebtedness of the economy is always several times greater than even the most liberal estimate of the money supply. Put simply, if society was to pay back the principal of all outstanding loans, there would be no more money left in existence. And still, the interest would be owed to the banks.

When a bank loans someone $100,000, they require that person pay back the $100,000, plus interest of say $10,000. So, $100,000 was created, but $110,000 is now owed back. But where does the extra $10,000 come from? It does not exist! As a result, the only way an individual or small business can pay back the interest owed is to capture a portion of someone else’s loan principal through the process of commerce, theft or taking on additional debt, which can also never be repaid.

I hope you are starting to get a sense of just how perverse and unsustainable the current monetary system is. It is certainly great for the banks, but the rest of society is left fighting to try to attain each others’ principal in order to pay back their own loans and avoid bankruptcy or imprisonment. Obviously, this type of environment encourages abhorrent behavior and reduces humans to nothing more than enslaved animals.

So we see that, under our debt-based money system, interest can never truly be paid off, but can only be shifted from one person to another. That more than anything else is what creates our dog-eat-dog, musical chairs economy — an economy in which millions of people work frantically to capture other people’s loan principal; and in which virtually everyone works (to one extent or another, and whether they realize it or not) as indentured servants to the banking elite. There is no freedom in this system.

“None are more hopelessly enslaved than those who falsely believe they are free.” – Johann Wolfgang von Goethe

Debt-Free and Interest-Free Money

One proposed solution to fix this problem is to replace our debt-based money system with a debt-free money system. Under a debt-free money system, all new money would be spent into circulation interest-free instead of loaned into circulation at interest. This is just common sense. If the government can issue a dollar bond, it can issue a dollar bill. Both have the same backing. The only difference is that one bears interest, the other doesn’t; one serves the banking elite, the other serves the general public.

There are many ways to implement such a reform including pegging the debt-free expansion of the U.S. money supply to the consumer price index. If price levels begin to rise, the law would require (1) a moderate decrease in the percentage of government spending that comes from newly issued Treasury currency, and (2) a proportionate increase in the percentage that comes out of tax revenue. If the price level began to fall, the law would require the reverse.

As the resultant decrease in the public debt freed up an increasing percentage of the $200+ billion wasted every year on interest payments alone, and as the resultant boom in prosperity increased the tax base, tax revenues would soon exceed overall expenditures, thereby creating a real budget surplus. At that point, adjustments to the growth-rate of the money supply could be made simply by adjusting the percentage of the surplus that is rebated to taxpayers. In other words, the rebate would go down if the price level went up, and up if the price level went down.

Such a model would also allow for more of the value created by entrepreneurs in society to actually go back into the system, rather than getting siphoned from the system by a banking elite that adds little to no value to society. Instead of needing to pay back $500,000 on my $250,000 bank loan, I can spend the additional $250,000 in value that I create into the economy. No more waiting for some miracle ‘trickle down effect.’

The debt problems facing Greece, Italy and other sovereign nations are not going to go away. Politicians can come up with fancy schemes to mask the problems or kick the can down the road, but eventually the debt burden catches up to everyone and wreaks havoc.

Once you grasp the fact that debt can never be paid back but only grow more burdensome, you can realize that austerity measures, re-elections and bailouts are not real solutions. Whether is it the individual under water on a home loan, small business going bankrupt or governments worldwide facing default, all of these problems return to the fundamental design flaw in our monetary system and the understanding that the debt can never truly be repaid.

Banks and the institutions they control will move in to secure the world’s assets, demand austerity from the people and do whatever else is necessary to extract valuable resources and increase their concentration of wealth and power. Freedom-loving people must stand up and put an end to this system!

Resource-Based Economy

While transitioning from debt-based money to debt-free money would create a vastly superior economic and political system, other solutions propose a shift to a resource-based economy and elimination of money all together. The idea is that money is no longer needed in a world of abundance and that we are only given the illusion of scarcity to keep us subjugated. Our current trajectory is devastating our ecosystem and destroying the human spirit by trapping us in monotonous and meaningless jobs in order to acquire enough money to get by. Yet we have the resources and technology to create abundance for everyone right now. We need only muster the will to make it happen. Keep an open mind as you explore the ideas presented below.

The powers that be will not relinquish their control easily, but we must move past our current system if we want to throw off the debt shackles to be truly free. In the meantime, it is my goal to help as many people as possible get prepared for what could be an ugly transition. Shifting your fiat money into tangible assets such as precious metals will help you to survive the coming transition comfortably. Precious metals are a vastly superior form of money to debt-issued dollars and will likely be used in trade during the transition, so you should have some physical in your possession.

I have also created a “Common Sense Guide to Surviving Crisis,” which I believe it critical knowledge prior to the breakdown of the debt-based monetary system. To receive this guide and my monthly newsletter, sign up for the Gold Stock Bull Premium Membership. A limited number of free memberships are also available for those without the financial means to access it.

I wish you all peace & prosperity in these challenging times.

By | 2017-03-23T14:06:29+00:00 November 7th, 2011|Gold & Silver Commentary|

About the Author:

Jason is the founder of He previously worked in data analytics for the world's largest research firm, consulting to Fortune 500 companies globally. Jason eventually leveraged those skills to trade successfully full-time and after helping friends and family optimize their investments, he launched Gold Stock Bull and The GSB Contrarian Report newsletter. Jason is a cycles investor with a contrarian eye for identifying undervalued assets. He has built an expertise in both the precious metals and cryptocurrency markets. Jason believes in honest money, limited government, decentralization of power and enjoys studying alternative economic models.