Blogs: Ralph J. Benko
Image courtesy of Wikipedia
Rembrandt captures the golden candle light and yet one is struck by the complexities implied by the books and papers surrounding the money changer himself. Among the reasons why the classical international gold standard is superior to "floating" currencies is that gold provides a common monetary lingua franca in which all people, all over the world, may conduct honest commerce. Wikipedia defines "lingua franca" as
"A ... bridge language, or vehicular language, is a language systematically (as opposed to occasionally, or casually) used to make communication possible between persons not sharing a mother tongue, in particular when it is a third language, distinct from both mother tongues."
Gold repeatedly, throughout history, has proven itself to be the "vehicular language" of commerce par excellence. It is a neutral, non-national asset providing equal dignity to all currencies defined by, and convertible into gold. And gold possesses innate integrity.
The towering stacks of paper surrounding the money changer depicted by Rembrandt are an excellent metaphor for the monetary "Tower of Babel" effect that besets the world since the formal ending of the last remnant of the gold standard on August 15, 1971.
The inefficiencies caused by the inexorable fluctuations in the national units of account -- fluctuating in value against one another (and against real goods and claims) -- certainly are a contributing factor to the stagnant (and inequitable) growth of wealth that has beset the world under the "world dollar standard." How much more beneficial for the workers of the world for our authorities to return to the elegant simplicity of the classical gold standard.
Robert Frost famously wrote a rather melancholy poem, Nothing Gold Can Stay:
"Nature's first green is gold, The hardest hue to hold."
Frost family grave, photo by Richard Avery
Now science, reports Gizmag, has developed a process called "ion beam milling" to turn the metal gold to any color.
Such as green. Gold now can be green.
[S]cientists from the University of Southampton have now devised a technique that causes gold (or other metals) to be seen in a variety of other colors ... green gold, anyone?
Unlike processes such as anodizing, in which colored films are added to metal surfaces, the Southampton technology works by actually altering the gold itself. Tiny raised or indented patterns are embossed onto its surface, changing the way that it absorbs and reflects light. Depending on the shape, height and/or depth of the pattern, that reflected light can be seen as any one of a number of colors. Different patterns could even be applied to the same object, causing different parts of it to take on different colors.
Ion beam milling reportedly can change the perceived color of other metals as well.
It could, in principle, turn lead the color gold.
But, whatever the color with which metals can be imbued, that's just an optical effect. Gold is an element, its atomic structure unchangeable (which is why alchemists were never able to transmute base metals into it.) As Lewis E. Lehrman, founder and chairman of the Lehrman Institute, wrote in the October 2012 issue of The American Spectator, A Road to Prosperity,
"Gold, by its intrinsic nature, is durable, homogenous, fungible, imperishable, indestructible, and malleable. It has a relatively low melting point, facilitating coined money."
That article memorably commences:
Gold, a fundamental, metallic element of the earth’s constitution, exhibits unique properties that enabled it, during two millennia of market testing, to emerge as a universally accepted store of value and medium of exchange, not least because it could sustain purchasing power over the long run against a standard assortment of goods and services. Rarely considered in monetary debates, these natural properties of gold caused it to prevail as a stable monetary standard, the most marketable means by which trading peoples worldwide could make trustworthy direct and indirect exchanges for all other articles of wealth.
The preference of tribal cultures, as well as ancient and modern civilizations, to use gold as money was no mere accident of history. Nor has this natural, historical, and global preference for gold as a store of value and standard of measure been easily purged by academic theory and government fiat.
History teaches us, pace Robert Frost, in fact, only gold can stay.
The ancient Greeks, much like India, told of a long-lost golden age.
Lucas Cranach the Elder, The Golden Age, ca. 1530
Hesiod, in Works and Days, tells the tale -- and of the decline into this age of "sore trouble."
I will sum you up another tale well and skilfully -- and do you lay it up in your heart, -- how the gods and mortal men sprang from one source.
(ll. 109-120) First of all the deathless gods who dwell on Olympus made a golden race of mortal men who lived in the time of Cronos when he was reigning in heaven. And they lived like gods without sorrow of heart, remote and free from toil and grief: miserable age rested not on them; but with legs and arms never failing they made merry with feasting beyond the reach of all evils. When they died, it was as though they were overcome with sleep, and they had all good things; for the fruitful earth unforced bare them fruit abundantly and without stint. They dwelt in ease and peace upon their lands with many good things, rich in flocks and loved by the blessed gods.
(ll. 121-139) But after earth had covered this generation -- they are called pure spirits dwelling on the earth, and are kindly, delivering from harm, and guardians of mortal men; for they roam everywhere over the earth, clothed in mist and keep watch on judgements and cruel deeds, givers of wealth; for this royal right also they received; -- then they who dwell on Olympus made a second generation which was of silver and less noble by far. It was like the golden race neither in body nor in spirit. A child was brought up at his good mother's side an hundred years, an utter simpleton, playing childishly in his own home. But when they were full grown and were come to the full measure of their prime, they lived only a little time in sorrow because of their foolishness, for they could not keep from sinning and from wronging one another, nor would they serve the immortals, nor sacrifice on the holy altars of the blessed ones as it is right for men to do wherever they dwell. Then Zeus the son of Cronos was angry and put them away, because they would not give honour to the blessed gods who live on Olympus.
(ll. 140-155) But when earth had covered this generation also -- they are called blessed spirits of the underworld by men, and, though they are of second order, yet honour attends them also -- Zeus the Father made a third generation of mortal men, a brazen race, sprung from ash-trees (4); and it was in no way equal to the silver age, but was terrible and strong. They loved the lamentable works of Ares and deeds of violence; they ate no bread, but were hard of heart like adamant, fearful men. Great was their strength and unconquerable the arms which grew from their shoulders on their strong limbs. Their armour was of bronze, and their houses of bronze, and of bronze were their implements: there was no black iron. These were destroyed by their own hands and passed to the dank house of chill Hades, and left no name: terrible though they were, black Death seized them, and they left the bright light of the sun.
(ll. 156-169b) But when earth had covered this generation also, Zeus the son of Cronos made yet another, the fourth, upon the fruitful earth, which was nobler and more righteous, a god-like race of hero-men who are called demi-gods, the race before our own, throughout the boundless earth. Grim war and dread battle destroyed a part of them, some in the land of Cadmus at seven- gated Thebe when they fought for the flocks of Oedipus, and some, when it had brought them in ships over the great sea gulf to Troy for rich-haired Helen's sake: there death's end enshrouded a part of them. But to the others father Zeus the son of Cronos gave a living and an abode apart from men, and made them dwell at the ends of earth. And they live untouched by sorrow in the islands of the blessed along the shore of deep swirling Ocean, happy heroes for whom the grain-giving earth bears honey-sweet fruit flourishing thrice a year, far from the deathless gods, and Cronos rules over them (5); for the father of men and gods released him from his bonds. And these last equally have honour and glory.
(ll. 169c-169d) And again far-seeing Zeus made yet another generation, the fifth, of men who are upon the bounteous earth.
(ll. 170-201) Thereafter, would that I were not among the men of the fifth generation, but either had died before or been born afterwards. For now truly is a race of iron, and men never rest from labour and sorrow by day, and from perishing by night; and the gods shall lay sore trouble upon them.
Classical writers such as Hesiod associated gold not with greed but with virtue, piety, ease and abundance.
So, too, do the advocates of the classical gold standard propound the definition of currencies by gold, and their convertibility thereto, not from miserliness but as a counsel of equitable prosperity.
Indian culture long has held a high appreciation for gold.
The Vedic faith records four historical ages, the highest being the Satya Yuga. Per Wikipedia, "when humanity is governed by gods, and every manifestation or work is close to the purest ideal and humanity will allow intrinsic goodness to rule supreme. It is sometimes referred to as the "Golden Age."
Hinduism reveres many deities. One of the most beloved is Laksmi, goddess of prosperity. Wikipedia: "Lakshmi ... is the Hindu Goddess of wealth, prosperity (both material and spiritual), fortune, and the embodiment of beauty"
She sometimes is represented as providing a cascade of gold coins from her palms.
Image courtesy of eBay's India Live Store
A case can be made that monetary policy can be managed well by elite civil servants simply by reference to the price of gold. Such elected officials, however, while generally serving with integrity, have not generated a track record to induce confidence in their consistency in adhering to a monetary rule.
Meanwhile, gold has proven to have an enduring hold on the human imagination. Hinduism is the, or among the, most anti-materialistic of faiths. And yet, Laksmi is portrayed as generating gold coins rather than what Keynes called "Representative Money" (in his essay Auri Sacra Fames, wherein he mocked gold coins as "little household gods.")
The power of the human imagination lies well outside the calculus of most technocrats. Yet it is well for those engaged in high matters of public policy to keep in mind Napoleon's dictum on the imagination.
From Napoleon Bonaparte, by John SC Abbott, (Project Gutenberg, p. 44):
"It was the genius of Napoleon which thus penetrated these mysterious depths of the human soul, and called to his aid these mighty energies. 'It is nothing but imagination,' said one once to Napoleon. 'Nothing but imagination!' he rejoined. 'Imagination rules the world.'"
Some critics of gold (and of the gold standard) are concerned by the environmental toxicity of the cyanide now used to extract gold from ore. This process may be about to change to something much greener.
Flow chart courtesy of Professor Abrol Kakharov
In the gold-mining process, the precious metal is often extracted from low-grade ore in a technique known as gold cyanidation. As its name suggests, the process utilizes highly-poisonous cyanide, some of which ends up entering the environment in the mines’ tailings. ... Scientists at Illinois’ Northwestern University, however, recently announced their discovery of a new gold recovery process that’s based on a non-toxic component of corn starch.
The process was discovered by accident, when postdoctoral fellow Zhichang Liu was trying to create a tiny cubic structure that could be used to store gases and molecules. ...
To his surprise, less than a minute after the solutions were mixed together, the gold content formed into solid needles. ... While the needles were very small themselves, they could be harvested from the rest of the liquid.
The inexpensive process creates relatively innocuous alkali metal salt as a by-product, and reportedly extracts gold more effectively than existing methods.
“Zhichang stumbled on a piece of magic for isolating gold from anything in a green way.”
The distinction between gold as commodity and the classical gold standard -- which does not require extravagant amounts of gold to perform its own piece of magic in the fostering of a climate of equitable prosperity -- is a significant one. Many proponents of the classical gold standard fully share a devotion to the highest environmental standards and welcome the accidental discovery by Dr. Zhichang both for environmental reasons and reasons of cultural mimetics.
BY RALPH J. BENKO: