The Gold Standard For Democrats


There’s a rising income inequality between the poorest workers and the 1%. This is a fact, and no good can come from denying it. It’s been going on for a long time, too.

There are lots of opinions about the cause and how to fix it. For example, one popular idea is that bosses keep down the wages of their workers out of sheer greed, and we should just make them pay more. 19 states did that in 2015. Call me a tea bagger for saying this if you want, but it’s not going to turn out well. It won’t help many of the lowest paid workers. It will, however, hurt the small businesses that many workers depend on for jobs.

blue collar worker

I write about money, so I want to talk about how the dollar itself is putting the hurt on the poorest people in society. The Federal Reserve manages our money, and Janet Yellen is in charge of it. She wants inflation to run at 2%, which she says will create jobs.

Let’s look past the sales pitch. Driving up the cost of food and rent doesn’t help anyone, especially not the poor. It hasn’t created jobs either. Over five years past the end of the last recession, a big chunk of the workforce has totally given up looking for work. Millions more have part-time, dead-end jobs. Even though they want to work full time, many qualified people can’t find decent paying work.

Those who are lucky to still have jobs can’t save for their retirement because the banks are paying nothing on savings accounts.

Yellen is doing something else. She is pushing down the interest rate. This helps businesses but not employees. When a business buys a machine, interest is a big part of the monthly payment, just like when you buy a car. So lower interest equals lower cost. Yellen’s plan is backfiring. She is making it cheaper for companies to replace people with robots.

The other half of income inequality is that the income of the 1% is rising. The ultra-rich don’t make most of their income from salaries, if they have a salary at all. For example Mark Zuckerberg, the guy who runs Facebook, gets paid $1 a year. He also happens to be a billionaire.

The uber-rich make their money from investments. As interest drops, the prices of their assets are going up like crazy. Yellen is doling out trillions of dollars to those who are eligible. How do you become eligible for the Fed’s free money? Simple. Just own bonds, stocks, and real estate. Better yet, borrow at dirt-cheap rates to buy even more (until the market crashes again).

The dollar is an ideal system for the rich and connected, the cronies. The Fed can do whatever it wants, and there’s nothing you can do.

The gold standard takes power away from The Man, and gives it back to the people. When wages are paid in gold or silver, workers have real money in their hands. They don’t have to deposit it, unless the bank offers a fair interest rate. If not, they can take it home and put it under the mattress, and that’s what keeps the bank honest.

Gold doesn’t give the rich free money. Under the gold standard, the rich have to do what everyone else does to make their money. Work for it.

Keith Weiner is president of the Gold Standard Institute USA in Phoenix, Arizona, and CEO of the precious metals fund manager Monetary Metals. He created DiamondWare, a technology company that he sold to Nortel Networks in 2008. He has his PhD from the New Austrian School of Economics. He lives with his wife near Phoenix, Arizona. In March 2015 he moved his Gold Standard column from Forbes to SNBCHF.com.
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