Thomas Paine and fiat money

Some more common sense from Thomas Paine,  below.  I like Tom's smile; not typical of the somber style of the era. 

I think we are in the frog experiment where the water slowly increases in temperature resulting in the death of the frog because it kept adjusting to the heat. If we jumped into the current dollar suddenly, we would understand the whimsical nature of our "money."

Our ancestors knew exactly what they were talking about but since, oh, the 1920s, then 1972, we have come to believe the dollar bill actually had a value. It is just paper, no, paper and digits, nothing more.

Thomas Paine's "Dissertations on Government."

When an assembly undertakes to issue paper as money, the whole system of safety and certainty is overturned, and property set afloat. Paper notes given and taken between individuals as a promise of payment is one thing, but paper issued by an assembly as money is another thing. It is like putting an apparition in the place of a man; it vanishes with looking at it, and nothing remains but the air.

I picked this up from a discussion by Jake Towne of the curiously long-lived silver backwardization.

I wanted to get a feel for what is going on in the gold and silver bug side. Specifically, I figured that investing in gold mines does not link one to the movement in gold, anymore, and one should look at, for example, GLD or CEF as inflation hedges. Buying real gold doesn't make sense for me as it would be so little and I would lose it.

The above referenced article repeats the notion that the fiat money we use is dead, he was referring specifically to the pound, only few know it yet, and it will take time for people to realize they should have been in gold or silver. He quote Anatal Feteke, whom I discussed a few months ago. He linked to a pdf in the article, toward the end, if you want to keep up. I will get to it.

I did buy 5,000 shares of Brigadier Gold, however. That was so I could have a beer with Ken Wolfson, the CFO, and talk about our mining business. I envision chats like at the end of Boston Legal. Oh, I got shares for .0176 cents, so don't be impressed. My biggest concern was making sure the broker's fee was less than the purchase.

In fact, I made the market for two days. I drove the price down 12% all by myself. (Sorry Ken) I can tell because no other trades seem to have hit the markets. This is blatant specultation based upon fair news. Also, Ken would be incapable of working with crooks. So, its an arrow into the night, a pleasant night.

The metals and monetary areas of thought require time and a clear head, so most of us can't sit around and work through it. So...

Bottom line, as he points out, is get your family protected during the calm. This is the peanut butter and gold speech, I frequently give.

------------------------

On the other hand, Mr. Obama reports, with a happy face, from Europe that everyone just worked so hard during their 11 minute meeting. He also noted, indirectly, that GM's bankruptcy would be a clean affair and screw Chrysler. (I thought we invested in these companies) Directly, he promises to save the companies. I guess the government could buy a million cars and give them to Acorn.

Five banks gave back their TARP money today. Signature Bank's president said it all: When the program began, under Bush, it was designed for banks to busy themselves making loans and buy weak banks. He didn't want the money, but the FDIC is always honored and the bank took some 120 million.

Then, everything changed, guess what else changed, and now having TARP money means you are a troubled financial institution and the the government is delivering instructions and regulations. 

He didn't sign on for that, so he is giving the money back. Of note, Signature's stock took a dive after taking the money. People assumed it was a troubled company, one of those evil companies being slammed by Washington. The stock was up on the recent news. Do you get the picture, yet?

Other news, Hank Greenberg, the founder of AIG pushed out two years ago by Spitzer's threats, said in an interview the government screwed up the company. Surprise.

He didn't care much for his successors.  We can thank Spitzer for the AIG chaos, the poor millionaire, dilettante victim.