Military force or gold: which backs a currency?

Carmen asked: “what happens if China amasses enough gold to back its currency?”

Paul retorts: “Do they have weapons of mass destruction?”

US gold certificate (1922)

US gold certificate (1922) (Photo credit: Wikipedia)

Paul’s answer is interesting. Is it possible that military force is important in economics? Isn’t it obvious?

Is it possible that military force is important in the relations between nations (like when they set up things like trade treaties or colonial exploitation agreements and war reparations)? Is it possible that military force is important when a governing institution dictates what form of payment is accepted within their court system?

Consider the importance of military violence in enforcing these kinds of tax extortion systems: “If you do not pay us in government-approved salt (or gold or diamonds or whatever), then, after 3 years, your property will be subject to a real estate ‘tax lien foreclosure’ and the court will take BACK ‘your’ property.” Why would courts (and legal documents) refer to “land owners” as TENANTS? Why do courts have the authority to rule that someone is no longer the tenant or owner (or whatever) and then send military troops (deputies) over to evict or arrest the people who are suddenly legally defined as “trespasssers?”

Could military force be important in economics? It is possible, isn’t it?

Combination of four currency symbols

Combination of four currency symbols (Photo credit: Wikipedia)

Most of the comments that I have ever seen on this group [a group on LinkedIn] are based on presumptions which I consider absolutely false- even silly. We might as well ask “how many miles north do I have to travel to get to where I already am?”

There is no issue of “enough gold to back a currency.” Gold itself cannot give a currency purchasing power. Military force gives a currency purchasing power.

When one understands what currency is, everything about it is simple and obvious. Until then, things may be rather complicated and there may be much arguing and ridiculing and hysteria.

English: The Confederate Unknown Cemetery in G...

English: The Confederate Unknown Cemetery in Gainesville, Alabama. Gainesville was the site of Buckner Hospital, an official Confederate government hospital during the American Civil War. Most of the wounded here came from the battlefields following the Battle of Shiloh. Many of Buckner Hospital’s unknown dead soldiers were interred at this site. A Brooke Rifle can be seen to the left of the central obelisk. (Photo credit: Wikipedia)

In the US Civil War, when the Confederacy was “invaded” and defeated by the invaders, the confederate currency was RULED to be worthless. The military force that had been backing that currency had been defeated and suddenly another system of organized coercion/extortion was ruling that geography.

If the Confederate government had made lots of promises in paper coupons to redeem those coupons in gold, would that have changed things? Well, the invaders could have simply confiscated whatever gold the Confederate government (or private bank) might have amassed.

A contractual promise for gold not only requires gold to back it up, but someone to perform the redemption of the paper coupon, plus a few armies to protect the territory (not just to protect the gold, but to protect the borders of the governing operation from external invasion, plus protect from internal rebellion). Gold does not back a currency. A promise on paper does not back a currency. Only military force backs a currency. Without a functioning operation of organized violence, there can be no extortion system of taxation and no currency system creating demand for the exclusive form of payment for those dictated tax claims invented out of thin air. (Out of thin air- using mere words- tax liabilities are invented and then an exclusive form of payment is dictated, creating demand for that form of payment for that currency… in direct proportion to the military dominance of the rulers of the extortion system who are doing the inventing, claiming, and dictating.)

emblem of the Papacy: Triple tiara and keys Fr...

emblem of the Papacy: Triple tiara and keys Français : emblème pontifical Italiano: emblema del Papato Português: Emblema papal. (Photo credit: Wikipedia)

However, can China amass enough gold to scare the Vatican? That is an intelligent question and that is probably the direction Carmen was going, whether she knew it or not.

If the Vatican (for instance) is trying to set up a new operation of military force to further establish global control of human resources by enslaving billions of people through tax extortion systems, then a monopoly on gold COULD be important for their system to function. IF that was their plan, but then China amassed just as much gold as the Vatican, then that would give China the economic capacity to “flood the market,” disrupting the public perception of scarcity and religious glamour around gold.

A gold-rich China would become a PRIMARY military target of a global police state. Or, their gold could be a key bargaining point for negotiating a high-rank within the Vatican hierarchy.

Is using gold as the sacred object behind a global currency *required* to create a global system of organized coercion? Not at all! A much more efficient method would be to use chip implants and simply force everyone to use a credit account (like a social security number) in order to get food or housing or a job, then entice or force everyone to receive a chip implant.

Most people who read this, if they do understand it, still may not have the emotional maturity to simply get the information presented without reacting emotionally. Instead, they will respond in terror with things like “how can we stop this?” or maybe even with “how can we help China advance the global salvation method of a gold-backed currency?”

Gold is not very important to you. What you can later acquire in exchange for accumulated gold may be much more important to you than gold itself, which is why you would plan to eventually EXCHANGE gold rather than USE it.

Gold is not a primary economic resource (like gasoline). At the absolute most, it is a legal form of money, with an immense network of military force creating hysterical demand for it (as in the phrase “the gold standard”).

Gold is one of the most obviously speculative investments. The bubble in gold that has been “deflating” since 1980 is arguably the most enormous speculative bubble in the history of human civilization.

However, that does not mean that some network of military force (and profiteering) will not eventually catapult demand for gold through propaganda or through threatening to use nuclear weapons unless the masses stop giving attention to diamonds or silver or salt and instead exclusively worship the holy object of the Vatican treasury: gold. The God of the Vatican is a jealous god, after all, right?

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