Pen Meets Paper Oct.4'10

Opinion by Helge Nome
Albert Einstein popularized the notion that the qualities and quantities we use to describe the world around us are entirely relative entities. For example, the speed of an object can only be meaningfully described in relation to some point of reference, like the earth we stand on. Things get a lot more fluid out in the cosmos, where there is no obvious reference point. Thus was born Einstein’s famous theories of relativity.
Upon reflection, we also realize that the same principle applies to “value”. We value something relative to something else: An ounce of gold is worth a lot more, in our mind, than an ounce of lead, or iron, for example. So as to create some kind of order in how things are valued, we have devised units of value, like the “dollar”, “euro”, “yen”, etc., somewhat akin to the “meter”,”kilogram,”second” in the physical sciences.
But there is a problem with our monetary values. Unlike the physical ones, that have some fixed reference point (one meter equals so many wavelengths of light emitted from a gas at a certain temperature), our units of fiat money value are literally floating around in space with relative values changing moment by moment.
In the old days, they were tied to the value of gold, the magic metal of humankind, but that is no longer the case. In the old days the value of a nation’s money also used to be connected to the productive capacity of that nation so that highly productive nations’ currencies were highly valued and sought after by people from all over the world.
That has also changed as financial speculators have hijacked control of currency creation and created enough fancy money, by way of debt, to buy the whole world a hundred times over.
Have you noticed that people are very reluctant to spend money these days, during “bust” times? (In contrast to the boom time some three years ago). The reason is that everybody is now busy trying to pay down the debts that were so recklessly gone into during the boom. No money, no jobs, the economy shrinks and the dreaded specter of deflation appears on the stage because people who have to sell assets in order to meet their financial obligations are forced to lower the price of those assets in order to secure a sale.
The central bank fix for this problem is to print money and distribute it far and wide, hoping to get some inflation going again. That effectively devalues that particular currency in relation to those of other nations, giving a competitive export advantage to the nation with the central bank that indulges in this practice. So the other central banks follow suit in order to neutralize this effect. Outcome: Currency wars with unpredictable consequences. And a good way to measure this phenomenon taking place is to keep an eye on that fixed point in the landscape of value: Gold.
It is now over $1,300 per ounce in US funds, and the equivalent in other currencies.
Gold is not rising in value. It is holding its real value while fiat currencies, created out of nothing’ are showing their true face as they tumble downhill. You see, gold and silver are literally imprinted on our collective mind as having intrinsic value, based on thousands of years of successful usage. There is nothing inherently wrong with fiat money, though.
The problem is that we have allowed a bunch of scoundrels to create tons of it. And in doing so, by way of tricks and deceit as old as the hills, they have shifted control of the bulk of this money from us, the public, to themselves.