Author Archive | GSI

The Fed’s purpose, when it comes down to it, is to buy bonds. Under their various “Quantitative Easing” (QE) programs, they sure have bought a lot of bonds. This pushes up the price of the bonds. Since the yield is basically the inverse of the bond price, this means the rate of interest falls. These [...]

The question asked by the title of this article is not rhetorical. It came up in the debate about Arizona Senate Bill 1439, which recognized gold and silver as legal tender. The bill passed in both the Senate and the House but was vetoed by Governor Jan Brewer, who was concerned the state would lose [...]

The answer is profoundly important as we debate what sort of role gold ought to play and evaluate the various gold standards being proposed. If people are free to own gold coins directly, then the mechanics of setting the rate of interest are simple. Let’s define a term. The marginal saver is the saver who [...]

The Root of the Problem is Debt Worldwide, an incredible tower of debt has been under construction since 1971, when President Nixon defaulted on the gold obligations of the US government.  His decree severed the redeemability of the dollar for gold and thus eliminated the extinguisher of debt.  Debt has been growing exponentially everywhere since [...]

I have not really preferred the word “contagion.” When an effect happens, even in the monetary system, it has a cause. This is generally not merely that a similar thing is happening across a nearby border. The word contagion has connotations that because something is happening in Country X, then that by itself means it [...]

There is an erroneous view of fractional reserve banking that claims all fractionally reserved banks are de facto insolvent. A variant asserts that if a bank takes in $100 of deposits then it can make $1000 of loans, creating money out of thin air. This view is false. To understand why, let’s look at the [...]