Gold, The Only Objective Standard of Value

18 August 2011

The following is a seminal passage from Ayn Rand’s Atlas Shrugged. As Francisco explains the importance of money as the only moral base for man’s existence, he highlights an inevitable fact we would all do well to recognize from current trends resulting from both fiscal and monetary policy coming out of Washington and the Federal Reserve respectively – the declining value of our fiat money.

“Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtues of the victims. Watch for the day when it bounces, marked: ‘account-overdrawn’.” Atlas Shrugged, 383-84

The “legal looters,” are of course those in Washington, and yes, I mean to include everyone because if you are not part of the solution, then you must by logical necessity be part of the problem. The account “which is not theirs” is of course that of the taxpayer. S&P’s recent downgrade of U.S. credit is evidence that the “day when it bounces, marked: ‘account-overdrawn'” is not so far off. Also interesting to note is that gold recently topped $1800 per ounce following S&P’s announcement and a highly volatile market here at home and overseas. It only makes good sense that the value of gold would climb as the value of the world’s reserve currency no longer commands the highest credit rating.

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