James Turk brings sound money principles to a new generation

James Turk has long been a friend of gold. The founder of Gold Silver in 2001, and also the author of Free gold money report for many years, summarizes some of the knowledge acquired during his career in a new book, Money and Freedom: The Pursuit of Happiness and the Theory of Natural Money (2021). I’m looking for a “book shelfof contemporary authors, which can serve as an intellectual foundation for a new era of Sound currency (currency based on gold) in the United States and around the world. Turk’s new book contains much insight and timeless wisdom, updated to our times and current concerns, and serves as a single source of much “golden knowledge” that is needed by anyone interested in these topics. I imagine it as a kind of textbook, especially for younger kids, who might instead have to search here and there for scattered bits and then have to sift through those for errors and fallacies. I did, so I know very few will undertake such a task; and of this already small group, very few will succeed in throwing away the rubbish accumulated over decades to find the pearls of wisdom within. In other words, it helps to have a guide. Turk dedicated his book to his two sons, suggesting to me that he had something like that in mind when he wrote it.

my own books have tended towards a somewhat technocratic approach – the economic equivalent of “rocket science” – so I’m glad to see someone expressing some of the broader principles of statesmanship whose goals serve these technocratic methods . The second chapter describes the central role that money plays in our “pursuit of happiness”, the ambition of each person to improve his personal situation. It requires mutually beneficial cooperation with others; and the primary way we do this is through monetary transactions. When money is neutral and reliable, free from government control and manipulation, this individual pursuit of happiness becomes collective prosperity and freedom. Gold is a “natural currency” because it best serves this human need for a neutral and reliable medium of exchange. No attempt by central banks to ameliorate the situation through currency distortions and manipulations can produce a better result, although the effects may provide some benefits here and there, for a limited time. But more generally, a system of macroeconomic manipulation by a handful of money bureaucrats, who seem to have no consistent method or track record of success, undermines all principles of freedom and delivers us all into a global system of politics. monetary. tyranny. Like most other socialist systems of government control, throughout history, it never ended well. Turk includes many concrete examples of how these principles play out in our recent experience.

Nevertheless, I disagree with Turk on a number of points. The book is flawed, I think, with an excessive focus on “fractional reserve banking,” Murray Rothbard’s old workhorse. Rothbard argued, oddly enough, that basically the whole modern banking edifice, born in Italy from around the 12th century, had to be overthrown to have a gold-based currency again. Rothbard began this crusade in the 1960s, a time when the US dollar was already gold-based through the Bretton Woods system, and banking and the economy as a whole were doing very well in one of most prosperous decades in American history. The Bretton Woods system had a number of serious flaws, which led to its disintegration a few years later, in 1971. But that had nothing to do with “fractional reserve banking”, which had coincided with currency based on gold for the previous 500 years. As part of Rothbard’s musings, he also imagined that returning to a “100% gold dollarwould imply a roughly 10:1 devaluation of the dollar, starting at around $35/oz. at the time at around $350/oz. – a rather impenetrable notion for a supposed advocate of “sound money”.

It was very stupid. However, despite adopting some of the same terminology, it seems Turk really has none of Rothbard’s policy prescriptions in mind, but rather reiterates his view that a gold reserve rate high – Turk specifically mentions 40%, which Isaac Newton apparently recommended from the Bank of England in the early 18th century – is a desirable thing in a monetary system. Turk himself built a “100% reserve” system, comparable to the Bank of Amsterdam in the 17th century, in the form of GoldMoney. The system was originally designed to facilitate “electronic gold” payments, directly and contractually tied to real bullion in a vault, effectively serving as a sort of digital currency. Unfortunately, GoldMoney hasn’t quite lived up to its promise and potential, in part because governments have imposed numerous regulatory barriers to prevent GoldMoney from becoming popular enough to undermine their fiat currency monopolies. Today, “crypto stablecoins”, including those based on gold, have achieved similar goals, but we can eventually conclude that a centralized system like GoldMoney – or the ACH system that already erases millions of bank transactions in USD daily at minimal cost – is a lot more convenient. Today, GoldMoney continues to be more of an investment vehicle than a payment or transfer vehicle – a savings account, instead of a checking account – but it still has the potential to achieve its purpose. and his original fate.

Turk also uses, I would say, the label “fractional reserve banking” to refer to a wide variety of questionable interactions between the current banking system, central banks and probably bond markets, in the context of today’s floating fiat currencies today. Former Governor of the Bank of England, Mervyn King, rightly called this the “alchemy” of modern monetary policyalso suggesting George Soros’ book The alchemy of finance. King – employed for a time as Britain’s chief alchemist – believed this “alchemy” had to end. Turk’s criticism of this regime is shared even by those who work within it. “Sound money,” or money based on gold, takes money out of the hands of money manipulators. It’s like sunlight on vampires.

James Turk’s background is in banking and asset markets, not in academic economics where careers are made on promoting institutional dogma often divorced from reality. This hands-on stance informs her book throughout, with plenty of material that gets to the heart of the matter, and has stood the test of experience. I don’t want to focus too much on some differences of opinion, which I see as flaws, but rather point out that the book provides a lot of background knowledge, from a practitioner who has been involved in these topics for decades. If we had another dozen people who knew as much about money and freedom as James Turk, we would be well on our way to building a much better monetary base for our continued prosperity.