Saturday, May 9, 2009

Martin Armstrong Makes The Case for FreeGold

Or something pretty close to it.



The Coming One World Currency
How do we do it?
by: Martin A. Armstrong
former Chairman of Princeton Economics International, Ltd.
and Foundation for the Study of Cycles

May 1st, 2009





The One World Currency Cometh





How do we retain sovereignty?



A Two-Tier Currency System





It Must Be Practical








Anonymous said...

Armstrong : " Growing salad in the desert " :)))

Will 2009-2011 prove to be a global flight into the dollar because world economy contracts !?
A. seems to suggest this as a serious possibility. He extraploates from the chart-patterns...and cycles connected to it.

Salad in the desert, is a mirage. How can you make a projection out of a mirage ? A fata morgana hologram ?

The history of rise and fall of European mini-empires (castles and citystates, etc) of all kinds, learned me that the rises and falls all had one thing in common : Sudden (abrupt) starts and falls due to unforeseen circumstances. The "It's Time", fenomenon (balance of power).

Armstrong is amalgamating his projections from the floating currency chart-patterns with the It's Time (or This is It) , practice. This is confusing.

The Make or Break-events are not that cyclical as A. tries to prove.

The fact that the $-system/regime are increasingly put into question, the most important current that is leading to the inevitable radical change . "Cycles", can, at best ake a good guess in tops/bottoms.

Anonymous said...

" Salad in the desert " versus "Black Swan " : One can never guess when/why the bucket of water finishes or when/why a black swan appears.

Most of the time, the event that dramatically breaks/makes the ongoing process is an absolute non-event at an absolute unexpected moment.

Armstrong tries to time the processes. Can we "time" life and death ? Investigate your own (personal) history for conclusions...

By the way : The euro reached a serious up-resistance (1,36)...

Anonymous said...

You are not going to believe what you see/hear !

Anonymous said...

Rethinkhing America's decline (!?)

Note that the title says "America" and not the $-system and its regime.

Read the last paragraph : " International Cooperation...under leadership " !?

>>> A snakepit plenty with hazards (salad swans...).

Anonymous said...


The Great Credit Contraction is a fine analytic work. Trace Mayer comes to the gold community with a different slant and background. He is a legal scholar with an emphasis on the Constitution, focusing on gold and currency issues. In his e-book, one can read about the historical significance of a crisis that will surely reshape the world. The global economy is built on an illusion currency that is evaporating before our very eyes. This book is an autopsy of the current worldwide systems and begins with financial history, discusses the current great deflationary credit contraction, projects the future environment, and concludes with suggestions on how to protect, preserve, and generate wealth in this challenging time.

>>> The growing chorus of global gold-advocates remain, for the time being, rather disciplined (restrained).

Women in the Middle East are officially advized to keep on accumulating goldmetal.

FOFOA said...

Hello Anonymous,

Regarding that video, I'm kind of at a loss for words. Uhhh... Inspector General? How much are we paying this woman? She is like a retarded puppet. Did you see the puppeteers sitting behind her?

Regarding Armstrong, I would say that cycles are very powerful things. Like the tide.

But technical analysis means absolutely nothing right now. You can all safely skip the last 9 pages of the PDF. It deals with manipulated fiat currencies measured against other manipulated fiat currencies. Look at the Y-axis of the charts. It is other paper currencies. How can you measure something against a changing standard? Martin's technical analysis means nothing. So what if the dollar hits even 250? 250 what? 250 pieces of shit? It means nothing.

What is valuable here are some of the thoughts he articulates in the first part. This is why we will have Freegold. Whether it is brought to us by man, or whether man fails at what he tries. It makes no difference. A global currency... no... a global STANDARD is what is needed. And it already exists. No group of politicians can overpower this. It is too big. Like the tide.


Anonymous said...

I fully agree, Sir.

Martijn said...


General question: what is your opinion on the argument that gold cannot be eaten? It is often argued that such characteristic in a product favors its use as money/store of value.

However, should 1 oz of say "gold+" have all the characteristics of gold, but on top of that allow us not to eat and drink for one year when eating it, I would rather prefer owning gold+ over gold.

Unknown said...

Yes, this latest text from Armstrong is not very good. Anyway, we must understand that if he is in prison, the intellectual level cant be held constant.

He has much more eloquent and precise thoughts on the legal system, from experience, than the TA he provides. The last is however valuable if he is indeed as connected with the international financial elite as he says he is and he did provide advice to funds managing trillions.

A different thing is his credibility. Is he indeed in prison? Are these texts his writings or is someone copying his style? Dont you think if he is so deeply connected, the people he might anger with these texts may try to silence him by issuing bogus texts? It should not be very difficult I think.

A third point I want to make is something that I wrote about here some time ago. I believe it was one of my first posts (under alek_a) where I advocate a two-tiered system of currencies that are not exchangeable. The one is a "wealth" currency that you pay and get paid for when you deliver/buy products and sevices of a long lifespan (industrial machines, education, houses, long-term delviery/service contracts etc.) while the second fiat currency is reserved for consumables and perishables (food, computers, iPods etc.).

The price of each product consists of two components: a number in the wealth currency and a number in the fiat currency. You must pay both. Of course, sometimes the price of one is zero but that is OK.

You are paid in both currencies.

There is no interest charged on the wealth currency and it cant be created through fractional banking. The fiat currency is the same as the ones we have now.

This is very similar to what the two-tired approaches that I read about recently propose. I simply go further and propose this system of two-dimensional pricing.

FOFOA said...

Hi Martijn,

My argument is that the fact that gold cannot be eaten makes it an excellent wealth reserve. You don't want to hoard as a wealth reserve something others might need to stay alive. If you hoard a bunch of food and it rots, then you have essentially stolen from the common lot.

Second, gold makes the best monetary metal is because it is not consumed, either by people eating it or by industry. This makes for a stable supply. This is more important than rarity.

The best money is ONLY used as money. That is why it is best. This argument that gold has no intrinsic value is simply bogus. The argument relies on the idea that anything's intrinsic value is based on its usefulness to humans, to eat or consume in industry, or whatever. But the argument completely ignores the use of money or store of wealth or standard of value. It is a convenient slam on gold, but it is simply wrong.

Think long and hard about a world where everyone eats their money. Think about the problems. First of all, you would have constant deflation, unless your gold+ could be easily reproduced. Then you would have inflation. So what is the point? Stability of quantity is most important in a standard of value.


FOFOA said...

Hello Alek,

Indeed, I do remember your two tier pricing system! If I remember correctly, my biggest concern with your system was that it was not natural, because you wanted to outlaw the convertibility of the two kinds of money. You wanted to prevent those that may have accumulated too much fiat from exchanging it for the wealth reserve. Or those with wealth reserve from converting it back to the more useful fiat.

I think Martin's two tier system is close to Freegold because gold will not only be a wealth reserve and a currency standard, but it will also be used as the ultimate extinguisher of debt on the national scale. I think what he is suggesting is a global currency that can be used to settle trade imbalances because it is tied directly to gold (and exchangeable directly FOR gold).

Everything must be convertible and exchangeable at some point in the system or it loses the underlying value of the gold. Under Freegold, gold and currency are exchangeable at all levels. And exchange takes place freely, because the price is right and the free market is determining the price. The only factor determining what you hold will be "do you need your money now to spend, or do you prefer to store it until later". Answer that question and then go freely exchange your money for the one that best suits your needs.


Unknown said...

Yes, the two-tiered ideas floated around are in fact Freegold. What I propose is more complex and goes farther. It is completely new. Probably why it is not very feasible at the moment.

But just let me comment on your observation. Look at the system in steady-state. Forget thus the transition to it. Assume it has happened somehow and the new system is now established.

You will get paid in both currencies. You can work for someone (or something) and get a the two-dimensional (2D) compensation, a salary, that you have the freedom to negotiate with your employer periodically, just as we all do now. Or, you can work for yourself, invest, take risks, create new products and ideas etc. and get paid in the currency that is equivalent to the fruits of your labour.

If you make short-term perishables then you earn more fiat, if you offer a longer-life service (like a teacher) then you get paid more in wealth. With the fiat you can grow much faster since fiat is needed to buy consumables and stuff that "burn at a faster rate" for your enterprise's growth, plus in fiat you can borrow more, hedge risks, play derivatives, get government support etc. With wealth you create slowly and methodically but you credit rating is much higher since you do not have leverage. You cant hedge risks and do anything of the sort you can with fiat because there is no political-economic control on fiat (like central banks etc.).

The problem you mention will be the problem of the farmer in such a system. On the one hand, he needs to pay for his pension, agricultural machines and other long-term expenses (example mortgage) in the wealth currency but on the other hand he is creating perishables (tomatoes and lettuce) that he sells for fiat currency. He will need to be able to balance his account. How, you ask, can he do that when the wealth and fiat currencies are not exchangeable?

Well, there is one way he can make a wealth currency. By making long-term contracts for food delivery of a certain standard. You see, when you sell a perishable, you not only sell the thing itself but also the excess of your labour (as you already have demonstrated previously). If you have excess of labour for a longer time, you can convert that to capital by commiting that excess on the mearket and receiving wealth in exchange. This is missing from the current system as we are all selling past labour at this moment and the market has some very nasty ways of pricing-in our longer-term excess labour that we commit to by chasing careers and becoming more educated and knowledgeable in our professions.

The buyer will have to pay extra in wealth for such guarantees. The farmer takes the risk of guaranteeing delivery but hey, risk cant be reduced whatever system you have!

In the case he defaults on his contracts he will have to put up the collateral: his machines and land which, yes you guessed it, cant depreciate very much in value since they are the things he purchased (mostly) with the deflationary wealth currency!

Of course, it is not all black and white. The prices will be both in fiat and in wealth. For instance, a PC may cost something like (F100,W1) while the contract to keep it up to date in software for 5 years will be (F499,W39) ON TOP OF THAT and to keep it up to date with both hardware and software will be additional (F799,W99). A kilogram of first-class apples for consumption will cost (F0.5,W0) but a koligram first-grade consumable apples for 3 years delivered to a restaurant will cost (F655,W100) more. A mining machine will cost thousands of W's and million F's, but the maintenance contract for xx years with certain standards will cost tens of million F's and W's. Gold, for instance will cost (F0,W100). Barrel of oil will cost (F100,W0) but an obligation to deliver oil of a certain quality for 10 years will cost billions of W's and zero F's on top of the fiat price of the very potent consumable like oil (currently this guarantee is paid for in blood in Iraq). If the reserves of oil start to get depleted, the seller can decide to start pricing barrels in W's as well if he can find a buyer.

So there is a free market and you can do everything that we already do, but there is a new quality in the system to accomodate our civilisation's expansion in both knowledge and population. All stock charts will, for example, be 3D instead of 2D graphs.

Maybe it is science fiction but I think as our intellectual abilities progress (look at the children now, how smart they are!) we can use a more complex system to accomodate the more complex economic landscape.

Unknown said...

Well, since I propose a free market, the prices of things will also fluctuate and you can have tomatoes priced in both non-zero W and F as economic cycles progress. Maybe a kilo of tomatoes will cost (F0.5,W0.0001) today and (F0.85,W0.01) in 2 years time. It is a free market!

What I propose is simply an expansion of the system in one more dimension and prohibiting political-economic control on the new currency coordinate. That is the only rule that is necessary for the system to move towards my vision of pricing perishables in fiat and longer-life products and services in wealth.

FOFOA said...


Thank you for the additional explanation of your system. I will have to ponder it for a while.

It seems quite complex. And it seems to me that the advantages found in your system could be mostly achieved in Freegold, especially if gold is allowed to be legal tender backed by the rule of law.

In a Freegold world, a very small amount of gold, like a gram, may be worth two weeks labor, or even a month's labor for an unskilled worker. So, supposing contract law allowed for the inclusion of gold as a portion of the payment, you could negotiate your annual salary to be $50K fiat, and 12 grams of gold. Your monthly income would then be $4,166 + 1 gram. You would live off of the $4,166 and the gold portion would be the equivalent of a 401K or an IRA.

Similar deals could be made in the forward sales of produce, as in your farmer example.

Can you demonstrate an advantage to your system that exceeds Freegold by enough of a margin to justify and validate the considerable relative complexity of your system?


Unknown said...

Well, yes I agree it is complex and at the moment I cant pinpoint efficiency increases nor make a claim that it is inherently more anti-corruptive that simple Freegold.

It has also never been tested and you just cant implement something like this without having the proof of time and the experience necessary to cure any beginners ills, if indeed what I propose makes sense to macro and monetary economists.

One thing that I can claim is that absent the exchange mechanism, all avenues of paper manipulation are eliminated.

Also, the 2D system encompasses Freegold as the latter is simply the former but with the exchange mechanism (a gold market) enabled. So the Freegold system is a "simplification" technically of the full 2D pricing system, thus the latter is the more general theory academically. But I think these things are less relevant in social sciences than proven practices and "case law".

Ender said...

IMHO, there is really no need for any complex currency systems. There is no need to label one ‘wealth’ and another ‘currency’. It just doesn’t make sense from a fundamental point of view. That is, a currency is a means of facilitating an exchange of goods and services. Just leave it at that. Make an agreement, use the currency for exchange and move on. It’s that easy.

The wise (wo)man will exchange their currency for items that grow or maintain their value over time. The goal is not to exchange currency for gold, but to exchange currency for that which enriches your life. Live and laugh for nighttime may come in the blink of an eye.

I cannot think of a situation in which there were two functioning currencies functioning in the same economy produced by the same political organization. It just doesn’t make sense.

Ultimately, it is the individual that must come to understand that currency is for spending, assets are for saving. The more functional the asset, the higher the quality of life.

A Freegold system will naturally come on its own as people choose to save gold and spend currency. The People will bring on a Freegold type system out of necessity.


FOFOA said...

Hello Ender,

I agree completely with you. Between you, me, Anonymous and others, I think we are describing the same thing as seen from slightly different angles. But the different angles/perspectives make for deep and interesting Thoughts. Something to occupy the mind while we practice our patience.


Anonymous said...


Have a question for which I don't seem to have clear answer. Maybe you can help.

If like Another says the "great currency wars" are raging then it seems common-sensical that the contenders will each try to have the strongest currency in order to win the war (i.e. strengthen the currency with the backing by gold or gold hiding in oil).

Why then is the USA on this outrageous path to openly, in public view, debase it's currency as compared to strengthening it? (with all the quantitative easing).

Doesn't it want to win the currency wars and price oil in USD?

FOFOA said...

Hello Anonymous,

No matter how many dimensions you use to analyze economics, it will always exceed your capacity. This is the main problem with the study of economics.

But at the same time, some macro principles are very simple.

Regarding your question, the dollar has backed itself into a corner. It has left itself in a position without choices. It must act in the only way it can. Strategy is no longer an option. Neither is winning.


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