Quote

Silver Stock Report ". . .government price fixing is wrong. . .But the Constitution has granted the government the power to fix the price of gold and silver. . ."

ReportGold
Date03/12/2009
Loaded Date03/12/2009
TitleThe Constitution gives the U.S. too much Power
Quote"Nearly everyone who has studied any portion of free market economics knows that government price fixing is wrong, and incompatible with elementary free market theory. But the Constitution has granted the government the power to fix the price of gold and silver, by regulating the value thereof.

Article 1:8: "To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;'

Clearly, a constitutional government need not exercise that draconian price fixing power to regulate the value of gold and silver coinage. This article gives the government the power to set and fix the ratio of the value between silver and gold, and such prices were fixed for most of the early history of our nation at 15:1, so that 15 ounces of silver were worth 1 ounce of gold.

But such price fixing always leads to trouble, and it seemed nobody could figure it out. When the market price for sliver was higher than the official ratio, people held the silver and dumped gold. So the treasury would fill with gold. And when the market price for gold was higher than the official ratio, then people would hold gold and dump silver, and the government treasury would fill with silver, all according to Gresham's law.

Funny thing is that Gresham lived 200 years prior to our Constitution, but still, it seems the men who made our constitution just could not figure out the solution to that monetary problem.

The solution is actually rather easy. The government should act according to Gresham's law, until neither their own gold nor silver is overvalued, and should attempt to maintain an equal value in both gold and silver. Thus, if the government has 50 ounces of silver for every 1 oz. of gold, but the value in the marketplace is 70:1, then the government should attempt to acquire silver until it has about 70 ounces of silver for every one of gold. Doing this would, of course, drive up silver prices, and thus reduce the ratio in the process, so that maybe a balance would take place at the 60:1 ratio, at which point the government would stop buying silver, until the ratio changed again. In such ways, the government would always be dumping the overvalued metal, and acquiring the undervalued one, and this buying and selling would also act to keep the market prices between the two much more stable, yet still freely changing, which would be good for everybody, and would be completely non-manipulative."