A New Information Theory of Money by George Gilder
Book Review by DAVID BRADSHAW, Idea Factory Press
"Time is the coin of your life. It is the only coin you have, and only you can determine how it will be spent. Be careful lest you let other people spend it for you." -Carl Sandburg
Being a so-called "gold bug" can be very counterintuitive in today's world of changing economic and monetary values.
The public has been told over and over by so-called experts to think of gold as either "just another commodity" or "just another investment". But for over 30 years Swiss America has told the public the full story: "Gold is neither a commodity nor an investment - it is the world's most trustworthy store of value, time and labor." Now a new scholarly book and scientific theory, with substantial imperative evidence, backs us up our premise.
"Is money a measuring stick that gauges the value of economic activity? Or is it a magic wand wielded by central banks to summon new economic growth?" asks economist-technologist-philosopher George Gilder, bestselling author of 'Wealth and Poverty,' 'Microcosm,' 'Telecosm,' 'Knowledge and Power,' and co-founder of Discovery Institute in his newest book entitled, The 21st Century Case for Gold: A New Information Theory of Money.
We've long argued gold is the ultimate, worldwide "numeraire" (most fundamental form of money) or base good and that all similar goods must be valued and priced against the base good. Thus in today's corrupt world of floating currency values it has become impossible to identify the true value of almost every other asset.
The U.S. dollar has morphed from a promise to pay a specific weight measurement of gold or silver into a nebulous promise to pay an unmeasurable weight of debt. Our economy and money system, once a solid "gold-based" monetary system, has gradually become a politically "faith-based" system.
During such a time as this, I am thankful George Gilder has undertaken to make the case for gold. We need wise men to explain to us in fresh ways why gold matters both to our present freedom and to rebuilding the exceptional American entrepreneurial spirit in the future.
Key quotables from Mr. Gilder's thought-provoking INTRODUCTION:
MONEY AS INFORMATION SOURCE
Mr. Gilder introduces his brilliant essay by asking readers to think, "Is money chiefly a source of information? Or is it an embodiment of wealth that can be created out of thin air and distributed to the financial institutions closest to government?"
WHY IS GOLD RELEVANT?
"Is gold even relevant in the new 21st century information age economy?" asks Gilder. "For too many of the best and the brightest, conservatives as well as liberals, the debate over monetary reform and, in particular, a gold standard, is ancient history."
WEALTH IS KNOWLEDGE
"A new information theory of economic growth leads to new insight into monetary policy. Most educated people understand that knowledge leads to wealth creation, but this understanding is incomplete. It is not that knowledge creates wealth - wealth, in its deepest form, is knowledge."
MONEY MEASURES LEARNING/GROWTH
"If knowledge is wealth, growth is learning. The most important role of money is as the measure of that learning. Money is the channel that carries the information to investors, workers, small businessmen, major corporations and entrepreneurs. All need to gauge the success or failure of their attempts at growth."
AN AUTHENTIC MEASURING STICK
"The older case for gold sprang from the idea that its value as money derives from its objective value in economic activity. But this view has it exactly backwards. Researches in Bitcoin and other digital currencies have shown that the real source of the value of any money is its authenticity and reliability as a measuring stick of economic activity. A measuring stick cannot be part of what it measures."
GOLD: A PURE MEASURE OF TIME
"Gold can function as money because it operates outside the financial economy as an index of the time it takes to extract it from the earth. The cost of extraction rises almost in proportion to the advance of mining technology. Gold thus cancels capital and technology and becomes almost a pure measure of time. Only gold money is rooted in time."
TIME IS MONEY - MONEY IS TIME
"The source of the value of money is time - irreversible, inexorably scarce, impossible to hoard or steal, distributed with remorseless equality to rich and poor alike. As an index of time, gold imparts the accurate price signals needed for sustained economic growth and expanded opportunity."
A NEW MONETARY REFORM AGENDA
"These insights impel an imperative agenda of monetary reform. Money is not chiefly power - it is information. While government power can increase monetary volume, it cannot enhance monetary value. Value is an expression of entrepreneurial knowledge. The quantity theories of money must be replaced by an information theory of money that preserves the currency as an objective medium of measurement rather than as the government's latest message. As a vessel of knowledge rather than an instrument of power, the new theory ultimately leads us to money rooted in time. It will bring us to a new consideration of the necessary role of gold in a global Internet economy of information."
I sincerely hope Gilder's book receives wide public discussion and distribution, and serves as a beacon for other brave monetary reformers. I plan to reread it, as there is so much packed inside it.
Mr. Gilder reminds readers that no paper currency can ever be an accurate measure of wealth or time unless it is rooted an unchanging "a store of value". For thousands of years gold has been the ultimate "numeraire" for measuring all other forms of money. This simple chart illustrates how gold has protected your time, labor and future over the last three generations.
Will physical gold and digital currencies converge at some point in the near future as he predicts? Time will tell. Thankfully Gilder's book confirms that, in the meantime, freedom-loving citizens seeking alternative forms of money that will stand the test of time can put themselves on a "personal gold standard" with confidence. Discover The Timeless Truth About Gold & Silver.
WHAT OTHERS ARE SAYING
Mr. Gilder's book is a "Monetary Must-Read" for all serious gold-bugs and monetary reformers, according to Jim Grant, of Grant's Interest Rate Observer. "Gilder makes you think - he insists on it....You're going to have to see for yourself how the story ends. Something to do with gold and Bitcoin displacing Janet Yellen."
"Gilder's new book tackles key questions about how monetarism distorts the economy and leads to misallocation of investment. Gilder covers a variety of topics, including Milton Friedman's greatest 'error,' money supply and velocity, the perils of high-volume trading, Bitcoin and how it mimics Gold, and why a Gold Standard is superior to targeting based on a basket of commodities," according to AmericanPrinciplesProject.org.
"In 106 lucid pages, Gilder magisterially demystifies money. In the hands of Copernicus, Newton, and Shannon as channeled by Gilder, money becomes simple and intuitive. Gilder reveals anew the gold standard's deep scientific foundation. Buy a copy on old fashioned paper in better bookstores everywhere or download it and read it," writes Ralph Benko at Forbes.