What's In Fort Knox?

An advertisement appeared in the Wall Street Journal last week that you need to know about. I realize that not everyone who reads L-W shares my avid interest in economics, so if you just yawned when I said "economics," you have my permission to check out after you read the next sentence. The implications of what is alleged in this ad could destroy your ability to feed your family.

To appreciate the gravity of what is at stake, let's talk about how society functions with and without a "medium of exchange." In our country, we use pieces of paper called "Federal Reserve Notes" as money. Beads, coins, even packs of American cigarettes (post-war Germany), have been used as a medium of exchange. Without such a convenient device, we are reduced to the use of barter and the velocity of the marketplace slows dramatically.

Imagine a society without "money." Let's say you are a farmer who grows corn. And you would like to purchase a shiny new HDTV. Since there is no medium of exchange, you must find an HDTV retailer who is willing to accept corn in exchange for his product. And if you cannot, then you must ask the HDTV guy what he wants, and he says, "I want milk for my children." So you must now find a dairy farmer who needs corn so you can get the milk to exchange for your HDTV. If you cannot find a dairy farmer who wants corn, then you must ask the dairy farmer what he wants, and he says, "I want some diesel fuel for my tractor." Sigh - This is getting time consuming!

Now consider the marvel of money. It eliminates the time and trouble of having to do product match-ups. The corn farmer can concentrate his energies on growing corn. He can sell corn for this medium and KNOW that someone else will receive this medium in exchange for his HDTV. What a tremendous time saver, this thing called money! There is one catch. The thing used as "money" must have perceived value. This is not the same as real value. (Although real or intrinsic value handily solves the challenge of creating "perceived" value.) Those Federal Reserve Notes we use have no intrinsic value. They are just paper. Because they are "notes," they are IOU's from the government. But if you present one to the government for payment, they will pay off this note by giving you - drum roll please - another IOU. If you say, "I would like an equivalent amount of something else, like gold or silver," they will shrug and say, "No dice! I am only authorized to give you another Federal Reserve Note."

Now it is true that by designating the Federal Reserve Note as legal tender, the US government has put itself on record as saying it will accept these IOU's as payment for taxes. If you owe the IRS, you can give the government back an equivalent amount of what it owes you (Federal Reserve Notes) and it will call things square. Isn't that nice of them!

But these Federal Reserve Notes do have "perceived" value. I can present them to all manner of retailers and they are willing to exchange their stuff for these pieces of paper. They do so because they believe that others will give THEM stuff for these pieces of paper, too. Everyone is happy to receive this paper because they know they can get rid of it for what they want because everyone is happy to receive this paper. (A is true because B is true because A is true? Anything seem a little circular, here?) What would happen if the perception of value for this medium of exchange was eroded? What would happen if your HDTV retailer said, "What do I want with that worthless piece of paper?" Would you still be willing to part with your valuable corn for a piece of paper that no one wants? Duh!

The problem that GATA is attempting to get on the public radar has profound implications for the dollar's perception of value. You cannot turn in your Federal Reserve Notes to the government for gold, but there is a public perception that our government ("we the people," by the way) can make good on all its loans because it has a big pile of gold at Fort Knox. What if it became public knowledge that that big pile of gold is not there? What would this do to the PERCEPTION that Federal Reserve Notes have value? 

Here is an example: Let's say that "Sam" owes you a thousand dollars and has given you a slip of paper that says "I owe you $1,000." (This is the same as holding that amount in Federal Reserve Notes.) Because Sam also has a pile of gold in his "secret room," you're not too worried about his ability to pay you back. But what if you discover that the secret room is EMPTY. And what if you also discover that Sam has given a bazillion "notes" to everybody else in town. Now you are worried! Why? Because you have considerable doubt that Sam will ever pay you back. That slip of paper probably doesn't mean a thing. (This example is actually putting a better face on the situation than reality. The real Uncle Sam has no intention of giving you any of the stash from his secret room to pay off his notes. Ever!)

So if it becomes public knowledge that the secret room is empty, this revelation won't improve people's perception of the dollar's value. And since these Federal Reserve Notes have no intrinsic value, perceived value is all they have going for them. When even this is unmasked as fiction, how will our society function?

Some might protest, "The risk is too high. Let's just keep the door to the secret room locked and assume it's all there." GATA is saying, "If it's all there, make it known and allay our fears. If it's not there, then come clean with the citizens of the country to whom you owe an explanation." It is perfectly appropriate for we, the people, to know where we stand, and I am grateful for GATA saying so! If Fort Knox is empty, a lot of people will have reason to wonder about the worth of their IOU's, and when that happens, you might have trouble finding the guy with milk or corn who wants your Federal Reserve Notes.

So why am I going into all this at Light-work? Two reasons: We assign too much value to money and stuff. Money is a marvelous tool - no argument. But it is not capable of providing true security and this ad reminds us of its tenuousness. Second, the GATA ad invites us to prepare for the possibility of a life without the monetary instruments on which we depend. The Book of Revelation makes the same invitation. It describes a future that includes the global destruction of infra-structure and a monetary meltdown. Think post Hurricane Katrina conditions on a world wide basis coupled with the global disappearance of our current economic system. Revelation says this will happen. If GATA's inquiry shows that the secret room is empty, it might happen soon. Stop living as if the good times will just keep rolling.

Comments

[Jeff]

I don't get it. I mean, I get completely what you're saying. What I don't get is the implied threat in the situation (not made by you, but illustrated in what you've said) that says, "The government is going to collapse and you'll be left with nothing. Your family will starve and die and there's nothing you can do about it." But then I read Matthew 6, where Jesus warns about the same thing, THEN tells me directly afterward not to worry about clothes and food. So, I guess what I don't get is how the threat from today's Powers That Would Be and the assurance from God work together.

[Jim Fleming]

Jeff,
There is a difference between the absence of anxiety and the absence of preparation. To be calm in the knowledge that God will watch over us does not require us to be passive. For example, here's a passage in which Jesus says, when you see a certain set of circumstances, "Then those who are in Judea must flee to the mountains" (Matt. 24:16). He is saying, when you see this, RUN! But don't panic.
Here's a related word from Paul, "While they are saying, 'Peace and safety!' then destruction will come upon them suddenly like labor pains upon a woman with child, and they will not escape. But you, brethren, are not in darkness, that the day would overtake you like a thief" (1 Thess. 5:3-4). Paul thinks we should not be taken by surprise, even in a time when most are saying, "It doesn't get much better than this!"
Think of the speech they make on the plane before take-off, "In the event of an emergency, remain calm and move toward the nearest emergency exit. Take a moment right now to identify the emergency exit nearest your seat." So here is what God is saying, "Stay calm and trust Me, but be prepared for an emergency that I know is coming, and it won't throw you off balance (like everyone else) when it does. Right now and with My guidance, you should identify the best way to deal with the physical and spiritual challenges of the coming crisis. But please remain calm, trust my instructions, and take action accordingly!" We need to be prepared for the worst but also remain calm and trust Him.

[randy]

Here’s my two cents, and it may be worth less, if we consider intrinsic value. Gold at one time was supposed to be the anchor that kept the perceived value of the dollar in check. However, that ended in 1976. However, many are still intrigued and impressed with it, not because of any intrinsic value, as I see it, but rather a perceived one. No question, the world economy is very fragile, but that’s mainly because perception drives everything anyway. Yes, gold has more perceived value based on the laws of supply and demand, but as far as intrinsic value, well, why couldn’t we substitute it with any other natural resource, perhaps rocks? The only thing that seems to have any real intrinsic value, at least with respect to our physical needs, are those things God created for our survival (food, water, air, etc). The medium of exchange by which we choose to circulate these essentials, or any other commodity that matter, seems to be based entirely on perception, whether it be paper, gold, or rocks. Once again, perception becomes our reality. Ok, guess I better go get another cup of coffee, because I can can see I’m starting to ramble. Right now, that java may have some real intrinsic value.

[Jim Fleming]

Randy,
In the future "a piece of bread will buy a bag of gold." The most basic of necessities will have great intrinsic value. A man stranded on a deserted island would consider a source of clean water of ultimate value. I consider our water supply the most undervalued earthly treasure we have, at least here in America.

[Randy]

Jim,
I hope you are wrong about the future plague that could come upon us, but I realize there's no reason to believe it couldn't happen. I certainly would like hear more of your views from a scriptural perspectve. On a Light-er note (yes, a pun is intended) I will give you 5 rocks for a cup of coffee, but only if it is a Starbucks!

[Jim Fleming]

I appreciate the offer, but I'm pretty well fixed for rocks right now.

[Jeff]

I'm actually looking forward to the prospect in a way. I mean, the ultimate reason is because Revelation says it's going to happen so it happening just means that God's hourglass is getting bottom-heavy. And truthfully, I'm not prepared but am trying to get so. So even if it happens tomorrow, I HAVE to trust that God can work around my screw-ups.

[mrs]

Jim, I think you might be right about the high value of clean water. A friend who is a food broker in Atlanta (where water is running low) has had food-processing factories call him to inquire about purchasing water by the truckload. Some plants require tens of thousands of gallons a day, and there are not nearly enough trucks to handle that. If there were, the fuel costs and air pollution would negate any advantages.
Some of our presidential candidates are suggesting nuclear power as a partial solution to our energy needs. However, nuclear power requires tremendous quantities of cold (meaning fresh from a river) water that might quickly run out - particularly in the south.
Drink up!

[SLW]

Well, I have been waiting for just the right time to leave the state to learn how to "live off the land". I guess it is time! Now I see how my love for dirt is a gift. Maybe the college fund would be better used to purchase a few cows, chickens and rain catchers! So, can you give some insight as how we can be productive and not passive for the future?

[Jim Fleming]

SLW,
I have talked with those responsible for Collierville's "Emergency Plan." Their recommendation matches what played out with Katrina. Don't count on government. If there is a crisis, their hands will be full. Make preparations to take care of your family even if there is no outside help. Of greater consequence, however, is developing the spiritual fitness that will be needed. If we should enter a period in which allegiance to Jesus is costly (as is the case in MANY other parts of the world) my faith must be healthy enough to declare, "I will not deny Jesus regardless of the cost." By making personal sacrifices for the Lord part of how I live NOW, this spiritual discipline will strengthen me and prepare my heart to keep beating for Jesus regardless of what the future holds.