ATM Salvation

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Would you buy
a gold bar from a vending machine? If the ATM were located in a
secure area, and the bars carried an acceptable premium over the
current spot price and could be purchased in units as small as one
gram or as large as an ounce, would you consider swapping your unbacked
paper money for an authenticated 24-karat gold bar?

There are entrepreneurs
who are betting you would. Thomas Geissler, managing director of
the German company GOLD
to go
, installed
a gold vending machine
in the lounge of the three-billion-dollar
Emirates Palace Hotel in Abu Dhabi earlier this month. His company
is able to produce fifty gold ATMs a month that he plans to install
in places where "the machine will be liked by the audience,"
which so far doesn't include the U.S. Another firm debuted a
similar gold vending machine
in Las Vegas a few weeks ago.

But gold is
not yet money again. Why would people buy gold from a vending machine
when all they could do is hoard it or give it away? To Austrians,
the answer is the same for buying gold anywhere: to prepare for
the ultimate rainy day – the Flood, for those who like biblical
references. Bernanke may not want to shower the world with dollars,
but history suggests politicians will gladly do the job and blame
the disaster on speculators (and now Asians, given their current
economic position). If enough people have gold bars and coins in
their possession, the government will have trouble imposing a new
paper money standard to replace the one it destroyed. Hyperinflation
would be bad enough, but to allow government to lay the foundation
for another monetary disaster would be an act of supreme treason
to mankind.

Gold ATMs would
be a convenient way of getting civilization's choice for money to
the general public. Let Krugman and other statists howl about how
senseless it would be to return to the "barbarous relic"
and how Keynes would be rolling over in his grave. People are still
wise enough to know a con game when they see it. The bailout mania
of recent times has shredded the slick wrapper on government's fraudulent
monetary scheme. People see the massive corruption but not necessarily
where it's taking us. They don't see the endgame of monetary inflation.
Thus, the run on gold and silver has not happened yet. Can a run
be modulated with technology? The ATMs' novelty and very presence
will alert people to the seriousness of the crumbling monetary order
and induce them to act now.

If gold-buying
is limited to a relatively few who understand the monetary turmoil
to come, the majority of the public will be vulnerable to the usual
barrage of controls, edicts, and accusations that accompany high
inflation and hyperinflations. But if most people have gold (and
silver) in their possession, they will have a potential exchange
alternative to the wallpaper the government cranks out. They will
learn that the precious metals preserve their wealth, while the
government's imposed money drains it. As the dollar falls ever closer
to zero in purchasing power, their gold and silver holdings will
turn from being keepsakes to items they could exchange for real
goods. ATMs that now accept fiat paper for gold could be joined
by machines that exchange gold for silver or copper, for use in
smaller transactions.

Mises said
for gold to become cash people must have it touch their senses.
In his words (pdf),

Gold must
be in the cash holdings of everybody. Everybody must see gold
coins changing hands, must be used to having gold coins in his
pockets, to receiving gold coins when he cashes his pay check,
and to spending gold coins when he buys in a store. [pp. 450--451]

Very few on
planet earth today have had this experience. As a start, gold-dispensing
ATMs could get those coins into pockets and purses.

As more gold
went into more hands through gold ATMs people would begin to appreciate
the value of saving. In 1966 Alan Greenspan wrote:
"In the absence of the gold standard, there is no way to protect
savings from confiscation through inflation. There is no safe store
of value." Since 1976 matters have
improved
somewhat. Government makes us accept its inflated paper,
but it doesn't forbid us to use an alternative. Not directly. It
penalizes gold with sales and capital gains taxes. Still, using
an ATM to get rid of dollars for gold and silver would be a convenient
way for Main Street to build insulation from government "monetary
policy."

Gold and silver
ATMs would teach valuable lessons to our youth. They already know
the metals are rare and highly-prized. And as any parent could testify,
kids of all ages love vending machines. As they fed depreciating
paper money into the machines and pulled 24K gold bars from the
chute in exchange, it might occur to them they were, in effect,
snubbing the tyrants. They would be taking a step, however small,
towards putting their future in their own hands rather than leaving
it to the whims of Washington bureaucrats.

Government
officials could always find ways to stop or cripple the emerging
gold ATM movement, but doing so would be self-defeating. As parasites,
they have a vested interest in the prosperity of others. We can
always hope they have enough self-interest to step aside and let
the market prevail.

George
F. Smith [send him mail]
is the author of Eyes
of Fire: Thomas Paine and the American Revolution
and
The
Flight of the Barbarous Relic
, a novel about a renegade Fed
chairman. Visit his website.

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