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Offline g

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Re: Gold & Silver News: No Financial Crisis Was Ever Caused By Stable Money
« Reply #165 on: October 25, 2012, 04:39:22 AM »
http://www.forbes.com/sites/nathanlewis/2012/10/14/let-it-be-known-that-no-financial-crisis-was-ever-caused-by-stable-money/


Let It Be Known That No Financial Crisis Was Ever Caused by Stable Money
US gold certificate (1922)

US gold certificate (1922) (Photo credit: Wikipedia)

There aren’t many blanket statements you can make about economics. Usually, “it depends.” But, there’s one thing I can say with a fairly high degree of confidence:

No economic crisis was ever caused by stable money.

For some reason, the gold standard system has gained a reputation for causing crises. This is mostly from the Keynesian camp: they need floating currencies to play their funny money games. The purpose of funny money is to solve some kind of problem whose fundamental cause is typically not monetary at all. For example, we are now in a process of trying to solve a bank insolvency crisis, an unemployment problem, and a fiscal deficit problem, with a monetary solution.

The purpose of a gold standard system is to produce stable money. Nobody has found a better way to do so. For the most part, it works. So, how does this gold-based stable money cause a crisis? It doesn’t.

Of course, many crises happened during the gold standard era, before floating currencies appeared in 1971. In the two centuries before 1971, people got into financial trouble for all kinds of reasons. Banks lent money to people that couldn’t pay it back. Businesses invested in ideas that turned out to be not so hot. Governments borrowed and spent more than they should have. Destructive domestic tax increases were imposed. Countries got into tariff wars with each other. There were even a few World Wars, Civil Wars, communist revolutions, and so forth.

None of them were caused by money that was too stable.  :icon_study: :icon_study:

                                     
Us gold certificate 1922
Us gold certificate 1922

« Last Edit: October 25, 2012, 04:44:04 AM by Golden Oxen »

Offline g

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Re: Gold & Silver News: Telegraph Notes Mystery German Gold Withdrawal
« Reply #166 on: October 25, 2012, 04:58:51 AM »
From ZERO Hedge this morning.   :icon_study:

Telegraph notes mystery German gold withdrawal and GATA's clamor about it
   

Submitted by cpowell on 10:47PM ET Wednesday, October 24, 2012. Section: #0066cc [8];">Daily Dispatches

Bundesbank Slashed London Gold Holdings in Mystery Move

By Ambrose Evans-Pritchard
The Telegraph, London
Wednesday, October 24, 2012

#800080 [9];">http://www.telegraph.co.uk/finance/financialcrisis/9631962/Bundesbank-sl...

Germany withdrew two-thirds of its vast holdings of gold from Bank of England vaults shortly after the launch of the euro more than a decade ago, according to a confidential report that emerged on Wednesday.

The revelation came as Germany's budget watchdog demanded an on-site probe of the country's remaining gold reserves in London, Paris, and New York to verify whether the metal really exists.

The country has 3,396 tons of gold worth E143 billion (E116 billion), the world's second-largest holding after the United States. Nearly all of it was shifted to vaults abroad during the Cold War in case of a Soviet attack.

Roughly 66 percent is held at the New York Federal Reserve, 21 percent at the Bank of England, and 8 percent at the Bank of France. The German Court of Auditors told legislators in a redacted report that the gold had "never been verified physically" and ordered the Bundesbank to secure access to the storage sites.

The report called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. It said Frankfurt has no register of numbered gold bars.

 

The report also claimed that the Bundesbank had slashed its holdings in London from 1,440 tons to 500 tons in 2000 and 2001, allegedly because storage costs were too high. The metal was flown to Frankfurt by air freight.

The revelation has baffled gold veterans. The shift came as the euro was at its weakest, slumping to $0.84 against the dollar. But it also came as the Bank of England was selling off most of Britain's gold reserves -- at market lows -- on orders from Gordon Brown.

Peter Hambro, chair of the UK-listed gold miner Petropavlovsk, said the Bundesbank may have withdrawn its bullion in self-protection since it did not, apparently, have its own specifically allocated bars in London. "They may have decided that the Bank of England had lent out too much gold and decided it was safer to bring theirs home. This is about the identification. Can you identify your own allocated gold, or are you just a general creditor with a metal account?"

The watchdog report follows claims by the German civic campaign group "Bring Back Our Gold" and its US allies in the Gold Anti-Trust Committee that official data cannot be trusted. They allege central banks have loaned out or "sold short" much of their gold.

The refrain has been picked up by German legislators. "All the gold must come home: It is precisely in this crisis that we need certainty over our gold reserves," said Heinz-Peter Haustein from the Free Democrats.

The Bundesbank said it had full trust in the "integrity and independence" of its custodians, and is given detailed accounts each year. Yet it hinted at further steps to secure its reserves. "This could also involve relocating part of the holdings," it said.

http://www.zerohedge.com/contributed/2012-10-25/telegraph-notes-mystery-german-gold-withdrawal-and-gatas-clamor-about-it      ::)

Offline RE

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Re: Gold & Silver News: No Financial Crisis Was Ever Caused By Stable Money
« Reply #167 on: October 25, 2012, 05:02:29 AM »

Let It Be Known That No Financial Crisis Was Ever Caused by Stable Money

"Stable" and "Money" in the same sentence is an Oxymoron.  Think "Jumbo Shrimp" or Military Intelligence".

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Offline monsta666

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Re: Gold & Silver News
« Reply #168 on: October 25, 2012, 06:04:33 AM »
Correct, good work, and were the currency not convertible into gold they would own a disproportionate share of that, and of course do. What else is new?

I think this issue should not simply be dismissed out of hand. Today issues of inequality are causing a lot of social unrest and distrust between various members of society. It has been shown that the higher the level of inequality present in society the more distrustful it becomes. As a result of this distrust often there is less empathy for other people and more crime or social tensions. If we move to a system that various gold then it is quite likely the existing inequalities we see today will increase further which will only serve to exacerbate existing problems even more. As the collapse unfolds then have nots will become increasingly bitter and reckless and they will target the haves with that much more vigor. If gold increases the gap between the rich and poor then it is likely the conflict between the two will be even greater.

Finally as another point large inequalities are not favourable from an marcoeconomic standpoint. If a smaller percentage of people have all the monetary wealth then there will be less transactions in the economy than if a larger population had access to the same wealth. This is because the richer people are more likely to save (hoard) a larger percentage of their money (in this case gold) than poorer people. The poorer people will spend a larger percentage of their money more quickly to meet their basic needs. If there are more transactions the economy will be more healthy. In fact you could say the desire of the rich to get richer becomes self-defeating if taken far enough. The issue of gold could make this dynamic even worse... With that said, it is not bad if the individual does it but you just need to see that if everyone had this mentality it would be a negative to society.   


Right again Monsta, a hat trick, the Zombies are going to come after me for my tungsten filled gold and let you and you paper money stash stay at home with your hoards of canned goods and Twinkies, and let you continue watching the three stooges on TV until Doomsday goes bye bye.

Thanks for your help,  I am going our right now and get rid of my gold for a briefcase full of fiat so the Zombies don't get me.

Just because there is a large risk of gold confiscation it does not mean that gold should be abandoned. What I was trying to get at is if someone should invest in gold to protect their wealth and the consequences of collapse, then they need to address the issue that governments or people will try to take this gold away from them. Historically this been the case so it seems a little foolish to believe it won't happen again. If you are going to get gold then you need to make some plans to ensure the government or wondering hoards will not steal the precious gold you spent so much time aquiring. It is not a insurmountable problem but it is something that needs to be addressed and you need to consider the ways it can be stolen. Failure to do so could mean all that gold you accumulated would be for nought which would be a shame.

There is a point that is truly astounding and so insightful. Did you really think that one up on your own or are you a former student of RE?  Such wisdom from a young man has me suspicious.

I did not think of that point on my own. A lot of my ideas just come as a result of reading various sources throughout my life and applying common sense to determine whether the source has merit or is bogus. The internet is a vast place with a wealth of knowledge and people can learn much if they took the time to learn. Oh and I should say learn with an OPEN MIND seeing as loads of people simply want to learn about only the stuff they agree with so they get caught in traps of group think. I am not saying you are susceptible to this, the fact you found the Doomstead Diner is proof enough that you are capable of thinking for yourself and not believing all the BS that is fed down your throat through the mainstream media. It just an issue that afflicts many people including highly intelligent people.

Oh and I am no padawan of RE at least not yet. I am not even sure if he teaches the force to younglings to protect them from the evil empire.

Offline Petty Tyrant

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Re: Gold & Silver News
« Reply #169 on: October 25, 2012, 07:08:50 AM »
Correct, good work, and were the currency not convertible into gold they would own a disproportionate share of that, and of course do. What else is new?

I think this issue should not simply be dismissed out of hand. Today issues of inequality are causing a lot of social unrest and distrust between various members of society. It has been shown that the higher the level of inequality present in society the more distrustful it becomes. As a result of this distrust often there is less empathy for other people and more crime or social tensions. If we move to a system that various gold then it is quite likely the existing inequalities we see today will increase further which will only serve to exacerbate existing problems even more. As the collapse unfolds then have nots will become increasingly bitter and reckless and they will target the haves with that much more vigor. If gold increases the gap between the rich and poor then it is likely the conflict between the two will be even greater.

Finally as another point large inequalities are not favourable from an marcoeconomic standpoint. If a smaller percentage of people have all the monetary wealth then there will be less transactions in the economy than if a larger population had access to the same wealth. This is because the richer people are more likely to save (hoard) a larger percentage of their money (in this case gold) than poorer people. The poorer people will spend a larger percentage of their money more quickly to meet their basic needs. If there are more transactions the economy will be more healthy. In fact you could say the desire of the rich to get richer becomes self-defeating if taken far enough. The issue of gold could make this dynamic even worse... With that said, it is not bad if the individual does it but you just need to see that if everyone had this mentality it would be a negative to society.   


Right again Monsta, a hat trick, the Zombies are going to come after me for my tungsten filled gold and let you and you paper money stash stay at home with your hoards of canned goods and Twinkies, and let you continue watching the three stooges on TV until Doomsday goes bye bye.

Thanks for your help,  I am going our right now and get rid of my gold for a briefcase full of fiat so the Zombies don't get me.

Just because there is a large risk of gold confiscation it does not mean that gold should be abandoned. What I was trying to get at is if someone should invest in gold to protect their wealth and the consequences of collapse, then they need to address the issue that governments or people will try to take this gold away from them. Historically this been the case so it seems a little foolish to believe it won't happen again. If you are going to get gold then you need to make some plans to ensure the government or wondering hoards will not steal the precious gold you spent so much time aquiring. It is not a insurmountable problem but it is something that needs to be addressed and you need to consider the ways it can be stolen. Failure to do so could mean all that gold you accumulated would be for nought which would be a shame.

There is a point that is truly astounding and so insightful. Did you really think that one up on your own or are you a former student of RE?  Such wisdom from a young man has me suspicious.

I did not think of that point on my own. A lot of my ideas just come as a result of reading various sources throughout my life and applying common sense to determine whether the source has merit or is bogus. The internet is a vast place with a wealth of knowledge and people can learn much if they took the time to learn. Oh and I should say learn with an OPEN MIND seeing as loads of people simply want to learn about only the stuff they agree with so they get caught in traps of group think. I am not saying you are susceptible to this, the fact you found the Doomstead Diner is proof enough that you are capable of thinking for yourself and not believing all the BS that is fed down your throat through the mainstream media. It just an issue that afflicts many people including highly intelligent people.

Oh and I am no padawan of RE at least not yet. I am not even sure if he teaches the force to younglings to protect them from the evil empire.

Monsta you are essentially dismissing out of hand that Inequality exists, has always existed and always at the macro level, as well as at the individual level also. If an individual was as idealistic and altruistic as you suggest then they would not even be able to pay their internet bill.

Essentially you are saying greed is bad? Success and keeping fruit of success is bad, and bad for the economy to boot, yet a strong economy is a good thing despite it allowing for wealth creation which is uneven and evil?

IN relation to gold this only makes sense if you hope that fiat money devalues and therefore evens the wealth inequality, therefore GO and his gold is the only one who is still wealthy having held his value, which is bad because: other wealthy people who held other assets including paer are now poor and no target for the envious and desperate, these fiat holders now  being poor are going to be zombies.

Wealthy people are bad for the economy because they dont spend all their money out of necessity like poor people. Is it possible poor prople also spend their money on drugs booze and cigarettes, also it could be possible that if the wealthy spent all their money they would no longer be wealthy?

Are you serious people like GO can adress the 16T$ deficit by increasing the velocity of money themself by spending more and that would make even a drop in the ocean in difference.

Does it not go without saying that he needs to not leave his gold out on his front porch? And what is the precaution to take to avoid confiscation by govt when you need to provide everything including a DNA sample to buy gold.  Go around buying jewellery privately, Fake ID, Just tell them you lost or spent it?

What you are saying only makes sense if you hope that the wealthy have their wealth devalued so they are just as poor as the already poor and are therefore not targeted (never mind that that mistrust and lack of empathy as you put them have never been a deterrent to anyone since money was invented). Believe it or not wealthy people take the option of paying for protection in numerous ways along with remaining wealthy as a preferable option to becoming poor just so the poor wont target them. Go to a ghettto and find them saying they are lucky to turn 21 because the poor also target each other a lot.  These poor also have a mistrust and lack of empathy to each other. The rich also have a lack of trust and empathy to each other. Nobody needs to feel responsible for the basic nature of man just because they dont want to see their lifes work go up in smoke.
« Last Edit: October 25, 2012, 07:30:04 AM by Uncle Bob »
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Offline Jb

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Re: Gold & Silver News
« Reply #170 on: October 25, 2012, 01:11:38 PM »
"So given this reality about the nature of gold (they can't print it out of thin air), the Treasury had to turn elsewhere to find the gold necessary (1) to keep these banks from defaulting on their bullion obligations arising from their mismatched gold books in an environment where metal had become increasingly difficult to come by and/or (2) to keep the gold price low so that the likelihood of default by the banks would be lessened, even though metal would remain tight because fabrication year after year was exceeding newly mined supply. Rather than accept the bitter pill that certain banks were about to default on their bullion obligations, the Treasury looked for alternatives and found one – they put their hand into the till, until recently known as the Gold Bullion Reserve at West Point."


http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/10/25_James_Turk_-_The_Entire_German_Gold_Hoard_Is_Gone.html


Offline Jb

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Re: Gold & Silver News
« Reply #171 on: October 25, 2012, 01:28:56 PM »
Ok, I'm not an expert, but here's my 2 cents on gold confiscation:

Gold was confiscated because it was being used as currency and hoarded (kept out of circulation) and therefore presented challenges / risks to the government / banks during a 'national emergency.'

Gold is not used as currency today. Hoarding gold does not affect current Treasury operations (see James Turk's post above). Even in 1933, people were allowed to keep certain amounts and types of gold. If you are worried about confiscation, only hold small amounts in small denominations such as 1/10 oz coins.

BTW, it's interesting that the Executive Order #6102 defines a 'person' as an individual, association OR a corporation.



Offline g

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Re: Gold & Silver News
« Reply #172 on: October 25, 2012, 01:56:28 PM »
 
 
Quote
Quote Jb "Gold was confiscated because it was being used as currency and hoarded (kept out of circulation) and therefore presented challenges / risks to the government / banks during a 'national emergency."

Always amazed me how the Democrats view other peoples property as theirs, to do with as they please, with no regard for private property laws or the Constitution.

Offline Jb

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Re: Gold & Silver News
« Reply #173 on: October 25, 2012, 02:14:50 PM »
Quote
Democrats view other peoples property as theirs, to do with as they please,

Aw, c'mon GO.... really? You're smarter than this. You think a Republican, a Tory, a Canadian, or Zaphod-Beeblebrox would have done otherwise in a "national emergency?" You think everyone involved in this decision was a Democrat? What about the Americans who hoarded 'their' gold? No Republicans among them? Hmmm? Gimme a break.





Offline g

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Re: Gold & Silver News
« Reply #174 on: October 25, 2012, 02:33:56 PM »
@ Jb  I gather you thought it was the proper thing to do.

Was an unlawful act in my opinion and fortunately overturned by the courts decades later.

People are hoarding their paper money now and are fearful of spending it due to worry about their jobs, pensions, viability of Social Security etc.

Do you think Obama should take it away from them and spend it for them Jb? Or Romney for that matter.?
 

Offline Petty Tyrant

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Re: Gold & Silver News
« Reply #175 on: October 25, 2012, 03:04:53 PM »
@ Jb  I gather you thought it was the proper thing to do.

Was an unlawful act in my opinion and fortunately overturned by the courts decades later.

People are hoarding their paper money now and are fearful of spending it due to worry about their jobs, pensions, viability of Social Security etc.

Do you think Obama should take it away from them and spend it for them Jb? Or Romney for that
matter.?


2 loosely related points,

Hitler confiscated and stole gold anywhere and everywhere he could, first within Germany, then Poland, Holland etc to finance buying weapons.

Not all money is being hoarded, a lot belonging to big playersis sloshing around looking for safe havens as these are shrinking, and of course a lot going into gold.


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Offline RE

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Economics & Moral Philosophy
« Reply #176 on: October 26, 2012, 02:42:32 AM »
Economics & Moral Philosophy by Brian Davey now UP on the Diner Blog.

This is a Guest Post published unde Creative Commons Licensing.

I added this post earlier in the thread here to try to get the discussion going on what represents REAL VALUE and how Economic Systems derive from that, but sadly nobody really looked at this in detail.

I will publish here also some other of Brian Davey's material, which overall demonstrates why the Gold Argument does not really work.  Value and Monetary systems which derive from perceptions of value are far more complex than simply attributing Everlasting Value to a Metal on Faith.

I present the material here for the readers to grasp on their own, the concepts are not understood or even acknowledged by Gold Bugs, so you cannot have a reasonable discussion with them about such things.  If you have an Open Mind though, you probably will be able to see why the Gold Bug arguments do not address the fundamental questions of Money and Value that Brian Davey explores in detail.  This analysis provides a much deeper understanding of how Economic systems develop and what Money really IS than Gold Bugs will even address.

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Offline Jb

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Re: Gold & Silver News
« Reply #177 on: October 26, 2012, 05:33:52 AM »
Quote
@ Jb  I gather you thought it was the proper thing to do.

I have absolutely no idea what the President should or should not have done in 1933 during a 'national emergency.' But I will say this: I think removal of the gold standard was inevitable.

As an independent voter, I could care less who gets elected. Neither of them can print oil or suck CO2 out of the atmosphere. Neither Obama nor Romney has the moral courage befitting the Office of the President. That Obama has followed the same path laid out by Bush/Cheney tells me everything I need to know.

Offline g

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Re: Gold & Silver News
« Reply #178 on: October 26, 2012, 05:51:01 AM »
Quote
But I will say this: I think removal of the gold standard was inevitable.

I was taught the only things inevitable were Death and Taxes Jb.

Offline monsta666

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Re: Gold & Silver News
« Reply #179 on: October 26, 2012, 03:37:30 PM »
Quote
But I will say this: I think removal of the gold standard was inevitable.

I was taught the only things inevitable were Death and Taxes Jb.
But isn't inflation a form of stealth tax? Governments and private enterprises have a recurring habit of spending beyond their means and since they abhor the discipline imposed by gold, they will seek ways of undermining or even eliminating the gold standard and once removed it becomes a form of hidden tax imposed by the ones in power to its citizens. This insidious process of recurring high inflation can be seen in this diagram below:



Or to put more simply:















=


1913




2012


=


1913


2012

 

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