Global Debt Repudiation? IMF’s Paper On The Chicago Plan Continues To Stir Opinions

Tyler Durden's picture

From Goldcore Gold Bullion

IMF’s Paper on The Chicago Plan Continues to Stir Opinions

Today’s AM fix was USD 1,725.00, EUR 1,321.03, and GBP 1,075.10 per ounce. 
Friday’s AM fix was USD 1,732.75, EUR 1,327.27, and GBP 1,078.86 per ounce.

Silver is trading at $32.23/oz, €24.76/oz and £20.18/oz. Platinum is trading at $1,625.00/oz, palladium at $625.40/oz and rhodium at $1,160/oz.

Gold fell $18.90 or 1.09% in New York on Friday and closed at $1,722.10. Silver hit a low of $31.92 and rallied back higher in the afternoon but still finished with a loss of 2.02%.


Cross  Currency Table – (Bloomberg)

Gold edged down on Monday, as pressure from speculators exiting long positions and continued concern about the health of the global economy dampened interest.

When equities fall market players often have to cash in their long gold positions to cover losses. Since the current pullback lacklustre interest in the yellow metal may force investor to retreat into the US dollar. Friday’s US existing home sales figure for September came in at 4.75M which was a bit higher than the 4.7M that was expected.

All eyes will be concentrated on the US Fed’s policy meeting on Tuesday and the FOMC rate decision on Wednesday. In addition, on Wednesday economic data released include Initial Jobless Claims & Durable Goods Orders, on Thursday are Pending Home Sales and following on Friday are GDP & Michigan Sentiment.

US Commodities long bets have decreased to their lowest levels since the end of August. Bloomberg said Gold holdings increased 7.7% to 178,426 contracts, the fifth straight advance and the most since Feb. 28, CFTC data show. 


XAU/USD Currency 5 Year – (Bloomberg)

In Africa, over 8,000 workers involved in an illegal strike at Gold Fields' KDC East mine will be fired if they fail to return to work on Monday night and Tuesday morning, said the company today. 

Edel Tully, UBS analyst said in a report yesterday that, “India should be a better buyer over the next two weeks from a seasonal perspective, but this remains highly contingent on the behaviour of the rupee gold price,  Indian imports are already 40 percent less than they were last year, and we understand inventories are generally light. Therefore, if the rupee behaves, fresh demand will also prompt restocking.”   

The International Monetary Fund’s paper, “The Chicago Plan Revisited” by Jaromir Benes and Michael Kumhof highlighted a means to wipe out debt by legislation by using state created money to replace the private banking system and was commented on in The Telegraph by journalist Ambrose Evans-Prichard. The full paper can be read here.

In sum, the paper illuminates on a plan created in 1936 by professors Henry Simons and Irving Fisher during the aftermath of the US Depression. It examines how money created by credit cycles leads to a damaging creation of wealth.  

Authors, Benes and Kumhof argue that credit-cycle trauma - caused by private money creation – has been around forever and lies at the root of debt catastrophes as far back as ancient Mesopotia and the Middle East.

They claim that not only harvest cycles lead to defaults but rather the concentration of wealth in the hands of lenders would have augmented the outcome.

Solon, the Athenian leader implemented the original Chicago Plan/New Deal in 599 BC to relieve farmers in hock to oligarchs enjoying private coinage. He forgave debts, returned lands seized by creditors, and set floor-prices for commodities (like Franklin Roosevelt), and fuelled the money supply with state-issued "debt-free" coinage.

The ancient Romans studied Solon’s reforms and 150 years later copied his ideas and created their own fiat money system under Lex Aternia in 454 BC.

Fiat currencies have been around since man began trading.  The Spartans banned gold coins and replaced them with iron disks with little intrinsic value.  In early Rome bronze tablets were favoured.  Their worth was determined by law, much like the dollar, euro or pound today.

The 1936 Chicago Plan was created to somehow prevent the large boom and bust cycles seen during the Great Depression.

The debate initiated by Benes and Kumhof and continued by Evans-Prichard examines many issues that question Western Capitalist values and encourages us to examine whether we are so far removed from a Leviathan state?

For breaking news and commentary on financial markets and gold, follow us on Twitter.

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NEWS

Gold rebounds from 1-month low; jewellers set to buy - Reuters

Gold Imports by India Seen Climbing First Time in Six Quarters - Bloomberg

10 nations that control the world’s gold – Market Watch

COMMENTARY

Ambrose Evans-Pritchard: IMF's epic plan to conjure away debt and dethrone bankers – The Telegraph

Gold ETFs vs equities, Goldman Sachs surveys the battleground – Mineweb

Hedge Funds Cut Bets to 12-Week Low as Prices Drop: Commodities -

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GetZeeGold's picture

 

 

Every time the IMF opens it's damn mouth....it costs me money.

 

I should have a better attitude about it I suppose.....a third world dictator does get a billion dollars in his offshore retirement fund...and a brown kid somewhere gets half a Poptart....but that's on a good day.

Popo's picture

Debt repudiation = one giant money printing explosion.

If they do it, it will destroy central banking forever. The entire premise that the Fed and Treasury have been resting on is that "It's not printing because it's debt".

Well, if they "repudiate" they admit they've been printing all along. And they'll never be able to lie about "debt" ever again. Which means fiat currencies are dead and buried forever.

SWRichmond's picture

I just read the AEP piece.  Yes, by all means, let's shift control of "money" from the completely corrupt banksters to the completely corrupt government.

JHFC.  There seems to be no shortage of slaveowner-wannabees.

WHY NOT LET PEOPLE USE WHATEVER THEY WANT FOR "MONEY"?  Answer: because then the governments and the banks couldn't skim their "share."

BKbroiler's picture

let's shift control of "money" from the completely corrupt banksters to the completely corrupt government.

Well, let's be practical here.  A government run treasury would be incompetent but well-meaning.  A bank run treasury would be skilled and self serving (evil).  I think we're better off with the idiots we elect, as the constitution stated.

anarchitect's picture

"A government run treasury would be incompetent but well-meaning. A bank run treasury would be skilled and self serving (evil)."

If you think government is any less self-serving than business, you're naive--and that's putting it kindly.

john39's picture

the scum that own the banks would infilitrate and control government anyway... always has...  so, this would just be another illusion to control the masses.

TruthInSunshine's picture

If nothing else, by wiping out only that debt/credit (they're the same thing in a system of full fractional fiat reserve banking) held by full fractional reserve central banks, and thus, destroying the notion of the fiction that is those entities along with the ability of those entities to accrue/soak up even more such sovereign debt/credit, there would be an interest rate set on further sovereign borrowing that would conform much more closely with the level free markets would set them at (i.e. full fractional fiat reserve banks that are, in reality, fig leafs for politicians promising money for nothing and chicks for free, would no longer be able to artificially lower interest rates on sovereign borrowing-- transfer inflation from reckless borrowers-- especially of the government backstopped, too-big-to-fail gambling/speculating variety-- to prudent savers).

In other words, schemes such as quantitative easing, as just one example, which subsidizes the financial and banking sector by not only artificially lowering their cost of borrowing, but which actually pays them to borrow fiat (e.g. interest on excess reserves), at the expense of suppressing the yield upon sovereign debt held by entities and individuals other than the very central, full fractional reserve banks helping to do effectuate much of the artificial suppression of yields on soveriegn debt instruments (i.e. interfere with free market interest rates), and incentivize fiat printing, which causes the price of real goods and services to spike to levels far higher than they ordinarily would if true supply & demand set prices absent such radical interference, would no longer be possible...

...the emperor would be fully naked to even the most poor of vision sheeple, and rage for ramped taxation in the form of reduced purchasing power would then be directed at those who control the budget process (i.e. the politicians).

 

 

**p.s. - It's interesting that gasoline at the retail level has dropped 50 cents per gallon in certain "battle ground" states the last week alone, which is more than it's dropped in such a short time frame during the preceding 3 years & 11 months, as it's just prior to the election, but as interesting as this is, I'm sure that it's purely coincidental, and that even a mention of this in relation to the upcoming election is borderline conspiracy whackiness.

Benjamin Glutton's picture

Did you read the so called International Monetary Fund’s paper, “The Chicago Plan Revisited” by Jaromir Benes and Michael Kumhof?

 

Was it my imagination or did the authors clearly state that their paper does NOT represent the views of the IMF?

 

This comment is NOT directed at Truth In Sunshine.

SWRichmond's picture

...the emperor would be fully naked to even the most poor of vision sheeple, and rage for ramped taxation in the form of reduced purchasing power would then be directed at those who control the budget process (i.e. the politicians).

Would that such were true.  The dot gov would simply trot out another boogeyman and blame it for inflation.  Have you watched Nixon's explanation for closing the gold window?  Did he get away with it?

TruthInSunshine's picture

We have had a fully functioning, fiat diluting, full fractional reserve central "bank" since 1913, including during the Nixon "Shock," which has helped facilitate all such heists.

Earth Ling's picture

We've got some seriously confused (and I'm sure many conflicted) folks here if they're defending the current "money as debt so the banks can get slice after slice of every bubble loan they key into existence until the whole thing crashes and then we bail them out so they can own everything on the cheap while the rest of us get fucked AGAIN" system. 

Unbelievable really.  I hope Tyler will get a guest post here that directly addresses the question of whether money supply should be controlled by private crooks or transparently by elected officials. 

The problems caused by incompetent or even corrupt government officials pale in comparison to what the private banks do. 

Control of the money supply is the single most important thing the government is responsible for.  When the government cedes that, it has effectively ceded everything. 

hoos bin pharteen's picture

"A government run treasury would be incompetent but well-meaning.  A bank run treasury would be skilled and self serving (evil)."

Correction: A government run treasury would be incompetent AND self-serving (evil).  A bank run treasury would be skilled and self serving (evil).

 

CH1's picture

A shot across the central bankers' bow?

By the various states? Politicians wanting to push the bankers out? A distraction? Tossing a bone to the greenbackers?

evolutionx's picture

where is the German Gold???

 

Bundesbank Refuses Gold Control

The Bundesbank, has refused to allow the German members of parliament Philipp Mißfelder and Marco Wanderwitz to view the German gold reserves stored in Paris and London. Reason: The central banks in Paris and London do not have suitable rooms for visits.

 

http://www.mmnews.de/index.php/english-news/11126-bundesbank-refuses-gold-control

magpie's picture

The Euro...world's next reserve currency backed by gold marked to market...did i get something wrong there.

magpie's picture

Kind of funny that this is not getting more coverage. Far from being only a publicity stunt by Mißfelder, whose prior notoriety rested on threatening to cut grannies health insurance, or this being some kind of revanchist neo-Nazi conspiracy, the lack of an appropriate tungsten viewing room is a European problem now.

CH1's picture

my weed is sellin for $1500 an ounce.

Is that really what it goes for now? (Been a long time.)

Orly's picture

Not even close...

An ounce of the very, very best (THC content above 30%...) will still fetch around five hundred.  Of course, this is the real world and not the inner city of depraved yuppies.

:0

spentCartridge's picture

Mine retails @ £220.00 per oz

Very good shit, made by rain Sol & lots of good lovin'.

Orly's picture

That's about right for here, too, though I thought it would be more expensive in Britain.  Did you hear about the big bust in an old factory in Notts a couple of weeks ago?

Canadian seed-stock.  Blue Rhino and SuperBud mix.  Colas like DDs.

My thing would be where to hide the cash...

falak pema's picture

how much did they pay u to star in "weeds"?

Orly's picture

Falak!  Hey, I've found the best recipe for the rub on a roast chicken.  It was stolen by Todd Wilbur from a recipe by K. Paul Prudhomme.  It is very good on chicken but it also works well on other things...whatever needs some spicing up.

I've found I've had to make this stuff by the boatlaod, as it is everyone's favourite...

http://www.topsecretrecipes.com/Chef-Paul-Prudhommes-Poultry-Magic-Recip...

I replaced the comino with nutmeg because the cumin was the culprit in giving some of us a headache.  Makes it even more tasty!

You should try it.  I imagine it goes well with a butter sauce for asparagus, as well.

I'm cooking my chickens at a higher temp than I used to, in an oven bag, with the rub on the inside, outside and a bit under the skin.  220 degrees C (425 degrees F...) for about an hour does the trick.  Use the thermometer, of course.  The key is to make sure to truss the chicken as tightly as possible to get the inside breast meat steamed in its own juices.  The remaining juice in the bag can be made into a wonderful sauce that is not too salty or too spicy.

I love this recipe!

:D

Cypher_73's picture

Noob question, I know but I thought the lion's share of Germany's gold was held at the NY FED?

TPTB_r_TBTF's picture

the Germans thought that too...

spentCartridge's picture

The central banks in Paris and London do not have suitable rooms for visits.

 

Dependent upon ones apparel, I assume?

Some scuba gear might be handy.

Neethgie's picture

By using QE the us and uk have already defaulted on obligations.

GetZeeGold's picture

 

 

Molly geez....you just can't come out and say that!

Sandmann's picture

Yes but internally by buying out foreigners and loading domestic pension funds with Gilts. Then the Corporations have to keep liquid to pay the shortfalls in the pension funds before the PBGC seizes the corporate assets and puts the operating business into bankruptcy

CPL's picture

I know, it's HI-larious.

 

All central and federal systems are about to puke up their toes after 40 years of being complete and total retards.  I wonder which week the govie cheques start to bounce in a tidal wave?

falak pema's picture

the solution is not QE to help the bankers, its cutting the root power of the bankers by destroying their debt slavery machine of derivative plays. Close down the City shenanigans and tear apart the Walmart bankstas. Legislate, Gl-st, stop fractional reserve and all naked derivatives...tax when required to stem banksta exuberance from going systemic.

paulie's picture

Maybe but they don't get attacked by speculators and don't see their interest skyrocket only because rating mafia agencies presume they won't be solvent.

Ghordius's picture

excellent reminder about how Solon solved a similar situation by debt forgiveness (actually it was a Babylonian habit that was adopted by all Asian's kingdoms and so appears on the Bible, too).

"The Spartans banned gold coins and replaced them with iron disks with little intrinsic value." This is nowadays a given under historians, but several serious students of history doubt it. the first super-charged hyper-valuable metallic trading good was probably meteoritic iron. without the technology for iron smelting, a few kilograms of iron where the stuff of legendary weapons and armours (read: Achilles and his black-clad troops). Following iron's technological devaluation the Spartan might just have just rejected the new metals, i.e. the Asian's gold and the Athenian's silver. Accepting them would have meant binding their trade to those currencies and their currency zones. So they might just have kept their iron-now-"fiat"-disks for trading-political and internal reasons.

Sandmann's picture

Probably because the Old Lady of Threadneedle Street has "loaned " the gold and there is double-counting between Paris and London

topspinslicer's picture

Debt Repudiation? Give me about a week's heads-up so I can buy me a few corvettes and such....

falak pema's picture

There u go, Solon the legislator and honest government to shut the dirty mouths of debt slavery Oligarchs bleeding the peasant.

Economia is simple when a true honest man can tell the chaff from the wheat, the real value system from the fake capitalist sleight of oligarchy hand; all we have to remember is what is the aim of society and what are the means.

If the aim is betterment of Man then means are freedom from debt slavery, if the aim is accumulation of Friedmanian supply side Oligarchy wealth, even if it means tilting the democracy and rule of law table,  then Reaganomics becomes the fraudulent means! 

Now that the economic world has found an Appian way laid out for it by past history; that good government can use to legislate upon against bad oligarchy play, lets see if these political shills have the cojones to do it.

Viva Solon and Greek wisdom of tha ages! 

 

CH1's picture

good government

LOL... wait, I see a unicorn!  No, no, it's a leprechaun! No, it's a pink elephant!!

Fantasies ALL.

falak pema's picture

zeus was a one man government; best solution.

Tidewater's picture

The plan calls for banks to grow their balance sheets by taking on (wait for it) additional government backing, which the Treasury would account for on its own balance sheet as a financial asset, and for "the full buy-back of household debt by the government."

And I suspect the post-modern implementation would find the final transition phase, away from banks taking certain kinds of lending risk, passe.

But what do I know; "Economics Is Hard."

Vince Clortho's picture

So those who are deepest in debt, managed their finances the worst would benefit the most; those who have worked hard to keep afloat would receive nothing.

Sounds like the Great Society program in its logical conclusion.  You have to have politicians and PHD Economists to come up with this flavor of crap.

How's about if we are going to start giving a way free cash, we give some to everybody (instead of govt picking losers and turning them into winners).

Earth Ling's picture

"Deepest in debt, managed their finances the worst, would benefit the most"

Obviously you're talking about the banks right?  Because there is NO ONE who has fucked up shit like the banks have and has been rewarded insanely for it.

Read the introduction, at least the first page and see if it starts to make sense to you.

Related to this there is no fucking way I am going to accept the mortgage interest rate deduction being taken away UNLESS the portion of my mortgage ABOVE the historical house price trendline is ALSO taken away since it was that bankster inpsired deduction that FUELED the fucking bubble in the first place.

 

max2205's picture

Good. I have a tablet.

the 300000000th percent's picture

Only if MY personal debt can be repudiated as well

AnAnonymous's picture

Money is not unsuspended. Money and the circulation of money leads to consumption of the environment.

'Americans' keep waving false flags in order to turn people away from the very basic fact that money circulation is linked to the consumption of the environment.

This is an 'american' world and it is global. The USD is the world reserve currency. The world is awashed with it and the USD is circulated massively.

The repudiation of the debt in monetary terms will no erase the environmental debt.

Ancient people could claim jubilees because their consumption of the environment was so small compared to 'americans' and none of them has reached a global reach.

Small losses, that could be pretended as being substituted when defaulting.

The 'american' story has an additional dimension: the debt to the environment can not be wiped off, but as it is global, it can not be minimized or marginized.

If ever, 'americans' have to return to the environment, 'americans' who dismissed the environment, claiming they were able to overcome it.

'Americans' can write off every account book they can, it wont write off the debt to the environment, that can not be neglected.

Vince Clortho's picture

 

...

'Americans' , 'american' , USD, .

'americans' ,.

'american' , 'americans', 'americans'

'Americans'.

 

Cliff Notes Version

 

PUD's picture

The fundamental problem has always been the private banking cartel. There is no need for private banking. The state should run banks as utilities to process transactions and the state should be the sole creator of money that it spends into the economy as needed. The money should be backed by a basket of commodities and services. The financialization of everything is the product of private banking whereby the first users of money become the landlords of money and the masses simply renters of it.