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What A Confidential 1974 Memo To Paul Volcker Reveals About America's True Views On Gold, Reserve Currency And "PetroGold"

Tyler Durden's picture





 

Just over four years ago, we highlighted a recently declassified top secret 1968 telegram to the Secretary of State from the American Embassy in Paris, in which the big picture thinking behind the creation of the IMF's Special Drawing Right (rolled out shortly thereafter in 1969), or SDRs, was laid out. In that memo it was revealed that despite what some may think, the fundamental driver behind the promotion of a supranational reserve paper currency had one goal in mind: allowing the US to "remain masters of gold."

Specifically, this is among the top secret paragraphs said on a cold night in March 1968:

If we want to have a chance to remain the masters of gold an international agreement on the rules of the game as outlined above seems to be a matter of urgency. We would fool ourselves in thinking that we have time enough to wait and see how the S.D.R.'s will develop. In fact, the challenge really seems to be to achieve by international agreement within a very short period of time what otherwise could only have been the outcome of a gradual development of many years.

This then puts into question just what the true purpose of the IMF is. Because while its stated role of preserving the stability in developing, and increasingly more so, developed, countries is a noble one, what appears to have been the real motive behind the monetary fund's creation, was to promote and encourage the development of a substitute reserve currency, the SDR, and to ultimately use it as the de facto buffer and intermediary, for conversion of all the outstanding "barbarous relic" hard currency, namely gold, into the fiat of the future: the soon to be newly created SDR. All the while, and increasingly more so as more countries converted their gold into SDR, such remaining hard currency would be almost exclusively under the control of the United States.

Well, in the intervening 44 years, the SDR never managed to take off, the reason being that the dollar's reserve currency status was exponentially cemented courtesy of both the great moderation of the 1980s and the derivative explosion of the 1990s and post Glass Steagall repeal 2000s, when the world was literally flooded with roughly $1 quadrillion in USD-denominated derivatives, inextricably tying the fate of the world to that of the dollar.

However, back in 1974, shortly after Nixon ended the Bretton Woods system, and cemented the dollar's fate as a fiat currency, no longer convertible into gold, the future of the SDR was still bright, especially at a time when the US seemed set to suffer a very unpleasant date with inflationary reality following the 1973 oil crisis, leading to a potential loss of faith in the US dollar.

Which brings us to the topic of today's article: the international monetary system, reserve currency status, SDRs, and, of course, gold... again.

Below is a memo written in 1974 by Sidney Weintraub, Deputy Assistant Secretary of State for International Finance and Development, to Paul Volcker, when he was still just Under Secretary of the Treasury for Monetary Affairs and not yet head of the Federal Reserve. The source of the memo was found in the National Archives, RG 56, Office of the Under Secretary of the Treasury, Files of Under Secretary Volcker, 1969–1974, Accession 56–79–15, Box 1, Gold—8/15/71–2/9/72. No classification marking. A stamped notation on the note reads: "Noted by Mr. Volcker." Another notation, dated March 8, indicates that copies were sent to Bennett and Cross. It currently resides in declassified form in Document 61, Foreign Relations Of The United States, 1973–1976, Volume XXXI Foreign Economic Policy, and is found at the Office of the Historian website.

The memo is a continuation of the US thinking on the issue of the then brand new SDR, the fate of paper currencies, and the preservation of US control over reserve currency status. Most importantly, it addresses several approaches to dominating gold as well as the US' interest of banning gold from monetary system and capping the free market price, contrasted by the opposing demands of various European deficit countries (sound familiar?) on what the fate of gold should be at a time when the common European currency did not exist, and some European countries were willing to fund their deficits with gold: something the US naturally was not happy about.

While we urge readers to read the full memo on their own, here the two punchlines.

First, here is what the US' intentions vis-a-vis gold truly are when stripped away of all rhetoric:

U.S. objectives for world monetary system—a durable, stable system, with the SDR [ZH: or USD] as a strong reserve asset at its center — are incompatible with a continued important role for gold as a reserve asset.... It is the U.S. concern that any substantial increase now in the price at which official gold transactions are made would strengthen the position of gold in the system, and cripple the SDR [ZH: or USD].

In other words: gold can not be allowed to dominated a "durable, stable system", and a rising gold price would cripple the reserve currency du jour: well known by most, but always better to see it admitted in official Top Secret correspondence.

We continue:

To encourage and facilitate the eventual demonetization of gold, our position is to keep the present gold price, maintain the present Bretton Woods agreement ban against official gold purchases at above the official price and encourage the gradual disposition of monetary gold through sales in the private market. An alternative route to demonetization could involve a substitution of SDRs for gold with the IMF, with the latter selling the gold gradually on the private market, and allocating the profits on such sales either to the original gold holders, or by other agreement.... Any redefinition of the role of gold must be based on the principle stated above: that SDR must become the center of the system and that there can be no question of introducing a new form of gold– paper and gold–metal bimetallism, in which the SDR and gold would be in competition.

And there, in three sentences, you have all the deep thinking behind the IMF's SDR: simply to use it as a vehicle through which a select few can accumulate gold (namely those who can create fiat SDRs d novo), while handing out paper "profits" to the happy sellers.

And just in case it was not quite clear, here it is again, point blank:

Option 3: Complete short-term demonetization of gold through an IMF substitution facility. Countries could give up their gold holdings to the IMF in exchange for SDRs. The gold could then be sold gradually, over time, by the IMF to the private market. Profits from the gold sales could be distributed in part to the original holders of the gold, allowing them to realize at least part of the capital gains, while part of the profits could be utilized for other purposes, such as aid to LDCs. Advantages: This would achieve our goal of demonetization and relieve the problem of gold immobility, since the SDRs received in exchange could be used for settlement with no fear of foregoing capital gains. Disadvantages: This might be a more rapid demonetization than several countries would accept. There would be no benefit from the viewpoint of financing oil imports with gold sales to Arabs (although it is not necessarily incompatible with such an arrangement).

One wonders just who in the "private market" would be stupid enough to convert their invaluable paper money into worthless, barbaric relics?

And finally, was there the tiniest hint of a proposed alternative system to the PetroDollar. Namely, PetroGold?

There is a belief among certain Europeans that a higher price of gold for settlement purposes would facilitate financing of oil imports... Although mobilization of gold for intra-EC settlement would help in the financing of imbalances among EC countries, it would not, of itself, provide resources for the financing of the anticipated deficit with the oil producers. For this purpose, it would be useful if the oil producers would invest some of their excess revenues in gold purchases from deficit EC countries at close to a market price. This would be an attractive proposal for European countries, and for the U.S., in that it would not involve future interest burdens and would avoid immediate problems arising from increased Arab ownership of European and American industry. (The Arabs could both sell the gold and use the proceeds for direct investment, so that the industry ownership problem would not be completely solved.) From the Arab point of view such an asset would have the advantages of being protected from exchange-rate changes and inflation, and subject to absolute national control

One wonders if the price of gold is "high enough" now for Arab purposes, and just where the Arabs are now in their thinking of converting oil into gold... or alternatively into a gold-backed renminbi. And if not now, soon, once the pent up inflation in the Fed's $4 trillion, and rising, balance sheet inevitably start to leak out?

The full Volcker memo can be found here.

h/t Koos Jansen

 


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Mon, 11/11/2013 - 23:14 | Link to Comment a growing concern
a growing concern's picture

Fuck you, Obama!

And Reggie, you cocksucking bastard!

Oh, and GOLD!! It's what's for dinner, bitchez!

Mon, 11/11/2013 - 23:36 | Link to Comment sunaJ
sunaJ's picture

Ahem, this is when stuff started to REALLY get kinky.  Since we are living a false narrative of the "wealth" of humanity, controlled by those that have profited very well (and continue to do so), we have passed the emperor-has-no-clothes moment.  I think that what we have experienced is so absurd since 2008 (a COMPLETE and fraudulent takeover of the markets), that we are living a slow-motion implosion -the anesthetizing calm before the hurricane.  People are no longer playing the game, but no matter, we have computers that will keep it all going...nothing could go wrong there.  It is a 100-year ponzi in it's desperate death throes. We have historical records of the same human tendencies. 

Mon, 11/11/2013 - 23:45 | Link to Comment James_Cole
James_Cole's picture

Paul:

This is a paper which we prepared for Secretary Kissinger giving some of our views on the gold question. 

Kissinger, ultimate Bond villian.

However, there is still substantial disagreement on what the exact future role of gold should be—whether it eventually ought to be phased out of the system(the U.S. view) or retain an important function as a reserve asset and means of international settlement (the position of some European countries).

Tue, 11/12/2013 - 00:00 | Link to Comment synergize
synergize's picture

And costs of gold production continue to rise - over $1200 per ounce in the second quarter BEFORE taxes and writedowns:

http://seekingalpha.com/article/1828702-the-full-quarterly-all-in-cost-t...

That's an uh-oh for the shorts - one day it will turn around...

Tue, 11/12/2013 - 00:13 | Link to Comment markmotive
markmotive's picture

The world of money isn't as complicated as most make it. It is made complicated so few understand that we are being screwed.

Gold is part of a secret world for a reason.

http://www.planbeconomics.com/2013/06/documentary-secret-world-of-gold.html

Tue, 11/12/2013 - 00:48 | Link to Comment The Shootist
The Shootist's picture

Pssssht.

NOBODY would ever manipulate gold or engage in diabolical financial terrorism.

Cough* USSA

Tue, 11/12/2013 - 01:28 | Link to Comment piceridu
piceridu's picture

I don't think this is sinking in for many here on this site...This is a smoking gun for the manipulation of gold prices. This is the equivalent of a video of OJ killing Nicole. This is the equivalent of a Zapruder film of the grassy knoll showing CIA operatives holding smoking bolt action Carcano rifles. This is 100% evidence of the continuing suppression of gold prices worldwide and to what levels they will go to keep the biggest ponzi in man's history afloat. Am I wrong? Mega fucking kudos to the Tylers.

Tue, 11/12/2013 - 02:37 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Critical issues that this essay doesn't address is the differences that have taken place between 1974 and now in terms of the structure of who has oil and to what degree, who imports and to exports oil and to what degree, and exploration (and advances in exploration & extraction technologies) and newfound deposits of oil since then.

As just one example of how much global dynamics have shifted, while recognizing that oil is fungible, the U.S. produces 1/2 of the oil it consumes from domestic deposits, and imports a large % of the remainder of its oil from Canada.

Now, given that oil is fungible, consider the U.S. Military's network of global bases, and its ability to project power in its quest to support "friendly" regimes in MENA oil producing nations, as well.

On this issue, does anyone here seriously believe that such MENA oil producers now protected by the U.S. are going to gamble staking their very continuation of power based on some form of trust in China military superiority, regardless of any other factors?

There's no doubt that the U.S. and now E.U. have to cap the value of potential fiat currency competitors such as gold. But it's in China's best interest to do the same given their economic model, deepening dependence on fiat monetization of their banking & economic system through the PBoC in precisely the same manner as the Fed & ECB, and their desire to NOT float their fiat currency freely (as this could destroy their export dependent economy).

This essay speaks to issues occurring in a world that's much different than that of today.

Tue, 11/12/2013 - 04:21 | Link to Comment Doña K
Doña K's picture

As an optimist, I am looking for the silver lining (pun intended) of this revelation and I see that despite the desires of the US, there are major forces in the opposite direction and considering that this was written 40 years ago and none of the options have been implemented, the whole memo while an eye opener, it is inconsequential.

Gold still has fans, still has its luster, still freely bought and sold and I believe that US is alone in its quest to supress it.

I noticed that the USD/rand moves in tandem with the gold price. Can someone suggest an arbitrage here?

Tue, 11/12/2013 - 06:47 | Link to Comment clymer
clymer's picture

Don't be so sure that the chinese don't like and are not taking advantage of this artifical suppression

 

http://www.youtube.com/watch?v=onQIibjVf9U

Tue, 11/12/2013 - 06:58 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Don't you just hate it when the gold Nazis take over?

 

Paul Volcker......worse Fed Chaiman......EVA!

 

We try that 20% interest rate crap now.....and death and destruction will come quickly.

Tue, 11/12/2013 - 07:07 | Link to Comment new game
new game's picture

what to do with all that gold out there. if it would just go away. poooff-gone, life would be so much simpler for the ptb.

but there it is representing something they don't have and will never have unless of course they obtain some...

the opposing force of their pnzi scheme. they now it and hate it. it just won't ever go away, cause that is why it is so valuable...

keep 20 percent as ultimate insurace that the ponzi unwinds. get z gold!

Tue, 11/12/2013 - 09:02 | Link to Comment SafelyGraze
SafelyGraze's picture

great memo, mister weintraub

"There is, in fact, still a considerable emotional attachment to gold as a monetary asset, and a basic distrust of bank or paper money not having intrinsic value."

"central banks would cling to their gold in expectation of further official gold price increases"

emotional and clinging.

that's what banks are.

instead of putting complete trust in their own "monetary asset" not having instrinsic value.

 

Tue, 11/12/2013 - 09:45 | Link to Comment 0z
0z's picture

World gold production by year.

http://www.goldsheetlinks.com/world.gif

Tue, 11/12/2013 - 09:56 | Link to Comment pmbug
pmbug's picture

Emotional and clinging?  I've been called worse.  Doesn't diminish my respect for math and history though.

Oh, and:  Tradition!

Tue, 11/12/2013 - 07:18 | Link to Comment negative rates
negative rates's picture

That was nothing but the separation of the rich and poor by Volker, an illegal move no doubt. And how thick can you get, the Saudi's have been selling oil to back their currency with gold for a long, long time. Now he wants to raise up a concern about it happening.

Tue, 11/12/2013 - 10:59 | Link to Comment safe as milk
safe as milk's picture

although it's true that the situation has changed since the memo was produced, the memo is still very relavent. don't kid yourself about the domestic oil situation. we may be producing 50% of our own oil but at a break even cost of at least $75/barrel not to mention the environmental/groundwater cost. the russians are now as big, if not a bigger player in the oil market than the saudis. and let's not forget about iran. there are plenty of parties who would be happy to use a gold backed currency for trade settlement. we haven't made a lot of friends since this memo was written.

Tue, 11/12/2013 - 11:24 | Link to Comment rabbitusvomitus
rabbitusvomitus's picture

IMHO it's no suprise that while the rest of the worlds( ie. MENA)  reserves of oil are waning, at home we are becoming net exporters of black gold and on track to become the largest producers of same. Once the transition from saudi/iraqi/kuwati et al, oil is complete (once they are drained dry) the USSA will stop "caring" about what goes on over here, much the same way that we don't give a shit about what goes on in the rest of continental africa. that's when the next "big one" starts cuz we won't be intervening. But then again, I've been wrong before. 

Tue, 11/12/2013 - 11:33 | Link to Comment Flakmeister
Flakmeister's picture

You have to figure out what are fairytales and what is reality...

Here is a summary showing oil imports by country

http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.htm

The US is nowhere close to being a net exporter of Oil... and will never be for that matter

Tue, 11/12/2013 - 12:41 | Link to Comment DaveyJones
DaveyJones's picture

Did anyone see the latest OPEC- NSA-Snowden leaks? 

This "declassified" memo is pretty amazing

Never seen a more naked confesson

that the bankers and government work together

to pillage the village

that currency is nothing but paper

and oil is everything

while it lasts

Tue, 11/12/2013 - 12:44 | Link to Comment Flakmeister
Flakmeister's picture

No, do you have a link?

Tue, 11/12/2013 - 05:52 | Link to Comment johny2
johny2's picture

It is just that many have read about the CIA and US government so much things and getting away with it, that the smoking guns are so many and normal. Each of the US presidents and FED in the last 100 years have been involved in the operations to instigate and carry out a war somewhere for the profit of the banking underworld. Manipulating the gold is just one of their tricks, but even before the Gold was "demonetised" ( demonised ), they were getting away with mass serial murders. 

Tue, 11/12/2013 - 01:26 | Link to Comment SafelyGraze
SafelyGraze's picture

the hunt bros caught on

problem-reaction-solution

reaction?

damn those hunt fellas

solution?

make them the whipping boys

teach everybody else a lesson

do not look behind that FREEKIN curtain

now eat your vegetables, you sheep.

baaaaaaaaa

 

Tue, 11/12/2013 - 04:24 | Link to Comment Doña K
Doña K's picture

They played the leveraged paper market and the .gov changed the rules in the middle of the game.

Tue, 11/12/2013 - 13:24 | Link to Comment robobbob
robobbob's picture

I didn't know soylent green classifies as a veggie.

Tue, 11/12/2013 - 01:21 | Link to Comment fonestar
fonestar's picture

I like gold but I hope we do not wind up back on a gold standard.  Invariably, people get fat, lazy and stupid.  Their kids want things before they can pay for them.  Gold restricts credit and debt, so we go back onto a fiat/debt system.

Time to try something different.

 

Tue, 11/12/2013 - 02:51 | Link to Comment zhandax
zhandax's picture

WTF?  This is where we are now; "the kids want things before they can pay for them"  Allow me to introduce a few alien concepts; discipline, thrift, patience.  Riddle me this, when did people get more 'fat, lazy and stupid'; between 1891 and 1933 or between 1971 and 2013?

Tue, 11/12/2013 - 02:59 | Link to Comment fonestar
fonestar's picture

Time to take people out of the equation.  People only change when they are forced to and if politicians have the ability, they will manipulate the currency through inflation or deflation.

An algorithmically run currency is far superior to a gold standard or fiat standard.

Tue, 11/12/2013 - 04:27 | Link to Comment Doña K
Doña K's picture

Brilliand, creative and profound thinking!

 

 

s/

Tue, 11/12/2013 - 05:28 | Link to Comment Gief Gold Plox
Gief Gold Plox's picture

"An algorithmically run currency is far superior to a gold standard or fiat standard."

I agree. Only as long as your sitting down in front of an ipad in an air conditioned room online ordering pointless crap you don't need using currency you don't own. Came down to my farm to buy some food, eggs, chickens, cows or what have you and convince me how there's a secret number that your GPUs came up with and people ascribe value to because it fits into a certain cryptographic block.

...Oh, the entertainment value.

Put your bitcoins where your mouth is and donate some of that fiat you bash to help the people on the Philippines.

Tue, 11/12/2013 - 07:43 | Link to Comment therover
therover's picture

Gief...I need a dozen eggs, 2 steaks and a chicken.

 

How many ounces of silver would that cost ? Do you take pre-65 or prefer bullion ?

 

Tue, 11/12/2013 - 08:11 | Link to Comment Gief Gold Plox
Gief Gold Plox's picture

Diesel Fuel and/or Ammo are preferred, but PM in any form are fine. In a world where silver wasn't insanely manipulated I'd probably charge 1/3 or maybe 1/2 oz. Ag. Seeing that we don't, I currently charge much more in fiat. Helps me grow my stack though. :)

Tue, 11/12/2013 - 09:34 | Link to Comment therover
therover's picture

So based on 1/2 oz of Ag, my reserve stack of 500 oz of Ag can basically buy my family breakfast (steak and eggs) and a chicken dinner (I got the veggies covered) everyday,  for close to 2.5 years. 

 

DEAL.

Tue, 11/12/2013 - 12:56 | Link to Comment RafterManFMJ
RafterManFMJ's picture

That's exactly what I'm doing, getting ready by only eating one meal a day. Just now ate bacon, with saurkraut fried in the bacon grease. Delicious. And on Saturday nights, I waterboard myself. Get ready, people!

Tue, 11/12/2013 - 09:34 | Link to Comment Race Car Driver
Race Car Driver's picture

GFY, shill. You are here to heard folks into digital currency.

Go fucking authenticate yerself and leave the rest of us out of it.

To the rest of us ... ignore the title and just watch the video and see where BTC is going. BTC is no different than Google or Facebook - the spooks are behind it.

http://www.youtube.com/watch?v=WBeZ6WHzeEQ#t=250

Tue, 11/12/2013 - 12:57 | Link to Comment RafterManFMJ
RafterManFMJ's picture

Dat's raycisss!

Tue, 11/12/2013 - 12:50 | Link to Comment quasimodo
quasimodo's picture

Anyone got a link that works? I can't find one anywhere, seems too many folks viewed this and they used the copyright excuse.

Tue, 11/12/2013 - 00:13 | Link to Comment Stuart
Stuart's picture

not much has changed.  The fight continues.  Those who espouse no manipulation are charlatans and complicit shills. 

Tue, 11/12/2013 - 14:25 | Link to Comment Kobe Beef
Kobe Beef's picture

Yup. SDR = just another con.

Tue, 11/12/2013 - 00:14 | Link to Comment maskone909
maskone909's picture

Damn where do u find this shit tylers? I can never find anything substantial on sdr's. Good read thx

Tue, 11/12/2013 - 00:28 | Link to Comment maskone909
maskone909's picture

What the fuck were they thinking declasifying this? Isnt this like a smoking gun?!? How fucking insidious these fuckers are. Another conspiracy theory turned conspiracy fact. Tradition my fucking ass ben

Tue, 11/12/2013 - 05:37 | Link to Comment HardAssets
HardAssets's picture

Would they worry if that memo was shown to a classroom of 8th graders ?  That's the reading comprehension level of the average American adult. Most of them haven't read a book since h.s.  42% of the college grads haven't read a book since leaving university. Go into homes and see how many books are on the shelves and what type.

You will see a t.v. Likely several in the house. Maybe even a large screen version.  TPTB own the media and control the 'reality' that people merely parrot. And you can bet this document won't be featured on 'the news'.

So declassifying this kind of stuff isn't really a problem for them.

Tue, 11/12/2013 - 07:21 | Link to Comment new game
new game's picture

and that is why it gets worse. until, well, plan accordingly and ask one question to the ones that didn't plan - suck my cock for some beans...

now, that wasn't very nice...

how can you have any compassion for the people that are getting us deeper down the rabbit hole.

i would help the people that  truely are prepers but had an unfortunate situation-you will know.

only the good die young-well maybe...

to see if you are prepared try this: in a predefined area in full camo and armed(w/o live ammo) try to kill your partner.

bang your dead. great fun and can take hours - ultimate preping.... just sayin.

Tue, 11/12/2013 - 09:53 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

I read the whole linked memo and China + other Asian countries were not even in the picture then or mentioned. Can we restart the game please?

Totally different world now and the US may be alone trying to tie 190 loose ends.

190 = all the countries in the world more or less

 

Tue, 11/12/2013 - 09:23 | Link to Comment topshelfstuff
topshelfstuff's picture

as for this quote:
""""In other words: gold can not be allowed to dominated a "durable, stable system", and a rising gold price would cripple the reserve currency du jour: well known by most, but always better to see it admitted in official Top Secret correspondence.""""

 

The author must have been referring to Most HERE, certainly not to the intentionally put asleep, dumbed-down Public

and Note: the SDR's are comprised of the 4 given the High Speed FIAT PRINTERS

Tue, 11/12/2013 - 11:29 | Link to Comment rabbitusvomitus
rabbitusvomitus's picture

Me thinks you give "them" too much credit. These pricks ain't that smart. The core is so rotten they can't keep up with what should be hidden and never declassified and what is fit for publick consumption.

 

Tue, 11/12/2013 - 01:00 | Link to Comment Real Estate Geek
Real Estate Geek's picture

Stock vs. flow . . . stock vs. flow.

Tue, 11/12/2013 - 13:48 | Link to Comment Tall Tom
Tall Tom's picture

Synergize wrote: "And costs of gold production continue to rise - over $1200 per ounce in the second quarter BEFORE taxes and writedowns:

http://seekingalpha.com/article/1828702-the-full-quarterly-all-in-cost-t...

That's an uh-oh for the shorts - one day it will turn around..."

The Gold Miners are the ones whom are Shorting Gold. They are Forward Selling. They are selling that which they have not mined. (If you are looking for the "boogeyman" for "Price Manipulation" you need not look any farther. That is the Gold that backs all of that Paper Gold on the Comex and LBMA.)

 

It is is easier to sell and make a profit on Gold in the Ground, promised at a later date for delivery, than to expend scarce resources and labor and "dig it out of the Ground". (Process Ore...Chemically treat it, isolate the Gold, refine it...)

 

With profitting from Declining Gold Prices, through Forward Selling, they are mortgaging their future. If demand began to rise (perhaps because of a Lack of Confidence in the US Currency), prices would rise across the board for all resources. In an environment of "across the board" price increases, costs to mine the Gold will become exorbinant. Many Gold Miners would simply not be able to allocate enough resources to obtain that Forward Sold Gold, which they "solemny promised", for delivery.

 

So they will DEFAULT ON DELIVERY to the Comex Warehouse. They simply declare Bankruptcy and the Gold remains in the Ground, unprocessed and unrefined. Do you want to write about a Fraud? There it is.

 

What happens to the Gold Price at that point?

 

Watch your GOFO Rates.

 

The people whom invest in Gold Minig stocks only serve to provide Financial Support to the Fraud by providing the Miners the Liquidity to do this. It is rather unproductive to take a Long position in Gold while buying Gold Stocks They just use your Capital to buy the Shorts.. You are only paying the people whom are out to cut your throat.

 

It is all a fraud as there is nothing real in this economy. Nothing will be more pleasing than a Derivatives Meltdown caused by moves in the Interest Rates in the US Ten Year. Because of the Leverage just a minor move, in either direction, will have major impact on the Interest Rate Swaps. I am hoping for an HFT Black Swan that will trigger the entire Derivatives Market to implode. What do you think that will do to the confidence in the US Dollar?

 

Maybe we will learn to abandon Fraud at that point. Is there a chance of abandoning Fraud? It is the same chance that an HFT Fukuppy can trigger a Derivatives Meltdown. That becomes more likely with every passing day.

Mon, 11/11/2013 - 23:50 | Link to Comment BoNeSxxx
BoNeSxxx's picture

Say what you want about these globalist cental banker psychotic fuckshites...

One thing you have to admire is their patience... 1974 and they are still at it.  Most rational people would have given up by 1976.

Tue, 11/12/2013 - 00:03 | Link to Comment Anusocracy
Anusocracy's picture

Their desire to control is innate as is their warped morality which guides them in achieving that control.

Nature has created many parasites and predators - they are amongst them.

Tue, 11/12/2013 - 00:48 | Link to Comment Skateboarder
Skateboarder's picture

Just as good bides its time, so does evil.

Tue, 11/12/2013 - 02:01 | Link to Comment Idiocracy
Idiocracy's picture

yup.  And their desire for control was branded into their brains from a young age, starting at their elite prep schools, where they were basically told that their destiny is to manage the world

Tue, 11/12/2013 - 14:27 | Link to Comment Tall Tom
Tall Tom's picture

Do you manage your World? Do you manage your children?

 

What is so very wrong about this is that they are incompetent managers as they are Psychopathic and Self Serving. As a result just a few of us, but a majority of whom just happen to comment on ZeroHedge. have LEARNED that "Managed Economies" are inherently evil and that we must be self reliant, that the entire idea of Politics is a scam, and, most importantly, THERE ARE NO POLITICAL SOLUTIONS.

 

Twenty Five to Thirty years ago I heard very few complaints while the Planned Economy was being mismanaged. Times, for most, were great. As Ronald Reagan, the Actor, ACTING as the leader of the Free World stated, "It is Morning in America." Many here were children, or, young adults at the time. But we all bought into it, didn't we?

 

If someone brought up the topics THEN, which we so uneloquently spout off about today, then we would label them as the Lunatic Fringe and continue on in our illusion. (It was as much of an illusion as it is today. But times were pretty damned good for many, for most.)

 

Besides it was not the Prep Schools that molded them. Who they are, their personality, crystalized in their first five years. They were taught by their parents. It started with their PARENTS.

 

What makes you think that the Elite do not manage, or, mismanage (as in psychologically damage them through indulgence along with neglect, emotional distance and other abuses) their children?

 

I am a product of Prep Schools. I find it challenging enough just to manage my own affairs. I thank God that I am not in charge. I do not want to be in charge. I'd would probably fuck it up worse...while HAVING BENEVOLENT INTENTIONS.

 

The road to Hell is paved with Good Intentions. At times the best action is not to act. It is because of myopic actions that we face the PREDICAMENT that we are currently facing. (thank you to the Commenter who gave me the discernment between the word, "problem", and, "predicament".)

Tue, 11/12/2013 - 00:04 | Link to Comment john39
john39's picture

they have been at it since the days of Babylon.   why would they stop now?

Tue, 11/12/2013 - 09:21 | Link to Comment BoNeSxxx
BoNeSxxx's picture

Longer than that... the first currency/debt paradigm is credited to the ancient Phoenicians - predating Babylon by some 2,000 years.

But, yes, point taken.  They are a patient lot and fiercely dedicated to this particular scam (only because it works time after time after time).  Jesus understood this.  As did the US founding fathers...  As long as there are sheep, there will be someone to fleece them.

Tue, 11/12/2013 - 00:10 | Link to Comment NidStyles
NidStyles's picture

A Tiger never changes it's stripes. These bastards have been at this for centuries now. Look more into the role that Fiat currency had in building the British Empire. Banking sort really took off in England. Sure it has a few spouts of success in China and Italy beforehand, but the first real success story of it was when the British were using a Fiat system to take over trade around the world by building a Navy almost completely using it.

Tue, 11/12/2013 - 01:47 | Link to Comment Diogenes
Diogenes's picture

Fiat currency had nothing to do with building the British Empire. Quite the reverse. They were on a gold standard and the pound hardly changed in value from 1815 (end of the Napoleonic Wars) to 1914 (beginning of WW1)

British pounds were accepted around the world because they were backed by gold sovereigns that never got devalued, clipped or adulterated. The most backward tribal cheiftain or trader would take British gold and silver coins because they were known to be good.

This was one of the factors in building a world wide empire and not an insignificant one. British power hit the skids when they went off the gold standard although it was 20 years before it became obvious they were through as a world power.

Tue, 11/12/2013 - 02:00 | Link to Comment Flakmeister
Flakmeister's picture

A Gold standard is awesome when you are running trade surpluses....

Not so, otherwise...

Tue, 11/12/2013 - 02:39 | Link to Comment akak
akak's picture

Strict adherence to a gold standard (or any other hard money standard) tends to make signficant trade deficits, or trade surpluses for that matter, self-correcting.

Tue, 11/12/2013 - 10:40 | Link to Comment Flakmeister
Flakmeister's picture

If by self correcting you mean hyperinflationary  spirals as the currency is debased thereby enabling the rise of fascist dictatorships, then you may be own to something  (N = 1 in Europe, admittedly a small sample )...

Now, if you want to impose a statist solution, e.g tariffs to protect local industries you may be able to address trade imbalances...

Not exactly free market though...

Remember that in the event of war, the first thing to go is convertability of local currency into gold at a fixed rate....

Tue, 11/12/2013 - 14:59 | Link to Comment Tall Tom
Tall Tom's picture

Well if one is trading for a good or service that one cannot afford then one stops when they run out of Gold. Ideally they will do it beforehand. But they will learn through austerity if they continue their behavior to the point of recklessness. The consequences of the Moral Hazrd is felt by the people so they are much less likely to repeat the poor behavior.

 

As for Fascist Dictatorships, they originated AFTER the adoption of Government issued Fiat Currencies.

 

Let's look at Germany. Before World War I Germany was on a Gold Standard. By the end of World War I Germany had abandoned Gold and was using a Fiat Currency...which was Hyperinflated to avoid payment of War Reparations (just or unjust).

 

You are correct that abandonment of a Gold Standard was the first thing that went. However it was because the European Belligerant Governments abandoned Gold at the same time in order to finance that insane war is that which allowed the war to happen. This allowed the Destructive Effects of that War to last for many, many decades, even into this Century, well after the last combatant laid down his arms. 

 

Had the Gold Standard been maintained, and other Nations refused anything but Gold as a Tender for Goods and Services, rather than a promise to pay at a later date, the duration of World War I would have shortened. Less destruction would have been realized. The seeds for the Fascist Dictatorships would have faltered in unfertile ground. The World would be much better off than it is today.

 

There are two lessons.

 

A Gold Standard does not allow for long duration Destructive Wars.

 

A Gold Standard restricts people from insanity as it provides consequences for violating Moral and Just behavior.

 

There is a Moral Hazard for violating that which is prudent.  Acting for short term expedience is not permissable under a Gold Standard as the Government Treasury, the People's wealth, is rapidly drained.

Tue, 11/12/2013 - 16:17 | Link to Comment Flakmeister
Flakmeister's picture

The 30 Years War put lie to your claim...

That austerity to address that you propose is balanced on the backs of the labor class. With a gold standard the only thing you can really play with is wages. Heaven help it if your deficits are related to foodstuffs...

The gold standard that existed in the 19th century was only made possible by the ruthless explotation of the imperial colonies.. Or did you miss that little tidbit...

Sorry, the Gold standard is a chimera....

Tue, 11/12/2013 - 16:40 | Link to Comment akak
akak's picture

 

The gold standard that existed in the 19th century was only made possible by the ruthless explotation of the imperial colonies.. Or did you miss that little tidbit...

That is one of the worst lines of revisionist, pro-fiat bullshit that I have ever read.

For one thing, the gold (and silver) standards existed LONG before the 19th century (pretty much in almost ALL places and almost ALL times, in fact), and also existed in many nations which were not only NOT imperialistic in any way in the 19th century (e.g., Switzerland, Latin America, Scandinavia), but in a notable number of them which were in fact victims of imperialism --- China and India, for example.

Your grasp of monetary history is obviously extremely weak.

Tue, 11/12/2013 - 17:36 | Link to Comment Flakmeister
Flakmeister's picture

Really...

The Great Powers all benefited from effectively looting their colonies so as to maintain a positive current-account... All the Great Powers increased their gold reserves simultaneously until WWI....  You and I know who bore that cost...

Swissyland was basically a poor backwater until it became a place to stash money...

http://en.wikipedia.org/wiki/Economy_of_Switzerland

Sweden was primarily agrarian with little international trade...

My statements have nothing to do with being pro-fiat or not, it only has to do with the balance of flows in the 19th century.... 

Tue, 11/12/2013 - 19:36 | Link to Comment akak
akak's picture

 

The Great Powers all benefited from effectively looting their colonies so as to maintain a positive current-account... All the Great Powers increased their gold reserves simultaneously until WWI....

Great Power colonialism had little or nothing to do with the gold standard, or with ANY sort of monetary policy.  It was simply looting, pure and simple.  Stop attempting to tar the gold standard, and hard money more generally, with the crimes of some of those who happened to practice it concurrently --- I believe this falls under the logical fallacy of "guilt by association".

Swissyland was basically a poor backwater until it became a place to stash money...

Sweden was primarily agrarian with little international trade...

And both those facts have precisely NOTHING to do with the subject under discussion, and do not in any way negate the fact that both nations were in fact under the gold (and prior to that, a bimetallic) standard throughout the 19th century (as well as long before that century).  They also prove your previous statements to be false.

You really are not as intelligent nor as logical as you appear to believe yourself to be.

Wed, 11/13/2013 - 00:03 | Link to Comment Flakmeister
Flakmeister's picture

They absolutely do...

You brought up Swissyland BTW...

And praytell how much international trade was there before the 19th century? Gold and silver based stayed local, the only real net flow of precious metals was from the New World to the Old World (and in the 20th centrury to the US until the 60's)

You have a serious reading comprehension, I am not tarring the Gold standard, I am only pointing out the very special conditions that existed in the 19th century when international trade emerged...

Untill then, everyone could basically feed themselves, there was no great international market comparable to the oil market. No great capitel flows between nations. Colonies like India, Jaimaca, Martinique, Cuba were basically being looted. Do I have to remind you about the amount of silver the Brits pulled out of China in the Opium trade?

Moreover, PM supplies were rocketing (relatively speaking) during the period...

Need I remind of what the tariffs were back then? I already posted a link with that info...

Tue, 11/12/2013 - 17:01 | Link to Comment Tall Tom
Tall Tom's picture

The "Thirty Years War"?

 

We have been at World War for the past Century if not active, then by Proxy, or Cold War. There has been not one year that I can recall when there has not been an active conflict is armed aggression somewhere on the face of the Globe. The World powers have been funding and supplying both belligerants with weapons and support. (Perhaps I am mistaken about this...But I cannot remember any year when there was not an active war happening. If you can document an exception I am all ears.) I believe that it has been far more destructive than the regional Thirty Years War.

 

But let's look at the facts...From Wikipedia...

 

"A major consequence of the Thirty Years' War was the devastation of entire regions, denuded by the foraging armies (bellum se ipsum alet). Famine and disease significantly decreased the population of the German states, Bohemia, the Low Countries, and Italy; most of the combatant powers were bankrupted."

 

http://en.wikipedia.org/wiki/The_Thirty_Years_War

 

What stopped the Thirty Years War?

 

You write, "That austerity to address that you propose is balanced on the backs of the labor class. With a gold standard the only thing you can really play with is wages. Heaven help it if your deficits are related to foodstuffs..."

 

I agree. Hunger is a good motivator to stop Deficit Spending. That is a consequence of violating that which is prudent. People only rise and REVOLT against a Ruling Class when they experience FAMINE. (That is a Historical Fact. It has been repeated continuously...even in the Thirteen Colonies' revolt against the Crown....not as widely known as it needs to be. It was not exactly altruism that caused the Colonies' move for Independence. Times were harsh and the Crown's rule exasperated problems.)  

 

If the Rulers want to remain in power then they have every incentive not to have Deficit Budgets that will lead to this eventuality. It restricts them from spending imprudently. It is not "Heaven help me." It is "Heaven's wrath is about to be realized upon the Ruling Class."

 

You wrote, "The gold standard that existed in the 19th century was only made possible by the ruthless explotation of the imperial colonies.. Or did you miss that little tidbit..."

 

Well I do not miss too much. But the Imperial Colonialists are still exploiting the Emerging Markets Economies   today without a Gold Standard. We do not call them Colonies anymore..but affectively they are. We have abandoned the Gold Standard and that did not serve to stifle that behavior or alleviate the problem, did it? That is a non sequiur Logical Fallacy. There is no correlation between the exploitation of Colonies and the Gold Standard.

 

(I will overlook your word, "colonies", as I did understand what you wrote. As I wrote I do not miss much.)

 

By the way...I do not make a habit of lying. I do my damndest to report what I believe to be true. At times I am prone to mistakes as I am Human. Please be civil. Thanks.

Tue, 11/12/2013 - 18:37 | Link to Comment Flakmeister
Flakmeister's picture

I did not accuse you of lying...

And if it takes 30 years and ~20% of the population dead to end a war, it is safe to say that the gold standard didn't work as advertised...

Note that the "international gold standard" did not really emerge until 1871.

The leading powers all enjoyed positive current accounts in the late 19th century which was helped by increasing gold supply and exploitation of colonies.

http://cup.columbia.edu/book/978-0-231-15252-5/the-gold-standard-at-the-turn-of-the-twentieth-century/excerpt

http://www.investopedia.com/articles/05/030705.asp

Finallly there is this

http://econ.la.psu.edu/~bickes/goldstd.pdf

Tue, 11/12/2013 - 19:07 | Link to Comment akak
akak's picture

 

Note that the "international gold standard" did not really emerge until 1871.

Flakmeister, that is a highly misleading half-truth at best, as the plain fact is that prior to the 1930s essentially EVERY nation in the world, with rare and brief exceptions, was either on a gold standard, a silver standard, or some combination of both.  Your attempts to mischaracterize and misrepresent the history of hard money does not, however, surprise me in the least, as you are a statist to the core, and as such implicitly reject the monetary freedom and financial self-determination that sound money fundamentally represents.

On this topic you are as disingenuous and dishonest as Chindit13, Jon Nadler and Ben Bernanke.  I have upvoted and defended you at certain points in the past, but I am beginning to see more and more why many ZH members automatically downvote you.

Wed, 11/13/2013 - 00:11 | Link to Comment Flakmeister
Flakmeister's picture

Noone is contesting your claim, but you also realize that most trade was between colonies and the home country. Not with each other... No significant capital flows between First world nations, Britain got rich, not off of France or Germany, but off of Jaimaica, India etc.. 

It was emergence of the US in the late 19th culminating with WWI that changed the happy managable balance that existed till then, you cannot have an interantional gold standard if all the gold flows one way....

Tue, 11/12/2013 - 02:45 | Link to Comment Silver Bully
Silver Bully's picture

'A Gold standard is awesome when you are running trade surpluses....'

EXACTLY. The trick isn't getting off the standard. The hitch is getting back on it once you leave. Countries could abandon it temporarily as a type of credit to pay off wars. Then once the debt was paid down, you went back on the standard. But when the entire world goes to war, such as WWI, and in such a massive effort all at once, it makes trade difficult, inflation rampant, and terminally kills one's currency. Seems we haven't reversed that process these days.

Tue, 11/12/2013 - 04:32 | Link to Comment zhandax
zhandax's picture

I have contended in a couple of drunken tirades that the only way to insulate the reserve currency's host populace is to maintain a two tier system; domestic, based on a gold standard and fiat for the reserve currency with strict export limits on physical gold.  While I realize they are no more than drunken tirades, I still occasionally wonder if that would work to shield the host country's populace from the Triffin dilemma.  It's all mental masturbation, as we have yet more prima facie evidence above that the central banks have no desire to shield any populace from their machinations.

Tue, 11/12/2013 - 08:39 | Link to Comment NidStyles
NidStyles's picture

Stick to being a drunk.

Tue, 11/12/2013 - 10:43 | Link to Comment Flakmeister
Flakmeister's picture

Arbitrage, arbitrage, arbitrage....

How many times have read a story referring to the Official Conversion rate and the Black Market conversion rate?

Cronyism would flourish...

Tue, 11/12/2013 - 08:40 | Link to Comment NidStyles
NidStyles's picture

Those ships were built thanks to IOUs, Tallys, and shareoptions loaned out by the Central Bank of London. 

If you are going to throw history around, at least get it correct. That gold went straight into the crown, and Britian happened to have been on a silver standard, not gold. British is Sterling Silver, Spain was the last Empire built that was on a gold standard at any point in time. The US was the next closest, but nope it was Bi-Metal.

 

The British Empire was also built and over with by the time Naplolean came around. Fuck man, don't they teach you kids anything? The British Empire was essentially over by the early 1800's and was on a decline for the next 100 years as they lost control of trade and territory.

Tue, 11/12/2013 - 15:19 | Link to Comment Tall Tom
Tall Tom's picture

Yes...I agree.  If you are going to throw History around at least get it correct.

 

"In 1816, the gold standard was adopted officially (by the British Empire), with the silver standard reduced to 66 shillings (66/-, £3 6s), rendering silver coins a "token" issue (i.e., not containing their value in precious metal)."

 

Bolded is my insert...If you click on the link you can read about it under the paragraph, headed "Gold Standard"

 

http://en.wikipedia.org/wiki/British_Pound_Sterling#Gold_standard

Tue, 11/12/2013 - 10:08 | Link to Comment HardAssets
HardAssets's picture

The British Empire was built on rum, sodomy, and the lash.

Or was that the British Navy ?

Same difference.

Tue, 11/12/2013 - 13:02 | Link to Comment RafterManFMJ
RafterManFMJ's picture

You sound nostalgic about that, HardAssets.

Mon, 11/11/2013 - 23:34 | Link to Comment remain calm
remain calm's picture

Eventually musical chairs ends, and when the music stops, Who is siting on the Gold?

Tue, 11/12/2013 - 01:15 | Link to Comment Cacete de Ouro
Cacete de Ouro's picture

Why James Bond wasn't interested in SDRs...

SDRfinger

SDRfinger, he's the man
The man with the paper touch
A spider's touch
Such a special drawing right finger
Beckons you to enter his web of sin
But don't go in
......
He loves only SDRs
Only SDRs
He loves SDRs
He loves only SDRs
Only SDRs
He loves SDRs

Tue, 11/12/2013 - 01:26 | Link to Comment Skateboarder
Skateboarder's picture

Don't forget modern day comedic super spy Austin Powers in SDRmember.

Tue, 11/12/2013 - 06:03 | Link to Comment Bokkenrijder
Bokkenrijder's picture

"...and just where the Arabs are now in their thinking of converting oil into gold... or alternatively into a gold-backed renminbi."

A gold backed RMB? Forget it! The Chinese are total control freaks, so why would they back their RMB by something that they can not 100% control?

Furthermore, the Chinese lack any imagination: they have a copy/paste education system, they have a copy/paste industrial system, they have a copy/paste economy and they WILL make the same copy/paste monetary mistakes as the West has made.

If there would be one country I would bet on it would be Russia! When two (US and China) dogs are fighting over a bone, the third (Russia) might run away with it.

Russia in the past has proven that it has global ambitions, it's a HUGE country, has a HUGE amount of natural resourses and it has a large population.

RUSSIA, bitchezzz!!

Tue, 11/12/2013 - 08:26 | Link to Comment Montezuma
Montezuma's picture

Whats Obama got to do with this great piece?

Stop fucking your sister and blaming Obama for everything. He is mister establishment, if he were white and Reb. (and named Buck Rogers or something) you would be thanking baby Jesus for sending him to Earth.

And what comes to FIAT Milton Friedman suggested way back that the system should be changed for automatic 1-2% continues creation of money. No more no less. Would at least stabilies the hell out of things.

Mon, 11/11/2013 - 23:16 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

It seems to me that if you are a (fiat) Superman that it's in your best interest (not mine) to control the global supply of (Golden) Kryptonite.

Mon, 11/11/2013 - 23:31 | Link to Comment Carl Popper
Carl Popper's picture

Absolutely. This is why the SDR will always be composed of paper credit based currencies and never have a gold component.

Lets say you make gold 10 percent of the SDR. The SDR becomes a defacto gold standard leveraged 10 to 1.

It's rate of growth is limited to the amount of gold in circulation plus newly mined gold. That is just a gold standard in drag.

Tue, 11/12/2013 - 17:42 | Link to Comment DaveyJones
DaveyJones's picture

what do you call a gold standard in drag? GOLA?

Mon, 11/11/2013 - 23:31 | Link to Comment DCFusor
DCFusor's picture

Well said, CD.

Tue, 11/12/2013 - 00:10 | Link to Comment Anusocracy
Anusocracy's picture

How much gold do the pathogenic elites have?

Tue, 11/12/2013 - 00:16 | Link to Comment NidStyles
NidStyles's picture

I hear the Rothschilds have a nice vault. I have no idea if it is true or not, I've never seen it.

Tue, 11/12/2013 - 03:32 | Link to Comment zhandax
zhandax's picture

I heard a couple of their daughters do.

Tue, 11/12/2013 - 00:18 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Right up to the point where the only thing that matters is physical ownership of Gold......control of Gold is just as good, if not better than, actual ownership. So I'm not sure that at this point it really matters how much Gold they own.

Tue, 11/12/2013 - 04:56 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

I'm amused at how they want all the nations to trade in their gold for (fiat) SDRs, and then "sell it to private holders".

Who'd want all this gold in this scenario? The fucking "Anunaki" gods returning for moar gold (in exchange for technology)? The Israelis, so they can rebuild Salomon's Temple, just in time (JIT) to make the Zionists and Christian Rapture sects happy?

The whole thing stinks like the perpetual motion machine of the USD Ponzi, which it is.

Tue, 11/12/2013 - 12:16 | Link to Comment Jumbotron
Jumbotron's picture

"The world is a business Mr. Beale."

 

https://www.youtube.com/watch?v=jxiT30N6ti4

Mon, 11/11/2013 - 23:19 | Link to Comment DanDaley
DanDaley's picture

Where we are is no accident. The Creature From Jekyll Island mentions all of this...a book that everyone should read to see the big picture. 

Mon, 11/11/2013 - 23:28 | Link to Comment Constitutional ...
Constitutional Republic's picture

As Ron Paul said: it is no coincidence that the century of war coincided with the century of central bank supremacy. The robber barons are making their move from West to East over the dead bodies of other people's children, not theirs.

Mon, 11/11/2013 - 23:22 | Link to Comment Ignatius
Ignatius's picture

Hello?  Is this thing on?

Mon, 11/11/2013 - 23:26 | Link to Comment Constitutional ...
Constitutional Republic's picture

It's 'on'. Leaks like this only happen purposefully.

Mon, 11/11/2013 - 23:28 | Link to Comment Theta_Burn
Theta_Burn's picture

This should cause the establishment some embarrassment...

But then again nothing seems to pierce 0'dong and Co.

Mon, 11/11/2013 - 23:31 | Link to Comment THX 1178
THX 1178's picture

The average Chump and Chumpette aren't smart enough to even understan what this shit REALLY means. 

Tue, 11/12/2013 - 00:16 | Link to Comment daveO
daveO's picture

I don't know anyone I could explain it to. Most are finacially ignorant Debt Slaves. They think they're normal. Yet, before Nixon, most folks were not Debt Slaves.

Tue, 11/12/2013 - 00:48 | Link to Comment Tinky
Tinky's picture

No need to explain it – there's an APP for that.

Tue, 11/12/2013 - 05:37 | Link to Comment Gief Gold Plox
Gief Gold Plox's picture

You're so correct. I feel like a lunatic when 10/10 people I ask haven't the faintest about how money (or rather currency) is created.

Tue, 11/12/2013 - 05:54 | Link to Comment HardAssets
HardAssets's picture

"You're so correct. I feel like a lunatic when 10/10 people I ask haven't the faintest about how money (or rather currency) is created."

Try referring people to this cartoon version explanation that's quite well done. There are a few fact errors regarding some quotes, but the gist of it is accurate -

THE AMERICAN DREAM

http://www.youtube.com/watch?v=tGk5ioEXlIM

 

I know we get angry at the lack of knowledge out there - but people are victims of a system that purposely keeps them ignorant and lacking in confidence regarding these matters.

Tue, 11/12/2013 - 13:10 | Link to Comment RafterManFMJ
RafterManFMJ's picture

Try this, you'll be the life of the party.

Ask the dullard if they are going to die someday. Usually, they'll acknowledge that they will.

Then get a paper and draw a line on it, marking it in thirds.

Note that each third indicates Time Spent at work, asleep, and doing what they want/other things.

Pull a hundred from your wallet, and ask them what it is? Ask them where it comes from?

When they cannot answer, ask them if they think it's odd that they are giving 1/3 of the most precious thing they own, the only thing they truly own, their life for a green rectangle that they know absolutely nothing about.

And go from there.

Tue, 11/12/2013 - 17:51 | Link to Comment DaveyJones
DaveyJones's picture

nice

Tue, 11/12/2013 - 02:43 | Link to Comment Oldrepublic
Oldrepublic's picture

The "new system" will be normal too!

Tue, 11/12/2013 - 01:24 | Link to Comment Bro of the Sorr...
Bro of the Sorrowful Figure's picture

probably true, but the percentage of people who could comprehend this that actually do is also tiny. those who are intelligent enough to understand have been brainwashed to suspect anyone and anything that challenges the status quo. that is the real problem. we cant rely on the proles to save the day, spend your time convincing intelligent people of means of the reality of our system.

Mon, 11/11/2013 - 23:44 | Link to Comment JPM Hater001
JPM Hater001's picture

Oh yeah, they all cancelled the Monday Risk get together.  Too hot to be seen together.  

Mon, 11/11/2013 - 23:23 | Link to Comment Constitutional ...
Constitutional Republic's picture

He who owns the gold makes the rules. O'bomba, you jerk, and your freak crypto commies, champagne socialists.

You should have taken Volcker seriously. He could have restrained you young political guns, not that I admire the Fed. This is what it is.

Mon, 11/11/2013 - 23:26 | Link to Comment i_fly_me
i_fly_me's picture

“Truth is tough. It will not break, like a bubble, at a touch. Nay, you may kick it about all day, and it will beround and full at evening.” -- Oliver Wendell Holmes, Sr

 

Mon, 11/11/2013 - 23:29 | Link to Comment wisehiney
wisehiney's picture

"Never tell the truth to people who are not worthy of it"   Mark Twain

Tue, 11/12/2013 - 00:17 | Link to Comment NidStyles
NidStyles's picture

That man was ahead of his time.

Mon, 11/11/2013 - 23:26 | Link to Comment wisehiney
wisehiney's picture

This nice Jewish fella knows the value of that paper. The other guy will be hearing from IRS. 

http://money.cnn.com/video/news/2013/11/11/n-new-haven-rabbi-finds-money-in-desk.cnnmoney/index.html?iid=HP_LN

Mon, 11/11/2013 - 23:34 | Link to Comment Constitutional ...
Constitutional Republic's picture

And this good young Rabbi and his wife are priceless; no money can buy them. And this is the kind of role model that CONgress needs.

'You cannot cheat an honest man.'

Thanks for that link. We all need to see true goodness sometimes in order to overcome cynical thoughts.

Tue, 11/12/2013 - 00:13 | Link to Comment thisandthat
thisandthat's picture

Psshh.... they don't do rabbis like they used to...

Tue, 11/12/2013 - 08:09 | Link to Comment shovelhead
shovelhead's picture

Forward to Francis Sawyer.

Tue, 11/12/2013 - 17:34 | Link to Comment thisandthat
thisandthat's picture

Does he run a rabbi school? Or is he fluent in sarcasm - seems to be a very hermetic knowledge these days, too...

Mon, 11/11/2013 - 23:26 | Link to Comment Missiondweller
Missiondweller's picture

Goldbulliondebitcard.com

Its coming, and all the world will be free from fiat currencies.

Mon, 11/11/2013 - 23:27 | Link to Comment QQQBall
QQQBall's picture

Digital SDR

Tue, 11/12/2013 - 00:14 | Link to Comment thisandthat
thisandthat's picture

bit coin

Mon, 11/11/2013 - 23:29 | Link to Comment dwayne elizando
dwayne elizando's picture

All the nonsense I've heard about gold lately leads me to believe the gold flow is going to hault. Maybe asia will give the IMF their hawaiian gold stash! HA

Freegold, fuck this nonsense!

Mon, 11/11/2013 - 23:46 | Link to Comment Constitutional ...
Constitutional Republic's picture

Fact is stranger than fiction. Chinese troops will appear for the first time on U.S. soil in Hawaii on November 13 during the nationwide power grid outage drill in the U.S., Canada and Mexico.

Of course, it is wrong and unconstitutional for foreign troops to be mobilised on U.S. soil.

Washington D.C. is out of control, and quite possibly out of its mind, in thrall to the foreign shareholders of the un-Federal no-Reserve Board. 

Mon, 11/11/2013 - 23:54 | Link to Comment dwayne elizando
dwayne elizando's picture

I was using sarcasm. I don't think the story about gold in hawaii is true. But I'll mark my calendar for wednesday the 13th.

Mon, 11/11/2013 - 23:54 | Link to Comment dwayne elizando
dwayne elizando's picture

I was using sarcasm. I don't think the story about gold in hawaii is true. But I'll mark my calendar for wednesday the 13th.

Mon, 11/11/2013 - 23:30 | Link to Comment Four chan
Four chan's picture

good money forces out bad always,

even when fiat tries to force back,

in the end it will always be what it is, worthless paper.

Mon, 11/11/2013 - 23:33 | Link to Comment Carl Popper
Carl Popper's picture

You must live in Bizarro world.

This universe obeys Gresham's law

Mon, 11/11/2013 - 23:43 | Link to Comment akak
akak's picture

Gresham's "Law" is only applicable given the force of legal tender laws, under which the hapless and helpless citizen MUST use the fiat currency of their overlords under the threat of penalty and punishment.  Absent coercive legal tender laws, the good money WOULD drive out the bad money, analogously to any similar such situation in a free market.

Tue, 11/12/2013 - 01:58 | Link to Comment Diogenes
Diogenes's picture

Absent coercive laws, anybody in his right mind will keep the good money and pass the bad money on the first chance he gets.

This is how bad money drives good money out of circulation.

How long has it been since you found a pre 1964 silver dime or quarter in your change?

Tue, 11/12/2013 - 02:23 | Link to Comment akak
akak's picture

Not when those to whom he would pass his bad money are not FORCED to accept that bad money.

Would you buy rotten lettuce in preference to crisp fresh lettuce merely because the produce stand puts it on display?

Tue, 11/12/2013 - 03:57 | Link to Comment NickVegas
NickVegas's picture

Metal coins were invented to pay standing armies, and the same coins were required to pay taxes.

The history of money is obfuscated. It is the vehicle of oppression. What "coins" mean in modern society, I'm not quite sure. My best guess is coins and fiat are used to pay standing armies, and the coins and fiat are required to pay taxes. Bad money, good money, does it really matter. The guy with the gun wants to trade in coins that you need to pay your taxes. It's not coercive, really it's free trade.

Tue, 11/12/2013 - 15:34 | Link to Comment Tall Tom
Tall Tom's picture

Akak...This is what you wrote, "Absent coercive legal tender laws, the good money WOULD drive out the bad money"

 

The key word is that which you capitalized "WOULD". But that IS NOT the case.

 

Laws describe REALITY. They do not descibe ideals. They describe REALITY. Ideally none of this predicament WOULD be occurring.

 

But IT IS occurring in REALITYVILLE. You can deny the REALITY...at your own peril.

 

I do not suggest that you do. I actually respect much of what you write. You are pretty "spot on" usually.

 

Gresham's Law is a LAW as it describes the REALITY. It is not what "could be", "would be" or "should be". It is a valid description of the Truth. Bad money chases out Good Money.

 

Anything else is just fantasy. We must deal with REALITY. Or...we must deal with the consequences of Reality is probably more accurate.

Mon, 11/11/2013 - 23:47 | Link to Comment Quus Ant
Quus Ant's picture

Save your nickels, kids.  They're next on the hit list.

Tue, 11/12/2013 - 02:07 | Link to Comment trader1
trader1's picture

kyle bass would know

Tue, 11/12/2013 - 01:30 | Link to Comment Crawdaddy
Crawdaddy's picture

Gresham's Law applies to culture too. We see it every day. I knew something was fucked up back in 1979 when I noticed all the morning TV shows were based out of NY.

Tue, 11/12/2013 - 00:42 | Link to Comment F22
F22's picture

+1 for nice mammaries

Tue, 11/12/2013 - 01:45 | Link to Comment sablya
sablya's picture

You said it backwards.  Good money doesn't drive out bad.  That's crazy talk.  People collect what is valuable and let the junk go free.

Mon, 11/11/2013 - 23:32 | Link to Comment disabledvet
disabledvet's picture

meh. the purpose was to keep the gold in da house in my view. SDR's were the paper promises that kept the gold sound asleep in the vaults of the Treasury Department. As it turned out you got a petro-dollar instead...something no one really saw coming...least of all the French who really stuck it to the United States in 1979 with the Shah and Mitterand. That turned out to be a bad case of timing as the Reagan Revolution came roaring in, the US economy boomed, energy prices had an epic collapse and the Soviet Union would be over and done with by 1991 thus swamping the world in a huge commodity glut after the Asian financial collapse and the destruction of the ruble. don't get me wrong i still think the dollar is pretty much "not worth a Continental" here still. but unlike America's first attempt at "printing its way to prosperity" we produce a whole lot more Continentals now courtesy of more than just an energy boom i might add. http://seekingalpha.com/symbol/ddd?source=search_general&s=ddd

Mon, 11/11/2013 - 23:34 | Link to Comment SheepDog-One
SheepDog-One's picture

It's all just imaginary bullshit, paper and otherwise. 

Mon, 11/11/2013 - 23:36 | Link to Comment Constitutional ...
Constitutional Republic's picture

It wasn't imaginery bullshit when troops died in the trenches in WWI and WWII, and gifted you the right to write.

Mind your tone if only on Veteran's Day. Thank you.

Mon, 11/11/2013 - 23:46 | Link to Comment SheepDog-One
SheepDog-One's picture

As Kissinger said, useful willing stupid animals to be used as cannon fodder pawns for foreign policy. Wake up to reality, and piss off with your thinking you can tell me how to bahave and what sort of 'tone' to have. 'Veterans Day' LMAO as if they do anything but laugh at you.

Mon, 11/11/2013 - 23:49 | Link to Comment Constitutional ...
Constitutional Republic's picture

You are immature, and a FEMA concentration camp awaits you.

Mon, 11/11/2013 - 23:51 | Link to Comment SheepDog-One
SheepDog-One's picture

Sorry for just stating the truth it apparently causes butt-hurt feelings.

Mon, 11/11/2013 - 23:52 | Link to Comment Constitutional ...
Constitutional Republic's picture

You are no different than a compliant NAZI before Hitler put you in a concentration camp built with your compliance.

Mon, 11/11/2013 - 23:55 | Link to Comment SheepDog-One
SheepDog-One's picture

Now I'm 'compliant', simply because I stated the truth about things? How does that work exactly? OH, and BTW I am a veteran too, and call bullshit on the rah-rah nonsense, fuck the military.

Mon, 11/11/2013 - 23:56 | Link to Comment Constitutional ...
Constitutional Republic's picture

FEMA camps for you are made with civilian compliance, and tax money from people like you who sit and do nothing except whine on web sites, pet.

Mon, 11/11/2013 - 23:58 | Link to Comment SheepDog-One
SheepDog-One's picture

You're quite obviously a mentally disturbed person, so I'm going to ignore you from now on.

Tue, 11/12/2013 - 00:02 | Link to Comment Constitutional ...
Constitutional Republic's picture

You may ignore reality. Reality will not ignore you. You should be grateful that others died for your right to write. They did not die in vain. Others do more than you, wimp.

Tue, 11/12/2013 - 00:22 | Link to Comment akak
akak's picture

The last US soldiers who "died for my right to write" were maybe those who fought in the War of 1812, when the USA was actually invaded by the British (who, it was later determined, had no pretensions of reasserting their control over the American colonies in any case) --- EVERY other war in which the USA has engaged since that time was for the purposes of expansion, imperialism and the perpetuation of rule of a criminal financial elite over us. 

EVERY US soldier since then has only been either a slave or brainwashed cannon fodder for a criminal and sociopathic elite.  I spit on all those who willingly sign up to be minions of empire, aggression and oppression.  You pro-military sheep can bleat all you want about "strong defense", but the fact is that 90+% of everything in which the US armed forces are engaged in is OFFENSE, not "defending the USA" at all.

 

PS: Oh, and FUCK all the flag-waving, rah rah "USA #1!" Veteran's Day bullshit.  I say we rename it "Sociopath's Day" instead, in honor of those who led all the cannon fodder to their pointless and needless deaths.

Tue, 11/12/2013 - 02:48 | Link to Comment Oldrepublic
Oldrepublic's picture

http://www.lewrockwell.com/2013/11/fred-reed/veterans-or-butchers/

nice Fred Reed piece on Veterans or Butchers

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