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"The Gold Cartel" And The Giant Credit Bubble

Tyler Durden's picture




 

Submitted by Pater Tenebrarum of Acting-Man blog,

Dimitri Speck is an expert on commodities markets who may actually be familiar to many of our readers as the creator of seasonal charts (which incidentally are the statistically most accurate seasonal charts available). Readers may also recall that we referred to Mr. Speck's work in the past, when speculators were accused in the media of causing hunger in the third world, as their activities were alleged to artificially inflate the prices of agricultural commodities. When we wrote about the topic,  the voices of reason were few and far between. Mr. Speck's unique and highly original contributions to the debate certainly took some of the wind out of the sails of the economically illiterate scaremongers in the media and politics.

 

The Gold Cartel

The English language edition of Mr. Speck's book “Geheime Goldpolitik”, has been published early this year under the title “The Gold Cartel”, in parallel with an updated second German edition. The book has received great praise from many quarters, and it is well-deserved (ironically, even from a central banker, in spite of the fact that central bankers come in for a lot of criticism in the book).

The first few pages of the book right away prove to the discerning reader that the author actually understands gold. Surprisingly, this can often not be taken for granted. A great many analysts continue to regard gold as akin to an industrial commodity, including many working for 'expert' organizations, whose main job it is to publish data and forecasts on the gold and silver markets.

Essentially one could say that the Gold Cartel consists of three major parts, namely statistical studies, a historical disquisition and a theoretical part that deals with the consequences the adoption of a full-fledged fiat money system has wrought.

Note: This is an abridged and edited version of the review that appeared in issue 92, January/February 2014 of the Hedge Fund Journal.

 

Statistical Studies

When Frank Veneroso published a study on gold lending in 1998, many people probably heard the term 'gold carry trade' for the first time. However, it became a staple of deliberations about the gold market in subsequent years. A superficially legitimate (if ultimately slightly dubious) business activity, namely the hedging of future gold output by mining companies, had apparently been turned into a major and potentially explosive financial engineering scheme. However, research was hampered by the fact that the carry trade involved gold held by central banks. It was shrouded in secrecy and its size could only be estimated. While Veneroso's work was path breaking, it was marred by its lack of precision, which partly resulted from the difficulty of obtaining good data.

Central bank accounting for gold was (and in most cases remains) rather peculiar: gold receivables and bullion still in their vaults are treated as a single line item in their balance sheets. This makes it nigh impossible for outsiders to ascertain how much of their gold is actually on loan. Central banks used inter alia the alleged need to protect the trade secrets of their business partners as an excuse to avoid publishing the data. This flimsy pretext naturally fanned speculation about the amounts involved as well as the planners' motives. It was no secret that central banks once upon a time intervened in the gold market quite openly. Given gold's nature as the 'political metal', it didn't seem a big stretch to suspect them of still doing so clandestinely.

Estimates of the size of the carry trade published by researchers varied enormously (the more establishment-friendly they were, the smaller their estimates would be). Enter Dimitri Speck, who has delivered what is to date probably the best such estimate ever produced by an independent gold market analyst, not least because he actually employed sound statistical analysis.  His estimate of the amount of gold lent out by Germany's Bundesbank over time, calculated from the meager tidbits of information that could be gleaned from the BuBa's balance sheet, confirmed the soundness of his methods. The BuBa recently relented in the face of public pressure and finally lifted the veil of secrecy from the data, so we know how close the estimate came (the BuBa is no longer lending out gold by the way).

'The Gold Cartel' presents the results of painstaking statistical analysis of the gold market from every conceivable angle. It never gets so technical as to bore the reader – the analysis reads rather like a detective story. It focuses specifically on whether anomalies that point to possible interventions are detectable in the gold market and whether the beginning of these anomalous activities can be dated. Gold's behavior during financial crises, as well as the  carry trade and the determination of its overall size are other focal points.  There is a refreshing difference in Mr. Speck's approach to the subject compared to that often encountered elsewhere, which we believe makes the book an enjoyable and highly informative read even for people who are skeptical  about the intervention thesis. There is very little speculation, instead the focus is strictly on known or knowable facts.  Speck lays out a logically consistent and coherent history of the gold market. Some of his conclusions naturally remain open to debate; history is a thymological discipline and as such always leaves room for interpretation. It should be mentioned that although central banks nowadays increasingly strive to provide greater transparency, Speck thoroughly disabuses the reader of the naïve notion that they 'would never intervene clandestinely in markets' by providing hard evidence of past transgressions (which include even the deliberate falsification of data in one instance).

 

fig15.1

Gold lent out by the German Bundesbank over time – click to enlarge.

 

fig16.4

Estimate of central bank gold entering the market worldwide - click to enlarge.

 

Historical Background

The book's statistical analysis is buttressed and supplemented by a gripping account of the history of the modern monetary system, beginning with the step-by-step disintegration of the Bretton Woods system in the late 1960s (which culminated in Nixon's gold default in 1971) and encompassing everything that has happened since then, including the creation and first major crisis of the euro. All these events are brought into context with what happened concurrently in the gold market. There is a detailed look at the FOMC meetings of the early 1990s, which show that although gold had been thoroughly 'demonetized' from an official standpoint, it still was very much on the minds of many FOMC members at the time, including then chairman Greenspan. The conversations at these meetings clearly show that there was major concern at the time both over gold's potential as a competitor of the US dollar as a store of value as well as its function as an indicator of inflation expectations.

As Speck explains with respect to the gold carry trade, once gold lending by central banks had grown well beyond the hedging needs of mining firms, the interests of private parties involved in the trade and those of central banks at first increasingly converged, only to diverge again at a later stage. He demonstrates convincingly that once the carry trade exceeded a certain size, the role played by private profit motives must have grown ever larger. In order to keep being able to play the game and avoid losses, bullion banks started putting pressure on central banks to motivate them to continue to sell and lend out ever increasing amounts of gold. For a time, an odd role reversal between bullion banks and central banks took hold with respect to their gold market-related interests.

Speck looks closely at what happened during this phase in the late 1990s.  A great many politicians, whose credentials as experts on gold or monetary policy were rather dubious, attempted to influence the climate and official attitudes toward gold. Unwilling central banks such as e.g. the Swiss National Bank were put under great political pressure to agree to gold sales. Many of the events surrounding official gold policy in the late 1990s are largely forgotten today, and Speck does us a great service by rescuing them from the memory hole.

Gordon Brown's famously ill-timed sale of the bulk of the UK gold reserves is of course discussed as well. To this day it remains a bit of a mystery why Brown deliberately chose to perform the sales in a manner that ensured that the UK would get the lowest possible price. Clearly though, there was more to it than just the fact that he was evidently one of the worst market timers of all time. The discussion of the Washington agreement, which effectively froze the carry trade and limited official sales, was especially interesting to us. Few people will remember all the details and announcements that were made just prior and after the agreement was struck, or may never have been aware of them at all. The information Speck provides in this context serves to greatly enhance one's understanding of these events.

In this context, Speck also provides a logical explanation as to why the carry trade never 'blew up' as so many forecasters had expected it to do – in spite of the considerable size it had attained at its peak and in spite of the fact that a bull market in gold began in 1999/2000.

 

fig9.1

Gold sales by central banks, net - click to enlarge.

 

The Giant Credit Bubble

The statistical and historical analysis of the gold market is followed by a theoretical part that deals in great detail and in a highly original manner with the problems the abandonment of gold as an anchor of the monetary system has ultimately brought about. The conceptual approach to the topic will be recognizable to readers familiar with the Austrian School of Economics, even though Speck employs at times a slightly different, somewhat idiosyncratic terminology. The most notable effect of demonetizing gold has been and continues to be the recurrence of numerous sizable booms and busts, although Speck rightly acknowledges that the emergence of credit expansions could not necessarily be completely averted in a gold-based system, although gold would   definitely 'serve as a brake', as he puts it.

A detailed description of how credit-financed bubbles begin and are then continuing to grow, driven by their inherent dynamics, is provided. The most important feature of such bubbles is that speculation for some time appears to 'pay for itself', as artificial accounting profits emerge. Wealth is seemingly created ex nihilo, and profits are booked even though no-one has actually produced anything tangible. This explains the enduring popularity of credit-driven bubbles, as it is simply human nature to embrace the 'something for nothing' mirage that is their major characteristic.

Since financial bubbles have real economic effects, and since their recurrence can seemingly not be averted, the  focus of the authorities soon shifted to the question of how the effects of their bursting could be mitigated -  a momentous decision, as Speck proceeds to show. The mitigation policy involves governments intervention in the form of a further expansion in debt and credit claims, the very policies that lead to the emergence of bubbles in the first place. Illogical as this is, it almost always seems to 'work' in the short term.  As credit claims accumulated in the past are never extinguished, but merely added to, a kind of 'mega-bubble' evolves over time. Private and public sector indebtedness both continue to expand, effectively egging each other on. An ever greater pile of credit claims towers over the real economy. Speck also points out that the vast expansion in public sector liabilities is deeply undemocratic, as it lulls the population into believing that it can get 'something for nothing'. As a result, there are only superficial deliberations over the wisdom of public spending. Ultimately, no-one is taking responsibility while the political class pursues its own narrow interests. Indeed, as official remarks preceding the abandonment of gold in 1971 show, it was precisely the ability to run deficits in quasi-perpetuity that attracted governments to the new monetary system. The ability to increase spending without having to increase taxation is deemed a highly desirable method of achieving short term political goals.

Establishment economists have done us a great disservice by ignoring and/or whitewashing the long term implications of the ever-growing level of financial claims. Ever since the 1987 crash, central bankers have begun to consistently err on the side of easier monetary policy and their focus has increasingly turned toward he chimera of price stability, while the growth in credit claims has been ignored. 'Mitigation of busts' has become the official mantra to this day.

Speck also discusses the question of the long term consequences of this spiral of ever-growing debt. As he points out, the classical denouement of a credit-financed bubble used to be a major deflation, egged on by debt defaults and the associated destruction of deposit liabilities held by banks falling into insolvency. There can however be no guarantee that this outcome will be repeated in modern times. Today, the authorities can and do intervene to avert deflationary reductions in outstanding financial claims. Their countermeasures could eventually result in the exact opposite outcome (i.e., a major inflation). However, other possibilities are just as thinkable (such as e.g. a prolonged period of stagnation as has happened in Japan).

 

fig34.4

Japan's debt to GDP, total and disaggregated: the world's biggest debtberg - click to enlarge.

 

fig34.5

Global debt to GDP - click to enlarge.

 

Summary and Conclusion

We highly recommend this book to anyone with an interest in the gold market. In fact, anyone with an interest in financial markets and/or the economy will undoubtedly benefit from reading it. It provides a solid statistical analysis of every aspect of the gold market, a thoroughly researched and well-presented account of the history of the modern monetary system and a highly original perspective of the growing bubble in debt and credit claims we have experienced since adopting today's system of credit-based money.

 

Dimitri Speck, The Gold Cartel (link to Amazon)

 

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Sat, 05/10/2014 - 13:10 | 4746215 linniepar
linniepar's picture

Gold, bitchez.

Sat, 05/10/2014 - 13:27 | 4746235 Lmo Mutton
Lmo Mutton's picture

+1 What he said.

Sat, 05/10/2014 - 13:31 | 4746248 Pinto Currency
Pinto Currency's picture

The gold fraud - both the secret cb leases and the paper market price perversion - is one of the greatest in history.

Paper gold is going to be a bar room joke someday.

Sat, 05/10/2014 - 13:44 | 4746273 SHEEPFUKKER
SHEEPFUKKER's picture

Paper gold or infinite bond issuance by broke nations? Both worth a chuckle. 

Sat, 05/10/2014 - 13:56 | 4746318 RafterManFMJ
RafterManFMJ's picture

I used to be able to read books, but the nature of the internet and of today's instant gratification zeitgeist has completely incapacitated my ability to pay HEY THAT DOG HAS A PUFFY TAIL! HERE PUFF, HERE!

Sat, 05/10/2014 - 14:26 | 4746395 outofideas
outofideas's picture

I don't really get ZH's bias here, it seems that somehow we are assuming that Putin in an angel?

Sat, 05/10/2014 - 14:51 | 4746457 intotheblack
intotheblack's picture

How does that follow? Putin is Putin. But the West is the West. We can criticize our own insanity without promoting Putin. Similarly, you can criticize French insanity with respect to Deim Ben Phu whout canonizing Ho Chi Min. (I would argue Ukraine is or could be the NeoCon Deim Ben Phu). You can criticize the Scipios without taking up Hannable's cause, yo. You can agree that U.S.-Turkey attempted a false-flag operation to bring the U.S. into war with Syria wiithout any great love for Bashar al-Assad.

Binary thinking much?

Sat, 05/10/2014 - 16:16 | 4746494 Pinto Currency
Pinto Currency's picture

 

SheepF - the paper gold fraud allowed infinite bond issuance without the market able to signal to people the huge inflation underway.

 

The 'great moderation' - hahaha. 

 

Quote:

 

What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.

Dr. Peter Warburton, 2001

http://www.gold-eagle.com/article/debasement-world-currency-it-inflation...

 

Sat, 05/10/2014 - 14:05 | 4746341 SafelyGraze
SafelyGraze's picture

to the extent that the numbers can be believed, the graphs depict the actual "quantitative easing" that occured as gold was sold into "the market", followed by the "mopping up" afterward that nank promised

the "sold" gold is M1 and the sold+leased is M2

the movement via rehypothecation/re-lending confirms Keynes's observation that the velocity of gold tracks gdp

we are all kinesiologists now

Sat, 05/10/2014 - 13:17 | 4746223 Carpenter1
Carpenter1's picture

We'll never beat them playing their game of paper. But we can "change their equation" by sucking up all the gold.

Sat, 05/10/2014 - 13:38 | 4746240 Commodore64
Commodore64's picture

Give the Cartel a golden shower.

 

Sat, 05/10/2014 - 13:52 | 4746304 SHEEPFUKKER
SHEEPFUKKER's picture

Or perhaps even a rusty trombone. 

Sat, 05/10/2014 - 14:39 | 4746411 Commodore64
Commodore64's picture

Or both :)

 

In random order..

 

Sat, 05/10/2014 - 20:30 | 4747031 new game
new game's picture

 gold is the most confussing fucked up commodity i have ever tried to makes sense of.(period)  it's value, quantity and where the fuck it is!!, ect ect!!! leased bi/tri/quad-fucking-loaned to the the three horse men. and therefore fuck gold...

Sat, 05/10/2014 - 13:46 | 4746274 lasvegaspersona
lasvegaspersona's picture

Sounds similar to the words of Another and FOA back in 1997 to 2001....have to read the book.

Sat, 05/10/2014 - 13:55 | 4746294 daveO
daveO's picture

Credit-financed bubbles used to turn into 'major deflation' when our ancestors had fairly free markets. No more! The only thing that will stop the FED and CONgress now is for the oil producers to refuse the 'petro' dollar. Saddam and Moamar tried, and died.

The FED will debase until the banksters own every last square inch of the western world. It's a hostile takeover of our economy. It may well be time to move east like Jim Rogers.  

Sat, 05/10/2014 - 14:25 | 4746393 hairball48
hairball48's picture

Past alchemists tried making gold with the crude methods and means they had at the time. And, and as throughout history, sometimes some of the people were duped. The greater fool?

Modern day alchemists, the bankster community and their political cronies, believe they can do the same thing with "paper gold".

Ultimately, I believe they will fail, and those of us holding the real deal, gold bullion, coins, bars, etc. will preserve our "real wealth".

The question for me is, "Will I live long enough to see that day of actual, real reconciliation?"

So says Hairball and Clyde the Raven

https://www.youtube.com/watch?v=Sx7D8p-AoEs

Sat, 05/10/2014 - 14:33 | 4746408 hairball48
hairball48's picture

"Clyde" and his mate, "Bonnie", live near me. Bonnie doesn't think much of Central Bankers either

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

Her "clockin" means "off with their heads".

:)

Sat, 05/10/2014 - 14:34 | 4746409 I Write Code
I Write Code's picture

er, say what?

Review doesn't say much, I won't try to judge the book on this basis.

namely the hedging of future gold output by mining companies

 um, I expect the hedging is more the *price* of future gold output, not tonnage.

Sat, 05/10/2014 - 15:04 | 4746484 hairball48
hairball48's picture

I think what was meant was that the gold futures market, in the past, was mostly for the miners to hedge. Now the futures market has been co-opted/corrupted into a place for banksters like JPM to speculate and manipulate the gold markets.

 

Sat, 05/10/2014 - 15:08 | 4746432 Radical Marijuana
Radical Marijuana's picture

"The most important feature of such bubbles is that speculation for some time appears to 'pay for itself', as artificial accounting profits emerge. Wealth is seemingly created ex nihilo, and profits are booked even though no-one has actually produced anything tangible. This explains the enduring popularity of credit-driven bubbles, as it is simply human nature to embrace the 'something for nothing' mirage that is their major characteristic."

While that sounds like a book that was as well-researched as it could be, the analysis results in classic understatements of what is really going on. "Money" created out of nothing, ex nihilo, as debts, (credits) is due to the triumph of the methods of organized crime dominating the political processes, which have two components, which may be "simply human nuture," but tend to be persistently psychologized, rather than discussed directly.

The two components of private banks being able to create the public "money" supply out of nothing are the power of the ruling classes to back up their deceits with destruction, as their psychology, along with the accommodation to those social facts by the vast majority of people, who develop their psychology to deliberately ignore those most important social facts.

Systems of legalized lies, backed by legalized violence, have small groups of people that make that happen, and big groups of people to whom that happens. Those are the underlying realities, which are "simply human nature," that enable bubbles to be blown, on the basis of those who have the power to make money out of nothing taking maximum advantage possible of their opportunities, while the vast majority of people remain deliberately ignorant of those dynamics, because they had adapted for generations to deliberately ignore the real meaning of private banks being able to make the public "money" supply out of nothing as debts.

"Financial bubbles have real economic effects, and ... their recurrence can seemingly not be averted," BECAUSE they are the result of the triumphs of the application of the methods of organized crime to control civilization, in ways which the vast majority of people do not understand, especially since they have been conditioned to not want to understand. Financial bubbles are based on runaway triumphant financial frauds, which exist because of the real history of how society is dominated and directed by the persistent application of the methods of organized crime, through which processes governments become the biggest form of organized crime, controlled by the best organized criminals, or the biggest gangsters, which currently are the banksters.

Overall, "the question of the long term consequences of this spiral of ever-growing debt" should not be considered outside of the two main things which it causes. The first is social polarization, and the second is strip-mining of the planet, both of which occur inside the context of a civilization controlled by a fundamentally fraudulent financial accounting system. The "spiral of ever-growing debt" drives debt slavery to generate numbers which are debt insanities. Meanwhile, it appears politically impossible for enough people to gain enough perspective on the deeper aspects of what is "simply human nature" manifesting in those ways, which are based upon how the biggest bullies are able to force almost everyone else to agree with bullshit, and therefore, almost everyone ends up behaving in ways which are mostly based on believing in bullshit.

One of the classic examples of that bullshit is to still believe that somehow there could be some kind of "real" or "sound" or "honest" money supply which was backed by commodities, such as gold, which can not be created out of nothing. That old-fashioned view continues to be too superficial. IN FACT, MONEY IS MEASUREMENT BACKED BY MURDER. Any money which is backed by some commodities is the measurement of commodities backed by murder. Therefore, gold backed money does not really solve the underlying problem, which is that civilization is controlled by the application of the principles and methods of organized crime, which are at the heart of what is "simply human nature."

The ACTUAL "Gold Cartel" is due to the history of War Kings, morphing into the Fraud Kings, which became surrounded by their courts of frauds, which control civilization. As long as the vast majority of people continue to mostly believe in the biggest bullies' bullshit social stories about "economics," then there are no possible better resolutions to the problems of frauds blowing bubbles that pop, with the globalized blowing of the bubble of the total human population on the basis of strip-mining the planet as the overall biggest of those bubbles.

Actually, the real problems are due to the ways that the methods of organized crime work, especially including the role of murder, because the death controls back up the debt controls. Any "solutions" which do not include that are merely more hypocritical bullshit. However, any solutions which do include that then involve all of the paradoxes of militarism into the monetary system. The deeper history of the Gold Cartel has been the history of a combined money/murder system, which developed a financial system based on the maximum possible frauds, due to being built on the history of civilization being developed by successful warfare based on the maximum possible deceits.

The "Giant Credit Bubble" has been due to the combinations of runaway robbery, strip-mining the planet, in ways that have high-graded natural resources to hell, which have temporarily sustained the exponential growth of total human activities, but have done so through attitudes of evil deliberate ignorance towards the fundamentally fraudulent ways that was organized, because the established systems of legalized lies, backed by legalized violence, only had to care about the their short-term expediencies, which were enabled by the combinations of the ruling classes promoting their lies, while those ruled over adapted and accepted to live within those lies. Thereby, the paradoxical ways that the prolonged history of the "money of kings" Gold Cartel played through are that there has been blown a Giant Credit Bubble, which now encompasses the entire planet.

What was "simply human nature" has been amplified by technologies which are trillions of times BIGGER than ever before in human history. Thereby, triumphant financial frauds controlling civilization have been able to become the foundation upon which almost everything else was built. The socially hidden ways that murder systems backed up the monetary systems, which are mostly taboo topics, have blown the BIGGEST BUBBLE! Every day that the runaway triumphs of the established systems of enforced frauds control civilization, there continues to accumulate even greater levels of debt insanities. Since the original debt slavery systems were due to the successful application of the methods of organized crime through the political processes, which meant that those debt slavery systems were always being backed up by wars based on deceits, the resulting runaway debt insanity numbers indicate that we are headed towards corrections which will become death insanities.

Since our civilization operates itself through the maximum possible frauds and deceits about what it is doing, because its ruling classes are able to promote that to those they rule over, regardless of whatever the relatively more objective radical truth may be, all of the "success" achieved within that system is based on being able to maintain frauds, or to maintain attitudes of evil deliberate ignorance towards what is really going on, behind the bullshit social stories about what is supposed to be going on, as presentations of fantasy cultures, whereby economics gets to operate as if it was isolated from ecology.

To attempt to reconnect economics with ecology is resisted by everyone who has benefited from being able to make "money" out of nothing, which is necessarily an enforced fraud, or a symbolic robbery, because one of the most basic laws of nature is that things can not be made out of nothing, nor sent to nothing. Our civilization is dominated by the best organized gangs of criminals, who have been able to create a kind of "magical mathematics," which is the banksters' bookkeeping. In reality, their "magical money" does not work, unless it is backed by murder, which it was. Therefore, to combine economics with ecology necessarily combines money with murder, which is something that the both the ruling classes, and those they rule over, do not like!

While it is worthwhile to review the "Historical Background" presented in articles about books like this, I almost universally find that those continue to be too superficial, and therefore, grossly understate the real situation. A deeper analysis leads to discovering what is "simply human nature" actually being control of civilization through the methods of organized crime, and that, in turn, leads to recognizing that the only genuinely better resolutions to those problems necessarily being better organized crime. The deeper realities about the "Gold Cartel" and blowing the "Giant Credit Bubble" are the ways that triumphant systems based on deceits and frauds have controlled civilization to behave in ways which maximized the short-term advantages for some, while simultaneously maximizing the longer term disadvantages for everyone.

The interesting questions in that situation are how and when will we reach the turning or tipping points between those shorter-term versus longer-term effects? However, and whenever, that happens, one can probably count on what is "simply human nature" continuing to do its best to deliberately ignore and misunderstand what is happening, since what is happening will be the result of the necessarily psychotic breakdowns of social systems which were built on the basis of Huge Lies, being backed by Lots of Violence, for a long time, which will "naturally" scramble to adapt the minimum possible in order to stay the same, by adopting modified new systems of lies, backed by violence. Meanwhile, whether what was "simply human nature" may evolve any higher consciousness about itself, commensurate with technologies becoming trillions of times more powerful, remains to be seen ...

Sat, 05/10/2014 - 16:38 | 4746726 X_mloclaM
X_mloclaM's picture

tldr

Thu, 05/29/2014 - 12:32 | 4805986 willyrave
willyrave's picture

The question about gold is investigated by many economists as the solution to overcome endless crises is being looked for. I have found one interesting fact that long time ago when the economy was not pumped inflationary money and banks didn’t try to impose wide range of financial products to consumers and people paid interest for storing money there were no any crises and the  society flourished.

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