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Guest Post: Golden Cognitive Dissonance

Tyler Durden's picture





 

 

Submitted by John Aziz of Azizonomics

Golden Cognitive Dissonance

Simon Jack of the BBC asks a question that many of us have already answered:

Gold v paper money: Which should we trust more?

Fortunately, this gives way to some relatively fair coverage:

Detlev Schlichter is a former banker and the author of Paper Money Collapse and he says the current system is fatally flawed.

 

“The problem is that what we use as money can be created and produced by the privileged money producers – which are the central bank and the banking system.They can produce as much of this money as they like. And so the supply of this form of money is entirely elastic, it is entirely flexible.”

 

Detlev Schlichter believes this will, ultimately, lead to people losing faith in our current system of elastic money and turning to something that does not stretch – like gold.

The key point to add to this of course is that gold is not just insurance against dilution, it is more importantly insurance against counter-party risk:

Counter-party risk is the external risk investments face. The counter-party risk to fiat currency is that the counter-party — in this case the government — will fail to deliver a system where that fiat money will be acceptable as payment for goods and services. The counter-party risk to a bond or a derivative or a swap is that the counter-party  will default on their obligations.

 

Gold — at least the physical form — has negligible counter-party risk. It’s been recognised as valuable for thousands of years.

 

Counter-party risk is a symptom of dependency. And the global financial system is a paradigm of interdependency: inter-connected leverage, soaring gross derivatives exposure, abstract securitisations.

 

When everyone in the system owes shedloads of money to everyone else the failure of one can often snowball into the failure of the many.

Unfortunately, the BBC then embarks on an inane and pointless discussion on the merits of gold as an enforced monetary standard, a completely different topic to whether or not individuals should trust paper assets or hard money.

DeAnne Julius of Chatham House is quoted as saying:

If the amount of money in the system was limited by pegging it to gold it would limit economic growth, which is the last thing we need right now.

I think to put your faith in gold as the basis of a country’s monetary system would be extremely foolish.

This is not actually true — every single historical example of the gold standard has allowed for the expansion and contraction of the money supply as per the market’s desire for money — it can be mined, it can be recirculated, it can be credited, it can be imported, it can be devalued, or it can be supplemented with silver and other substances. The “problems” with gold only really began in the 1930s when central banks started imposing policies of forced contraction over extended periods — ignoring true market preferences.

The gold exchange standard period, which followed WW2, was a period of unprecedented and unparalleled expansion, productivity growth, technological innovation, and financial stability.

The Bank of England’s recent report on the gold standard periods concluded:

Overall the gold standard appeared to perform reasonably well against its financial stability and allocative efficiency objectives.

The BBC concludes by quoting former Chancellor of the Exchequer Lord Lawson:

You can’t force a government to stay on gold, so therefore gold has no credibility.

Do you see the cognitive dissonance here? If we are to believe Lord Lawson, gold has no credibility, because governments have previously proven themselves untrue to their word. Surely the thing that has no credibility is not gold, but government promises? And that is the answer to the BBC’s initial question.

 


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Tue, 07/03/2012 - 15:05 | Link to Comment narnia
narnia's picture

A gold backed state run currency monopoly, with central planners in charge of the peg, won't work either.  It's an illusion to perpetuate top down control.

Tue, 07/03/2012 - 15:10 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Nothings "works" in the absence of real consequences for bad behavior.  Hence I am more than convinced that only a revolution works now. The event horizan was passed some time ago, probably before most that are alive today were born.

Tue, 07/03/2012 - 15:13 | Link to Comment strannick
strannick's picture

You cant control a government to ensure it keeps its currency linked to gold. At that point that government has abandoned fiscal prudence and responsibility. At that point you abandon that currency. Simple.

Tue, 07/03/2012 - 15:27 | Link to Comment BigJim
BigJim's picture

 The gold exchange standard period, which followed WW2...

John, strictly speaking, "the gold exchange standard" was started after the conference of Genoa in 1922 and was a fucking disaster

  http://en.wikipedia.org/wiki/Genoa_Conference_%281922%29

(though that was the fault of the central banks involved, not because there's anything wrong with using gold as a money)

What you're talking about, Bretton Woods, is a form of gold exchange standard, but is usually just referred to as 'Bretton Woods'.

Your central thesis still holds, I'm just just being persnickity :-)

Tue, 07/03/2012 - 15:35 | Link to Comment Kitler
Kitler's picture

Gold: "A barbarous relic for barbaric times."

Get yours while suppplies last!

Tue, 07/03/2012 - 15:35 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

July 13th Silver Bomb!

We will take down the cartel this day!

July 13th!

Buy silver!

Tue, 07/03/2012 - 15:37 | Link to Comment SWRichmond
SWRichmond's picture

Tyler,

 

Damn you...you guys gotta know that guys like me get wood when we see a picture like that one.

Tue, 07/03/2012 - 15:50 | Link to Comment BigJim
BigJim's picture

"Wood"?

Didn't you know tally sticks are a barbarous relic too?

Tue, 07/03/2012 - 15:57 | Link to Comment BigJim
BigJim's picture

On the subject of Dr. DeAnn Julius' (now there's a ghetto name if ever I heard one) idiotic pronouncements, when I heard this one I almost choked on my own vomit:

"We currently have less than one per cent of our GDP locked up as gold reserves in the Bank of England, so the kind of multiplier you would need to create pound notes which were very strictly tied to gold would be something of the order of four, five hundred times," she explains.

"Every time the price of gold moved, you would find the value of that money in your pocket leaping up and down - an extremely volatile and unstable way to run an economy."

I mean, where do you begin? And the BBC 'Analysis' (*snort*) team did absolutely no analysis of this mind-rotting idiocy. God help the sheep who turn to them for some kind of clarity on these matters

 

Tue, 07/03/2012 - 16:22 | Link to Comment knukles
knukles's picture

from Wikipedia  (Who else ya' gonna trust in this day and age, eh?)
Jesus....
A Whole New World Order resume Deluxe

 

DeAnne Shirley Julius, CBE (born April 14, 1949) is a former CIA analyst and a British-based American economist[1][2], notable as a founder member of the Monetary Policy Committee of the Bank of England.

She holds MA, PhD Degrees in Economics from the University of California and a B.Sc. Degree in Economics from Iowa State University.[3]

She began her active career as a project economist with the World Bank[3] in Washington and has handled extensive roles in the private sector. Since July 2003, she is the Chairman of Chatham House (formally known as The Royal Institute of International Affairs), in London. She is currently a non-executive director of BP and Roche Holding Ltd and a vice president of the Society of Business Economists. She also sits on the board of Jones Lang LaSalle.[4]

 

And even fucking better (also from Wikipedia, so written by them very own hands, most likely)

Chatham House, formally known as The Royal Institute of International Affairs, is a non-profit, non-governmental organization based in London whose mission is to analyse and promote the understanding of major international issues and current affairs. It is regarded as one of the world's leading organizations in this area. It takes its name from its premises, a grade I listed 18th century house in St. James's Square designed in part by Henry Flitcroft and thrice occupied by British Prime Ministers including William Pitt, 1st Earl of Chatham.

The current chairman of the Council of Chatham House is Dr DeAnne Julius and its Director is Dr Robin Niblett, who succeeded Professor Victor Bulmer-Thomas in January 2007. The three Research Directors are Bernice Lee, Dr Paola Subacchi and Alex Vines OBE. Keith Burnet is Director of Communications.

Chatham House was named the top non-US think tank by Foreign Policy magazine. Chatham House was also listed as one of the top "scholars" for being among a handful of stars of the think tank world who are regularly relied upon to set agendas and craft new initiatives.[1]

Tue, 07/03/2012 - 17:37 | Link to Comment BigJim
BigJim's picture

Nice work, Knukles.

And this is just the stuff they see fit to print!

Wed, 07/04/2012 - 10:24 | Link to Comment gold-is-not-dead
gold-is-not-dead's picture

true, they've excluded the part about a lump of Celery and kinky games...

Tue, 07/03/2012 - 23:03 | Link to Comment SAT 800
SAT 800's picture

OMG The mind boggles. Reading this shit makes me feel like screaming and banging my head on the wall. Another hive of parasitical scumbags lost in a delusional greed frenzy.

Tue, 07/03/2012 - 17:59 | Link to Comment Umh
Umh's picture

The ladies like it too just turn it into jewelry and use your wood.

Tue, 07/03/2012 - 23:22 | Link to Comment Reptil
Reptil's picture

good, I'm in. had this on my "to do" list anyway. ^__^

Tue, 07/03/2012 - 23:04 | Link to Comment SAT 800
SAT 800's picture

Very Good.

Tue, 07/03/2012 - 15:53 | Link to Comment Aziz
Aziz's picture

BigJim,

Bretton Woods was a kind of gold exchange standard. I wasn't referring to any of the other gold exchange standards, especially not the inter-war gold bullion standard, which is why I said "after WW2". But yes: I probably should have said Bretton Woods system for clarity. 

Tue, 07/03/2012 - 16:00 | Link to Comment BigJim
BigJim's picture

I think it might all be down to the comma:

 The gold exchange standard period, which followed WW2...

should read

 The gold exchange standard period which followed WW2...

reminds me of "eats, shoots and leaves"...

Tue, 07/03/2012 - 17:57 | Link to Comment Sophist Economicus
Sophist Economicus's picture

The gold exchange standard period, which followed WW2, was a period of unprecedented and unparalleled expansion, productivity growth, technological innovation, and financial stability.

 

BigJim, to follow your persnickity theme -- There really wasn't financial stability (e.g., there was inflation in the US in the 50s followed by a Treasury led financial repression regime that lasted till 1980, France had a real issue with inflation in the 50s and 60s, Engalnd was a basket case, etc., etc, etc.).   

Actually, the whole productivity growth thing was also spotty, and had hit-and-mss cycles everywhere - and had really nothing to do with the gold exchange standard.  

There was technical innovation, but the same could be true of other eras and it really had nothing to do with gold -- actually, massive governement spending on the space program, cold war, etc pushed CNC development in machining, the micrprocessor, etc.

Actually, come to think of it, the article is kind-of-flawed all around.   However, I do like gold, especially the 'freegold' concept AND I think I can dance to the article -- so I'll give it 2.5 stars....

Tue, 07/03/2012 - 18:41 | Link to Comment BigJim
BigJim's picture

Yes, I think what gets missed in a lot of financial analysis of that period is just how well the US did out of the war, relative to the other developed (and semi-developed) economies. Japan? Devastated. Britain? France? Germany? The same. Sure, they all experienced growth after the war, but so what? If you own your own house and you're earning $20k before a war, versus $23k after the war but your house is a pile of rubble, you can hardly view this as an increase in your net wealth. Thanks, GDP-obsessed economic commentators!

Considering all the wealth destruction in the first half of the 20th century (WWI, Fed-induced boom and bust of the Great Depression, FDR's ruinous command economy, WWII) it's a testament to free-market capitalism (remember that?) that we're as well off today as we are.

As for massive government spending being so beneficent, I suggest you research Bastiat's "that which is seen and that which is not seen". The capital required to fund those public projects got sucked out of private projects.

Tue, 07/03/2012 - 23:02 | Link to Comment SAT 800
SAT 800's picture

The capital required to fund the R&D was in the form of un-backed printing; which automatically subtracted real value from every citizens pocket book and savings effort; but yes, of course you're right. It was a completely un-natural period. As far as I can see metallic currency economies don't need to be validated by modern theoreticians deep history is pretty clear on the subject.

Tue, 07/03/2012 - 15:13 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

fofoa.blogspot.com

It's a very, very long read, but it will answer all your questions about gold.

Tue, 07/03/2012 - 15:22 | Link to Comment Aziz
Aziz's picture

I have a lot of respect for FOFOA. I appreciate the depth/detail/context. But he does take 10,000 words to say what others say in 500. 

Tue, 07/03/2012 - 15:34 | Link to Comment francis_sawyer
francis_sawyer's picture

+1

or even 25/27... as you just illustrated...

Tue, 07/03/2012 - 15:51 | Link to Comment akak
akak's picture

If you found his inflated content:message ratio to be ONLY 20:1, you must have caught him on a good day.

I find him virtually unreadable --- and I am a very patient person.

To be blunt, I have found that most people who routinely engage in such overlengthy, rambling diatribes and endless circumlocutions to be those who are trying to deceive and/or defraud.

Tue, 07/03/2012 - 15:52 | Link to Comment BigJim
BigJim's picture

One doesn't 'read' FOFOA!

One performs diligent, nay, forensic, exegesis on the works of the mighty sage.

Tue, 07/03/2012 - 15:54 | Link to Comment akak
akak's picture

Sounds more like a religion to me.

Tue, 07/03/2012 - 16:03 | Link to Comment BigJim
BigJim's picture

Pah, next you'll be telling me the I'Ching isn't science!

Sounds like blatant US Citizenism to me.

Tue, 07/03/2012 - 16:13 | Link to Comment akak
akak's picture

Indeed --- whose nature is eternal.

Make me laugh!

Tue, 07/03/2012 - 17:55 | Link to Comment Sophist Economicus
Sophist Economicus's picture

Shhhh!   Come on guys, the neighborhood is quiet right now, leave a sleeping China-bot be....

Tue, 07/03/2012 - 18:32 | Link to Comment Ignatius
Ignatius's picture

He recently gave a rare (only?) interview that sums up his views nicely.

http://fofoa.blogspot.com/2012/07/interview.html

A gold exchange standard is the beginning of the con.  Physical gold is best as savings, as a wealth reserve asset (stored purchasing power that retains its value). 

The current and ongoing investment gains are due to continued government profligacy.

Tue, 07/03/2012 - 17:30 | Link to Comment dark pools of soros
dark pools of soros's picture

All his reasonings of increasing gold price in dollars will also increase everything else real.  So yes, it is the best store of value. Anything else you'd like to say?

 They do love to wax religion of gold and keep things foggy enough for endless inspection.

Talk of Giants and Shrimps (those with wealth, those who are consumers) etc etc

It is endless Grandfather to Grandkid fable talk.

 

Tue, 07/03/2012 - 16:05 | Link to Comment tmosley
tmosley's picture

Actually, it does, so long as the currency is specie.  Such a system lasted for the entirety of the Roman Empire, West then East.

That does not mean that that was or is the BEST form of a gold standard.  It's just that it DOES work when done properly, and when there are no central bankers.  And when debasers are actually put to death.

Tue, 07/03/2012 - 16:33 | Link to Comment LawsofPhysics
LawsofPhysics's picture

"And when debasers are actually put to death." - Now those are some real consequences for bad behavior.

Tue, 07/03/2012 - 16:50 | Link to Comment tmosley
tmosley's picture

Indeed, we have that very penalty encoded into law today.  We just don't enforce it: http://worldcurrencywatch.com/2010/04/19/wp-content/blogs.dir/3/files/fx...

Tue, 07/03/2012 - 21:06 | Link to Comment philipat
philipat's picture

A Gold standard is the only way to prevent politicians from profligate spending supported by central banks printing. Which is why the politicians and central banks will never allow it to happen.

Thu, 07/05/2012 - 22:57 | Link to Comment RiverRoad
RiverRoad's picture

Gold is the "glue" holding the world together right now.  And one of these days we'll see the price tag the world puts on that.

Tue, 07/03/2012 - 15:07 | Link to Comment LawsofPhysics
LawsofPhysics's picture

With all that is happening, it is any real surprise that folks are asking for more than paper promises in exchange for their labor?  Something has got to give, and will.  Time to redefine wealth.  The sooner, the better.

Tue, 07/03/2012 - 16:06 | Link to Comment FEDbuster
FEDbuster's picture

I don't think my neighbor who raises chickens for eggs will be taking EBT cards anytime soon.  FRNs for now, bullion, bullets or buckets of rice later.

Tue, 07/03/2012 - 15:17 | Link to Comment GeorgeHayduke
GeorgeHayduke's picture

"Time to redefine wealth.  The sooner, the better."

I would say that game is already in play by those paying attention. The question is, how will the big boys try to take the new wealth from you/me/us as this system is redefining itself and then once the new system is accepted.

Those atop the heap will not accept a lower position too readily and they will do what they always do and tilt the board in their favor every chance they get and every step of the way.

Tue, 07/03/2012 - 15:06 | Link to Comment Gringo Viejo
Gringo Viejo's picture

"You can't force a government to stay on gold, therefore gold has no credibility." Yep. Doesn't get much more Orwellian than that.

HEE HAW!

Tue, 07/03/2012 - 15:19 | Link to Comment Sean7k
Sean7k's picture

If you eliminate legal tender laws, the process takes care of itself. You don't have to force the government, the markets or the banks. People will value assets and commodities accordingly. If paper is misused, the value and willingness to accept it will plummet. 

We don't have to do anything. You do not need a gold standard, silver standard or any other standard. 

This is not to say that people would not seek to have contracts paid in gold and silver or other commodity. 

Paper is very convenient, as long as you don't print too much of it. Smart cards are very convenient, except for the 2.5% tax to banks, if you don't allow unlimited leverage.

Why don't we let people decide what is money? Why depend on bankers?

Tue, 07/03/2012 - 15:54 | Link to Comment terryfuckwit
terryfuckwit's picture

I agree... when the ponzi of paper promises collapses gold/silvers use as store of value will once again be propelled to it's historic greatness and our use of it in the future will be the monetary guarantee paper will never come close to providing. Remember necessity is the mother of invention when paper has lost all trust nature steps in with the shiny metals .......

Tue, 07/03/2012 - 16:36 | Link to Comment traderjoe
traderjoe's picture

Here, here. We do not need a gold "standard" - which to me implies state 'tyranny' over the use of gold as currency/money. Eliminate all legal tender laws, and allow the people to choose their own money. 

I'm also in favor of a state-issued scrip, like United States Notes, that is issued directly from the Treasury, without debt or interest. It would be useful for certain transactions - as long as I get to choose when to use it and hold it. 

Tue, 07/03/2012 - 18:34 | Link to Comment CPL
CPL's picture

That would reinvite a derivatives market though, which is paper with no "value" but a defined one, main reason this big assed mess exists.  It would also allow for a lucrative counterfeiting trade, if governments are capable of doing one thing properly is protecting it's money making and theft.

Physical and hard assets are costly to fabricate.  It is why gold and silver have been used.  Chemical reactions, taste, weight, density.  Tough to beat elements that 98% of all civilizations agree is worth something regardless of distance, time and segmentation.  Paper is paper.  But gold will always be gold.  Silver will always be silver.  From the beginning of the universe all the way to the end of it.  Created in fraction of a second during the creation of the entire universe.

 

Congratulations if holding a piece of universal ancestry.  What you are holding required the power behind the creation of everything.  All there is out there is all there ever will be.  Periodic Elements are pretty cool huh?

Tue, 07/03/2012 - 22:56 | Link to Comment SAT 800
SAT 800's picture

Your physics is wrong. Gold and Silver were created in the death throes of Super Novae; and not in the first second of the Big Bang; which should not be referred to as "the creation".

Tue, 07/03/2012 - 23:12 | Link to Comment akak
akak's picture

Yes, the only element that was essentially solely created in the Big Bang was hydrogen, with the major amount of helium and some fraction of lithium.  All the elements from beryllium on up were of course only created in supernova explosions.

Wed, 07/04/2012 - 02:18 | Link to Comment Likstane
Likstane's picture

"created in the big bang".....sounds like you admit a creator. 

Wed, 07/04/2012 - 02:23 | Link to Comment Libertarian777
Libertarian777's picture

uhnnn, not really

supermassive stars can burn all the way down to iron (Fe). Iron is the however the first element at which nuclear fusion results in a negative energy deficit. This results in an ever large core of iron building in the heart of a supermassive star leading to its eventual collapse and supernova (once the core passes the Chandreska limit).

Although one could argue Type Ia supernova don't create an iron core organically.

Wed, 07/04/2012 - 12:00 | Link to Comment akak
akak's picture

You are correct, of course --- my comment had been replied to (and blocked from further editing) when I realized that what I meant to say, and did not, was
"... all the elements from beryllium on up were created by stellar processes, with all those elements heavier than iron created strictly by supernova explosions"

Tue, 07/03/2012 - 22:53 | Link to Comment SAT 800
SAT 800's picture

Correct. The most radical proposal of all; Freedom. And, it works. But it's basically unthinkable in todays world. It's very shocking to people to even consider.

Tue, 07/03/2012 - 15:12 | Link to Comment Seasmoke
Seasmoke's picture

i never leave my house and yet because i read ZH everyday, i have the need to take 3 showers a day

Tue, 07/03/2012 - 15:14 | Link to Comment frippy
frippy's picture

Go shave your palms.

Tue, 07/03/2012 - 18:03 | Link to Comment Umh
Umh's picture

Certainly he can wear it off.

Tue, 07/03/2012 - 19:13 | Link to Comment FeralSerf
FeralSerf's picture

Cold ones?

Tue, 07/03/2012 - 15:12 | Link to Comment TheCanadianAustrian
TheCanadianAustrian's picture

"You can’t force a government to stay on gold, so therefore gold has no credibility."

 

You can't force a person to exercise and eat healthy, so therefore proper diet and exercise has no credibility.

Tue, 07/03/2012 - 16:07 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

You can lead a horse to water but you can't make him drink therefore water has no credibility.

Tue, 07/03/2012 - 22:50 | Link to Comment SAT 800
SAT 800's picture

What happens to a human mind when it has a belief system; no nonsense is too absurd if it appears to support the "consensus reality". It is a shocking quotation; do people listen to what they're saying?

Tue, 07/03/2012 - 15:12 | Link to Comment StormShadow
StormShadow's picture

Would a tungsten standard work better? ;)

Tue, 07/03/2012 - 15:16 | Link to Comment achmachat
achmachat's picture

that would be "hard" money

Tue, 07/03/2012 - 15:13 | Link to Comment t_kAyk
t_kAyk's picture

No dissonance with my cognition, I love GOOOOOOOOLLLLLLLLD!! 

And plenty of silver.   

Tue, 07/03/2012 - 15:17 | Link to Comment pain_and_soros
pain_and_soros's picture

It is articles like this that you will rarely if ever hear from the mainstream media that makes ZeroHedge worthy of our support.

I don't see Janet Tavakoli's article of today posted on ZeroHedge - perhaps they are too modest to post, but it deserves your attention & support.

Donate today to keep this all too rare courageous & indispensable reporting going.

http://www.tavakolistructuredfinance.com/Responsible.pdf

Tue, 07/03/2012 - 22:47 | Link to Comment SAT 800
SAT 800's picture

Excellent reference; thank you.

Tue, 07/03/2012 - 15:17 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"Do you see the cognitive dissonance here? If we are to believe........."

I see Cognitive Dissonance EVERYWHERE. Don't you?

Tue, 07/03/2012 - 15:19 | Link to Comment Aziz
Aziz's picture

Why hello.

Tue, 07/03/2012 - 15:53 | Link to Comment ZerOhead
ZerOhead's picture

It's gone completely systemic. It's ubiquitous.

I was discussing potential outcomes with a retired CEO of a mid-sized pharmaceutical firm 2 weeks ago. The risk to the continued functioning of the global supply chain is unfathomable. I can only hope that TPTB have put some thought into these matters.

At this point I am merely hoping for something less than TEOTWAWKI.

Tue, 07/03/2012 - 15:22 | Link to Comment EmileLargo
EmileLargo's picture

Fuck the BBC

Tue, 07/03/2012 - 15:31 | Link to Comment Manthong
Manthong's picture

John, the time for the philosophical arguments will soon be over.

Once gold is made Tier 1 collateral it’s a whole new (actually old) ball game.

It has to happen. The world is desperate for collateral to have confidence in.

This is a good perspective:

 http://www.resourceinvestor.com/2012/05/30/can-sprout-less-gold-be-tier-1-capital

Tue, 07/03/2012 - 16:40 | Link to Comment onebir
onebir's picture

I think everyone's getting mixed up between capital, collateral & risk-weighting...

isn't it that the BIS is considering making gold a Tier 1 ASSET (eg http://stratrisks.com/geostrat/6732). That means it has a ZERO RISK weight which is better than the current 50% risk weight, because the higher a banks risk-weighted assets, the more capital they need, and capital is expensive. So under the new proposal, more gold would never increase a bank's total risk weighted assets, so banks would never have to raise capital if they wanted to buy more gold. (Just like they never have to raise capital to hold cash - on the asset side of their balance sheet - at present.)

This said, I'm sceptical this will be approved. It's basically saying 'gold = money', and in a secular gold bull market would make it a very attractive for banks to hold it, making it harder for central banks to maintain the credibility of paper currencies (& as they see it, their policy leverage over 'their economies'...)

For these reasons, I was utterly gobsmacked this proposal even saw the light of day. & I expect it'll get buried (& I imagine it's authors careers will suffer too...)

Anyway I couldn't find a reference to this on the Basel Committee website:http://www.bis.org/bcbs/index.htm

Maybe I missed it - maybe it's been misreported?

Tue, 07/03/2012 - 20:11 | Link to Comment Manthong
Manthong's picture

I wonder if there is even a single horned, cloven hooved banker out there that does not understand the value of increasing his barbarous relic, tail risk protection.

..and I am with you on the reluctance of the paper and ink crowd to give any credence to gold, but at some point the lack of confidence in a decrepit system is going to force a move to an uncompromised asset.

Tue, 07/03/2012 - 22:40 | Link to Comment SAT 800
SAT 800's picture

I was amazed to see this anouncement also. It's very interesting that you don't find it on the bis. website. It may well be "internet wisdom"; my term for the loads of rubbish circulating daily on the World Wide Waste of time.

Wed, 07/04/2012 - 02:04 | Link to Comment onebir
onebir's picture

The BIS isn't muched blessed with clarity or brevity - I could easily have missed it. I did search the PDFs they released around the time this broke for gold and Tier 1, and didn't find anything suggesting they were considering zero risk-weighting gold.

I'd love to see the source document proving this. There seems to be as much of an agenda amongst the vocal gold advocates as there is elsewhere...

Tue, 07/03/2012 - 15:32 | Link to Comment This is the end
This is the end's picture

With Obamacare now in force I think the time is right where a governor could stand up and say no we are going to do this in our state. It could lead to a standoff with the federal government. As people saw the ruthlessness of the federal government towards anyone who steps out of line it could lead to rallying many behind that governor's cause. The civil war started not too differently, that is over a fundamental disagreement over the rights of states and the federal government's power. We need to have this fight again today to divide the country between the European socialists and those desiring limited government.

Tue, 07/03/2012 - 15:39 | Link to Comment sdmjake
sdmjake's picture

 "THIS IS THE END":  ain't no GovERNOR I know of thaT HAS THOSE KINDA STONES....

Tue, 07/03/2012 - 16:32 | Link to Comment Dr. Eldon Tyrell
Wed, 07/04/2012 - 10:15 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

sdmjake said:

"THIS IS THE END"

Looking at your avatar, I'd have to agree.

Tue, 07/03/2012 - 15:56 | Link to Comment Diogenes
Diogenes's picture

The world has been on a de facto gold standard for thousands of years. No matter what tricks they pull, gold has always had value.

England was on a gold standard with a stable value from 1815 to 1914, This was the period of the British Empire's greatest power, wealth and prestige. I have suspected for a long time that this was deliberate. By making the British gold sovereign the world's most dependable currency, they made it the world's most desirable currency, and foreign trade that much easier for British firms and that much harder for everyone else.

Something like the US dollar since 1945.

The funny thing is, the gold isn't necessary. All it would take would be for one government to have a stable currency that can be freely traded, that does not inflate, depreciate or lose its value, and that currency too would be a world favorite.

In the inflationary seventies American investors, and others, put their money into Swiss francs, German marks and even Dutch guilders because these currencies held their value. I don't think any of these was gold backed while the US dollar supposedly was.

On the other hand, a so called gold backed currency is subject to all kinds of under the table games, and always has been.

So I would say what we need is a stable currency which may or may not be gold backed.

And that means we need an honest government that can resist the temptation to print free money and play other tricks with our wealth.

Tue, 07/03/2012 - 16:07 | Link to Comment terryfuckwit
terryfuckwit's picture

Sorry... but exactly  how many times does humanity have to try that before you get the message... FAF.... Fiat Always Fails. Papers redeemability in gold deprives the balloons of the air they need to inflate the ponzi's that have destroyed our current system. Men are incapable of the honesty you describe and 6000 years of history are testament to this fact.

Tue, 07/03/2012 - 20:35 | Link to Comment Doña K
Doña K's picture

I agree with you and I don't necessarily disagree with Diogenes about using stable currency, as long as we are allowed to buy and hold Gold and silver in parallel for wealth preservation and savings.

Wed, 07/04/2012 - 07:26 | Link to Comment AnAnonymous
AnAnonymous's picture

Fiat Always Fails.

______________________

Currencies always fail.

Wed, 07/04/2012 - 12:40 | Link to Comment akak
akak's picture

Much like the arguments, and illogic, of Chinese Citizenism.

Tue, 07/03/2012 - 16:14 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

 

 

And that means we need an honest government that can resist the temptation to print free money and play other tricks with our wealth.

 

When you find the fox without a taste for chicken let us know.

Tue, 07/03/2012 - 16:18 | Link to Comment akak
akak's picture

Are you implying then that the only perfect government would be one composed solely of vegetarian supermodels?

I could live with that!

Tue, 07/03/2012 - 18:52 | Link to Comment Umh
Umh's picture

They like chicken; they just throw it up when they go fix their make-up.

Tue, 07/03/2012 - 22:25 | Link to Comment SAT 800
SAT 800's picture

! Thank you so much for clarifying that.

Tue, 07/03/2012 - 17:36 | Link to Comment dark pools of soros
dark pools of soros's picture

"while the US dollar supposedly was"

huh?  gold was only redeemable by foreign countries till '71 and THEN the inflation took off

 

 

Tue, 07/03/2012 - 23:15 | Link to Comment WmMcK
WmMcK's picture

I don't think any of these was gold backed ...

The CHF was backed (40%) by gold until 2000.

Wed, 07/04/2012 - 05:35 | Link to Comment BigJim
BigJim's picture

 All it would take would be for one government to have a stable currency that can be freely traded, that does not inflate, depreciate or lose its value, and that currency too would be a world favorite.

Why would 'the world' choose to put its faith in a currency whose stability was determined by a small cabal of men, in power (via the election process or otherwise) in another landmass, and who have every incentive to lie about the amount of it that has been issued? Particularly if they were elected, which requires them to promise endless free lunches to their ever-venal electorate?

With gold, silver, platinum, 'the world' knows that producing more money takes disproportionately more effort to produce - which means, in a free market, there is no great advantage in doing so (because other producers are producing the commodity at the most efficient rate vis-a-vis how much can be produced, and will therefore be able to undercut the price)? There are exceptions, of course... the 'silver mountain' discovered by the Spanish conquistadors found its way back into the European money supply, producing very high inflation in Spain which damaged the Spanish Empire's standing as the issuer of the reserve currency. However, before you say, aha, that just goes to show silver is not good money - you need to bear in mind that Spain's inflation was as nothing compared to the hyperinflations that routinely occur with fiat, and can only be intelligibly expressed with the help of scientific notation. Furthermore, unless you think the world's geologists have missed finding similar mountains of silver/gold/platinum today, it is of historical curiosity only.

 On the other hand, a so called gold backed currency is subject to all kinds of under the table games, and always has been.

This tells me you are a troll. Gold backed currency is 'subject to all kinds of under the table games', and therefore fiat is somehow not? Clown, fiat is infinitely more manipulable than gold - why do you think TPTB love it so?

Tue, 07/03/2012 - 16:01 | Link to Comment Diogenes
Diogenes's picture

Actually the gold standard collapsed in the wake of WW1. Every country in Europe was devastated and financially ruined. England tried to go back to a gold standard and stable currency and suffered years of depression as a result. France, Germany and Italy  threw away the gold standard in favor of inflation and as a result recovered from the war much faster.

Tue, 07/03/2012 - 16:05 | Link to Comment magpie
magpie's picture

uh while the bullion fled to the USA and it boomed. Strangely also with a gold standard...

Tue, 07/03/2012 - 17:44 | Link to Comment BigJim
BigJim's picture

 ...England tried to go back to a gold standard and stable currency and suffered years of depression as a result...

They weren't on the gold standard, they were on the gold exchange standard.

Though as the original Diogenes was banished from Sinope for "defacement of the currency", perhaps your conflation is deliberate.

Tue, 07/03/2012 - 20:46 | Link to Comment Doña K
Doña K's picture

What if... Bernanke wakes up tomorrow morning and buys all the availabe physical gold and keeps buying all production and also buy 51% of all the gold mines in the world; thus rendering very little gold available for sale.

Okay! Gold would go to 10k/oz you say. So what? All the gold in the world is worth a few trillions maybe? he can print those in a millisecond. Then what do we have? copper? nickel? booze?

Has anyone made such theoretical analysis?

Wed, 07/04/2012 - 05:42 | Link to Comment BigJim
BigJim's picture

It's a good question. People like Jim Rickards say the US could go back to a gold standard by announcing they'll buy gold at (say) $5000 an ounce, and sell it @ $5010, and this would instantly drive up the price of gold in dollars, but only because people would start selling vast quantities of gold to the US gov, and to pay for this the US would have to print the money, which is obviously in itself highly inflationary, because this money would instantly wind up in the economy at large, as opposed to just expanding the monetary base or re-capitalising insolvent banks.

However, this would be one way to get spending going again... to the detriment of everyone who hasn't got any gold to sell.

Tue, 07/03/2012 - 19:16 | Link to Comment r00t61
r00t61's picture

They were financially ruined precisely because they overspent on war, breaking windows everywhere as a result. 

England did try to go back onto a gold standard, but it committed a fatal error in misvaluing gold, and as a result, Montagu Norman, head of the Bank of England, needed his good banking buddy, Benjamin Strong, head of the NY Fed, to help him inflate England's war debt away. 

The free-flowing liquidity that Strong unleashed led to your so-called "recovery" - an epic bubble known as the Roaring '20s.  The pop that followed was the Great Depression, which created conditions that allowed for National Socialism and Italian Fascism to take hold in Europe, and a tyrannical executive in FDR's White House.  The final result from this "recovery" was another war.

This is little more than a story of a powerful civilization overextending itself through constant warmongering.  It happened before - Rome is the archetypal example; the USSR is another - and it'll happen again - the US currently appears set for that path. 

Fiat enables modern civilizations to wage more war, for a far longer time, than if they were constrained by honest money.  Fiat money is one of the causes of the modern fascist MIC nation-state.  Don't try to pretend that fiat money and purposefully-engineered inflation is the "solution" to the problem of the debts that are incurred by warmongering nation-states.

Tue, 07/03/2012 - 19:26 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

r00t61 said:

Fiat enables modern civilizations to wage more war, for a far longer time, than if they were constrained by honest money.  Fiat money is one of the causes of the modern fascist MIC nation-state.  Don't try to pretend that fiat money and purposefully-engineered inflation is the "solution" to the problem of the debts that are incurred by warmongering nation-states.

Exactly.

The solution to the problem of the debts that are incurred by warmongering nation-states is the utter financial ruin of such nation-states and their lenders.

Tue, 07/03/2012 - 22:29 | Link to Comment SAT 800
SAT 800's picture

The amazing thing about Zero Hedge is that once and awhile there's a post from someone who actually read the history and does know what's going on. Very Good.

Tue, 07/03/2012 - 16:01 | Link to Comment adr
adr's picture

Gold works as money becuase it is pretty hard to print more gold. The problem is the majority of the gold is held by wealthy elites and governments. It doesn't do much good if 99% of the people still only hold less than 5% of the wealth.

People are buying gold as a hedge against the dollar going to zero, so at least they hold something of value. The problem becomes, what is your gold worth once the dollar goes to zero?

If you have 100oz, what kind of position are you in vs George Soros who has a few tons of gold in his name? I wager you are even in a worse position than before. Your gold might be outlawed for commerce and confiscated if you try to use it. Soros's gold won't be.

I guess the hope is that any reset will establish a gold based currency where you can trade a bit of your gold for gold backed paper. However, you will still be beholden to the 1% that hold far more than you ever will.

A better idea is a return to the value of labor, where trade of skills for wealth is prized over a lump of metal. Gold ensures that the least productive and the least skilled will still hold control over society.

Helping your neighborhood farmer plant his crops and helping with the harvest, in exchange for a portion of the grain should be worth more than the guy who shows up with a lump of gold. If you didn't provide any labor, you shouldn't get any of the spoils.

Money was created as a way for the unskilled, immoral, and lazy to reap the beneifts of a productive society.

Tue, 07/03/2012 - 16:19 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

 

Gold works as money becuase it is pretty hard to print more gold. The problem is the majority of the gold is held by wealthy elites and governments. It doesn't do much good if 99% of the people still only hold less than 5% of the wealth.

 

Do you have any documentation to support that assertion? Here's evidence to the contrary:

 

World gold holdings (2008) (Source: World Gold Council)[22] Holding Percentage Jewelry 52% Central banks 18% Investment (bars, coins) 16% Industrial 12% Unaccounted 2%

 

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

Tue, 07/03/2012 - 16:30 | Link to Comment Sean7k
Sean7k's picture

Unfortunately, we don't how much gold there is because of rehypothecation and endless claims to the same gold, by countries and investors. Still, as long as governments exist, the power to take and control gold is the 800 pound gorilla in the room.

Tue, 07/03/2012 - 18:16 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

You're talking about a possible future. That doesn't mean that banks and governments hold the majority of gold today. And note that 52% is held in the form of jewelry. As over half the world's gold is purchased in Asia and Indians especially have an affinty for gold jewelry one can surmise that most of the 52% of gold reserves held as jewelry is held in Eastern hands. I doubt that gold in that form and held by that demographic is available for current rehypothocation schemes.

Tue, 07/03/2012 - 18:52 | Link to Comment Sean7k
Sean7k's picture

No, but it is available for confiscation.

Tue, 07/03/2012 - 19:24 | Link to Comment FeralSerf
FeralSerf's picture

"The gold standard has been the ruin of States which adopted it, for it has not been able to satisfy the demands for money, the more so as we have removed gold from circulation as far as possible." -- Protocols of Zion, No. 20

Where's the 100,000+ Tons of the "Yamashita gold"?

www.phoenixsourcedistributors.com/000510.pdf

Tue, 07/03/2012 - 16:23 | Link to Comment Sean7k
Sean7k's picture

What you are probably alluding to is called "social credit". It has been the predominant system for community exchange over history. People had "accounts" with each other and depending on when they received value (harvests, etc) or through labor exchange. Money was not used.

Money appears to come on the scene when either of two things happen: one, trade with strangers or the need to pay a military. This also allowed for the creation of taxes paid in a single form. 

See, "Debt, The First 5000 Years".

Tue, 07/03/2012 - 17:41 | Link to Comment dark pools of soros
dark pools of soros's picture

you kinda went off a ledge here.. gold is used to store value.  Say your farmer friend kicked ass one summer while everyone else screwed up..  you can't store all that food right?  Wouldn't it be nice to get some gold in exchange and then hold onto for the summer he screws up?

Unless we all go back to be small tribal indians you aren't making a lot of sense

 

 

 

Wed, 07/04/2012 - 05:47 | Link to Comment BigJim
BigJim's picture

 ...The problem is the majority of the gold is held by wealthy elites and governments. It doesn't do much good if 99% of the people still only hold less than 5% of the wealth.

Sorry, adr, when it comes to understanding money, you're lost in the wilderness.

All monetary assets are originally held by a relatively small number of people who trade it in exchange for value (if everyone had access to large supplies to whatever it is, it wouldn't be rare enough to be useful as money, would it? This is why acorns, for instance, are not widely traded as money, despite the 'advantage' of being available to all)

The money then distributes itself outward throughout the economy. Saying that because "only a few people have gold, then only a few people will benefit if we go back to the gold standard", is like saying that "because only a few people have sheep, only a few people will be able to eat lamb". Money is the same - it's a tradeable good and is exchanged for value. As gold-bashers constantly point out, you can't eat gold - so, if Soros wants to eat, he needs to trade his gold with the sheep farmer to buy lamb.

In the old days, when the entire world was on the gold standard, do you think anyone who had any money (ie, practically everyone) must have also had a gold mine?

You think only a few people have control of gold now? LOL - how does that compare with how many people have control over the issuance of FRNs and other fiat currencies?

Wed, 07/04/2012 - 07:33 | Link to Comment AnAnonymous
AnAnonymous's picture

Money is the same - it's a tradeable good and is exchanged for value. As gold-bashers constantly point out, you can't eat gold - so, if Soros wants to eat, he needs to trade his gold with the sheep farmer to buy lamb.

___________________________________

And if the farmer wants access to gold, he has to buy gold with lambs.

What happened to the meme of "whoever controls the money supply" etc?

Anyone wishing for transfer and concentration has better to find ways to get the wealth circulated so that everytime the wealth passes through one's hands, one can retain a share.

And the money supply thingie still exists.

Tue, 07/03/2012 - 23:03 | Link to Comment WmMcK
WmMcK's picture

Helping your neighborhood farmer plant his crops and helping with the harvest, in exchange for a portion of the grain should be worth more than the guy who shows up with a lump of gold. If you didn't provide any labor, you shouldn't get any of the spoils.

What if someone's "productive" for 40-50 years and saves (money a/o PM's) for when he no longer can "plant"? Should he then starve? Then just put him on a boat and send him out to sea? You're either short-sighted or just trolling.

Wed, 07/04/2012 - 07:36 | Link to Comment AnAnonymous
AnAnonymous's picture

If you didnt provide any labour... What US citizens are quick to label as globalization (the four past decades) shows something: in US citizen economics, labour is valued differently depending on the location it is performed.

The guy who shows up with gold or any form of currency allows to buy that labour anywhere.

The neighbour's offer? Not so much.

Tue, 07/03/2012 - 23:28 | Link to Comment Reptil
Reptil's picture

SILVER AND GOLD COMBINATION !!!!!!

silver slippers on the gold road, remember?

 

Wed, 07/04/2012 - 07:45 | Link to Comment LULZBank
LULZBank's picture

It doesn't do much good if 99% of the people still only hold less than 5% of the wealth.

Exactly. Gold will only function as money if its in free circulation. If most of it is hoarded by few, minority elites, the majority will look for other means of exchange. Even an IUO note, represented by a piece of leather, or a debt agreement, within a small community.

Hard money, only becomes necessary when you trade with strangers or where an army needs to be maintained and serviced, as also pointed out by Sean7k.

Debt - The first 5000 Years is definitely a good read!

Tue, 07/03/2012 - 16:19 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

Dupe.

Tue, 07/03/2012 - 16:38 | Link to Comment twocents
twocents's picture

Oh well, if the BBC says so it's fine!

Blatently Biased Crap

Blatently Broadcasting Communism

Hey BBC, let's see how far you get once we refuse to pay a tax to watch your bullshit.

Tue, 07/03/2012 - 16:47 | Link to Comment DutchR
DutchR's picture

Damn, somebody better have the number of Starfleet Command, just send S.O.S

 


Tue, 07/03/2012 - 16:48 | Link to Comment QE49er
QE49er's picture

Once the Fed is Audited then we can all see the light at the end of the tunnel......Once the head on collision happens we should know who's officially in the vegistative state.

Tue, 07/03/2012 - 17:06 | Link to Comment eddiebe
eddiebe's picture

Flawlessly reasoned article.

Tue, 07/03/2012 - 17:14 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

IN GO(L)D WE TRUST.

Tue, 07/03/2012 - 17:19 | Link to Comment SHRAGS
SHRAGS's picture

FOFOA has referenced "The Age Of Inflation" [scribd, available for download with a scribd account] by Jacques Rueff. The French edition was published in 1963 and the English edition in 1964. It is out of print and unavailable in the physical, except in a few libraries. Rueff covers the resumption of the Gold Standard in 1922 after World War I - in his mind the seeds of the future inflation were set by adopting the Gold Exchange Standard instead of the classic Gold Standard, economising on the use of gold in the system. A similar system allowing foreign exchange as reserves was adopted later in the Bretton Woods agreements.

He also covers the "Hitlerite" economics, and credits Hilter with being the only person to conquer inflation. The 1948 German currency reforms are studied, and it provides in Rueff's view laboratory conditions for an experiment on planned vs unplanned economy.

Its 189 pages long, and quite a quick read.

From the inside cover:

In these lectures, delivered between 1932 and
1961, Jacques Rueff, the distinguished French
economist who conceived the financial reform
adopted by the government of President de
Gaulle in 1958, attacks the concept of the planned
economy, which he holds responsible for the
inflation which is now ravaging so many coun-
tries of the world.
Comparing Germany and England after World
War I, Rueff demonstrates how the Germans, to
avoid depreciating the inflation-ridden mark by
attempting to control foreign trade, took the first
step towards the planned economy of the Third
Reich; whereas England devalued its currency,
accepted financial responsibility, and preserved
its social structure.
In this and other lectures, Rueff proves incon-
testably that a country can rid itself of inflation
only by permitting the purchasing power of its
population to adjust itself to the total value of
purchasable wealth, and by returning to a gold
standard.

 

 

/abr /

Tue, 07/03/2012 - 17:55 | Link to Comment falak pema
falak pema's picture

Sadly France abandoned Rueff's lead in around 1966-67 when the Keynesian dream of french bureaucrats was forged, in their dealings with JFK and consorts, who were dead scared of French government calling for the FED to exchange their USD surpluses for gold in Fort Knox. The US admin convinced Valery Giscard d'Estaing finance minister of de Gaulle to move to a basket of foreign currencies, SDR,  rather than calling for the barbaric relic. For some reason de Gaulle gave in to this advice. In all sincerity, his closest aide was prime minister Pompidou who had been a banker for the Rothschilds for many years before joining de Gaulle in 1958. 

Tue, 07/03/2012 - 19:48 | Link to Comment SqueekyFromm
SqueekyFromm's picture

 

 

The Golden Reign (A Poem)

by Squeeky Fromm, Girl Reporter

 

Some people think GOLD has magical power,

While others, less certain, are a little more sour.

Like me, sardonic, and metallically dour.

But I'll laugh and cavort like a bee in a flower

When the Gold Bugs find out at some very sad hour,

What they're calling "Reign," is a big "Golden Shower."

 

Squeeky Fromm, Girl Reporter

 

 

Tue, 07/03/2012 - 20:00 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

SqueekyFromm wrote:

The Golden Reign (A Poem)

[snip bad poetry worthy of Leonard Pinth-Garnell]

So what's with the anti-gold boner you've been popping recently?

Tue, 07/03/2012 - 20:59 | Link to Comment SqueekyFromm
SqueekyFromm's picture

It's those STUPID "buy gold" commercials that I must watch 20 of per day. Some little guy comes out who looks like he never had a date with a non-inflatable woman in his life and starts that "Don't you just love the feel of gold" and then the creeps start FONDLING the gold right there on TV and it just totally creeps me out.

Or, some washed-actor sits on a horse in front of a green screen and  does the same gold-fondling thingie. Sooo, if gold is sooo hot, why come are people trying sooo hard to sell it to you??? To get you to give them your money for their shiny yellow metal by playing on your greed??? The very same people who are telling you to pay $1,600 for one ounce of their stuff, are walking away with the cash and there you are stuck with something a little bigger than a quarter, for which you could have bought an acre of farm land, or food, or guns, or guitars and they are laughing all the way to the bank.

Sooo, its a Ponzi scheme, and it irritates me, and makes me feel sorry for all the people who get scammed. Plus, all you victims are going to have hope that you can screw some future victim out of their money to get yours back, which is going to take a psychological toil on you. So that is why. Gold is just a horrible circle jerk.

Squeeky Fromm, Girl Reporter

Tue, 07/03/2012 - 21:41 | Link to Comment GOLDTEETHSILVER...
GOLDTEETHSILVERFILLINGS's picture

Follow the yellow brick road... That goes for pip-squeaks too! 

Tue, 07/03/2012 - 22:24 | Link to Comment IronShield
IronShield's picture

Yeah, yeah...  all well and good.  But, here's the bigger question: "Fondling creeps you out?"

Wed, 07/04/2012 - 00:14 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

It's those STUPID "buy gold" commercials that I must watch 20 of per day.

Sounds like you need to lay off of the heavy TV viewing habit. It's eroded your perceptive skills.

Sooo, if gold is sooo hot, why come are people trying sooo hard to sell it to you???

Scammers are nothing new, and there are plenty of dupes in the world for them to rip off. Whether the product is gold, automobiles, real estate, art, antiques, jewelry, or any other potentially valuable item, there are always sellers looking to rip off the uninformed or gullible.

To get you to give them your money for their shiny yellow metal by playing on your greed???

You have it backwards. Presuming an informed buyer and a reputable seller, you get to give them your scraps of linen paper printed with fancy engravings for their shiny yellow metal money.

there you are stuck with something a little bigger than a quarter, for which you could have bought an acre of farm land, or food, or guns, or guitars

Without going into debt, most people can't purchase expensive items unless they save their money. Are you opposed to the saving of money or just to the saving of shiny yellow metal money? Are you opposed to money in general?

Sooo, its a Ponzi scheme,

How so?

and it irritates me, and makes me feel sorry for all the people who get scammed.

So you'd feel better if they were ripped off buying swampland passed off as farmland, fake art masterpieces, or antique Shaker furniture made by Chinese prison labor?

Plus, all you victims are going to have hope that you can screw some future victim out of their money to get yours back, which is going to take a psychological toil on you.

The barrage of loaded words and unsupported assertions is pushing you closer to the edge of kookery. Try to remember that the shiny yellow metal is money in exactly the same way that federal reserve notes are not.

So that is why. Gold is just a horrible circle jerk.

Please, cut down on the TV viewing. You'll be glad you did.

Wed, 07/04/2012 - 01:36 | Link to Comment SqueekyFromm
SqueekyFromm's picture

Well, if you did buy swampland, you could at least go shoot an alligator for supper. Or hide out there from the Obamacare Polizei. There is something useful you can do with swampland to survive. What do you get to do with gold??? Sit around and "don't you just luuuuvvveee the feel of gold" yourself in an autoerotic fashion???

Plus, with gold, you have to hope and pray there will be a bigger fool in the future that comes along to take it off your hands, because there just isn't much you can do with the stuff. Every ounce of gold that is bought is done with the purpose of selling it in the future. Which, you could do with a bag of rice, and if you can't find a buyer or swapper, you can eat it.

Read about the Greek Midas Myth.

 

Squeeky Fromm, Girl Reporter

Wed, 07/04/2012 - 05:54 | Link to Comment BigJim
BigJim's picture

 What do you get to do with gold???

What do you get to do with gold? Stash it and smile while you watch the relative value of practically every other (productive) asset plunge because the credit-based expansion that powered asset inflations has hit the Minsky Moment and we watch the monetary aggregates compress down to sustainable levels.

What do you get to do with gold? Stash it and smile while you watch you neighbour, who bought several hundred acres of swampland (in the hope he could sell it on later to a bigger fool) get hit by 'alligator', 'environmental', 'zoning', and 'swamp' taxes by an avaricious government elected by assholes like you, until we finally reach some kind of monetary equilibrium when gold's value reflects historical norms and you can buy the swampland back for the government (that seized it from its previous hapless owner for unpaid taxes) for pennies on the dollar.

Does that answer your question, troll?

Wed, 07/04/2012 - 07:43 | Link to Comment AnAnonymous
AnAnonymous's picture

What do you get to do with gold? Stash it and smile while you watch the relative value of practically every other (productive) asset plunge

____________________________

Best. Instant US citizen classic.

So a few comments above, gold is extolled and it is explained how US citizens Soros would have to unhoard gold to buy lamb while in this one, it is about gold hoarding.

Gold bugs are a miracle of fiat currency and their US citizenism leads them to bash the very reason of their success.
Without that fiat, gold bugs would be compelled to circulate their gold, they could not hoard it trading gold for paper money.

But hey, US citizenism at work once again.

Wed, 07/04/2012 - 11:32 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous droned on with more of the same:

But hey, US citizenism at work once again.

What should be at work once again is you. My laundry had better be ready when I come to pick it up. This isn't a holiday for you, so chop chop, Chang, back to work.

Wed, 07/04/2012 - 12:12 | Link to Comment BigJim
BigJim's picture

  So a few comments above, gold is extolled and it is explained how US citizens Soros would have to unhoard gold to buy lamb while in this one, it is about gold hoarding.

I see... so I'm not allowed to use the 'store of value' aspect of money, because that would be 'hoarding'? Even by your abyssal standards, AnAnonymous, this is pretty lame.

You know, I have a lot of respect for ancient Chinese culture. What happened to you guys? You appear to have lost virtually all the virtues you once possessed as a people.

I guess plastic rice and Mao will do that.

Wed, 07/04/2012 - 11:25 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

SqueekyFromm, venturing ever farther from rational discourse, said:

Well, if you did buy swampland, you could at least go shoot an alligator for supper.

Oh, that's right, the swamps of Ohio are teeming with alligators. But if I shot the gators, what would Bigfoot eat? I can't afford to keep buying him Jack Links beef jerky because I spent my savings on swampland.

What do you get to do with gold???

What do you get to do with money?

Sit around and "don't you just luuuuvvveee the feel of gold" yourself in an autoerotic fashion???

Evidently your position is based solely upon the TV commercials you've been watching, as you continue to return to this point. What puzzles me is your fixation on gold. Ranging from subtle innuendo to blatant tits and ass, advertisers have always used sex to make their sale. Yet of all the products advertised on television, gold alone disturbs you and prompts this visceral reaction. Why is that?

Plus, with gold, you have to hope and pray there will be a bigger fool in the future that comes along to take it off your hands, because there just isn't much you can do with the stuff.

You appear to be confusing gold with federal reserve notes. Have you learned nothing from what you've read on this site?

Every ounce of gold that is bought is done with the purpose of selling it in the future.

The jewelry adorning millions of Indians and the gold plating on connectors in many electronic devices are sufficient to scuttle such an absurd statement.

If you meant only gold coins and bullion, perhaps rephrasing your statement will provide you with some clarity:

"Every dollar bill that is printed is done with the purpose of spending it in the future."

Which, you could do with a bag of rice, and if you can't find a buyer or swapper, you can eat it.

Do you have any money, anywhere at all, on your person, at home, in your car, or in a bank account of some sort? If so, why? Why haven't you spent every last bit of it? You can't eat it, and the only thing it is good for is spending, so why continue to hold it instead of stocking up on rice?

From everything you've stated, it appears that your problem with gold is based entirely upon your reaction to television advertising. You see a TV advertisement for gold and your naughty bits get all tingly, and that disturbs you.

Again, my recommendation is to reduce your consumption of television. The time would be better spent learning about the fundamental nature of money.

Tue, 07/03/2012 - 18:03 | Link to Comment Winston of Oceania
Winston of Oceania's picture

Gold, chicks dig it, they always have and that is why it has always been money... Troy was destroyed for the sake of a woman and bruised pride because men dig woman, they always have... Gold is money even to the most apish among us.

Tue, 07/03/2012 - 18:39 | Link to Comment KingdomKum
KingdomKum's picture

we few, we happy few, we band of silver holders  .  .  .  

Tue, 07/03/2012 - 19:29 | Link to Comment ForTheWorld
ForTheWorld's picture

The first quote in this article struck me as curious:

"The problem is that what we use as money can be created and produced by the privileged money producers – which are the central bank and the banking system."

Mainly because if we change it to...

"The problem is that what we use as money can be created and produced by the privileged money producers – which are the miners and coin minters."

We end up with a very similar situation where supply can be restricted to those "in the know".

We all know that gold and silver have long histories, have been used for over 5000 years etc. as forms of money, and it's a great long term store of wealth. However, while it certainly wouldn't be to the same degree as money printing, gold and silver could be mined and minted, but the actual minted coins (as an example) could be trickled out to the public allowing an artificial inflation of price (assuming no fixed price for gold and silver).

Then, when the miners and minters see fit, they can release their "excess supply" onto the market, and lower the value of the previously released coins by having a greater supply.

This also makes me wonder - if many societies prior to ours have used gold, where are their coins, and would they be worth their weight in gold, or would they have a premium on them because they're Roman coins?

 

Wed, 07/04/2012 - 11:03 | Link to Comment Winston of Oceania
Winston of Oceania's picture

Do you think that there is some advantage to hoarding a true currency? Do the banksters currently hoard their debt based script? You need to do some Rothbard research. www.mises.org

Wed, 07/04/2012 - 00:34 | Link to Comment dogbreath
dogbreath's picture

Hey Yall

 

First I want to say I fucking know that paper sucks but,   I think the junior miners are at their bottom and ready to move hard and fast.   Is there a leveraged way of playing the juniors, index options or somthing like that, somthing that could payoff big.   I want to gamble.

 

suggestions anyone

Wed, 07/04/2012 - 05:09 | Link to Comment silverdragon
silverdragon's picture

Gold is good but Silver is better, 10,000 industrial uses and having been money throughout history, unlike Gold.

Wed, 07/04/2012 - 06:18 | Link to Comment silverdragon
silverdragon's picture

As Silver gets manipulated down we all buy more Physical Silver.

Thanks.

Wed, 07/04/2012 - 07:23 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

seems how much or little gold is in fort knox, is secret. how much held by banks and FED is secret.

perhaps knowing would cause a problem for FRN's and Fiat the world over.

congressmen who want to know are told to F off.

that is all I need to know, the elite who order around the leaders of our country keep this info for themselves.

if it has no basic value why all the drama? if it has no value why keep secret when it is moved or to what location it goes, what's with all those secure vaults storing it?

if the banksters of the world go to such extreme measures to keep the gold secret from even the so called rulers of major nations, that is reason enough to own some. somebody sure wants us to forget about it and play in the real money world of 0's and 1's.

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