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ARCHIVED DISCUSSION FROM 3/8/2001 All times are U.S. Mountain Time (Yesterday's Discussion.) Mr Gresham (03/08/01; 23:44:24MT - usagold.com msg#: 49659) Trail headed upward! http://www.kitco.com/charts/livegold.html Looks like it might be getting steeper, probably too steep for many people. Good thing we've been taking these practice hikes to get in shape... Perplexed (03/08/01; 23:31:51MT - usagold.com msg#: 49658) SELF GOVERNMENT The human race can learn a lot from the hive and the honey bee! The occupation of every bee is determined by the need of the colony at the time. The hive tolerates no loafer.The droans have one purpose, to mate with the queen, once this occurs only a token number are tolerated just in case the queen dies. The queen does not rule the collective, but contrarily, because she loses her wings after her maiden flight, is captive, and is never left alone, she is constantly touched by several members of the grooming squad.Each bee can defend the hive only one time, and yet is ready and willing to give her all at anytime.The bank (honey store)needs no guards nor banker as it is not guarded against danger from within, but is guarded to the death against theft from without.Every bee except the queen can leave the collective at any time they choose and never return. (because they are not welcome in any other hive, the individual defector rate understandably is very low, When the hive becomes over crowed in which case the hatch another queen which leads a swarm.Of course, in the hundreds of thousands of years of their existance, they have managed to accomplish nothing but survival.There must be a message there somewhere.Still Perplexed SHIFTY (03/08/01; 23:26:12MT - usagold.com msg#: 49657) ji http://203.79.82.35/nzbanking/mmm2.html MODERN MONEY MECHANICSA Workbook on Bank Reserves and Deposit ExpansionFederal Reserve Bank of ChicagoHello ji. Have you seen this publication from the Federal Reserve Bank of Chicago ?Enjoy$hifty ji (03/08/01; 22:50:03MT - usagold.com msg#: 49656) Government, banking and fiat money @ Journeyman, Randy, ORO, All . If you write to the Secretary of the Treasury and ask where money comes from you will get an answer similar to this: " The actual creation of money always involves the extension of credit by private commercial banks." If you write back and ask where the money comes from to pay the interest, you will receive an answer like this: " It comes from the same place other money comes from." Under fractional reserve banking, banks lend money that did not exist until they loaned it. Banks create money by monetizing debt-the debts of government, business, and the people. Banks create money out of less than nothing because a debt is a sum of money due. It is not possible to pay a debt with a debt, but this is what the world is using as money! The absurdity of the situation is that if there were no debts, there would be no money, since all paper currency and checkbook money is loaned into circulation. In order to pay the interest, there must be another loan because the banking system only creates the principle and not the interest. In fact, the interest can never be paid because it is not possible to return to the bank more Federal Reserve Note's than were created-making it inevitable that the FED acquire title to all wealth in the nation. Paper money that redeems nothing only appears to have value because it can be exchanged for things of value. When a piece of paper representing debt is exchanged for wealth, someone has been robbed. Fiat money expropriates wealth from one person, then another, until the last person who gets it will be stuck with it. What the first user gets for nothing the last user will get nothing for. The sole function of paper money that is not one hundred percent redeemable in gold or silver coin is to get things without paying for them. Those who issue and control bank credit as money get everything for nothing. Bank credit is a devise for confiscating wealth, where numbers of nothing are exchanged for things of substance and value. This theft occurs unnoticed because we accept pieces of paper with numbers on them in place of real money, not knowing the difference between the two. When using wealth as a medium of exchange, government must receive wealth from its citizens to pay for goods and services. When using credit, government is independent of taxes and does not have to pay for anything, which the illusion of taxes conceals from the people. Though nothing is financed by taxes, consumption, the people's capacity to use up goods and services is reduced. Subtracting credits from bank accounts reduces consumption and eliminates previously created inflation. Taxes regulate inflation. The FED pumps money into the system and the IRS sucks it out. The tax system reduces public allotment of credit in order to destroy some of the bank created credit so that the bankers, and their government, can continue to create more credit, and with this credit get unlimited goods and services for nothing. Randy (@ The Tower) (03/08/01; 22:47:29MT - usagold.com msg#: 49655) The Piper says pay me now, or pay me later, but you've GOT to pay the money... http://www.usagold.com/gildedopinion/privateer.html And, my, what a BIG piper to pay!For those of you who have yet to meet this long time friend of gold and private enterprise, our lasted addition to The Gilded Opinion is the perfect introduction to the Captain of The Privateer himself, William (Bill) Buckler.In his well-crafted Global Report commentary entitled, "Trapped Between Debt and Taxes", Bill explains how Amercians have become caught in an economic trap with (on a per capita average) at least 33.8% percent of their income swallowed by a bloated government, while another 34.1% of incomes must go to service their private debts. Click the link above to see Bill's full commentary wherein he elaborates on these following excerpts...."The American political Establishment has always had in front of themselves a fundamental choice. They could have made laws that kept taxes low and allowed real monetary savings to be accumulated and then funnelled into real, productive, private investments. Or they could have kept taxes high to expand the size of the State, and then "compensated" for the tax burden by making borrowing very easy indeed. The U.S. political Establishment chose the second course. Artificially low interest rates inescapably lead to increased borrowing. But borrowing is the other side of debt, so debts have climbed higher.+...the American public was offered the easiest borrowing requirements possible - the Fed Funds rate fell from 8.25% in 1990 to 3.0% in 1992. ...+Borrow the American public most certainly did. They borrowed so much that the Federal budget deficit began to shrink as a higher proportion of government spending was funded by more tax revenues - especially capital gains tax revenues in the latter half of the '90s. The public abandoned savings for borrowing. One result of this was that U.S. stock markets surged to previously undreamed of highs. +Having induced millions of individual Americans and their families to contract huge debts, and then having watched them do it, the U.S. political Establishment has marched itself into a corner. They can help Americans to service their debts by lowering interest rates. They have already started that and more and MORE rate cuts are anticipated. ..... They are hoping that the economy will continue to grow so that the current corporate and private debt burden continues to be serviced, and perhaps even some principal repaid.+....Savings are absolutely required in order to make the new and additional investments that actually cause an economy to advance. The fundamental fact is that these savings are nowhere to be found. Americans have NO savings at present. Nor are they likely to have any in future for as long as Americans see 67.9% of their incomes pulverised between the millstones of debt and taxes."Thanks for sharing this with us, Capt'n. We hope to see more from your skillful pen in the future. (Thanks also to Cobra(too) for planting the seed.) turkey hunter (03/08/01; 22:30:42MT - usagold.com msg#: 49654) The Gold Vault of the Federal Reserve in NY http://woodrow.mpls.frb.fed.us/pubs/region/reg9112b.html Interesting article describing the Gold Vault at New York. The article was written in 1991. Journeyman (03/08/01; 22:00:27MT - usagold.com msg#: 49653) Greenspan's take on government & banking @Randy, ORO, ALL Don't have time to look up the exact quote, but Greenspan testified to congress a year or so ago that if it weren't for the FSLIC and other such government depositor insurance schemes, there would be no good reason for government to be involved in banking regulation at all.Regards,Journeyman megatron (03/08/01; 21:08:50MT - usagold.com msg#: 49652) Rpowell I agree with most people here that tech analysis is mostly crap, BUT! BUT! There are some amazing trendlines that can be particularily amusing to watch. The most solid is the S+P 500 which goes back to 82. This trendline has NOT been broken and every time it has been approached it has bounced off like 'magic' It presently sits at 1226. I believe if this trendline is broken it will be the first evidence of the collapse of the US$Thanks for the info. Will buy tommorow. Check out PFN on the CDNX. Incredible drill results on thier Palladium claims. Do your DD. :) megatron (03/08/01; 21:00:24MT - usagold.com msg#: 49651) ORO/Tree in tha forest Speaking of socialist losers, I'd be curious to see a daily/monthly chart of Canadian gold sales back to 80 or so.My poor grandmother worked for 60 years so these morons could unload the wealth of the nation for a short term backroom bailout of the 'Commyex'.ORO, I'm hearin ya, brother! Fingerprint42 (03/08/01; 20:56:15MT - usagold.com msg#: 49650) Gandalf the White, Not a paid shill but I wish I was http://www.321gold.com/minera.html Gandalf:My wife and I own about 20 different small golds. From Drooy to RIC to GLDR and more. I have a piece of a claim in Alaska and have spent the last two summers working the claim. You have to pay too much for everything, are lucky to work 100 days a year and have to beat off the mossies with a stick. It grates me that most of the small gold stocks sit on good ground, drill like madmen but the only time you can every make money is those rare occasions gold goes up or someone buys them out. Why not take the same money and dump it into mining equipment and people and start mining?Look up US Gold USGL I don't mean to pick on them but they are not untypical. They management sits in an office collecting fat paychecks while someone else drills and drills and drills. If by chance gold ever goes up, maybe we can make our money back. Why don't gold miners actually mine some gold? I looked over the proposal from Tim Watt and it makes sense. There is lots of good ground available. It's quite possible to make money with $260 gold if you will actually mine rather than pray. You can get an operation to the paying stage for $500,000 if you will actually mine rather than drill.All of his numbers work. You can mine for $10-$20 a ton and can mill for $25. If he can be producing 200 tons of .6 ounce ore a day in 120 days, he and all the rest of the owners of the place are going to make money. Lots of money. If gold actually goes up, they make more.If you see a flaw to the deal, let me know. And I wish I was paid but I'm not. R Powell (03/08/01; 20:54:57MT - usagold.com msg#: 49649) Megatron I believe there is an article in this month's issue of "Technical Analysis of Stocks and Commodities" on the Swiss franc that you're interested in. I haven't seen it yet myself and no longer get the magazine so I'll have to find one. I'm curious as to the author's identity and credentials as he's a well known goldbug and technical trader whose been "hot" lately. He's let us know that he's been calling them right but he's also callin'em before they happen which is the name of the game. Rich ORO (03/08/01; 20:48:21MT - usagold.com msg#: 49648) Randy, Glearis - three points and making an example To return to basics of government, a few points, one with an apropos example. 1. Government decision, outside of the application of common law (protection of life, liberty, and property of individuals and their mutual organizations), is a substitution of few decisions for many, and removal of the consequence from the decision maker. Because it is such, it removes the motivation of individuals and their associations to learn how to obtain the maximum benefit out of their decisions (usually by paying for the advice of a specialist in that area, or learning the principles of the field themselves) in the field in which government had made decisions. What is left is only the question of whether one follow government dictates or not. Government decision making is by nature destructive of learning. The consequences of decisions may reach the government functionary making them in a round about way through electoral and public expressions, but would only have a substantial effect on them in extreme cases, or when a sufficient accumulation of such decisions has prompted people to revolt against them or ignore them.2. Government, as a structure of people (i.e. concerned with their own welfare by their nature), but having coercive powers, will "corrupt" the holders of positions of power because of the benefits to them of selling their decisions, on the one hand, and of coercing others to benefit them and their group directly on the other. It has to be that way by the nature of the beast.3. People at large do not benefit from government, not even the supposed beneficiaries, such as Glearis thinks his child to be. Government (as an organization of people) uses such cases as Public Relations fodder to claim a moral character to their actions and thus lower resistance among people at large to their being taxed. What is not said, is that in order to provide a child such as Glearis’ with this benefit, it has done and caused the following:a. It took the resources (funds) from someone else, thus lowering their purchasing power and their ability to take care of their own children. b. Therefore, it had reduced purchasing power that could have been used to buy the services of Glearis and his well wishers, and has reduced their income in this way. c. They have occupied people in the function of determining and extracting the tax, and have occupied people in determining whether to help Glearis’ child and how. All of these people did not help Glearis’ child at all. d. Since the government functionaries produced nothing in their venture to have someone provide Glearis’ child with assistance, Glearis and all of us have lost these people's productive output, thus we have had to pay more for the same goods and services. The value of these people to Glearis was negative.e. The same process of collecting and distributing funds to pay the providers of care to Glearis’ child, the government has taken income away from the care givers and from Glearis in order for government to bee seen as serving other deserving people such as Glearis. This has raised the cost of the service Glearis’ child received and decreased further the income of Glearis and his charitable well wishers.f. By government "taking care" of the problem, the motive for Glearis and his charitable friends and strangers to help has been eliminated, as was much of the pool of resources available to them with which to do so.g. By making the decisions as to what treatments and research to fund regarding the problem facing Glearis’ child, government has eliminated the motive for Glearis and people facing similar problems to make judgments as to where to allocate resources. Furthermore, the experts that government had used in order to make these decisions have become too expensive for Glearis to afford, and have been occupied in explaining to government officials the hows and whys of their area of expertise. h. The government decision makers, having no direct interest in the actual practical outcome to Glearis’ child and those to follow, will have little motive to make the most effective decisions as to where to allocate funds for research, and to evaluate treatments other than those currently practiced (this constitutes effort).Glearis, your child and others to follow will have suffered a lower level of service, less effective treatment, and have lesser prospects for cure or prevention because of the involvement of government in the business of "care". Furthermore, Government had eliminated resources from Glearis and everybody else, that could have been used in these efforts, and has raised the costs of Glearis living. Government has made the child's problem into a threat to everybody's well being, instead of a cause for strangers to join together in charity. To repeat what I have stated before, every 1 unit of benefit derived from government costs 4-5 units (the 1 provided and the 4 destroyed by the process) to the whole of the people. Could Glearis and his well wishers afforded this care for the child if government were not providing for it and similar services? If one understands the reality of it, one sees that had Glearis’ child been provided for by Glearis and well wishers, and the same done for all government services, then Glearis income would most probably have been up 2.5 fold in purchasing power, as would have been that of his well wishers. ORO (03/08/01; 20:46:27MT - usagold.com msg#: 49647) Randy - One on the analysis driving the ideology Contrary to your reading of my view of government as ideologically driven, I suggest you listen to the arguments I am putting against its involvements in making decisions for other people and in allowing various groups to make decisions for others. The reason for my ideological view is the analysis. It is not the other way round.Most basic to the analysis I presented many times is that of motivations and decision making processes. The economic difference between cooperative trade done out of voluntary choice and transactions done under threat or actuality of violence is in the results of each set of transactions in the realm of the availability of goods and services through the effects of motivations. That which differentiates between the effects of cooperation and coercion in economic affairs is the inherent decline of welfare as a result of coercion, and its obvious growth out of cooperative trade. Coercion eliminates motivations for productive endeavor, and cooperation increases it.This provides two views of government as the supreme coercive power within any geography, which is its only functional definition. Should government be concerned only with the prevention (through punishment after the fact) of coercion among people, or should it actively coerce people in order to achieve some goals, increase a welfare outcome, serve some principle other than the minimization of the occurrences of the initiation of violence (including its own)? Since people run governments, the effect of having coercive force in hand will be the determinant of motivations of those within government. They will use their power to their own benefit through either direct use, or the sale of uses of this power to those outside government (time honored "bakshish"). Statutory Law, functions within government simply as the rules necessary to prevent it from fighting within itself thus destroying the bulk of its members, and functions in relation to the governed as the rules for treatment of them by a government that produces the best outcome for government's members that they can conceive of and agree upon. This is also limited by the extent of the effectiveness of available technology of coercive force, through control of information and opinion, and the degree of resistance of the governed, as well as their technological capacities in fighting back, circumventing government information and opinion control, and their efficiency in hiding income and assets from government. In democratic systems, resistance comes earlier than it does in non-democratic ones, but is reduced in intensity by the ability to partially resist government along the way, and at times reduce its powers. In non-democratic systems, government power expands till either enough of the economy has been destroyed so as to make the marginal benefit to the participants in government too small to retain their loyalty, in which case the governing organization simply collapses; or the expansion of power is halted by the emergence of a technology that extends the power of individuals to resist government. The other set of law, Common Law, is a natural development of people's need for arbitration in honest dispute, and obtain reparation in the event of having been harmed by violence of another. In a marginal way, it provides punishment for crime, so far as the participants of the process are willing to act on the decisions made in the course of its practice to eliminate the criminal from their midst. It is the distinguishing mark of continental Europe that it has destroyed the common law once thriving there, vs. the English system which had incorporated its principles into statute, or the American system, that has attempted to constrain statute within the limits of common law.The history of politics is that of the effectiveness of coercion and the limits to it. The original kings (governments) are the raiders of small villages who came to a deal with the people they had previously run roughshod over around harvest time, to protect them from other bandits and in return have the villagers pay a tribute to "their" bandits, a tax. Often, the common law practices were enforced by this same group of bandits (by then called nobility) because this common law practice required the use of violence by the local community (once convinced of such a need by the arguments of the court in its decision), which violent practice posed a threat to the banditry/nobility. The nature of people practicing coercion dictates that it is done for benefit of the active practitioners. If you have noticed, I do not use the common "noble knights" round table allegory because of the awareness of what a knight was historically, and the fact that nobility is historically a derogatory term for anyone who values freedom and justice. The use of this allegory for this bulletin board still grates harshly on my sensibilities even after these years of posting here. ORO (03/08/01; 20:39:43MT - usagold.com msg#: 49646) Randy - One about banking expansion The fact that bankers have managed to obtain government favor is not an argument for the perpetuation of that privilege. It is an argument for the explicit elimination of the government's power to provide privileged charter and license. As Journeyman pointed out, government made the need for charter mandatory for engaging in banking. As a result of this limit on the number of banking establishments, it had made it possible for them to join forces to create an effective cartel. Since, all things being equal, the profitability of a bank is maximized at high leverage to reserves, the cartel had motive to cooperate on maximizing the leverage. Mises demonstrated that competing banks must hold a larger reserve and thus lesser leverage than a monopoly of a single bank, or a system where a lender of last resort or regulator has the effect of coordinating the entire banking system to behave as a single bank. In the condition of competing banks the determinant of a bank's solvency is not only the bank's passable performance, in that its net capital (assets less liabilities) is above 0, but its relative performance to the other banks. Under competitive conditions, the bank that is leveraged most to its reserves is the bank that goes under. Why? Because by its leverage, it creates first a large amount of liabilities against its reserves, which would be withdrawn by competing banks upon expenditure of a loan by the bank's borrowing customer. For example:Take a market with three banks of equal assets A, and liabilities, L for each, with A=1.1 L (10% capital adequacy ratio), but differing reserves:Bank A has 50% reserves to liabilities (0.50 L)Bank B has 30% reserves (0.30 L)Bank C has 10% (0.10 L)A borrower comes to bank C and borrows 0.06 L (adding only 6% to liabilities and 5.4% to assets of bank C). The borrower spends his borrowed funds to purchase goods and services in equal proportion with depositors in each bank. Each bank gets 0.02 L and settles the claims on behalf of customers at the end of the day. Each of the other banks puts the 0.02 claims to bank C and takes in the reserves – A now has 1.02 L in liabilities, 1.12 L in assets, and 0.52 L in reserves; B has 1.02 L in liabilities, 1.12 in assets and 0.32 L in reserves. C, however, has 1.12 L in assets, 1.02 L in liabilities, and 0.06 L in reserves, having transferred 0.02 L in settlement of claims to each of the other banks. While Banks A and B have increased their reserve ratios, bank C has reduced it from the already meager 10% to just under 6%. The 0.06 L in assets gained as the loan to the borrower was offset by a loss of 0.04 L in reserves. Bank C may find itself insolvent (distressed) if it repeats this only 2 more times, whereupon its rivals would buy up Bank C's assets and take on its liabilities at the substantial discounts one would expect of a distressed sale. Depositors to bank C would see a portion of their deposits gone, and the more conservative banks would pick up bank C's old assets and depositing customers. Obviously, it is harsh for banks to compete on the matter of reserve adequacy (financial strength of the bank), and given a chance, they would cooperate to raise every one's profitability by having a fixed reserve ratio for all banks, at the lowest level practicable. But a new bank can enter the fray, composed of say 10% of the existing depositor's claims (having been dissatisfied by the cartel bank's service and risk have rallied around a financier proposing a new bank formed with their capital), having made no loans and having 100% reserves, will now proceed to take on depository clients from the existing banks that have leveraged to 10% reserves claiming that the new institution is more sound than the cartel members. Having taken 10% of depositor claims from the existing banks that had only 10% reserves, the leaving customers would drain completely the cartel's reserves, taking all of their deposits out. The new bank depositors had formed can push the cartel banks into insolvency by gaining just one more significant customer from each of them. Had there been the legally imposed need for a charter, the financier and his potential depositors would have had to apply for one. The regulator receiving the application, and his staff, having no motivation to do the work of investigating the financier, and having had prior contact with the existing cartel members, would most probably have sided with whatever side, existing banks or the existing depositors trying to open their own bank, that offered him the best paying future job. Without this element, regulators would naturally side with the people with whom they had done business with before, the existing banks. The new bank would get the dragging heels treatment, and would be forced to lobby legislators or the regulators themselves to obtain approval. The cartel banks, however, would be most motivated to prevent their clients from having their way, since that would mean the end of their cartel, and the loss of their positions of power, derived from the privileges of charter. To make things clear, it is the restriction on the number of banks that is inherent in government requirement for having charters and licenses that makes possible an effective cartel, and allows the cartel to expand credit to the point of hitting the people's cash preference ratio (how much money they want to have in cash, as opposed to deposit), or hitting the point of maximum leverage where credit expansion had caused such malinvestment that cash flows of debtors can no longer provide for debt service. In this case, a massive deflationary economic disaster follows the banks reaching that point. If there is a lender of last resort, the banks can continue expansion to the point of committing all the resources available to the lender of last resort. In a fiat system, the lender of last resort can interject at this point to enter any injection of funds into the system. Thus we have two major elements having importance:1. In a competitive system, banks restrict themselves from over-expansion, due to the competitive edge available to the more conservative bank – the one with the least leverage still able to offer a competitive return. 2. The least bit of government intervention, by regulation (dictating minimum reserve ratios, capital ratios, accounting standards), licensing or charter, etc. immediately lowers the competitive pressures the natural dynamics of banking impose. Just the imposition of the time delay in giving a new bank its charter is enough to lower the incentive for bankers to compete on financial strength. History has shown that the American bank system managed to lower its average reserves to 21% reserves (in 1913) only after having national charters and regulations limited competition and eliminated the motive to conserve reserves. Prior to that time, American banks had never managed to go below 25%, and had experienced a culling at that level – where 2-7% of banks would fall by the way side during a 2-3 year "recession", and expansion did not resume till reserves grew back to 40% on average. Only when the Fed was formed did banks really manage to obtain enough rope to collectively hang themselves and the rest of the economy. The Fed provided a source of non-market lending, undercutting natural market interest rates, to bring the reserve ratio down to some 3% (2.6% or 3.7% depending on what is considered a bank liability).It was neither the depositors nor the majority of banks that could benefit from that system. It was only a small number of banks at commercial clearing centers such as NY that could enjoy the benefits of the Fed's lending at artificial low rates. Indeed, the Fed was staffed by their employees, who were obliged more by their loyalty to their former banks than to depositors and the bulk of banking. Thus reserve requirements were lowered progressively by the Fed in order to allow the banks further expansion of lending, and thus profit.What I am trying to convey to Randy and his readers in this is that the free banking system runs without substantial expansion, and conducts a single (once over) dilution of gold with fiduciary substitutes over a period of some hundred years, whereupon it stabilizes and changes according to the actual needs of people for physical and paper money. Furthermore, during the expansion, the thing that free banking displaces in small part is freshly mined gold. The interest and principal repayment demand for the leveraged portion of bank gold accounts stands as a near perfect replacement for the extra fiduciary gold supply provided by fresh lending. As a result, there is nary an effect of this expansion on the purchasing power of gold over time. There is nothing unnatural in people restricting the powers of government. People tend to do this when it is within their power and its significance has found a place in their consciousness. Once the power of government to restrict banks and then issue charters and other privileges freeing them from the restriction is eliminated, it stands to reason that having no power to regulate or make decisions for others, government officials would not be able to sell privilege or otherwise prevent the natural dynamic of banking. There is nothing unnatural or unrealistic about this. And it is a position from which my ideological leanings are derived, not the ideology that derives the position. Randy, this free banking structure has all the advantages of trade in electronic currency, but not the disadvantages of moral hazard and boom-bust that are inherent to government involvement in banking, nor the devastating effects of hyperinflation. ORO (03/08/01; 20:36:47MT - usagold.com msg#: 49645) Randy - One of a few The development of free banking (gold and silver) to government controlled and regulated gold standard to fiat money was not inevitable, was no more natural than Hitler's rise to power, and served humanity no better than he did. It was plainly the result of people allowing bandits to ascend to power once their intellectual advisors were bought up by the bandit's backers and had betrayed them. One thing many of these potential backers and intellectuals now know, which they did not know then, is that they will not retain control of the system they will set up. They realized that they are more likely to be its victims than they are to be its beneficiaries. Today, they are more likely to oppose government power than to support it, despite the clear advantages they obtain over competitors through their networks of influence peddlers in political and bureaucratic circles. Many now understand that the same kind of advantage is sought and obtained by suppliers and customers, so that they end up with a future much reduced in scale, and not much better in security or stability. It should be pointed out that the Fed was not vetoed by Wilson though part of his platform in the election was the promise to do exactly that, as was his promise to keep America out of a war in Europe. Americans, when they had to opportunity to vote against fiat money, were quick to do just that. Furthermore, though people, when gathered in emotional crowds, do have the inclination to go off on wild rampages and flights of fancy. They are always happy to see that these were ignored by their representatives in government. Given an opportunity to entertain the arguments to dis-empowering government, most eventually fall in line, either because experiencing the results on their own skin, or by thought and conviction. The interest of Joe Average is recognized by himself as being against government power and its beneficiaries. Most all have had to deal with official's practice of patronage. It may be the water inspector, maybe a highway patrol man. Most often, the meeting goes with no special incident because Joe Average is unwilling to "get in trouble" by challenging the official. He recognizes the power of the official over him and resents it from the greatest depths of his soul. He resents the power of someone else to tell him what to do without paying for the damned privilege.It is easy to demonstrate the fallacy of the state to one who listens simply to the argument. It is difficult to convey this to someone who has read dozens or hundreds of texts that claim how good the state is, or those that claim the Mzrxist "historic inevitability" of it, etc.. But this is it: simply another case of bandits who not being better armed than you were had paid off your leader to open the gate when you were asleep, took your stuff, and sold you into servitude. megatron (03/08/01; 20:33:42MT - usagold.com msg#: 49644) knallgold You have a friend :) 100% true. The people of europe are no more or less intelligent or succeptible to the lure of the 'unearned'. The only difference will be a temporary harbour(euro) until it's eventual collapse. Please relate more technical info about the swiss franc if possible. Gandalf the White (03/08/01; 20:26:00MT - usagold.com msg#: 49643) Fingerprint42 (03/08/01; 20:13:23MT - usagold.com msg#: 49639) Please tell us that you are not a paid shill !<;-) Horatio (03/08/01; 20:25:46MT - usagold.com msg#: 49642) China vs Japan China is replacing Japan as U.S tradeing partner very rapidly,just look at the trade deficit with China,its now bigger than trade deficit with Japan.Its clear what Japans problem is ,the U.S. is buying elsewhere.Japan must do massive devaluation to compete,all they got to sell is labor or value added,they have no raw material to sell.Japanese people must buy GOLD immediately before they lose thier external assets. R Powell (03/08/01; 20:20:39MT - usagold.com msg#: 49641) The Stranger Thanks for confirming my understanding of the auction. I know you are a buyer and seller of equities. Do you deal with mining stocks and if so, does this recent run up in the XAU and HUI indexes look like the real thing or are games being played with those silly mining stock dreamers again?? Thanks for any insights. Also do the stocks lead the POG or the other way or is there no corollation? Thanks Rich Cavan Man (03/08/01; 20:20:06MT - usagold.com msg#: 49640) POG Relativity Aussie$ price:520 somethingUS$ price: 268 something1. What is a dollar, Aussie or otherwise?2. Gold sold in Australia is better/worse than US gold?3. Gold is gold right?4. US Dollar is better than gold? (or good as????)Spock says: "Captain, this is not logical". Fingerprint42 (03/08/01; 20:13:23MT - usagold.com msg#: 49639) Treasure of the Sierra Madres http://www.321gold.com/minera.html Here's an interesting proposal for a ground floor chance to get into a gold mine before it gets pumped up. Everything said seems to make sense to me. There are a lot of good properties going begging and equipment is cheap. I've always thought miners would do far better if they would actually get to the mining rather than spending millions on drilling.I'd love hear any comments anyone has to make about the deal. I'm inclined to go for it. silvercollector (03/08/01; 20:11:14MT - usagold.com msg#: 49638) Mr. Miner46 If you wonder this way please send oil/gold theories.TIA.silvercollector@hotmail.com Horatio (03/08/01; 20:10:53MT - usagold.com msg#: 49637) Reverse splits Japan is planning a reverse split in the currency 1 for 100,the problem with reverse splits is when there are no earnings the PRICE falls back to where it was.Japanese could lose a large % of the currency value = bankruptsy of the currency.Instead of letting some banks go under for making irrsponsible loans they choose to let the currency go under instead!Politicians figure they won't figure out what what happined.MASSIVE devaluation.Buy GOLD JAPAN before it goes down !!!Don't trust politicians. I have never seen a reverse split work to the benefit of stockholders or in this case savers.Your going to get screwed ,act fast. R Powell (03/08/01; 20:07:34MT - usagold.com msg#: 49636) Mr. Tree Thanks for the technical analysis report. T.A. is not my strong suit but i've read that the third try at resistance or support is more likely than the first two with the fourth as almost a sure thing. It seems the technical guys can rationalize almost any move with all the contingencies in their forecasts. Also the dimensions of the charts can be changed to show almost any shape or configuration desired. However, many swear by it and have the records to back it up. The post from G-E that Lamprey_65 posted for us is from a technical trader whose been calling his shots and he's been right on target recently. Great record and making money! If I could trade like that, Michael would have more dust on his fingers. Rich Cavan Man (03/08/01; 20:04:29MT - usagold.com msg#: 49635) Tree in the Forest I believe the WA is beginning to show its teeth. Soon now... R Powell (03/08/01; 19:54:59MT - usagold.com msg#: 49634) Work we must, pay we earn Michael, it seems fair that you are compensated for your services as are the rest of us in the working class. I pour and finish concrete (flatwork, mostly floors) and often refer to concrete as "gray gold". I've heard that bartenders in the gold rush days were often hired on the basis of how big their first finger and thumb were because miners would open their pouch of dust and pay by the "pinch" for their booze. To all: If you must labor, I wish that you endeavor at something you enjoy doing. I also wish gold would decide that tomorrow is the day! (options expiring) Tomorrow after expiration and if POG falls tomorrow, all who hold physical can point at me and say Na-na, nabo-bo. Don't worry, I have more. Rich USAGOLD (03/08/01; 19:14:56MT - usagold.com msg#: 49633) Sierra, your answer. . . . . With apologies to Omar..."I often wonder what Kosares buys,One half so precious as the goods he sells."Sierra----------------Gold.Until every ounce from thosewho don't want itFinds refuge with those who do,And a sliver of each sticks to the fingers of hewho passed it.Loved it, Sierra.Glad you asked. Regards to Omar, and no apology. (Smile)P.S. Happened to be here when you posted. MK Sierra Madre (03/08/01; 19:01:28MT - usagold.com msg#: 49632) With apologies to Omar... "I often wonder what Kosares buys, One half so precious as the goods he sells."Sierra Tree in the Forest (03/08/01; 18:55:56MT - usagold.com msg#: 49631) R Powell, Lamprey_65 Hi guys. Unfortunately Don Lindley is saying that this is a setup and gold will drop back shortly. Another failed breakout from the falling wedge. So what is that 2 failed BOs in a little over a week? Until they're ready to let this puppy run they'll keep it on a tight leash. BOE auction is next Wednesday the 14th and has helped put a damper on things in the past. I am now hearing more rumors of silver shortages. Another month or two, I think, so we'll just have to be patient. Looks like everything is being arranged to come together at once. Strong hands never gamble. They always bet on a sure thing. Japan looking bad. War looming. PM shortages. Wasn't it Hannibal Smith (played by George Peppard) who use to say, "I love it when a plan comes together." lamprey_65 (03/08/01; 18:24:23MT - usagold.com msg#: 49630) Good Evening! The following is a repost from next door -Lamprey (Important, Bullish Day) Hello, Everyone. Just got in and checked the golds...very bullish. We managed the following today: 1. Broke above the falling wedge in POG (breakout above resistance ) on the day before option expiration. Need to see at least one week of confirmation, but as of today looks very good. 2. Gold stocks smoked today. NEM - very bullish. This is my "tell". HM broke above $6 on volume...this is important as the $6 level was the target set by Morgan Stanley in late November analyst recommendation which first tipped me off that the worm was beginning to turn. 3. XAU broke above the 55 resistance. PD was up big today, so this needs more work for me. All in all -- I THINK we are on our way to a new bull market in gold. I would like to see at least one week of confirmation, but things look good. The time of year is right (March...just as in the '93 move), the technicals are right, and, of course, the fundamentals are right - both in gold supply and demand and in excess money creation. It looks to be time to start reaping the fruits of our labors. I'll save the congradulations until after we confirm - nevertheless... Enjoy It! TheStranger (03/08/01; 18:02:56MT - usagold.com msg#: 49629) Make that "in THE case of the BOE" Thanks. TheStranger (03/08/01; 18:01:11MT - usagold.com msg#: 49628) R Powell Your understanding of the BOE auction process is correct. This type of auction is called a "dutch auction" because it is precisely how the flower markets in Holland wholesale tulips. They have happily done it this way since the 17th Century. When you think about it, it is a very reasonable way to conduct a PUBLIC auction, though I agree it is missapplied in case of the BOE. Beowulf (03/08/01; 17:32:20MT - usagold.com msg#: 49627) Oops sorry Pandagold I hadn't read far enough to see that you had already posted that story. I guess I shouldn't be trying to read posts on five sites at the same time again. Cavan Man (03/08/01; 16:54:05MT - usagold.com msg#: 49626) Hello Pandagold! You make a profound point; China did save Asia because she did NOT devalue the Yuan. Right on the mark! China will lead Asia the next 100 years or better. Catch a rising star. R Powell (03/08/01; 16:49:48MT - usagold.com msg#: 49625) BOE Auction The last auction was oversubscribed by 4.8 times meaning there were bids for 120 tonnes and the bids were filled starting at the highest bidder and then down until the alloted 25 tonnes were gone. Randy has explained, if I understood right, that all bidders who were lucky enough to get gold paid the lowest accepted price. Please correct me if this is not correct as I still think it's an insane way to sell anything. I'm thinking now that the amount of gold bid for in the next coming auction will shed a lot of light on the much talked about current shortage of physical gold. Lease rates seem to indicate a serious shortage. Rumors indicate the same but rumors are not a reliable source of information. The next auction will confirm whether there is a shortage and how bad it is. The next auction will be oversubscribed by ?? times. If the auction's origin was to promote the impression of central banks selling at low prices then a large oversubscription number triggering POG upward might be poetic justice. Next week is it? Rich Beowulf (03/08/01; 16:46:34MT - usagold.com msg#: 49624) Not everyone thinks gold is a barbarous relic http://www.zawya.com/Story.cfm?id=emi-2fdsf_gold&imgactive=0 Eid holiday helps send gold sales soaringThursday, March 08, 2001A crowd of straw hats bobbing along...long queues outside the cash dispensing machine...and all that glitters is valuable as far as the eye can see. This is just one impression that greets the visitor at the Dubai Gold Souq.The first week of the Dubai Shopping Festival has seen gold sales catapult. Businessmen trading in the noble metal are quite happy with the increased number of buyers gracing their shop floors. They attribute the rise to a number of factors including the long stretch of Eid Al Adha holidays, higher oil and low gold prices.C.P. Renjith, general manager of marketing at Alukkas Jewellery, said that their seven outlets had recorded a 30 per cent increase in sales from the previous year for the same period. He said: "The Dubai Shopping Festival 2001 started off this year with a weekend, which was followed closely by Eid."This has been very good for business, especially when we compare it to the sales in the first week of the festival last year, including the Eid holidays. We have recorded a 30 to 35 per cent increase and expect this trend to continue until Friday."We have received a lot of shoppers from the UAE and Gulf Cooperation Council countries. The increased sales are due to the holidays, also the gold price is lower than last year. It is below Dh30 per gram. "There also appears to be greater liquidity in the market due to the international rise in oil prices and stronger economies so people have more disposable income at hand." He predicts the market will lull after the weekend until March 15, especially as schools have exams. So families and particularly people from the sub-continent, who buy a lot of gold, will not venture out for shopping until the exams are over. Renjith said: "Then the market will pick up again. Around this period we will also see a lot more tourists, especially from European countries." But this rise seems to be restricted to the 22 carat gold market. The 18 and lower carat jewellery still haven't caught on. Glennen D'Souza, Sales Coordinator at Shattaf Jewellers, said: "The 22 carat market is doing well, but the buyers for 18 carat is lower. "We expect the demand to increase as more Western visitors come in, especially from Europe. They tend to buy more 18 carat jewellery. The market should pick up more after Saturday." Virendra Soni, Director of National Jewellery, agrees to this market analysis. He said: "During the Eid Al Adha holidays we mostly had Asian and GCC Nationals coming in to shop. Now more Western tourists will come in. "This year we have experienced a good increase in sales for the first quarter of this month, I would personally bill it around 25 per cent." While the businessmen count their dirhams and look forward to more tourists coming into the emirate, the visitors who are already in the country seem to be having an interesting time. Fred Lerner from Ontario, Canada, transiting via Dubai while on a cruise to South Africa, said that he was enjoying his short stay. "I'm overwhelmed by it, especially all the gold in the Dubai Souk," he said. His wife, Margaret, said that bargaining was proving to be quite an obstacle for her at the souq. "I'm not used to it at all," she said. Louise and Geoffrey Bates from London are visiting Dubai after 12 years and are witnessing the shopping festival for the first time. Geoffrey said: "It's incredible how the city has changed. The infrastructure, highrise buildings, festivals and everything else, the development is just amazing. "Even the Gold Souq, the structure is the same but everything else has undergone a sea change. It's great being back." @ Gulf News 2001 Beowulf (03/08/01; 16:06:33MT - usagold.com msg#: 49623) Prices rise? I don't know what you think but to me it looks like they may be trying to push the price up at least to the level of the last auction. That way they don't look bad selling another 25T at a rediculously low price.Anyway, that's just my opinion. Let me make another prediction on the next BOE auction. I predict all the gold that is up for auction will be sold and none will be left to sit in the vault and wait for the next auction. Anyone want to bet this won't happen?-Beowulf Tree in the Forest (03/08/01; 15:51:31MT - usagold.com msg#: 49622) Journeyman Anything is possible with these guys. After all, they make the rules and change them when it suits them. Another thought had also occurred to me. It might not take a direct Comex default to break the Comex. There are OTC commodity contracts also which are invisible compared to the listed contracts. A default in a private contract could cause serious problems also. For example, if Kodak had some OTC contracts for silver and the counterparty defaulted for whatever reason, all hell would break loose in the silver markets. Kodak is a very big silver user and they might suddenly be forced into the open market. It's fun to think about! Pandagold (03/08/01; 15:49:45MT - usagold.com msg#: 49621) The tide is about to turn I said 'about'. The tide does not go straight out. In fact when it's going out, for a while it can look as though it is still coming in. You have to look closely. And, when you have local knowledge of the tides, because it is regulated by nature, and not man, you know it is going out.The financial tides are not regulated by nature, so you have to have more care,and be more perceptive. But they do ebb and flow.There will still be effort by the manipulators to lead you on, and confuse you. There will be lots of conflicting rhetoric and false signals that hold you back and keep you hesitating.No one, except an elite few (the manipulators)can hope to buy at the bottom. So, if you buy now, you may see the market move a little against you, but don't despair. That has to be.When the market does make its big move, I guarantee, it will catch most people napping and if you are out, you will rue the day. What is coming is a chance in a lifetime.Remember, many things are coming together. One BIG event that is not being trumpeted by the media is that a date has now been set for the opening of the gold market in China - JUNE. Gold is purchased by nations moving into wealth. China gets wealthier by the day. It was China that saved Asia from complete collapse when Soros did the dirty by not revaluing her currency. No the media did not trumpet that either. But the Asian people know it. It is China that will revitalise Asia, and Asia loves gold - pure gold.Many Chinese entrepreneurs are investing in many gold projects, and businesses. The Chinese are shrewd businessmendon't underestimate them.I say again, when the gold market makes its big move it will catch most people napping' R Powell (03/08/01; 15:16:54MT - usagold.com msg#: 49620) Cavan Man "It's up another buck and two bits right now". I'm smiling! That's in about an hour's time so can we figure $30.00 per day as the current upside velocity? How does that compute for POG for April Fool's Day? I'm most encouraged by the lease rates. Maybe Rhody is lurking and will comment. I know he watches thoses rates most carefully and he seems to gain more insight from them than I do. I do know that high rates mean short supply and that high rates will shut off the gold carry as a source of cheap capital and as the source of the gold supply surplus that has hammered POG for so long. This also puts some real pressure on the shorts who leased (and sold) gold last year and now have to renew the lease or return the gold. How would most variable mortgage rate holders react to a 500% interest rate increase! Also, that gold was sold to raise $ for investment. The investment opportunities and monetary returns from the same are not so great looking now as compared to when a great amount of that leased gold was sold. How many "shorts" are looking to repay and get out? This might be great fun shortly. Rich Journeyman (03/08/01; 15:14:38MT - usagold.com msg#: 49619) NASDAQ censors investors. @ALL Well that isn't quite the way NASDAQ's J. Patrick Campbell putit, but that's the essence of what they did. It turns out thatNASDAQ suspended trading of Yahoo! after seven minutes yesterdaybased on "unsubstantiated rumors from an analyst." While therewas substantial news from Yahoo! later, NASDAQ was not inpossession of it when they made the decision to halt trading. Toget this information, the CNBC reporter was forced topersistently repeat certain questions, culminating with, "Willyou halt trading of a stock in the future based onunsubstantiated rumors?" After much backing and filling andobfuscation, the answer was, "Yes. Whenever WE DECIDE it is inthe "purvew of the public good or the investor's best interest."-CNBC, March 8, 2001, 4:55PM ESTAs I suggested, censorship. Suppose we'll see similar actions byCOMEX soon?Regards,JourneymanIntel warns of a 25% revenue drop in the first quarter, down anadditional 10% from the recent previous warning of a 15% drop inthe first quarter. Intel also announced it will cut 5,000 jobsover the next 9 months through attrition. -CNBC, March 8, 2001,4:55PM EST 714 (03/08/01; 15:08:44MT - usagold.com msg#: 49618) Randy (@ The Tower)... ...are all those mortgages really inflationary? Second mortgages typically are being used to roll over already existing debts, so that really isn't an increase in money supply, just a debt service. And new, first mortgages are almost always for bigger, more expensive homes, and constitute an increase, again, in debt. How does this add to the money supply? I always had the impression, and experience, that debt destroys money. Tia. Stocks, Lies, and Ticker Tape (03/08/01; 15:05:05MT - usagold.com msg#: 49617) ET,....msg. #49606 Your last paragraph clears all the smoke from the room. Your reasoning is to the point, historically accurate, and rooted in common sense. Our world needs more such "simpletons". R Powell (03/08/01; 14:51:40MT - usagold.com msg#: 49616) Mr. Gresham's 49590 Mr. Gresham, "And if gold paper markets are headed for breakdown, does that apply to options markets....and shouldn't that possibility of a spike show up in some of those." If I'm interpreting your question correctly, I may be able to speak intelligently. Almost all commodities' options are settled in cash (fiat). This is true of grains, softs like sugar and coffee, fibers like lumber and cotton as well as metals of all kinds. Only a very small percent of options are exercised into futures positions. Even the vast majority of futures positions are offset for cash settlement rather than delivery. Any failure to deliver, if it ever should occur, will have very little influence on options as cash settlement is what 98+% of options players are after. Don't misunderstand, please, I'm not saying a lack of the real thing is insignificant, I'm simply stating that options are settled for cash. Also, options have both intrinsic value and time value. If an option is "in-the-money" then it has intrinsic value. As it is a right to buy or sell for a specific length of time, then the more time involved, the greater the value. The right to buy 100 ounces of gold at $260/ounce at any time for a year is obviously more valuable than the same right for one month. Intrinsic value plus time value eguals option value. But when the underlying commodity has price volatility (rather than barely changing in price for a long time) then the price of options reacts accordingly, that is they become more expensive as the seller is taking more risk in granting the option. Right after the W.A. gold calls skyrocketed in price about 500%. That is the same out of the money option with say one months time that was selling for say $200 jumped to about $1000. Those in the money saw a gain in their "time value" Hope some of this answers what you were asking. Rich Cavan Man (03/08/01; 14:46:57MT - usagold.com msg#: 49615) R Powell It's up another buck and two bits now. Tree in the Forest (03/08/01; 14:27:18MT - usagold.com msg#: 49614) Megatron, Rhody Sir Megatron, you wrote:"Very curious to me that a G7 country like Canada who is apparently in a SURPLUS!!! situation would sell 20,000 ounces of gold in FEB. @ $280.US. The measly amount generated wouldn't cover lunch in Ottawa. This is obviously an attempt to reliquify SOMEBODY..."Could this "somebody" be Comex? Gold spiked about 2 or 3 days before Feb gold last delivery date. Comex had to deliver over 1/2 million oz. of the real stuff. They had only 91,000 oz. eligible. Could they and/or an issuer have come up short? Based on the numbers, it looked as though they shook loose an additional 290,000 oz. from their registered stock and another 1/4 million oz. must have come from elsewhere. The spike was induced perhaps to shake loose more gold and it may be that Canada was tapped for 20k oz. Comex numbers stand as follows:Silver:March OI=496 with 8832 stoppersMay OI=50,034Registered stocks: 69,795,289Eligible stocks: 28,177,459Total: 97,972,748Gold:April OI=81,026Registered stocks: 1,498,929Eligible stocks: 133,944Total: 1,632,873There has been a rumor that Comex will not be able to cover March silver contracts. With almost 45,000,000 oz. calling for delivery it might be true but this is hard to verify. If you guys hear anything, please let us know. Thanks. R Powell (03/08/01; 14:25:35MT - usagold.com msg#: 49613) Another three for three day! Gold lease rates are up again. POG did indeed run the gauntlet and escaped from N.Y. with a $3.70 gain. And the mining stocks are soaring with the CNBC gold index up 3.23 which is about 6%. I'm not sure exactly which stocks CNBC considers as gold mining companies. CNBC was even showing charts of Newmont Mining today. It's not too often you'll see them. Does POG continue up overnight to break out tomorrow? April comex gold options expire tomorrow so those who have sold call options will work hard to keep spot in the doghouse. Maybe a few stray cats are needed to get spot fired up. Hope so! Rich WW Oracle (03/08/01; 14:00:54MT - usagold.com msg#: 49612) @Pandagold http://www.usagold.com/cpmforum/www.ZAWYA.com/Story.cfm?id=emi-2fdsf_gold&imgactive=O "What do you think gold is, something you just drape round your neck, or wear on your hand?"Thank you for posting the link to the story, Panda. And I sincerely thank you for returning to the Forum. beesting (03/08/01; 13:22:13MT - usagold.com msg#: 49611) Sir, Randy # 49599---Gold used in everyday trade. From Randy's message:<<It is not possible, however, for any man to act as easily to drive out the entrenched system of banking and paper currencies as used in daily finance andcommerce across the earth. It just ain't gonna happen,dudes!>>A True Story:Last week my wife returned from overseas. While there she spent all of her travelers checks, and left credit cards at home on purpose. Knowing my wife very well I had convinced her before she left to bring about 5 ounces of 24 carat Gold as a back up just in case she needed more cash, which she did. 3 weeks later she telephoned me collect to beg for some more cash(only $250). I sent $250 Western Union,,,,added wire cost $40.00, collect call $32.00.......Total $322.00 I urged her to sell some Gold.When she came home she reluctantly told me this:She had already checked out the local banks offer of $245.00 for one ounce of Gold before she called me.Spot was around $260.00 at the time. She would "RATHER" spend over $300.00(wired paper money) than get only $245.00 for the Gold. She had also "Sold" one ounce of Gold to her cousin for $275.00 before she called me.The cousin a real jewelry person had "Never Seen" or touched 24 caret Gold before and was very happy to pay only $275 for an ounce.Moral of Story.....Gold, Don't Leave Home Without It!.....beesting. Pandagold (03/08/01; 13:05:18MT - usagold.com msg#: 49610) Some people appreciate gold www.ZAWYA.com/Story.cfm?id=emi-2fdsf_gold&imgactive=O http://www.zawya.com/Story.cfm?id=emi-2fdsf_gold&imgactive=0Thursday, March 08, 2001Visitors at a jewellery shop in Gold Souq. ©Gulf News A crowd of straw hats bobbing along...long queues outside the cash dispensing machine...and all that glitters is valuable as far as the eye can see. This is just one impression that greets the visitor at the Dubai Gold Souq.The first week of the Dubai Shopping Festival has seen gold sales catapult. Businessmen trading in the noble metal are quite happy with the increased number of buyers gracing their shop floors. They attribute the rise to a number of factors including the long stretch of Eid Al Adha holidays, higher oil and low gold prices.C.P. Renjith, general manager of marketing at Alukkas Jewellery, said that their seven outlets had recorded a 30 per cent increase in sales from the previous year for the same period. He said: "The Dubai Shopping Festival 2001 started off this year with a weekend, which was followed closely by Eid."This has been very good for business, especially when we compare it to the sales in the first week of the festival last year, including the Eid holidays. We have recorded a 30 to 35 per cent increase and expect this trend to continue until Friday."We have received a lot of shoppers from the UAE and Gulf Cooperation Council countries. The increased sales are due to the holidays, also the gold price is lower than last year. It is below Dh30 per gram."There also appears to be greater liquidity in the market due to the international rise in oil prices and stronger economies so people have more disposable income at hand."He predicts the market will lull after the weekend until March 15, especially as schools have exams. So families and particularly people from the sub-continent, who buy a lot of gold, will not venture out for shopping until the exams are over.Renjith said: "Then the market will pick up again. Around this period we will also see a lot more tourists, especially from European countries." But this rise seems to be restricted to the 22 carat gold market. The 18 and lower carat jewellery still haven't caught on.Glennen D'Souza, Sales Coordinator at Shattaf Jewellers, said: "The 22 carat market is doing well, but the buyers for 18 carat is lower. "We expect the demand to increase as more Western visitors come in, especially from Europe. They tend to buy more 18 carat jewellery. The market should pick up more after Saturday."Virendra Soni, Director of National Jewellery, agrees to this market analysis. He said: "During the Eid Al Adha holidays we mostly had Asian and GCC Nationals coming in to shop. Now more Western tourists will come in."This year we have experienced a good increase in sales for the first quarter of this month, I would personally bill it around 25 per cent."While the businessmen count their dirhams and look forward to more tourists coming into the emirate, the visitors who are already in the country seem to be having an interesting time.Fred Lerner from Ontario, Canada, transiting via Dubai while on a cruise to South Africa, said that he was enjoying his short stay. "I'm overwhelmed by it, especially all the gold in the Dubai Souk," he said. His wife, Margaret, said that bargaining was proving to be quite an obstacle for her at the souq. "I'm not used to it at all," she said.Louise and Geoffrey Bates from London are visiting Dubai after 12 years and are witnessing the shopping festival for the first time. Geoffrey said: "It's incredible how the city has changed. The infrastructure, highrise buildings, festivals and everything else, the development is just amazing."Even the Gold Souq, the structure is the same but everything else has undergone a sea change. It's great being back."@ Gulf News 2001 Peter Asher (03/08/01; 12:13:13MT - usagold.com msg#: 49609) @ ET, Mr G. and Knallgold Fine, fine responses today to the insinuations that the government is here to help us.And while you guys have been waxing so elequent this morning it seems that the ol' goverment's grip on Gold has slipped and Spot only needs 16 more minutes to make it through the Comex gauntlet and show a strong four point day! Journeyman (03/08/01; 12:12:20MT - usagold.com msg#: 49608) Journeyman goes out on a very thin limb. @Randy, ALL Awhile back, I said my crystal ball was broken but someday I would predict a return to a gold standard. I said that on that day the message would be headed "Journeyman goes out on a very thin limb."In fact, I think the following is the curx of the matter, and proof things are about to pop. It is indeed the perception "they" need to get people to adopt that gold as a transactional medium is dead. Apparently "they've" been remarkably successful. I think Sir Randy is evidence of that:"To extend this thought to clarify the sentiment of my morning presentation, it is very easy for any manto act at any time, including now, to simply bring gold into his life as a means of savings. It is notpossible, however, for any man to act as easily to drive out the entrenched system of banking andpaper currencies as used in daily finance and commerce across the earth. It just ain't gonna happen,dudes!"Well, I am hereby predicting that it IS gonna happen. And that limb isn't nearly as thin as it was.Gold has all the advantages over fiat it ever had. And then some. Watch the growth of e-gold.Regards,Journeyman Randy (@ The Tower) (03/08/01; 12:05:09MT - usagold.com msg#: 49607) Final comment before lunch Responding to --- "Randy, your so-called realistic viewpoint assumes the need for government supervision of our lives as we apparently are incapable of conducting transactions among ourselves without their guidance."---ET, please consider this: With each and every additional home mortgage, We the People expand our currency supply. All governments aside, how do we then escape from ourselves?The issues I put forth are economic ones based on the realities of banking. For the sake of this discussion about the efficient economic usage of gold and currency, so long as the direct taxation policy on each monetary instrument is accounted for, first things first and government is but an afterthought...a battle beyond my scope here.I merely read the existing landscape and "calls 'em as I sees 'em". We can surely agree that an anthropologist does not become a caveman just because he examines and describes them. Neither does a sportscaster become a quarterback because he calls the game, or a weatherman take on qualities of a storm because he waves his arms in front of a map for the cameras.... ET (03/08/01; 12:02:15MT - usagold.com msg#: 49606) Randy Hey Randy - you wrote;"I am content to leave it to you to reconsider as you will. There is room on this earth for many thoughts. Some peopleeven have room to save using Turkish lira, and they have my blessing. Freedom is a good thing!"My point exactly! Is Turkish lira free of government intervention but more to the point, is it redeemable in gold or some other standard measure?The Turks are unfortunately the victims of their own greed. They condoned a legalized "taking" for the greater good. Now they are confronted with the fact that those empowered to take actually took too much. Same thing here, same thing in Europe, same thing everywhere.Where the "free-gold" argument fails is in the assumption that those that manipulate the money today will find it in their collective hearts to stop such manipulation. Given their track record, why would I rely on such an assumption? Why not rely on gold's value as money? Doing so relieves me of the burden of keeping track of these same people that have consistently robbed me since my birth. It just seems much easier to this old simpleton. Old Yeller (03/08/01; 11:30:40MT - usagold.com msg#: 49605) Fire in the hole http://news.bbc.co.uk/hi/english/business/newsid_1209000/1209118.stm Pretty strong words from the Japanese finance minister.It's kind of ironic they show you a picture of intense heat and smoke. SHIFTY (03/08/01; 11:22:56MT - usagold.com msg#: 49604) Randy (@ The Tower) Farfel I see your point .$hifty Journeyman (03/08/01; 11:19:34MT - usagold.com msg#: 49603) Sir Randy capitulating?? @ALL Sir Randy,You just knew something like the following had to come I'll bet. You're a brave man!!Let me see if I can condense your argument: "Because the antiquated bullion banking establishment in cahootswith out-dated central banks have engineered -- or more likelystumbled into -- a serious bullion banking paper-gold bubble ofastounding proportions (which we all know will come to a badend), and temporarily deluded folks into accepting diluted papergold, we should abdicate in favor of electronic mega-byte money,consigning gold 'for savings and jewelery use only.' Thisbubble, developing over perhaps ten years and estimated atsomewhere in the neighborhood of 12,000 tons, has diluted theknown world gold supply by an horrendous 10% or so. Thusmegabyte currency is preferable because, unlike gold, megabytecan only be diluted '100% every three months without entirelykilling the use of money in retail transactions,' according toKeynes." Do I have that right? I sure hope not!!The consequences of this line of thinking are right in front ofus: Turkey, Ecuador, Brazil, Russia, South Korea, Indonesia. . .. U.S.A.? We _will_ most likely have the hyper-inflation, youknow. How much can you get hurt by diluted gold? How much bydepreciating fiat?None of the values that caused gold to EVOLVE into the preferredtransactional medium has changed over the last several hundred orso years. Nor have the underlying manipulations of the fiat-money mongers. You're right, humans (and particularly governments and banksters)will attempt to inflate anything, and I do mean ANYTHING. Withassignats (late 1700s French money), [*1] it was real estate!! Yep, "assignats" began life as land titles, that is,"derivatives" of that most limited of assets, land. None theless, despite their down-to-earth "underlying," assignats were,of course, inflated into oblivion. Since this propensity to inflate - - - that is, kite your IOUs -- - is apparently universal (and especially virulent amongstgovernments and bankers), why make it easier for them by side-lining the referee? So, they've put a few _fake_ referees on thefield. Will it make things better to ditch the _real_ referee??It's clear that no promise to deliver _anything_ is safe fromdilution and kiteing. So, as long as promises to deliver goldare accepted in trade as if they were actual gold, gold pricescan be manipulated, just not to as great a degree as fiat valuecan be manipulated. And fiat always has that ultimate valuepotential which gold simply can't touch: Zero. Why would youwant to risk any part of your buying power for even a few secondsby trusting it to the one that's riskier?It's true. Despite the rip-off nature of governments, and theirother ungentlemanly habits and that they are, on net highlydetrimental to the great majority of the populations they feed on- - - not just the poor - - - we and probably our progeny will bestuck with them in some form for quite awhile. However, the EUdeclaring criticism of its institutions and leaders off limitsshould give you a clue to the ominous ultimate destination of ALLsuch organizations. That, however, is for a later post. Butnone of this is a good excuse for giving up the fight for free-market transactional gold. In fact, just the opposite.As far as a preference to keep your gold rather than trading it,there are two sides to a trade. While you might not want to giveup your gold, the guy you're trading with might not want to giveup his widget in return for your depreciating fiat. You mighthave to offer gold. Especially true if your trading partnerlives in foreign climes where your fiat isn't traded "on thestreet." Will EVERYONE hoard their gold? How much do you want thatwidget? They say everyone has their price. What's yours to partwith some of your gold? This is where trade starts, bickeringbegins, and "price discovery" results. The composite of"everyone's" price for gold is where it will trade in a context of transactional gold and free-market banking.But given the current situation - - - gold very likely toappreciate appreciably (a situation that virtually never developswith modern mega-byte fiat money) - - - I'd be reluctant to partwith my gold right now too!Gold, simply by existing as a scarce substance, threatens poorlymanaged fiats (and so-far, they all are poorly managed) and itthreatens them at all times and places. That's why "they" mustdo as much as possible, now and for their forseeable future, todiscredit gold's use as BOTH a savings medium AND a transactionalmedium. If gold's good for one, it's good for both. If bad foreither, it's bad for both. Neither goldbugs nor TPTB can concedethe field for one use without losing the entire war.Gold is NOT schizophrenic. To the extent gold is spoiled as atrade vehicle, it is also spoiled as a savings or wealth vehicleas well. If gold doesn't circulate as money, then it must beconverted into fiat before it can be used. If the price at whichthis conversion is done is manipulated and this manipulationspoils gold as a transactional medium, it also simultaneouslyspoils gold as a "wealth-preserving" medium. And from the opposite viewpoint, we will not stop "them" frommanipulating the price of gold by declaring it "for wealthpreservation only." Folks are using gold as a savings vehicleNOW - - - in India, Korea, Thailand, etc. Even some USAGOLDcustomers perhaps? This hasn't stopped the BB-CB paper-goldinflation -- or it's negative effects on physical gold holdershas it? Despite the BOE auctions, don't you think rational folks would bemore likely to sell something when they can get more for it thanwhen they can get less? Thus the "for savings only" situationmakes it easier for "them" to keep their hoards of cheaper gold. If you COULD consign gold to savings only, why would you? Thepotential transactional use for gold, even if gold is mercilesslydiluted with paper-gold, dwarfs the savings use. When goldbecomes the preferred transactional medium, "they" would have toinflate the paper-gold supply far more than it is inflated now tocause a reduction in "price" to the "cost of production" - - -which is where the pseudo-price is now.You may say, "But just wait, though!" That IS what we've been saying, isn't it? And that's exactly thepoint: The true supply of physical gold simply CAN'T beinflated. Eventually reality reasserts itself. To the extentthat reality includes transactional use for gold, the resultswill be much more than merely spectacular. Patience Sir Randy!!The practicallity arguments:Many posters, most notably ORO, have thoroughly dealt with thebase-level mostly imaginary practical problems with transactionalfree-market gold banking (like there isn't enough gold, etc.There IS enough.) in previous posts at a time far far away. Inshort, there really aren't any.What we have in the world today is a massive ignore-ance of thedifference between promises to deliver something vs. the actualthing that's to be delivered. Particularly for dollar users,there is still a great deal of confidence in I.O.U.s of alltypes. This confidence has set the stage for massive defaults indelivery of all sorts of things. (Many of these potentialdefaults are embodied in "derivatives" I.O.U.s, especially offinancial instruments, many of which luckily have an expirationdate, but that's another story.) I.O.U.s (derivatives of all sorts) are regularly and normallydiscounted on the prediction of their worth upon redemption. Fiat currencies are really no different, though they operate asgeneral I.O.U.s. and are thus also subject to such discounting. The result of this discounting in the case of fiat money iscalled "inflation." Many of the defaults and resultantdiscounting is already evident in palladium, oil, natural gas,etc. Physical gold, not operating as an I.O.U., isn't subject tothis discounting, though the promises to deliver gold (since theyARE I.O.U.s,) are. Most folks, as proven by our ancestors through their "bank runs,"are able to understand and deal with this relatively simplesituation once it's made clear. After all, it's not really thathard to understand; it's sort of like driving away from the take-out window with the order slip but no food. The lack of this simple understanding will become more clear tomore folks as time and events progress, and this will greatlyhelp pave the way to transactional gold, and, as apparentlyanticipated by the gathering of bankers at Jackson Hole a coupleof years back, the end of central banks and banking as we knowthem.We know however, we won't get this transactional gold from thebanker-government axis. They'd have to give up too much power -- and the ability to rob the unwary. But we will get it in theform of e-gold, etc., which is growing by leaps and bounds. Onesite keeps nearly real-time stats on the volume of transactionsit processes. You can check out the increasing volumes of tradefor yourself at e-gold.com. Regards,JourneymanNOTES:*1. For those who don't know, "assignats" were the Frenchmoney inflated out of existence in 1790's France with direconsequences to the entire society.P.S. Sir Randy, I said "down with all GOVERNMENT fiats." If onthe otherhand Uncle Joe - - - or GE Capital etc. want's to floattheir own I.O.U.s that's O.K. by me. I won't be taxed to supportthem and if they go under, only I and the other folks who choseto use them will be hurt, not the whole neighborhood, state andnation. Knallgold (03/08/01; 11:18:42MT - usagold.com msg#: 49602) ET Thanks,appreciated!I still hope that a new Gold driven fiscal discipline will put an end to the socialist "dream". ET (03/08/01; 11:18:34MT - usagold.com msg#: 49601) Randy Hey Randy - you wrote in part;"Practically speaking as a man with free will, I would never choose to spend from my gold savings if I also had a paymentalternative using an equivalent value-quantity of paper currency which was likely recently acquired from ongoingproductivity/earnings."If they are equivalent Randy, it would make no difference."Because ANY currency inflates in conjunction with human nature, banking, and government, whengiven the choice between either pile of instantaneously equivalent values in gold and currency, we choose to hold the goldfor its advantage found "tomorrow".A quick check of history finds times when currencies did not inflate as the means to do so did not exist. Your tying together of human nature, banking and government should tell you something about how we reached the problems we see today. Free banking would eliminate the government side of the equation leaving us just to deal with the human nature and banking. I fail to understand why banking "needs" this help from government if it is simply not to sanction plunder."In this realistic scenario in a post-bullion banking collapse you should see gold'swealth (savings) value exceeding the trade value as represented by the equivalent currency holdings that were spent"today" instead of the gold."Randy, your so-called realistic viewpoint assumes the need for government supervision of our lives as we apparently are incapable of conducting transactions among ourselves without their guidance. Can you not see that government is there in the transaction, to skim off its portion of plunder for those that vote for themselves what they cannot obtain through their own efforts? Condemning ORO's viewpoint that the less government the better only confirms your blessing of plunder by the majority. Indeed this may be "realistic", but I, for one, will continue to fight those that wish to steal from me in the name of the greater social good. Randy (@ The Tower) (03/08/01; 11:18:06MT - usagold.com msg#: 49600) Sir ET, thank you very much for the comments. I am content to leave it to you to reconsider as you will. There is room on this earth for many thoughts. Some people even have room to save using Turkish lira, and they have my blessing. Freedom is a good thing!got free will? Randy (@ The Tower) (03/08/01; 11:09:43MT - usagold.com msg#: 49599) Quick comments Topaz:--- "How do we determine the value of our hoarded Gold if it's not used in trade...?"---To clarify my position, perhaps I should have said that gold wouldn't likely be used in CONTRACTED trade. (That is, it wouldn't likely denominate trade contracts like currencies do.) Gold's value from day to day would in fact be determined in terms of each national currency by the amount of a currency that is offered "in trade" for it as amounts of gold in many hands moves in and out of its position as savings.justamereBear:--- "I see a good deal of the decline in the POG as attributable to the very efficient propaganda machine that debunks its use as a store of value with the public, thus reducing its price toward that of the industrial metal component of its market price, and destroying its monetary value component. For gold bugs, thank god old workable ideas and traditions die hard, and gold is likely to see its day in the sun again."---It is indeed this propaganda you've mentioned (put forth out of self-interest by the lessors (those who lease) of gold) along with the *temporary* international CB support for the dollar-based system (necessary to limp from 1971 to the next system) that has muddled the clear view of the gold in the eyes of the western public. This is what I was alluding to in final part of this comment offered earlier:"It is this unique value of gold for use as a savings asset -- as a global yet non-national "monetary system" for savings -- that has yet to be properly priced by the market in modern times. In the price of gold in today's market we only see the dilution effect of bullion banking, without much of your added premium effect for its direct trade usage, and further suffering without having any clearly perceived usage role among the eyes of the majority of the western world."To be sure, gold cannot be kept down and out from playing its proper economic role, and western man will soon relearn what the eastern man and emerging markets have known throughout these modern times about the most efficient operating system....that gold is more reliable for use as savings than currency is.To extend this thought to clarify the sentiment of my morning presentation, it is very easy for any man to act at any time, including now, to simply bring gold into his life as a means of savings. It is not possible, however, for any man to act as easily to drive out the entrenched system of banking and paper currencies as used in daily finance and commerce across the earth. It just ain't gonna happen, dudes!So, we all find the best way to work with the hand we're dealt, and in doing so, the system naturally evolves to the next stage. We will see bullion banking collapse on a global scale just as we saw it collapse long ago on local scales. When it does, the vast dilution of paper gold shall vanish, leaving physical gold to inherit the wealth-value that has been spread so thin this many modern years. Certainly there is nothing objectionable about gold in this role as liquid property? Real estate is non-portable, nearly indivisible, and highly taxed from year to year. Untaxed, portable gold makes for a better, natural savings asset outside of the banking system.Galearis:While I try to avoid pigeon-holing myself with categorical terms, seeing your application of the words "liberal" and "socialistic" in my direction sent a brief shudder up my spine. Despite my awkward morning effort to describe the existing landscape as I see it from a NEUTRAL political position, if I were forced to apply terms to myself they would be to some degree "republican" and larger degree "libertarian". But for the purpose of serving myself, my family, and this forum as best I can, I am better yet described as "a drop of water within a river"....flowing efficiently through whatever landscape is found before me, and in doing so, akin with erosion and deposition my action plays a small part in reshaping the landscape found by those who come after me.Without prejudice for the terrain I simply flow downhill and perhaps move a grain of sand in doing so, all the while my only goal is to reach the tranquil sea; not to try to move the mountain. Because you see, as I move forward, the mountain...it moves/fades easily into the distance! And just as easily over much time, the mountain ceases to exist even for all who follow after, because each of us today carried without effort one small grain of sand on our "downhill run" as we each efficiently pursued our individual life's desired course. beesting (03/08/01; 11:02:03MT - usagold.com msg#: 49598) Creation of Wealth-Dilution of Wealth-Destruction of Wealth! Condensed Version! The following is from notes taken from Dr. Rex Frank's talks in the early 1970's:1. All wealth is created by production,period!1A. Productive people trading amongst themselves only need an accepted medium of exchange to function well.History tells us Gold has served this purpose the best.(Comment: Was this the early U.S.A.?)2. The current worldwide banking system and paper money substitutes for real products "DILUTE" the value of the real wealth that has been created.2A. The paper money in circulation today has been diluted so much noone knows what it's real value represents.3. All Governments destroy the creation of wealth by taking from the producers of wealth and providing sustenance to non-producers and Government workers! Governments produce "NOTHING" of intrinsic value and run themselves like a new company with only one thought in mind, "EXPANSION, EXPANSION, EXPANSION!" This in turn thru out history is self destructing. All Governments draw (take) good people from the productive trades to help in the expansion mode, therefore causing less productivity and more Government!Conclusion:Group 1.(Production) can and has operated efficiently without the help of groups 2.(Banking) OR 3.!(Governments) Groups 1.(Production) and 2.(Banking) may?? be able to coexist together. Group 3.(Government) cannot exist without lots of help from group 1.!(Production)IMHO the original intent of the U.S. Constitution was to start a new society self-governed exclusivly by the productive members of group 1., using Gold(honest money) as money so noone has an unfair advantage over anyone else.P.S. In most society's family members take care of the young,the old, and those unable to produce and it usually only takes about one worker to support 6 or more family members, hence close knit families.Thanks for Reading....beesting. ET (03/08/01; 10:59:46MT - usagold.com msg#: 49597) Knallgold Hey Knallgold - you wrote in part;"Europe has to solve its problem NOW,get rid of socialism and socialists ASAPst and turn to freedomULTIMATIVELY.or it will end in a desaster.People might be lulled and brainwashed,but they have a strongselfconfidence,love their individuality above everything,and are no more like slaves.Paternalismus and "Grossreich"philosophy will fail.No room for arguments here."Freedom.Europe,get it!NOW!Gold.All,get you more."Strong words,I know,but you know how I think."Kudos my Swiss friend! Congratulations on your country's utter rejection of the EU and its currency. Perhaps it is easier to see from Europe what reliance on government does to the citizens liberties. Strong words indeed, but words that need to be said. ET (03/08/01; 10:49:54MT - usagold.com msg#: 49596) Randy Hey Randy - you wrote;"To reiterate from the previous, many persons having strong dissatisfactions with government make a fundamental error inextending or projecting this same anti-government sentiment upon the unrelated realm of currency and banking. Feel freeto "hate" none, one, or both, but recognize that you must not level charges at one based on the sins of the other. Nomatter what wide range of passions a person might harbor toward government, they must analyze the issues of bankingand currency with an untainted eye....and only then might they justly hurl stones if any such airborne deliveries are foundto be warranted."Your premise is flawed. Currencies today obtain their value via law. Governments make law. Banks exist today via charter. Governments charter banks. Governments passed laws requiring charters. Please reconsider your premise given these facts. ET (03/08/01; 10:41:02MT - usagold.com msg#: 49595) Randy Hey Randy - if I might interject a few comments to help in your understanding. You wrote in part;"To be sure, ORO, your analysis stands strong in the theoretical world which you frequently construct with yourideologically tainted views of government. But, the economic utility of your work is diminished by the degree ofdeparture of your ideology from our living reality."Whether you "like it or not" the governments we have today are part of the landscape. You will not move a mountain byshouting at it or making arguments against it; (but thankfully, it is up to each man alone to decide how he chooses tospend his own precious allotment of time and energy.)"Might I suggest Randy, that governments are today what they are precisely because of attitudes like yours. I will submit to you that you will move mountains by making arguments against them, reason is all we have to work with."So, what of this governmental mountain? Taking the large view, it can be said that under threat of "mob rule"governments operate today and tomorrow under terms acceptable to their constituents and their neighbors, and similarly,we see citizens operating today and tomorrow under terms acceptable to their system of government and their neighbors."Nonsense. Governments operate today by force. Please take the time to read Frederic Bastiat's "The Law". Things havent't changed since this was penned in 1850. Government today can only be described as mob rule. "Significant imbalances on either side tend to bring about a compromise in the acceptable terms of operation to restore thedynamic state of harmony."Nonsense. There is no compromise with force."It could be argued that as the realm of mankind's interactions become more intricate and complex, governments exist -- iffor no other reason -- to institutionalize/formalize the "custom" of the natural social order of the day. This is seen asman's own attempt to guarantee that the collective well-being of the present time extends into the foreseeable future. (Asimple judicial system comes to mind as the start point, distinctly *not* as a "babysitter" to help "the poor" howeverthey might be defined.)"Governments exist to institutionalize plunder. The collective well-being is not served by one citizen plundering another in the name of social order."My comments portray an oversimplification, surely, because they have not thus far fully acknowledged the potentialdifference we might have seen from an unfettered free-will progression of social interaction ("custom") as it mightotherwise have evolved outside of the insidious coercionary influence of government's less-flexible and less-timelyinstitutionalization of **yesterday's** customs. This, along with government's incremental legislation of self-servingappropriations and arrangements."But more importantly, I think -- to an extent far greater than your current ideological framework allows you to accept --that the whole of the banking structure stands quite apart from this concession of a "privileged" position enjoyed indegree by government alone as an institution participating in the give-and-take of a dynamic society."Nonsense. Please consider what the "legal tender" concept implies. It replaces a known standard of value with a standard subject to manipulation by those with a vested interest in obtaining what they have not earned via institutionalized plunder. Mr Gresham (03/08/01; 10:35:08MT - usagold.com msg#: 49594) Galearis You are certainly qualified to speak on the elements of "heart".My last microeconomics textbook was prefaced with a discourse on "efficiency" vs. "equity", with the first being the common view of what economics is about, and the second what most human beings probably want out of economic processes. How to maximize each in balancing them is what much economics debate deals with.My quickest thought (as a coughing child clamors for my better attentions) is that the economy exists within society, and society can draw rules to circumscribe it, just as individuals choose how to allocate their time and energies to economic and non-economic pursuits. However, society cannot totally outvote "human nature" and self-interest, and so it is worth understanding and using the dynamics of markets within a social context. And I can't think of many societies that have done a very good job of this.(You might say that technology has thrown more wild cards than usual at us in the past century, both as a driving force for humanity to "get it right" and as the spoiler to keep us from doing so...)However, it is often within the interests of market players to convince society that IT exists within the boundaries of markets and should bow entirely to those dynamics. It is even worth funding a propaganda campaign to push publlic opinion toward the worship of markets. (Think Heritage, Cato, AEI, Olin, Coors, etc here.)The issue of government that Oro does not address much is the "trust-busting" value of government as society's institutional response to "big business" when finance and/or technology have permitted combinations that may overwhelm even market balances.Oro -- pardon me, friend -- would probably reply that government has not fulfilled this function (whether or not a valid one) for some time, if ever, and is even vulnerable to (or likely to be) capture by big business (bribery, campaign financing), and so it would be better left out of the process entirely.Oro is a corrective voice of realism for me. Depressing at times (that EU stuff yesterday, sheesh! Things I'd never heard, or thought of) but better to be heard than keep blinders on, says I to meself.Without public self-education and a resulting consensus as to the desired balances between society and markets, I am afraid the "liberal vision" does not represent a very strong alternative to Oro's well thought out positions at this time. Someone who is as good as Oro at what he does deserves to be answered with equivalent depth, but my thoughts at this point come off sounding squishily to myself like "If people would only..." -- yecch!(Yes, if there is not a "consent of the governed", then government is oppressively coercive, and we do not hear that consent at this time. There is dissent, ignorant acquiescence, but very little "informed consent.")(And if "actually-existing liberalism" is that which we inherited from FDR, then maybe there's a burden of past history and assumptions that needs to be cleared away for that thinking to take place...)(And what about when each ideological side thinks that government has been in the control of the other side all this time?)(But wouldn't you like to lock Oro in an interrogation room with Ralph Nader for an hour and watch/listen through the glass? - {smile})And -- hey! -- how about those Leapin' Lease Rates!?! ge (03/08/01; 10:03:39MT - usagold.com msg#: 49593) Fiat Money for trade & debt - Gold for saving? I think the above proposition implicitly implies that the business cycle shall be abolished. Let me try to illustrate it with some examples:- The year is 1980 and I buy gold say at $650/oz. Shall I profit from it?- The year is 1982. Should I buy gold or should I enter the stockmarket? All right, you could say, these are the paradigms of the past, and in the coming new era such fluctuations shall not happen. Then why does the business cycle exist? Let me offer my position by quoting von Mises:BEGIN QUOTEThe monetary explanation of the trade cycle is not entirely new. The English "Currency School" has already tried to explain the boom by the extension of credit resulting from the issue of bank notes without metallic backing. Nevertheless, this school did not see that bank accounts which could be drawn upon at any time by means of checks, that is to say, current accounts, play exactly the same role in the extension of credit as bank notes. Consequently the expansion of credit can result not only from the excessive issue of bank notes but also from the opening of excessive current accounts. It is because it misunderstood this truth that the Currency School believed that it would suffice, in order to prevent the recurrence of economic crises, to enact legislation restricting the issue of bank notes without metallic backing, while leaving the expansion of credit by means of current accounts unregulated. Peel's Bank Act of 1844, and similar laws in other countries, did not accomplish their intended effect. From this it was wrongly concluded that the English School's attempt to explain the trade cycle in monetary terms had been refuted by the facts.The Currency School's second defect is that its analysis of the credit expansion mechanism and the resulting crisis was restricted to the case where credit is expanded in only one country while the banking policy of all the others remains conservative. The reaction which is produced in this case results from foreign trade effects. The internal rise in prices encourages imports and paralyses exports. Metallic money drains away to foreign countries. As a result the banks face increased demands for repayment of the instruments they have put into circulation (such as unbacked notes and current accounts), until such time as they find they have to restrict credit. Ultimately the outflow of specie checks the rise in prices. The Currency School analyzed only this particular case; it did not consider credit expansion on an international scale by all the capitalist countries simultaneously.END QUOTEIf one agrees with the above-sketched analysis of the trade cycle then the following policies can be suggested:1 Install Gold standard &2 Abolish Fractional Reserve Banking.What happens when there is "credit expansion on an international scale by all the capitalist countries simultaneously" still remains to be studied?!Abolish Fractional Reserve Banking:------------------------------------------------As far as I know, there used to be two kinds of banks: Deposit banks & investment banks. The deposit banks would not pay any interest on the money deposited and in fact charge some fee for storage - however the money could be withdrawn at any time. The investment banks did pay interest - but the depositor could not withdraw his funds until the end of the term. Modern banking, by combining both the deposit and investment modes has in fact evolved into an unstable structure.The deposit banks were possible because in a gold standard, prices fall as the economy expands and production increases. To illustrate the idea with a crude example assume that the monetary gold stock is 10 ounces and the GDP consists of 2 computers, then the price of each computer would be 5 oz. Now as the production increases and the GDP becomes 10 computers the price of each computer would be 1 oz. In such an environment, deposit banks become feasible.-----------At this point, I would like to make a speculation:Assume that the plan is succesful. Gold soars to $30,000++ and Euro becomes the reserve currency. At that time, shall it be safe to buy gold with the savings?I doubt it. In fact it might be the equivalent of buying gold at the 1980 peak. This time however, it looks as if the gold shall become overvalued and stay overvalued. Using the 1980 example, it would reach $650 and stay there indefinitely. Why? To mask the inflation in Euro.Let me illustrate this with a calculation. Assume that European Central Bank plans to inflate the money at rate of 5% p.a. Further, assume that gold becomes overvalued by a factor of 60%., then it would take 9.6 years for gold to become fairly valued ( 1.05 to the power of 9.6 = 1.6 ). Equate the overvaluation factor to 6 and the time extends to 36.7 years!As I switch into my conspirational mode <smile> I can see a multi-faceted strategy emerging:- Make the gold overvalued as reserve currency is switched from USD to Euro.- Make public believe that saving in gold is the thing to do under all circumstances.- Slowly sell the overvalued gold to unsuspecting public and increase the monetary stock. Galearis (03/08/01; 09:56:12MT - usagold.com msg#: 49592) HUGE lease rate hikes... continue!Pullingoutallthe stopstocapG. FredBear (3/8/2001; 9:17:53MT - usagold.com msg#: 49591) Mr Gresham (3/8/2001; 2:44:52MT - usagold.com msg#: 49576) Kinda of makes you wonder, does it not. The Japanese Finance Minister says the sky is falling and the currency traders say "Tea anyone?"Picture Al Greenspan saying "the US Federal government finances are close to collapsing."Think that would have an effect somewhere?The US has to try so hard to keep up the illusion of prosperity and growth while the Japanese can't give the store away. Mr Gresham (3/8/2001; 9:10:12MT - usagold.com msg#: 49590) Other Markets: Indicators? New questions? Just a quick wake-up thought this morning -- not sure if I know where to research these but:If Euro is going to displace Dollar as reserve currency, or at least make serious gains against it this year (whose prediction was $1.28 -- GS? not sure) shouldn't we see some signs of this in futures or options markets?And, if gold paper markets are headed for breakdown, does that apply to options markets (Q for FOA?)(CBOT?) and shouldn't that possibility or a spike show up in some of those? COMEX is not the only market that would need to be "managed" in this case, is it? Galearis (3/8/2001; 9:00:44MT - usagold.com msg#: 49589) @Randy (@ The Tower, your#: 49578) As a "liberal" who feels that democratic government functions as a fine line balancing act of representations of multi-dimensional supports from its backers (and detractors)I salute your views and subscribe to them fully.I too have been an admirer of OROs magnificent insights to macroeconomics and fiscal matters and can only find some minor disenchantment when there is an ideological shift that diminishes the message, from my point of view, with the effort to place some small squareish pegs in some roundish holes. These holes involve social conscience of governments to their electorate.At the same time we all owe ORO a great deal for his insights and the aclaim he has received is VERY well earned. Having said that: not everything socialistic is wrong (misquided?). Our family was a handicapped one for many years with a child who would not have survived in a non-socialized medicare welfare state. Therefore, in spite of the ideological pressure of many who would cry "unearned" and "unworthy" I would submit to you that the "misguided government" of the day payed many thousands of dollars per month to keep my child alive - and that is a lot of currency spent to buy two votes. It would seem to underline the fact that even a bureaucracy can have a heart.That the child died anyway would seem to underline that this too was a waste (?)But it should surely destroy the myth that governments are heartless and self-serving of the few over that of the majority. Governments may have hearts even if they are of an institutionalized nature. And one works harder to repay this kind of debt too -even if the currency one pays back takes a different form.This is a point that is often not seen, or shall we call it a point that has suffered some discount. Best regards,G. RossL (3/8/2001; 8:52:36MT - usagold.com msg#: 49588) Gold leases http://www.gold-eagle.com/editorials_01/bugos030801.html Ed Bugos with some theories on gold leasing. tedw (3/8/2001; 6:44:43MT - usagold.com msg#: 49587) Deflation http://www.usagold.com Jude Wanniski on deflation and Gold in todays world net daily at www.worldnetdaily.com justamereBear (3/8/2001; 5:50:53MT - usagold.com msg#: 49586) Oro Randy I would like to comment that any means of exchange is hoarded, used in trade, or whatever, only if it is accepted by all the parties, and percieved as, a store of value. If gold is not seen as a store of value, what purpose is it fulfilling other than an industrial metal? Personally, I see a good deal of the decline in the POG as attributable to the very efficient propaganda machine that debunks its use as a store of value with the public, thus reducing its price toward that of the industrial metal component of its market price, and destroying its monetary value component. For gold bugs, thank god old workable ideas and traditions die hard, and gold is likely to see its day in the sun again.Respectfullyj'Bear Topaz (3/8/2001; 5:37:08MT - usagold.com msg#: 49585) Lease rates are "GO" Monthly Au 5.15%GOFO about to be re-named Gold offered "backward" Yar! Topaz (3/8/2001; 5:26:16MT - usagold.com msg#: 49584) Randy Whew! I'm glad you got that off your chest Sir.How do we determine the value of our hoarded Gold if it's not used in trade, other than by decree? (back to the future - Bretton Woods)Thanks for ALL your efforts here.....Herculian! Rockgrabber (3/8/2001; 5:09:39MT - usagold.com msg#: 49583) DO we call this fortunate? Fiat Money has been a great invention. Without it I would never have been able to accumalate gold so easily. Imagine if we were on a gold standard, how little gold you would have? Sure it would be worth more, but I am not sure how long this under par value will hold. POINT... I dont think ever in history has gold been soo easy to obtain. For how easy it is to obtain dollars, and how cheap is gold? Randy (@ The Tower) (3/8/2001; 4:53:32MT - usagold.com msg#: 49582) Back to business...Bank of Japan Governor Hayami says strong currency in Japan's interests http://biz.yahoo.com/rf/010308/tau024435.html TOKYO, March 8 (Reuters) - Bank of Japan (BOJ) Governor Masaru Hayami said on Thursday a strong currency was in Japan's interests and it was desirable for foreign exchange moves to reflect economic fundamentals.---The latter portion of this in particular sounds like an echo of words spoken not long ago by U.S. Treasury Secretary Paul O'Neill regarding the U.S. dollar prior to the recent G-7 meeting. Given the fundamentals of the massive U.S. trade deficit, do you think the foreign exchange markets will much longer "reflect" favorably upon a strong dollar? Randy (@ The Tower) (3/8/2001; 4:16:24MT - usagold.com msg#: 49581) Finding value ORO, you have said, in your post to Holtzman (03/05/01 msg#49408):--- "the separation of the wealth and trade functions of money into currency for trade and debt, and gold for savings is not desired, required, or of general benefit to the country that adopt it. The bulk of gold's purchasing power is derived from its use in trade. Gold obtains its premium when used in trade it is a premium over its wealth value. When gold is displaced from use in trade by law (the law that establishes fiat money), by fractional reserve banking producing fiduciary gold substitutes, or by dilution of the gold content in coin, its purchasing power is low, and it is hoarded as wealth. When gold is used in trade, it obtains such a premium as to eliminate the bulk of its wealth function, thus it is not hoarded when used in trade, but dishoarded.+It is dishoarded because of the premium it obtains in trade, where it finds its best use. FOA shows the significance of gold's use as a trade money – not a wealth money. (I believe his usage of the words is a reverse of my use, but the concepts we present are identical, gold serves best in trade, not as a hoard). Governments and bankers have forever attempted to gain for themselves the premium gold obtains in trade over the value it obtains as wealth – the same kind of wealth as a precious painting or bottle of oil. +Holtzman, Aristotle and others have fallen into the intellectual trap of impossible coincidence. Namely that gold can obtain its full value - its trade premium - without being used directly or indirectly in trade and therefore in denominating contracts and debt. Yes, a portion of the gold premium may be absorbed in credit expansion and the use of fiduciary substitutes instead of gold bullion, but this portion is minor and steady in relation to the gold stock, thus having a minor effect on its value (once the fiduciary portion is created, and so long as government does not encourage further credit expansion)."---It was this final sentence of yours that I was essentially addressing with my earlier counterpoint comment, "Though, we must consider modern bullion banking...there is no single global lender of last resort, and yet look at the expansion that was eventually attained in this modern day thanks to good business communication/cooperation by the parties involved. And yet, the eventual collapse will be colossal because the system is running on a global scale. When you propose the workability (and the mild inflations) of "free banking", you ignore both history and human nature, and have thus placed any of your subsequent economic thought upon a fictional foundation."While you are seen to object in these words to a separate asset for savings and for currency, you now that I come down in favor of the right tool for the right job as stated beyond overkill in my previous post. And additionally, it is important that I let you know that I once shared your specific opinion about the highest value for gold being achieved through its trade use, but I no longer hold that view. By wiping out the dilution (an inevitable effect accompanying its use in trade as a currency introduced through banking), it is with the separation from currency in a near parallel "monetary" usage as a universal highly-liquid savings asset that provides a window into the true and higher valuation for gold. It is this unique value of gold for use as a savings asset -- as a global yet non-national "monetary system" for savings -- that has yet to be properly priced by the market in modern times. In the price of gold in today's market we only see the dilution effect of bullion banking, without much of your added premium effect for its direct trade usage, and further suffering without having any clearly perceived usage role among the eyes of the majority of the western world.I think if you return to reread FOA's commentary on the Gold Trail regarding the historic role of gold and its use-value in trade (as compared with the bottle of oil), you will see that he was leading to a conclusion for today's world that does not match the one you have attributed to this example. Today's world is not as it once was, and asset usage changes accordingly. In today's world, gold has more importance as a wealth (savings) money than as a trade money.Practically speaking as a man with free will, I would never choose to spend from my gold savings if I also had a payment alternative using an equivalent value-quantity of paper currency which was likely recently acquired from ongoing productivity/earnings. Because ANY currency inflates in conjunction with human nature, banking, and government, when given the choice between either pile of instantaneously equivalent values in gold and currency, we choose to hold the gold for its advantage found "tomorrow". In this realistic scenario in a post-bullion banking collapse you should see gold's wealth (savings) value exceeding the trade value as represented by the equivalent currency holdings that were spent "today" instead of the gold. Knallgold (3/8/2001; 4:04:52MT - usagold.com msg#: 49580) @ORO-Connolly and the freedom of Europe But why the hell think insiders the euro will win the battle?The EU has a major political problem,and this will take the euro down with it.I refuse to add an IMHO here.If you put the euros strenght solely on the weakness of the $ then it is as weak as you can think.I have followed the Maastricht creation,every trick was used to be included in the "fine" club.Impudent and blatant budget manipulations,the US couln't have done it better.And I can't follow the propaganda that Europe has less debt.Italy and Belgium are bankrupt.Germany has trillions of debt.Even the 7 million Swiss have 200billion official debt.,but posts now for the first time black numbers.And having 10 percent unemployment in good times doesen't speak for a strong economy.Switzerland was up to 5% during the hard recession but is now back to 2. %,thanks to a hard currency we had a lot of painfull restructuring to do.And now the EU threats Ireland with punishement because of an overheating economy-but who makes the monetarian policy in Europe???Freedom.It is slowly eroding.The media situation is Goebbels like and I don't use that term loosely.The EU Comission calles me "rechtsextrem"- Nazi and antisemitic because I voted for the conservative libertarian SVP,and Switzerland isn't even in the EU!Schroeder the Kaiser doesen't see Switzerland as a sovereign country anymore (his remarks in the money laundering cause,it doesent matter if you are a member,you have to do the "good",because Europe is a "Wertegemeinschaft".And of course the socialists define what is good,like Hitler did)Freedom is nowhere on the agenda here,officially!Solidarity,Faireness,Equality.Gone the legalism state (sp?).The moral state is back!Remember the Austria case?Don't go skiing at the Jews ähh the Austrians?Since then,everybody knows the real face of this so called European Unification.Recreation of the Roman Empire,at all cost.Remember Schröder going to Lybia to thank Gadhafi for helping(=paying)in the kidnapping case in Malaysia?EU giving money to Palästinia?The role of Israel?Turkey is also on the joining list of the EU.You see the old borders of ancient Rome again!I don't lose a word on the ridiculous EU bureaucracy.Just that,the norm of condoms. And the EU is running around and saying we are the better model!Of course they don't/can't allow the competition of the systems.It is embarrassing their incompetence and arrogance.The euro is a misconstruct,has ever been,whatever the "experts" tell us.It is doomed to fail,everbody (the peolple) knows it,they are just not allowed to say it officially.Denmark did,Switzerland did.All know the Brits think the same.If you followed the Englanders and the Swiss in the past you did well,in freedom I mean!This time?As soon as the dollar is repaired,investors will flee from the euro.I wouldn't be surprised that after an euro failure the europeans will start to knock their heads again.I don't hope this is exactly the plan of the NWO.I am very glad the Swiss got the curve finally,their own way is.This cause is dead for the next ten years here,whatever the media and politicians say.Our governement don't likes their people now,but hey,we are the boss by constitution and can kick some butt at will.If the EU/euro is the only alternative for the Dollar collapse,then I prefer the nuclear economic event(FOA)!You can't buy me with a little ultrahighpriced yet demonitized (!) "freely" traded commodity'sorry store of wealth -Gold!Europe has to solve its problem NOW,get rid of socialism and socialists ASAPst and turn to freedom ULTIMATIVELY.or it will end in a desaster.People might be lulled and brainwashed,but they have a strong selfconfidence,love their individuality above everything,and are no more like slaves.Paternalismus and "Grossreich" philosophy will fail.No room for arguments here.Freedom.Europe,get it!NOW!Gold.All,get you more.Strong words,I know,but you know how I think.Thanks for reading. Randy (@ The Tower) (3/8/2001; 3:08:02MT - usagold.com msg#: 49579) Why currency and savings are best viewed and used as vinegar and oil [My advance apologies for the length. Scroll by if you already view gold and currency as necessarily two separate and useful tools for two separate economic functions.]To reiterate from the previous, many persons having strong dissatisfactions with government make a fundamental error in extending or projecting this same anti-government sentiment upon the unrelated realm of currency and banking. Feel free to "hate" none, one, or both, but recognize that you must not level charges at one based on the sins of the other. No matter what wide range of passions a person might harbor toward government, they must analyze the issues of banking and currency with an untainted eye....and only then might they justly hurl stones if any such airborne deliveries are found to be warranted.This commentary stems from the need for a response to ORO's Monday rejection of an explanation (one of many possible) offered by Holtzman regarding why the euro was not crafted to be a fixed gold-standard type currency. In fairness, ORO, you make some sound counterpoints, my favorite of which was: ---"No government would disarm itself of its ultimate purchasing power in order to attempt a destabilization of another. It is like hurling one's cut off head at the enemy, one can do it only once, and is likely to suffer more from doing so than the target."---But in pitting "Joe Average" against "The Evil Government" as you so often do, you set yourself up for what I feel is a fundamental flaw in your thinking. You say:--- "The mere existence of the fiat currency takes substantial portions of Joe's dinner, and takes away his best clothes."---[An interjection: are you sure you are not confusing "fiat currency" with direct taxes upon Joe in that previous sentence? But let's continue...] --- "There is no value whatsoever which fiat provides the "average" person. The only beneficiaries are the thin layer of high government bureaucrats for which all Joes slave, and the politician elected by Averages to the post of slave driver. +Joe Average's current behavior regarding debt accumulation is a function of his need to protect himself from the depreciation he expects of his future monetary income. The self-indulgence we refer to often, is that resulting from the habit of trying to outwit the monetary authorities and their coterie of hangers-on. Joe does not need or want fiat money, he seeks protection from it."---ORO, you have misidentified precisely what it is that Joe is seeking protection from, and the seeds of my objection to this passage quoted above are found within your own excellent thoughts offered earlier in that same post. Regarding the nature of the euro currency itself, you provided:--- "The reason for the Euro not being a gold money is that what was desired was a currency. An inflatable currency based on debt, coupled with the possibility of having a cash gold element when necessary, so that rather than provide Euro for liquidity by buying market debt, euro would be used to purchase gold to provide liquidity. Thus assuring balanced books at the ECB and member CBs without having to hyperinflate the Euro.......+The EMU is not about solid honest money so much as it is about the political needs of EU governments and politicians to have a non-German non-French money -- one that is not a political football between the two governments. Thus the need to have gold in the system results from the need for a non-partisan money within Europe. The dollar experience has made the rest of the world wary of a new Western debt money for trade designed in all its institutions to benefit only its issuer. The Gold scheme is the alternative that allows Euro to be a potentially politically neutral currency."---Who truly has any strong objection to that as a starting point? But now, lets get back to the meat of the matter and reflect on your key comment, "Joe does not need or want fiat money, he seeks protection from it." Again, it is important that we understand from what it is precisely that we, the "Joes of the world", are truly seeking protection. Yes, it is the currency, but not because it is fiat. Let's use your own words against you from this same post to Holtzman.--- "Your [Holtzman's] pointing out to the 1920s and 1930s as having anything to do with a gold standard implies an erroneous view of the monetary system that collapsed. It was not a gold standard system, but a leveraged gold standard, where the degree of leverage was controlled and purposely expanded by government regulation and directly by government itself. Governments manipulated the credit system into expanding to such an extent that gold constituted under 5% of the money supply. Obviously that was not a gold standard."---It absolutely was a gold standard! And Centennial can sell you the authentic $20 gold coinage to prove it. <big smile ha! Ha!> And that was the exactly the problem with the currency! And to be sure, this is the same expansionary (supply) problem to be expected with any currency used in banking. You lay blame on the government for the problem, but in truth, the issue of such problematic collapses is only an issue of scale versus timing as guaranteed by human nature. The problem is one banking, and to be sure, the expansion/contraction problem is independent of the currency and the role of good or bad governments. And just as Journeyman might be heard to say, "If you don't believe me, just ask me!"So, getting right to it, let's address your flawed issue by beating this dead horse some more. You say, "Joe does not need or want fiat money, he seeks protection from it." But please consider this odd notion of mine: in truth, Joe needs fiat currency so that he can attain MEANINGFUL protection FROM it. History has taught this lesson, and for the first time on a grand scale "someone" has taken notice and acted accordingly. ORO, I know you have been exposed to this full line of thought before and have recently offered your resisting thoughts, but I must nevertheless reiterate this counterpoint now for those newly arrived or following along slowly so that each man is armed to be his own judge and act accordingly. (In the end, what a happy circumstance it is that despite our differing views, you and I both recommend gold acquisition as the conclusion of our thoughts.)In the course of normal commercial banking activity any fundamental asset which is selected (naturally or "artificially") and put into use as the circulating unit of currency experiences an unavoidable inflation (expansion) of its apparently available supply. As you should know, this holds true with or without the presence of a central bank, though is arguably apt to be more pronounced sooner in the timeline if a central bank is providing a moral hazard as lender of last resort.Notably, with a central bank comes a mixed blessing -- that banking dislocations are much fewer, yet they are more colossal when they do inevitably occur. (Though we must consider modern bullion banking...there is no single global lender of last resort, and yet look at the expansion that was eventually attained in this modern day thanks to good business communication/cooperation by the parties involved. And yet, the eventual collapse will be colossal because the system is running on a global scale.)When you propose the workability (and the mild inflations) of "free banking", you ignore both history and human nature, and have thus placed any of your subsequent economic thought upon a fictional foundation.It is during the time that the banking system is functioning normally and with high confidence that the currency expansion runs at its greatest while at the same time undermining the purchasing value of all long-term savings denominated (as would seem natural to "Joe") in the fundamental asset defining the currency system.Even if originally built upon such solid fundamental assets of gold for use as hard-money currency, the banking system soon evolves into a predominant system of elaborate accounting with an attendant waning of the perceived importance of the physicality of the fundamental currency unit. Thus, the phenomenon you describe of Joe seeking protection from fiat currencies actually has a parallel in those seeking general protection from ANY currency used in banking, including hard-money banking. (Witness the experience of modern bullion banking and the diminishing effect of its paper ledger supply upon the value of physical savings acquired in the fundamental denominating asset of that banking system, gold.) ANY thing can serve as the basis for the accounting units we use as our currency. (Just look what we are using now...credit! Mere contracts of promises, promises to repay units of other people's contracted promises!) But, only gold is suited best for use as instantly liquid non-bank savings. Gold works uniquely well in this savings regard because it is "monetary" by its nature, independent of any mandate.And thus, if the currency unit itself is to be gold, by your insistence upon a wide continuation of bullion banking rather than some other form of currency banking, you have effectively cut off Joe's most natural choice of savings alternatives outside the commercial banking system. The savings asset of choice must be something other than the currency asset to remain safely immune from the naturally occurring ledger-induced inflations and deflations experienced by the fundamental currency asset which is itself further represented systemwide by the banking paper that is lent and circulated as its equivalent.As we see, when it comes to currency and its supporting banking system, the function is more important than the form. So, to modify your original premise, Joe needs the existence of fiat (paper) currency as a means to set gold free...because he has a greater need for this unique yellow asset for the preservation of his wealth. He must, in ANY circumstance, seek meaningful savings protected from banking's effect on any manner of currency, be that dollars, silver (HA!), or euros. These are two distinct "jobs" (currency and savings) that require two distinct asset "tools". And given the relative importance of each "job", it is more important that Savings be the one that utilizes the best of the monetary assets, gold. And as Currency ultimately devolves to an elaborate system of paper accounting via banking, it might as well drag nothing physical down with it.The temporary problem with the system today, as FOA has said recently, is that our current system is only halfway complete. We have expansionary fiat currency AND we have expansionary gold banking operating side by side. We don't need both. With gold wrapped up in the banking intrigue, it cannot yet provide the expected performance as a savings asset keeping score of our wealth. (Not yet, that is, if you are looking at it as a savings asset versus the dollar currency. To the folks in Turkey, it is doing just fine versus the lira currency!) Because we and the euro framers recognize that human nature will dictate the terms in the end, we are aggressively acquiring cheap physical gold today for the coming collapse of bullion banking and the resulting upward revaluation of gold in its role as a wealth saving asset. Randy (@ The Tower) (3/8/2001; 3:01:59MT - usagold.com msg#: 49578) Observations and Ideologies -- directed toward ORO (and Journeyman, too) ORO, as you seem to participate as the perfect living sponge, absorbing everything and filtering only that which serves you, I am comfortable offering you once again words of constructive criticism. Much of this was penned Monday evening in the comfort of a coffee shop as a response inspired by your early Monday critique offered to Sir Holtzman. Unfortunately, my resources were spread thin over the past two days and I was unable to get this typed for the forum until now. Meanwhile, subsequent posts by Holtzman covered many of the sentiments I had addressed on paper, and I nearly held back with this as it would be an exercise in redundancy. However, my presentation varies in degrees from Holtzman's, and further, seeing Sir Journeyman weigh in in opposition, it seemed best to proceed with this posting for balance. (It has been ever so slightly altered from its original form in light of the post-Monday commentary.)To state this as directly as possible, as a long-time reader of your commentary I continue to see in your words such a prevailing and apparently ideological rejection of "all things governmental" that I submit to you stands in the way of your achieving the most effective analysis or economic forecast. [Journeyman goes so far as to say in (3/06/01 msg#49485):--BEGIN--"The fact that grown and otherwise intelligent adults believethe fairytale that governments help the poor more than they hurt them isa monument to disinformation, the power of brainwashing, and the modern press."[To which I must interject, for the sake of this discussion, it is patently wrong to place the foundation of government's necessity upon the fiction that it exists to help the poor. Whether or not it attempts to do so is another issue entirely.]"...in actual operation, governments are often a great source of disorderand chaos rather than the "fonts of order" they claim and we assume.Therefore, for order, morality, and the good of mankind(including the "poor",) down with all government fiat currencies. Period." --END--This leap to make recommendations about fiat currencies is a non sequitur that I hope to address in due course.]To be sure, ORO, your analysis stands strong in the theoretical world which you frequently construct with your ideologically tainted views of government. But, the economic utility of your work is diminished by the degree of departure of your ideology from our living reality.Whether you "like it or not" the governments we have today are part of the landscape. You will not move a mountain by shouting at it or making arguments against it; (but thankfully, it is up to each man alone to decide how he chooses to spend his own precious allotment of time and energy.) So, what of this governmental mountain? Taking the large view, it can be said that under threat of "mob rule" governments operate today and tomorrow under terms acceptable to their constituents and their neighbors, and similarly, we see citizens operating today and tomorrow under terms acceptable to their system of government and their neighbors. Significant imbalances on either side tend to bring about a compromise in the acceptable terms of operation to restore the dynamic state of harmony.It could be argued that as the realm of mankind's interactions become more intricate and complex, governments exist -- if for no other reason -- to institutionalize/formalize the "custom" of the natural social order of the day. This is seen as man's own attempt to guarantee that the collective well-being of the present time extends into the foreseeable future. (A simple judicial system comes to mind as the start point, distinctly *not* as a "babysitter" to help "the poor" however they might be defined.)Surprisingly, it was none other than Journeyman himself who offers credibility to the reason for this inevitable/necessary preservationary role for government in his post (3/06/01 msg#49500):--- "Much of the danger from other humans stems from"clique selfishness," that is, each group attempting to takecare of their own at any expense. This is a development ofmodern populations that are too large for face-to-faceknowledge with each other - - - usually in combination witha lack of understanding of the advantage of trade because"division of labor" makes such trade a win-win situation."---My comments portray an oversimplification, surely, because they have not thus far fully acknowledged the potential difference we might have seen from an unfettered free-will progression of social interaction ("custom") as it might otherwise have evolved outside of the insidious coercionary influence of government's less-flexible and less-timely institutionalization of **yesterday's** customs. This, along with government's incremental legislation of self-serving appropriations and arrangements.But more importantly, I think -- to an extent far greater than your current ideological framework allows you to accept -- that the whole of the banking structure stands quite apart from this concession of a "privileged" position enjoyed in degree by government alone as an institution participating in the give-and-take of a dynamic society.You may not be aware or share this perception, but as an individual (particularly an economist), it is in your best interest to at least know something of the thoughts from behind the eyes of the population you study. In consequence, my next post to you will address what I see to be a principle flaw in your Monday commentary (3/05/01 msg#49408 directed to Holtzman) regarding the motivations of people and the subsequent value of currency and gold used in trade and savings.If it counts for anything as you read this and what follows, please know that for a time in the past I once shared your lines of reason, but found that these such flowers of thought seldom bore fruit over the course of the season, always to whither on the vine. I have since changed my views as perhaps you will do one day, also. We simply cannot continue to discount the human element in our forecasts -- as you are seemingly inclined to do in favor of briefly glimpsing unattainable perfection, or shall I say, you embrace unreasonable human expectations given all we have seen. Randy (@ The Tower) (3/8/2001; 2:59:47MT - usagold.com msg#: 49577) Sir SHIFTY I don't want you to think that I have ignored your suggestion to "rattle Farfel's cage", so to speak....it's just that I view the privacy of our posters as being of utmost importance, and therefore do not make a habit of sending them unsolicited e-mails on non-business-related items unless they have previously established a friendly rapport with me of their own initiative, in which case The Tower door swings easily both ways. Mr Gresham (3/8/2001; 2:44:52MT - usagold.com msg#: 49576) "Yen Little Changed After Miyazawa Says Finances Near Collapse" http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AOqdFjhX5WWVuIExp "...Japanese Finance Minister Kiichi Miyazawa said the financial system in the world's second biggest economy is ``close to collapse.'' Old Yeller (3/8/2001; 2:41:17MT - usagold.com msg#: 49575) Late night comedy http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3IDRVH1KC&live=true&useoverridetemplate=ZZZUGORQ00C&tagid=ZZZ1XPDX70C&subheading=uk Excerpt from the link:"It is understood the gold market said that 25 tons was too much for the market to absorb in a single day." SHIFTY (3/8/2001; 0:48:56MT - usagold.com msg#: 49574) Trail Guide Trail Guide : I sure would enjoy a hike on the gold trail. Do you feel up to it? $hifty ViewYesterday's Discussion.
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