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Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

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Select date of the archive you wish to view Month 1 2 3 4 5 6 7 8 9 10 11 12 Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Archives date back to September 22, 1998

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ARCHIVED DISCUSSION FROM 7/5/2000
All times are U.S. Mountain Time

(Yesterday's Discussion.)

ORO (07/05/00; 21:30:54MT - usagold.com msg#: 33222)
Cash currency circulation - a thought

The bulk of money is not in checkable or cash form - i.e. in the form used for commerce. Most money and money substitutes reside as time deposits and securities, and do not participate in the circulation of money through the economy. In the monetary aggregates, M1 and MZM are the relevant parts of the money supply available for clearing purchases. Of the portion that is money market accounts within MZM, the bulk of that sits in intermediate/short dated securities, not in cash equivalent form.

Banks themselves have moved to "sweep" cash balances into money market funds/accounts where the cash is capable of sustaining a larger "head" (as in head of beer) of debt securities that are earning interest. The result is that the monetary base -or cash base -needed to support the debt and the circulation of funds in the economy has fallen substantially. Even at the checkout counter, the prevalent and growing use of credit cards has made the cash for transaction execution available at the moment of transaction - created by the obligation of the consumer at the moment of transaction. At the end of the day, the credit card balances are transfered to the retailer's bank and settled with the banks issuing consumer credit. The banks then sell and buy debt securities in the quantities needed to settle the transactions on both sides. The credit card balances may be "securitized" and sold as a short dated security to a money market fund. The cash from the money market fund would be used to settle the retailer's receipts and the retailer's bank will deposit the cash balance in checking accounts, from which the bank will sweep funds into another (or the same) money market fund. The cash circulated twice and returned to the money market fund after raising its balance by that amount.

The same can be seen as we go down the supply chain. The retailer is usually given 30 day terms by its suppliers, so that the suppliers borrow the sum from their banks, sell the products and either sell the bank the receivables (retailer's receipts) or use the receivables as security for the loan. (This loan is necessary in order for the producer to make the products ordered by the retailer, where retailer's payment will be given 30 days after production, while the producer's bills must be partially paid as the products are manufactured). The working capital loans are settled by the retailer using his money market balances to deposit into the producer's checking account. The producer then pays off the loan. The producer's obligations were made during the period between the receipt of the order and the receipt of payment from the retailer - often at a 2 week + 1 month period. The producer took on obligations to his bank so he can fill the order, and paid workers and supliers with the borrowed funds. Thus money was created by the bank - backed by the producer's order and later by his receivables and the funds were deposited in worker's and supplier's accounts. The producer's bank will often trade the receivables loan by selling it or a mortgage contract to a money market fund or another bank, the cash would be used to settle with worker's and supplier's banks who will either buy securities with the funds or lend the cash to the producer's or retailer's bank. Here again, the cash circulates twice during the period between order and payment. The use of credit rather than cash for payments doubles the circulation of cash but still results in a round trip from money market and bank accounts back into those same funds and banks. Title to the cash changes hands, but its location stays about the same.

Duisenberg described the resulting condition where cash is circulating in volumes so great that the whole of a bank's net capital is circulated daily. Banks are now only 1/4 of the US debt market. Securities backing money market accounts and held by pension funds and foreigners are now the bulk of debt. The mortgage securitization companies (which are GSEs) and the other securitizers (GMAC, GE commercial credit etc.) are more efficient than the banks themselves, and once semi-cash status was granted the money market funds balances other security accounts can be made to behave in similar fashion. Holders of equity and debt funds can move balances between them and money market accounts with no transaction costs - as they do with bank savings accounts and CDs. With the provision of automated transfer services and automated diversification services by some fund families, brokers and the new "Folio" service, the practical use of stocks and bonds as money balances is now possible with better convenience than that of bank accounts.

The bank's functions are receding to become cash settlement and derivatives originators. The derivatives are more credible when issued by a bank than by Joe Anyone because banks have the guarantee of the central bank for their liabilities, which reduces counterparty risk and makes them the preferred counterparty.



TheStranger (07/05/00; 21:25:42MT - usagold.com msg#: 33221)
Don Coxe Update
www.jonesheward.com/commentary.cfm
Just incase no one has mentioned it yet, Don Coxe has a new conference call accessible at the above referenced link. If you have twenty minutes, tune him in for his bullish Euro, oil and gold arguments. Goldbugs will particularly like his answers to questions posed at the end of the presentation.

Thanks to Cavan Man for the heads up.

ORO (07/05/00; 21:19:28MT - usagold.com msg#: 33220)
Aristotle - comments, installment 4
Debt money supply and demand - a balance

The effort to service debt is the sustenance of the purchasing power of a debt currency. While the dollar use within trade is simply as a medium of immediate exchange, this nanosecond of time in which a dollar is used is not where its nature shows. Where it shows is in the time between receipt and use - when it sits in your pocket, or in your account. Devaluation takes time and is thus not reflected in the moment of transaction.

The fact of use of a debt money as cash does not change its nature as a receipt for debt, nor does it change the fact that general price levels are determined by the balance of product (goods and services) supply and demand vs. monetary supply and demand. The demand for money to service debt and its supply by new debt issue balance out so that the residual of the balance is what matters for net supply and demand of currency.

This monetary supply and demand is one of the two determinants of a currency's purchasing power, and it seems to be the greater component.

If debt securities can be effectively used directly as money balances outside banks, then we can write up the general relationship:
Supply demand balance = Supply - Demand

Demand = IE * Debt(t)
Supply = DDebt = Debt(t) – Debt(t-1)

Where IE = effective average net interest on outstanding non-financial debt, which is not easy to determine. I like using a proxy for it in the form of the 6 month Eurodollar rate when using this measure with market statistics.

Dividing by the Debt(t) figure and defining a debt growth rate, DGR, as DDebt / Debt(t)
We get:
Balance = DGR - IE

For 1999, the balance comes to 7.1% - 5.44%, making for a +1.66% balance – meaning that there was monetary excess in the US.
Current expansion rates show excess demand of ¼ % for May 2000. Particular periods of excess supply are late 1998, when the figure stood at a phenomenal 5.3% during the last quarter, and late 1999, when the figure was at 4.4% for the last quarter. Deflationary conditions were rather weak and far between, at some -3.3% in May 1999, and -2.6% in Feb 2000. This year was rather tight so far at 1%, but March was loose at 4.2%.

Similar calculations done on "Big Float" show a push and a pull for dollars in the global debt markets where dollar demand excesses are imported into the US about 3 months after they occur abroad. The current situation has been very deflationary in the foreign dollar markets since late 1997. The bursts of credit creation within the US were necessary to avoid further deterioration in dollar debt of foreigners fighting each other for dollars they need to pay back debt. The funds were exported through net US investments abroad and through the trade deficit. The demand for dollars for settlement of debt abroad sucked cash and reserves from the US out to the global markets. The dollar debtors had to export goods at reduced dollar prices in order to increase overall dollar volume of exports to the US, and were rewarded with just enough dollars to break even. The IMF supplied the balance.

The Saudi and other oil countries that accept dollars for oil exclusively have forced central banks to keep larger dollar reserves on hand as oil prices rise, the Saudi and UAE increases may be shots at the dollar; by inducing relief in the needs of growing countries to have their central banks continue accumulation of dollar reserves – not only to pay debt, but to pay for oil.

Europe needs $175 billion to buy 1 year's supply of oil at $30/bbl, less than $150 billion at $25/bbl.
Japan needs $68 billion at $30, $56 billion at $25.
China $51 and $43,
Korea $27 and $23,

The world outside the US needs $660 billion to buy 1 year's oil at $30, $550 billion at $25. The combined rise in oil consumption and price since the March 99 bottom at $10-$11 raised the 1 year reserve from just over $200 billion to $700 billion at the $32/bbl mark.

The rise in the price of oil into 1997 was part of the dollar liquidity pressure on the emerging nations. At the time, $27 oil and the requisite $500 billion 1 year reserve was more than the dollar indebted nations could bear. After some years of collecting reserves and delaying of oil consumption, the Newly Industrialized Countries are raising consumption and have the dollars to pay for some of it – at least for now.


Golden Truth (07/05/00; 20:56:19MT - usagold.com msg#: 33219)
GOLD NOT MOVING ON KITCO CHARTS??????
It's like GOLD has frozen and has stopped trading, could it be????? Is it true??

G.T

Golden Truth (07/05/00; 20:32:52MT - usagold.com msg#: 33218)
Gold up $281.41 on C.T.V News Net??????????
C.T.V NewsNet shows Gold is up $281.41 dollars.
Is this an error or the real thing, i'll let you all know. Now back to my T.V it's channel 52 here in Calgary,ALTA.
G.T

HI - HAT (07/05/00; 19:05:39MT - usagold.com msg#: 33217)
Journeyman...msg.....33214 The Mess
No end In Sight ; Outcome Uncertain
"They", must be deprived of MONEY. Tax Revolt is the only solution at this point.

Only when the backs are broken of the terrorist organizations IRS..BATF..DOJ..FBI...EXECUTIVE ORDERS..ETC.will reason and a Republic have a chance to flourish.

I beieve the Nation will transgress through a surrealistic nightmare before reason prevails, if ever.

Although corrupted Government is the snakes head, the Nation of common people bears all responsibility for its trek into the deep woods, where they now find themselves
LOST

HI - HAT (07/05/00; 18:37:54MT - usagold.com msg#: 33216)
Town Crier___________ "new economy"
The only thing new in the US "new economy", has been the magnatude and unprecedented length of the "binge".

The hallmarks of the mania will be debt piled on debt, bald naked hedonism, pschotic consumerism, gambling, deceipt, denial, hubris, laying down to a mad Federal power grab.

We now stand at the dawn of "settlement day". There will be no soft landing.

Either all the out of control debt-money creating entities keep pumping more and more, or the debt servicing structure will implode.

..............Liquidation or Serious Inflation.........

..................OR BOTH.............................

TownCrier (07/05/00; 17:58:52MT - usagold.com msg#: 33215)
ECB's President Duisenberg plays down the notion of European "new economy"
http://quote.bloomberg.com/pgcgi.cgi?T=markets_newsfeat99.ht=&ptitle=EMU%20Top%20Stories&touch=1&s=AOWNHoRUBRHVpc2Vu
Speaking to the European Parliament, the ECB President said, "It is difficult as yet to find clear evidence of a new economy in the euro area," whereas on the other side of the big pond, last month Fed Chairman Alan Greenspan said the gains in U.S. productivity in recent years appear permanent.

President Duisenberg said the ECB must remain vigilant against inflation, and that such commitment to "nip inflationary pressures in the bud" was reflected in the five rate hikes within the past eight months.

While dismissing notions of a "new economy" in Europe, Duisenberg was nevertheless able to point to a promising economic outlook and real growth in the euro region, with each of the next two years seeing growth "considerably in excess of 3 percent." He said, "The best period that Europe has had in decades lies ahead of us, indeed we're in it."

If the U.S. economy is currently opperating within the glory of a "new paradigm" whereas Europe is only now starting to come up to speed, what are the prospects for future U.S. currency demand and external exchange rate strength, particularly when considering the massive U.S. trade deficit?

Journeyman (07/05/00; 17:24:29MT - usagold.com msg#: 33214)
Who's responsible for the Modern American Mess? @Black Blade, silent runner, Christopher, ALL

Black Blade, who's responsible for the Modern American Mess is a
very difficult thing to untangle, at least it was for me. The
core insight necessary for me to get it straight as to who is to
blame came from Ed Crane & CATO Institute in a radio clip I just
happened to hear. Crane said that the "government" was separate
from the country and "the people."

Now I'd heard this in various ways for years -- I was involved
with the National LP organization for nearly a decade -- but I
hadn't "gotten" it till Crane's statement hit me just right.
That's when I realized that somehow "the government" is "them"
and the rest of the population is "us."

When people say "our government," I now regularly tell them, "It
may be YOUR government, but it's certainly not mine." Did that
make you bristle? Are you thinking, "That low-life Journeyman
isn't a patriotic American. If he doesn't love America, he should
leave it," or some such?

Until it becomes second nature to reject anyone or any phrase
grouping you with those comprising "the government," you're like
a pet dog that begs for his leash so he can be walked by his
master.

Later when someone corrects your usage of, "our government,"
you'll thank them for "correcting" you. Later, you'll start the
thankless task of correcting others. I remember how hard this
all is to understand and accept - - - which is a monument to the
effectiveness of the disinformation, statist mythology, and the
context we've been raised in. Perhaps the following links might
help:

http://www.webleyweb.com/tle/le960409.html
http://www.buildfreedom.com/tl/tl07g.shtml (Search for "Bateson"
and read from there on, although the whole thing is interesting.)

Once you accept that governments are not the benevolent despots
that public prevaricators such as Bill Clinton portray them as --
nor the harmless court jesters suggested by buffoons like Al
Gore, once you accept that governments are not good for you or
your loved ones or your friends and neighbors, that they are at
best, as George Washington described them, "a dangerous servant
and a fearful master," that because as New York surrogate judge
Tucker observed, "No mans life, liberty, or property are safe
while the legislature is in session," and thus that you must
always keep an eternally vigilant eye on them as the price of
your freedom, you can begin to be able to untangle who's
responsible for what goes on in any government-dominated society.
Eventually the implications of the following quote will come to
seem almost second nature --

"It must never be unpatriotic to support your country
against your government. It must always be unpatriotic
to support your government against your country."
-Stephen T. Byington, from "Lessons From Libertarian
Tax Protests" by Bob Bennett, LP News, Spring 1986

I would suggest until a person really "gets" this, they're not
likely to get their head straight about those "idiot" Americans
who have voted themselves Bill Clinton, etc.

The reason governments are so entrenched and "we the people" find
ourselves oppressed is not that we're idiots. A main reason is
that governments steal for a living. Stealing is a very efficient
way to get your "food." If you can do it successfully and with
little "overhead" in terms of human hours, if you can get your
victims to not only allow you to take it right out of their
paychecks, but also get them to spend irreplaceable hours of
their lives to do your bookkeeping for you by filling out 1040-
type forms - - - and even pay for the stamp to mail it to you - -
- you have plenty of spare time and resources to do all sorts of
mischief. You certainly have all sorts of time to perfect your
techniques of disinformation and solidify your position of
getting your "food" in this most wonderful of all ways.

And if you're a victim, how do you resist an enemy who steals
your "food" before you've even taken possession of it and then
uses it against you? How do you recognize an enemy that
constantly uses some of this food to bamboozle you into believing
that enemy is your friend? How do you recognize your predicament
when you've been conditioned in the enemies' schools since the
age of five?

Is it the fault of, in Black Blade's words, "a generally good and
generous people, [who] tend to believe in the best of people and
not the worst?" Or is it the fault of the occupying cliques that
subvert the rules, the money, and the communications media? Is
it "idiot" Americans (or British or Argentinians, etc)? Do we
have "ourselves" to blame? Or is it the (hierarchist) cliques
that steal their sustanance through extortion (by threat of gang
attacks and at the point of the IRS gun) even though many of us
good and generous people disapprove of the "mischief" they do
with what they steal?

Is the population at large responsible? The ones who vote? The
ones who don't? Or does the very act of voting play a pivotal
role?

As this theory [propounded by T. J. Lowi, in
'Incomplete Conquest: Governing America,' Holt,
Rinehart and Winston, 1981 -LRW] goes, participation is
an instrument of conquest because it encourages people
to give their consent to being governed by the state.
Stemming from a sense of fair play deeply embedded in
the human psyche, people generally obey the principle
that those who play the game accept the outcome. Those
who participate in politics are no less committed even
if they are consistently on the losing side. Therefore,
to no ones surprise, politicians plead with everyone to
get out and vote because voting is the simplest and
easiest form of participation by masses of people. Even
though it is minimal participation, it is sufficient to
commit all voters to being governed, regardless of who
wins.
+
This scheme of politics is remarkably ingenious in the
way it exploits the natural inclination of humans
toward fair play, loyalty and cooperation in process of
subjecting them to conquest. This kind of subjugation
of the masses is no recent discovery. Etienne de la
Boetie described this phenomenon as 'Voluntary
Servitude' over two hundred years ago, well before the
mystique of majority rule became the subliminal message
in sophisticated, saturation propaganda campaigns
instrumented by a mass communication media. -Alvin
Lowi, Jr. for Economic.net
<http://www.economic.net/aina/aina5.html>

A quick insight into "who's responsible" is easily available; Did
you choose "W" and/or Al Gore as the two "realistic" candidates
for head hoodlum - - - and the "best" this country has to offer?
I didn't think so.

Regards,
Journeyman

P.S. Christopher, you see much too clearly to keep sitting in the
back of the class.


Twice Discipled (07/05/00; 17:22:04MT - usagold.com msg#: 33213)
Golden Trip
Since I am posting, thought I would mention that I just got back from a trip to Alaska. Panned for gold along a river - what an experience and brought back a cup of "dirt" from the river bank to teach me daughter how to pan for gold. There must have been some awesome nuggets up there for people to have contributed up to 19 oz nuggets to the University of Alaska Museum.
What a beautiful state.

Twice Discipled (07/05/00; 17:15:29MT - usagold.com msg#: 33212)
Watch out for the stock exchange police!
For those of you who use online trading, the following is a snip-it from an amended agreement which the NASDAQ would require me to sign before my online broker would allow me to continue using their on-line trading facility.

"7. Subscriber will maintain such accurate and verifiable records regarding the use of the Information and including the number and location of all devices that receive the Information, as may be required, and will make these records available for a period of 3 years in a form acceptable to Nasdaq for inspection by Nasdaq's auditors upon reasonable notice. Subscriber shall make its premises available to Nasdaq for review of said records and for physical inspection of Vendor's Service and of Subscriber's use of the Information, all at reasonable times, upon reasonable notice, to ensure compliance with this Agreement."

I flat out told them that if I can't trade stocks without agreeing to allow someone to come in and search me house, I will sell all of my stocks!

Forget their schemes, buy gold! This really BURNS ME UP! Give up your freedoms so you can become "rich". NOT!!!

beesting (07/05/00; 17:06:48MT - usagold.com msg#: 33211)
Christopher # 33202 -From the Back of the Classroom.


<<Now, what to do, patriots, what to do?>>

I had a long post worked out, that was lost due to a close lightning strike, but the action boiled down to this:

Thru the courts FREEZE the ASSETS of the United States Government, because of breach of contract.(Not using Gold or Silver as money!!!!
I know, I know, the consequences would have to be worked out. But it would be a bloodless revolution.....beesting.

wolavka (07/05/00; 16:49:46MT - usagold.com msg#: 33210)
meats and grains
turning up again, more solid inflation.

watch for a drop in gold overnite , clean out some stops and then higher.

TownCrier (07/05/00; 13:13:08MT - usagold.com msg#: 33209)
Increased Saudi Oil Output to go to China?
http://biz.yahoo.com/apf/000705/china_oil.html
HEADLINE: Chinese Oil Imports To Rise

Although China is the world's fifth largest producer of oil, growing demand from booming economic growth changed transformed China from an exporter to a net importer in 1993, with oil demand expected to grow by four percent each year going forward.

Recent signals from Saudi Arabia that it may increase oil production was said to be in order to maintain the prospects for continued world economic growth.

TownCrier's bottom line: With such global awareness, how much longer will the Saudis continue to support an oil payment arrangement (dollars) that so clearly favors a single nation over all of their other customers?

Hard assets...Easy access (07/05/00; 12:43:17MT - usagold.com msg#: 33208)
Centennial Precious Metals, Inc.
http://www.usagold.com/ProductsPage.html
Many feel that the current economic climate portends rising gold prices. If so, you will want to be properly positioned to profit from the trend. For others, especially in potentially volatile times, the preservation of wealth is paramount. In this respect, the role of gold is well known. Whether to profit or to preserve, perhaps the most comfortable portfolio approach is embodied in Robert Frost's poetry: "We will go with you, O wind!"

Diversify. And let the winds carry us where they may.

Let Centennial assist you with all of your precious metals needs. It is your decision to do business with Centennial that makes this website possible. Thanks for your support--past, present, and future.

TownCrier (07/05/00; 12:32:34MT - usagold.com msg#: 33207)
An update to the Week in Gold!
http://www.usagold.com/wgc.html
Thanks once again to the World Gold Council for sharing their weekly commentary with us at USAGOLD. Notable from this week's text is this first word on gold holdings out of Singapore:

"Under the auspices of the IMF's Special Data Dissemination Standard the Monetary Authority of Singapore has revealed, for the first time, the amount of gold held in its official reserves. As at end-May holdings are reported at 4,096,439 ounces, equivalent to 127.4 tonnes; this includes gold loaned to or, where appropriate, swapped with commercial banks."

Knallgold (07/05/00; 12:02:04MT - usagold.com msg#: 33206)
Another fine detail
IF Goldman will really kill any rally at 310-320$,that would also imply that they will probably kick Barricks ass.Remember their 319 calls ,bought with big tamtam and designed to reduce their hedge considerable ?
And ultimatively,GS will protect JPM,those who sold the calls to Barrick.But dont use the word cabal here...

But I have still the opinion that GS bluffs with their alledgedly selling in this range.

Leigh,my real time quotes say 283.9 284.5.Dont worry,Don_L. on the other site says it wont fall below 280.

TheStranger (07/05/00; 12:01:17MT - usagold.com msg#: 33205)
The Saudi Production Increase Announcement
The jump in the transports this morning and the drop in energy stocks are good examples of how people sometimes trade first and think later. Saudi Arabia and the UAE are the only oil exporting nations which are believed still to have excess productive capacity. But most Saudi oil is sour (high in sulpher content). This grade of oil is not suitable for American gasoline refining and will not help reduce U.S. pump prices.

This reality is why last month's OPEC production increase was followed by HIGHER, not lower, prices. Remember, the world did not get an oil rally in 1999 strictly because of production cutbacks. Global economic recovery was an even more important influence. Today, nearly all exporters are running at full tilt. No, as Michael suggests, there is more of politics than of economics to the Saudi announcement.

Leigh (07/05/00; 11:47:29MT - usagold.com msg#: 33204)
Current Gold Quotes
Kitco - Gold down $6.10
MCRI - Gold down $5.40
www.thebulliondesk.com - Gold down $1.90

There's a wide range here! Does anyone know which quote is most likely to be accurate?

Peter Asher (07/05/00; 11:34:14MT - usagold.com msg#: 33203)
Subject of the day, not just here
http://www.msnbc.com/news/428878.asp


War of words
over ‘The
Patriot'
Hollywood's horror over
conservative family
values
By John H. Fund
MSNBC CONTRIBUTOR

July 4 — In 1996, when director Roland
Emmerich made his last Fourth of July
spectacular, "Independence Day," both
presidential candidates endorsed his film.
But that was science fiction. His latest
film, "The Patriot," is about the founding
of our nation and some of it rubs
politically correct elites so raw that they
slapped an "R" rating on it for portraying
children defending themselves with guns.


MANY CRITICS have tried to dismiss the
epic as simplistic, tub-thumping patriotic drivel.
"There isn't an idea in it that will stand up to
thoughtful scrutiny," huffs PBS critic Roger
Ebert. Other critics claim "The Patriot" lacks
heart. "There is no majesty, no feeling here: it's
all FX and costuming," says Stephen Hunter of
the Washington Post. This is bizarre for a film
that dwells on the human impact of war on
family and loved ones.

Still other critics
correctly see
"Patriot" star Mel
Gibson as the next
John Wayne, a new
embodiment of
American
individualism, and
they don't like it one
bit. "The Patriot is right-wing hogwash bathed in
an olde-timey golden glow," writes Arion Berger
of the Washington City Paper. "Now the
disgruntled, home-schooling, SUV-buying,
pro-militia-but-cautious-suburban-family-values
working man has a movie to call his own." This
about a film that barely mentions the tax revolt at
the heart of the American Revolution.

CONSERVATIVE FAMILY VALUES

Time out. Now we know in part why so
few Revolutionary War feature films have been
made - less than a dozen compared to 407 on
World War II and even 72 on Vietnam. It's not
just the strange costuming or a reluctance to
make the Brits the bad guys.

"What you've got is folks that Hollywood would think are ‘right-wing Christian gun nuts,'"
says film critic Michael Medved. Indeed, Mark Gordon, who
produced the acclaimed "Saving Private Ryan,"
admits that the Motion Picture Assn. Of
America was upset by the scene of an
11-year-old firing a musket after British soldiers
had killed one of his brothers. It led to the film's
"R" rating. "We really wanted to get a PG-13
for "The Patriot,' but there was no way," a
Sony Pictures executive told the Los Angeles
Times. "The ratings board is very sensitive to
any connection between violence and children,
and here it's intrinsic to the story. Take it out,
and the whole movie falls apart."

REMEMBERING ‘SHENANDOAH'
‘Now the disgruntled, home-schooling,
SUV-buying,
pro-militia-but-cautious-suburban-family-values
working man has a movie to call his own.'
— ARION BERGER
Washington City Paper film critic
Screenwriter Robert Rodat, who wrote
"Saving Private Ryan," defends the scene by
pointing out the film immediately shifts to the
boy telling his father (the Mel Gibson character)
that he's glad he killed a soldier: "The look of
dread on Mel's face shows us the repercussions
of their actions. What scares me is violence that
is realistically depicted with no repercussions."
Indeed, there have been many films depicting
children involved in combat that haven't earned
an "R" rating. The Mel Gibson character
resembles the Virginia farmer played by James
Stewart who tries to save his family from the
Civil War in "Shenandoah." Films showing
Jewish children taking up arms against Nazis in
the Warsaw Ghetto uprising have been hailed.
So too have those depicting children
confronting policemen enforcing apartheid in
South Africa. A double standard here shouldn't
apply to depicting war on the home front.

NO BEEF WITH THE BRITS

The British do
have a proper beef
with some elements
of the film. Even
though this is the
first movie project
the Smithsonian
Institution has ever consulted on, dramatic
license takes over at times. The most memorable
atrocity - the burning of a church with the
congregation inside - can't be found in
Revolutionary history. But the British are not
portrayed as Nazis, as hysterical reviews in
British papers have claimed. Jeremy Isaacs, the
British actor who plays the Darth Vader-like
Colonel Tavington, notes that in the film, "My
superiors are very unhappy with the way I'm
behaving and my men balk at carrying out the
orders I give them. So the notion that the British
are represented badly is nonsense. I am the bad
guy."

PERSONAL FREEDOM
It's easy to read too much into "The
Patriot," which most people will go see as a
crowd-pleasing adventure. But unlike many
popcorn dramas, there is meat on its bones.
"This film is about personal freedom - which
many people take for granted today," says Mel
Gibson. Its essential message is the same one
that Thomas Paine told the colonists about in
his pamphlet "Common Sense." It comes from
the Israel of the Bible: Sooner or later, the king
unchecked will come for your sons.
That should be a universal message, untied
to any ideology, since tyrants have come in all
hues, shapes and sizes throughout history. It's
time for a cease fire on the politics of "The
Patriot," and for critics to appreciate it on its
own terms and not through the lens of their own
contemporary sensitivities.



John H. Fund is a member of the Wall Street
Journal editorial board and a regular
contributor to MSNBC on the Internet.



Christopher (07/05/00; 10:41:34MT - usagold.com msg#: 33202)
Musings from the back of the classroom re: the revolution
I have always been a history buff, and have always gravitated towards the past, whether it be the novels that I read, my geneaology, or metal detecting some long forgotten site in the deep dark woods. The past, it seems is filled with mystery and insight and knowledge, just waiting for those to uncover its information and bring the truth once again to the light.

As I read these forum pages day in and day out, I get an idea of the character of its posters; their interests and avocations, their loves and obsessions. And these insights collected together have drawn me to some conclusions which flitter about inside my head, just out of reach of the light, but close enough to send shivers down my spine when their shadows brush by me and the truth they contain presents itself.

What does this rambling have to do with gold you may ask? I'm getting to that in a round about way. The last couple of posts have prompted me to speak on these things: Gold, Freedom, Patriotism, and The Revolution.

This site is primarily a Gold discussion forum, but on its edges these topics of freedom and patriotism are always alluded to and seem to go hand in hand in the underlying currents of discussion. The Ladies and Gentlemen that speak so knowledgably about the former, also espouse the latter in their words whether consciously or not, I do not know, but it is there for all to see. Gold and Freedom are inseparable. You should not be able to have one without the other. Dare I say that you can not have one and forego the other. And does not this statement allude to in some extent, the situation that our once great country finds itself in? Are we as free as we once were?

Yes those of us who have exchanged our fiat for gold are, in a sense more free than most of the masses, but as the statement implies the mass of the people are not. We are definitely in the minority.

So, what to do? We know from past example what the masses will do. Will they not do anything until the misery is so excruciating that it awakes them from their fitful sleep? How long that will take is anyones guess, I have no idea. And then what? They will look for leaders to guide them out of bondage and back into freedom. They will look for that corps of patriots whom they once labelled as "crazy", or "troublemakers", or any other number of nomers that we like to pin to those who cry out in the wilderness.

You, ladies and gentlemen, are these people. You are the leaders of the revolution, that small band of patriots not afraid to stand, and as scary as that seems I humbly number myself among you. I do not like the idea, but I am afraid it is the truth. I have felt this way for a long time, about the people here.

Now, what to do, patriots, what to do?
There is history here in the making. The truth must be told, and I thank you for the commitment that has been made here regarding the truth.
May God bless us all, as I feel the time grows short for further preparation.

Let us be diligent my friends to the task we have assigned ourselves.

Veritas Tametsi Caela Cadant


Black Blade (07/05/00; 09:03:42MT - usagold.com msg#: 33201)
@silent runner
I agree that Americans are generally a good and generous people. As an American (US) I thank you. However, we as Americans have made some "idiotic" decisions that have resulted in the "dysfunctional government" that represents us. We the people, make the collective decisions on who our representatives are. Looking at who the candidates are in the upcoming elections, all that I can say is: This is the best we Americans can do? We as a people are easily swayed with sweet words and grand promises as well. We like to hear these things, though we know that they are out-right lies (the basis of commercial advertising). ultimately, it is us, we the people who have to take some personal responsibility for the mess that we create for ourselves. So I probably should say that most Americans tend to make many "idiotic" or even "stupid" decisions as evidenced by our political leadership and the resulting over-regulation of our daily lives. Everything comes with a price attached. We sell our freedom and liberty for what is percieved to be security. The freedoms, liberties, and rights that we as people once enjoyed and considred a birth-right are now gone for dubious reasons ("for the children", "the greater good of society", etc.) We only have ourselves to blame when the corrupt parasites (politicians) live off the blood, sweat, and tears of the people. I might add, it is that because Americans are a generally good and generous people, we tend to believe in the best of people and not the worst. This has come back to haunt us through out our history. Gee silent runner, now I'm really getting depressed. Again I thank you, perhaps "idiots" was too strong an word, maybe I should have said "Naive".

USAGOLD (07/05/00; 09:01:03MT - usagold.com msg#: 33200)
Today's Report: Interesting Weekend
http://www.usagold.com/Order_Form.html
7/5/00 Indications
 Current
 Change
Gold August Comex
288.20
-3.30
Silver July Comex
5.05
-0.03
30 Yr TBond Sept CBOT
98~00
+0~10
Dollar Index June NYBOT
106.66
nc


Market Report (7/5/00) Gold shunned any fireworks displays over the long Independence Day
holiday opting to weaken overseas. That weakness carried over to the New York open with traders
all-around blaming gold's weakness on oil. If it is oil making gold feel a bit of a summertime lilt,
it's not likely to last long. The Saudi announcement about production increases is more in the
"sound-and-fury-signifying-nothing" genre than it is a solid policy the goal of which would be to
appease "the hard-running-let's -get-Gore-elected" Clinton administration. Plummeting poll
numbers can serve as inspiration to a party's leadership. As the markets digested the Saudi news,
most of the nation's morning newspapers were running a New York Times article warning of
more shocks for the American consumer in the energy sector -- this time from heating oil and
natural gas which experts are saying will increase home heating bills by 30% or more this winter.
The latter story nullified the former. It seems that good news or bad news, take your pick, last no
more than the space between editions these days. When all is said done though, how many in
either the political or financial sectors really believe that the Saudi's would go over the line in
sabotaging the coalition/cartel it worked so hard to assemble over the past 12 months? Common
sense wills out.

If gold is reacting to something/anything this morning other than the typical summer doldrums, it
more likely has to do with Commitment of Traders numbers than it does oil -- at least today.
(We'll see how the oil story plays out in due time.) With about twice as many large speculator
longs (31,821)as shorts (15,602), some traders see the overhang as bearish for the yellow metal.
That, of course, depends upon whether or not the longs have been assumed for good reason and
whether or not the trend will continue. Either way you slice it, though these are low volumes and
not likely to be a factor in this market for long.

In other gold news, Russia declared that it would jump gold output from 10% to 15% but before
the shorts get too enthusiastic about this gold getting to market they must take into consideration
that producing gold and getting that production to market are two distinctly different problems.
Even if one were able to sort through the logistics of distributing anything in or out of Russia -- a
maze with more nooks, crannies and passageways than the Kremlin itself -- one would have to
make a further determination: Who's in charge in Russia and what is their policy toward gold?

The most interesting news of the weekend was emanating from foggy Londontown where a
supposed rift within the Blair government was developing over whether or not Britain should tank
the pound and hitch its wagon to the euro star. I say "supposed" because one wonders how deep
the divisions really are within the Labor government on the euro question. (If there is a real rift,
my guess is that some think time would increase Britain's negotiating advantage.) The Tories
should have no doubts where they stand though. Or do they? It is at least interesting, if not ironic,
to realize that as the United States was busy celebrating its sovereignty from Britain, the British
were debating whether or not to give up theirs. If national sovereignty isn't a Conservative isse I
don't know what is? The plea for Britain to join the single currency on the basis of the pound
being too strong (as advanced by four prominent British industrialists) is pure nonsense. If Britain
were truly interested in a weaker pound, such a goal could be accomplished with the right pressure
in the right places. Transfer that sovereignty to the continent and no such option would be possible
even with a hat-in-hand visit to Brussels. So what says Iron Maggie about all this? Her absence
from the discussion (at least as much as I have seen of it) in some British policy circles must be
akin to the "awesome silence from above."

That's if for today,fellow goldmeisters. Have a good day and we will see you back here
tomorrow.

An Invitation:

I would like to invite those who take an interest in the type of analysis read here to give our
newsletter a try -- News & Views: Forecasts, Commentary & Analysis on the
Economy and Precious Metals. This month we focus on oil and inflation. Many analysts and
investors think there very well may have been a fundamental shift in economy that could favor the
gold market and hammer the equities and dollar market. These opinions from various sources are
covered in some detail in the upcoming July issue. Along with the latest issue of News & Views,
you will receive our Gold Almanac 2000 which offers fundamental background on the yellow
metal. The theme of this year's Almanac is wealth preservation and one of the key articles is
how those in the 1970s -- a decade many are comparing to the present -- not only survived double
digit inflation, but prospered. The package is offered at no cost or obligation. You can call
Marie at 1-800-869-5115 to request the newsletter and Almanac or click above.

 

silent runner (07/05/00; 06:42:53MT - usagold.com msg#: 33199)
Americans
Black Blade..you wrote< most Americans are idiots> thats not true. Most Americans are kind generous people who are represented by a disfunctional government and a polluted hollywood culture. Americans a good people.

Black Blade (07/05/00; 06:41:01MT - usagold.com msg#: 33198)
Morning Wakeup Call! The War Continues!
Sources: Reuters and Bridge News.
Asia Precious Metals Review: Platinum flat after Tuesday slip
By Hiroyuki Fujiwara, BridgeNews

Tokyo--July 5--Spot platinum was underpinned at about U.S. $545 per ounce supported by light bargain hunting in Wednesday's Asian trading following a price slip overnight, dealers said. Gold consolidated in the sluggish market as the U.S. market remained closed for the Independence Day holiday, they said. Platinum declined overnight on expectations of supply from Russia, while expectations of strong physical demand continued to encourage speculators on the Tokyo Commodity Exchange (TOCOM) to buy platinum
futures, the dealers said. TOCOM players were willing to proceed with bargain hunting following a price decline in the past few days, they said.

Black Blade: Rumors of PGM sales. These rumors have been around for the last year, yet no PGM. Still looks like a tight market. Shorts slamming gold in lightly traded non-US markets. Could be interesting when NY opens. Gold is also off as oil is down on speculation that the Saudis will increase output. Strange thing is the Saudis can probably increase only slightly, yet refining capacity is extremely limited. In other words, nothing is changed.

Norilsk Nickel says starting platinum sales to Japan in few wks

Moscow--July 5--Norilsk Nickel, Russia's giant copper, nickel and platinum-group metals producer, said Wednesday it would start selling platinum to Japanese end-users "in a few weeks." Norilsk Chairman Yury Kotlyar also said the company was satisfied with the price offered by Japanese buyers during recent talks. (Story .11937)

Black Blade: Yeah, right. Heard it all before.

THE WESTERN FRONT:

Turkey January-June gold imports 101,325 tonnes

Istanbul--July 5--Turkey's January-June imports of gold and silver through the Istanbul Gold Exchange amounted to 101,325 kilograms and 74,920 kilograms respectively, the exchange told BridgeNews exclusively on Wednesday. It said the corresponding figures in January-June 1999 were 61,680 kilograms, and 32,000 kilograms. (Story .11574)

Black Blade: A nice near double over a year ago.

Europe Precious Metals Review: Gold above $286, platinum lower
By Gavin Maguire, BridgeNews

London--July 5--Gold prices continued to lie dormant in a U.S. $286-288 per ounce range Wednesday morning as players awaited the return of U.S. dealers from Independence Day celebrations. Sources said very little change was expected, however, as spot metal looks well confined by the $280-295 range that sealed trade for all of last month. Platinum softened on news that Norilsk Nickel was to start sales to Japan "in a few weeks," although conditions remained light. Dealers said spot metal was expected to gradually drift lower over the coming days as support at the 10-day moving average--around $286.85 this morning--"gets slowly eroded away," a dealer said. He added that physical interest is expected to continue to recede toward the $285 mark over the medium term, while profit-takers "will be tempted to jump in at lower and lower levels." However, he also said physical demand is expected to remain firm around the $285 area, "so the outlook for now is more sideways trading." In the news, Russia is expected to increase primary gold output this year by 10-15% on the year, Chairman of the State Depository for Precious Metals (Gokhran) and Deputy Finance Minister Valery Rudakov said Wednesday. He said Gokhran planned to purchase 30 tonnes of gold this year, up from 18 tonnes in 1999. Silver trade was very light in the $4.95-5.00 area, and dealers expected further $4.95-5.15 range-trading to define trade over the medium term. Platinum slipped to a 13-day low around $535 on renewed Asian selling following news that Norilsk Nickel, Russia's giant copper, nickel and platinum group metals producer, said it would start selling platinum to Japanese end-users "in a few weeks." Norilsk Chairman Yury Kotlyar also said the company was satisfied with the price offered by Japanese buyers during recent talks. Dealers said some players were wary of pre-empting the sales by selling in large volumes "because of the dubiousness of all news on PGMs out of Russia," in the words of one. However, a return to the $520 in the near term was on the cards, he suggested. Palladium was dragged lower in platinum's wake and eased to four-week lows in the $613 vicinity in very light trade. However, the 10-dma around $606 is expected to stem the tide should further weakness come about, a dealer suggested.

Black Blade: That about says it all. Even many dealers are doubious about PGMs. Gold appears to be falling in sympathy.

Meanwhile, S&P Futures are down -2.50, fair value up +2.19, indicating a slightly higher open on Wall Street at this level. Au down -$2.60 at $286.80, Ag down -$0.02 at $4.98, Pt down -$23.00 at $538.00, and Pd down -$30.00 at $610.00.






Turnaround (7/5/2000; 3:39:52MT - usagold.com msg#: 33197)
Journeyman,ORO - Martin Shubik paper
http://www.santafe.edu/sfi/publications/Working-Papers/00-03-021.pdf

ORO (07/04/00; 10:53:18MT - usagold.com msg#: 33147)
Journeyman, Turnaround - Martin Shubik paper
I have not given the whole paper a thorough reading, but I would like to criticize a couple of points already.

From the text:
…

"Not enough money An economy will not have enough money, if at an equilibrium there is no way to redistribute the money such that all individuals can avoid a cash flow constraint.."
…

Would not price discovery address this concern?


ORO: Comments:
In this treatment, Shubik ignores a number of issues and ignores the main point of having a commodity money:

1. The trust in political and banking powers has not once been demonstrated to be placed where it belongs. History has revealed repeatedly that neither banking nor government are trustworthy. Analysis of the "natural" character of these "agents" shows that neither is structurally capable of avoiding mismanagement of fiat money. THE EXISTENCE OF FIAT MONEY AND THE CONCEPT OF MONETARY MANAGEMENT ARE INHERENTLY CONTRADICTORY TO PROPER FUNCTION OF THE FINANCIAL MARKETS.

To expand on this point a bit:
****

Repeatable Results

Scientific theory derives its validity by building on the prior established knowledge base.
That knowledge is originally discovered from repeatable experiments conducted in the
real world. (The purpose of the laboratory setting is to eliminate as many uncontrollable real-world variables as possible. If an experiment returns reproducible results from a "noisy" laboratory environment, this is a further verification of the strength of the observed effect.) A new theory, or model, that faithfully describes the prior experimental results is then verified by its ability to predict novel behavior.

This is the essence of scientific inquiry and the basis of our knowledge of the real world.

Though it has recently become possible to simulate life-like processes via computer modeling, these
results must always be checked against the empirically established facts. A model is necessarily subject to simplifications introduced by its theoreticians to make the problem tractable. These idealizations can introduce unforeseen errors that invalidate the theory.
Socioeconomic theory, in particular, has been hampered by the introduction of idealized behaviors, generally reducible to "working postulates", that have no counterpart in the real world. This was a central failure of Karl Marx's predictions- the postulate of worker solidarity was shown to be in error. This failure was predictable from the prior, empirical evidence.

Example Theory-
Objects fall to the ground. Planets orbit the Sun.

Gravitational theory, or the "law of gravity" was originally developed by Isaac Newton, by collecting and synthesizing the results of real-world observations into a coherent model of how the universe works. That model was then subjected to several centuries of testing and validation. Its limitations led in turn to Einstein's General Theory of Relativity, which returns Newton's laws in the limit (v/c-->0, mass density-->0). In no known case do these theories depart from empirical observation, excepting gravitational singularities.
Newton's three relations of motion provide an example of a subset of experimentally derived, orthogonal "working postulates", ones that still permit useful results, but were subsumed later by a more elegant set of postulates.

A designer of a new theory of gravitation, such as "quantum gravity", is therefore required to show that his theory will return Einstein's results in one limit, then Newton's in a further limit. It must be in agreement with the empirically derived knowledge- the results of centuries of observation and deduction. To be useful, it must also give rise to new predictions that can be verified through experimentation.

If one attempts to build a new theory that incorporates antigravity, it is the investigator's responsibility to
refer to any prior experiments conducted in the real world that would support his contention. A computer simulation cannot be relied on in this case, as it is not currently possible to model the physics with the necessary fidelity.

As there are no known experiments that conclusively demonstrate antigravity, an airplane designer or a transportation network planner cannot utilize a new gravitational theory that incorporates this effect.

Money Theory

One branch of socioeconomic theory is the study of money. The use of precious metals, commodities and fiduciary media have all generated rich data sets, extending back several millennia in some cases.

It has been observed repeatedly over the past few centuries that a paper (or its electronic equivalent) money returns to its intrinsic value of zero. This experiment has been run under widely varying field conditions, which serves to reinforce the validity of the results. The currently running experiments, though still in progress, reproduce this behavior quite faithfully. Therefore, a putative General Theory of Money can take this as a working postulate:

1. Paper money returns to its intrinsic value.

The claim is sometimes made, for example, that the fiat 'US dollar'* has replaced gold as the premier international trade instrument. The evidence presented includes the recently falling dollar-denominated price of gold. The claim ignores the attendant unbounded inflation in gold-denominated instruments. This experiment has also been run on numerous occasions over the past few centuries, always returning the same result: a loss of confidence and a concomitant bank run. This is an empirically derived fact, based on several centuries of observation.

The observed behavior of a fiat currency in its final approach to the natural value is caused by a similar reaction on the part of its holders- a loss of confidence. This in turn appears to be caused by a lack of trust in the issuing authority. In each current and historical experiment with fiat currency, the issuer creates more (or "increases the money supply" in monetarist terms) than the market requires. Some of the newly invented money is then used (by the issuer) to create an artificial demand, thus introducing distortions in the economy. This occasionally causes enough economic damage to result in war or revolution. As the issuer is either a government or its proxy, this loss of investor confidence can also be expressed as a working postulate:

2. Government cannot be trusted to issue fiat currency.

Again, the currently running experiments agree with the results from prior runs, most spectacularly in the case of the 'US dollar'. Its status as the world reserve currency has not reduced its predicted (based on working postulate 1.) behavior, but rather appears to have accelerated the minimum-seeking process.

A more sublime General Money Theory would return these results in the limit (confidence -->0).

*Note: Single quotes are used for 'US dollar' as this can no longer be strictly defined as money. Cf Alan Greenspan's acknowledgement to this effect.



Topaz (7/5/2000; 2:06:16MT - usagold.com msg#: 33196)
'archy's-n-stuff
@ Black Blade-Netking et al

Am in the throe's of reading "The Red Chief" by Ion Idriess, in which he gives a first hand account of life, loves and structure of an Aboriginal Clan pre White Settlement.
The thing that stands out (relevant here) is the complexity of Government within this "primitive" group and for 1000's of years the same structure had survived.
Yup- you guessed it, A Monarchy.
The difference was the "King" wasn't numero-uno, it was the Witchdoctor and any decision made by King and council had to have his (tacit) approval. If they varied from this they got the "BONE"- a fate worse than Death!
Our (the British) system has been abused to the point of (almost) irrelevance- however the noble Structure is still intact and I for one am glad of that.

A recollection regarding the Fathers of Federation attempting to install the Head of the Scottish House of Stuart as King of America comes to mind but alas I can't recall the source- perhaps Sir Holtzman can assist?


Black Blade (7/5/2000; 1:08:48MT - usagold.com msg#: 33195)
The more differrent we are, the more we are alike!
I might add that we get Tyrrany in four-year increments, then have the option of four more years, or get a new Tyrant. On another note, somehow, I just can't quite picture a couple of blokes in a London pub arguing over how King John's signing the Magna Carta was such a raw deal. In many ways we are very much alike. But then again, we don't have Charles and camilla, instead we got Bill and Monica. Hmmmmmmmmmmmmnnn............

Topaz (7/5/2000; 1:07:07MT - usagold.com msg#: 33194)
Galearis (Rhody) Patriot

FYI- Mel Gibson was raised in Australia although his Ancestory was American (Father had a broad US accent). Mel's antipodean up-bringing no doubt provided him with the depth of character, screen presence and Worldly awareness that so often is lacking in home-grown "Leads" <smile>.
Yul Brenner did a good "King & I" though <big smile>.

Best Movie of late--- Fight Club.

Black Blade (7/5/2000; 0:53:37MT - usagold.com msg#: 33193)
@Netking
Oh well, I have to admit, it is more fun to elect your Tyrant rather than it be an accident of birth. ;-)

ORO (7/5/2000; 0:52:12MT - usagold.com msg#: 33192)
Aristotle - comments, installment 3
Workable systems, suboptimal systems, "good enough" systems, the best system.

The description you gave of the non-existent "accepting paper dollars against their will" condition is one of extreme crisis. It is met at the outset and at the end of the life of monetary systems. Under the conditions prevailing at the start of the first incarnation of our monetary system, the very popular move of "soaking the rich" by taxes and by the confiscation of gold specie in 1933, actually did not soak the richest and few coins and bars of gold were lost by the "rich". Most had been spirited away long before the confiscation was done. The party of FDR had made quite a noise about the issue for some years, making it possible for the cautious and the well connected to avoid having their gold confiscated by depositing it abroad and by hiding it without US based insurance. The "hoarding" of specie that FDR referred to in his inauguration speech and which was part of the excuse for the gold confiscation, was a direct result of the threat of confiscation. FDR's overwhelming popularity as the champion of the "little guy", made the prospect of resistance to the confiscation unlikely. The common man simply had no substantial gold to confiscate. The middle class had done their best to hide their gold (stories I heard include the whole gamut of methods, some foolish, some smart, some futile), and the rich had only to put their gold abroad.

The "near end" in the 70s was not quite as intense a crisis as it had potential to become because of the support granted the dollar on international markets by the central banks of nearly all nations because of the need for avoiding the expense of the cold war in Europe and elsewhere. Germans and French were taxed by the monetary reserve system for the purpose of supporting the dollar, allowing the US to escape the consequences of its over-issue of debt and its growing exports of dollars.

Today, international support on this scale is not available. View the proposition put forward by Leigh; that the US is no longer in a position to convert dollars into other people's gold at a fixed exchange and must test the waters regarding the trade of its own gold for oil imports. Like the man at the grocer's who has accumulated too high a credit balance and is asked to pay in cash. "You are my best customer, but you pay off such a small portion of your outstanding bill that keeping your custom is just not enough of a reason to accept your credit. I would do just as well if I closed shop and we were both ruined- because I can't afford you, and you can't afford yourself."

In my experience, resistance to accepting fiat money is done quietly and in hushed tones. People start second jobs as freelancers that are "under the table" and settled in cash. The prices for payment in the declining currency are higher than they are for payment in "hard" currency or gold. Contracts become indexed to certain items, currencies, etc.. The people with freelance jobs (most people) provide less of their time to their official employer who has to pay in the local currency. The consumption statistics grow out of sync with the income data. Corporations accumulate their profits in inventory just as people buy on credit wherever possible, and change all cash into tradable goods or just spend every bit of it as it arrives. Rents are denominated in foreign currency and the used goods trade blossoms. At some point, the banks go under and their obligations are taken over by government. The stocks of exporting corporations goes through the roof, and the method of payment for top talent becomes missions abroad (used for the purpose of opening secret bank accounts) where the workers can be paid in foreign currency rather than converting it into the home currency and paying the worker at home.

Eventually, after passing draconian laws to prevent the underground economy from expanding, the government gives up and allows official indexing of rent prices, government debt, bank accounts, wages, etc. The benefits to government from further inflation of the money supply are limited by the escalation of indexing and the breakdown of taxation which is avoided by the "going underground" of whole professions when government expenditures threaten to grow. Occasionally, massive amnesties for escaped taxation and hidden funds are granted.

Outright overt resistance to legal tender law becomes a matter of degree and a matter of government effectiveness in combating the alternative payment and contracting devices. Modern popular democratic governments back down and accommodate at least some of the (formerly) illegal practices long before confrontation with popular action is necessary. Even wildly unpopular dictatorships avoid this confrontation.

Best for whom?

The question of the "workability" of an inherently self destructive system is not answered in economic studies, but in political analysis viewed in economic terms. The question is "why does this impossible system seem to work?". This raises the corollary questions of "work for whom?", "seem to whom?", "what is it they see?", and "who pays for the inefficiencies and destruction inherent in the structure of the system?". Of course, this raises another question; "why is the victim willing to pay, and how is the beneficiary exacting his dues?".

This political analysis and its economic consequences has been presented here before. FOA and ANOTHER presented additional portions of it. The "excess demand" resulting from expansion of the US money supply and the expansion of its substitutes is provided by goods imports and the export of dollars and dollar securities.

The scale of imports is distorted so that imports seem smaller in nominal dollar terms than their economic significance actually is. The distortion ranges from 30% understatement of imports from the EU, to 80-85% understatement of imports from China, Malaysia, and Brazil. The distortion is such that even nations that are exporting goods and services at new records every year in terms of volumes are still finding it difficult to maintain a positive current accounts balance even without substantial growth in imports. In some cases, the dollar reward for a manufacturing and assembly process using imported components and materials is nearly non-existent by the time foreign debt payments (in dollars) and patent royalties are calculated into the cost. In essence, the transformation of silicon chips plastic and metal into a DVD player within Korea is nearly free for the American.

The distortion is maintained through the dollar debt balance of foreign countries and corporations in what can be described as a short squeeze. The EU and Japan suck dollars out of the international markets and into their reserves, and cause the dollar to be bid up in the Newly Industrialized Nations, who now must sell more product and import less in order to service the same debt. This was done, for example, in the preparation of the "Asian Flu". The squeeze was put on by rising oil prices and rising dollar interest rates coupled with the rapid dollar reserve growth in the EU and Japan. In order to service the greater dollar debt burden when dollars were made artificially scarcer, the "Asian Tigers" had to increase sales, which could only be done by devaluation of the currency. The devaluation made it more difficult to service dollar debt by non-exporting dollar debtors within each country, and forced the acquiescence to IMF "assistance" in rolling over loans at the worst possible terms the governments of these nations were willing to accept – in order to avoid default, which would have been the healthiest step these nations could have taken; it would have put all capital imports on a cash flow basis and avoided the mechanics of debt traps in the future. IMF "assistance" meant that title to substantial portions of local productive infrastructure had to be offered to the EU, Japanese and American banks and corporations at prices well below construction cost.

To give a rather extreme example, Brazil exports over 40% of its GDP, yet has barely managed a positive current accounts balance. Granted that Brazil's government has a history of economic mismanagement (particularly of monetary affairs) second to none, however, the economy there had grown steadily (e.g. per capita real GDP is up 1.5% per year since 1985– better than US and other industrialized nations) the population has seen only half of the benefits of their increased productivity, and even less of it today.

In Mexico, the rapid rise in population has kept per capita real GDP steady, however, Mexican per capita real income has fallen 20% over the last decade.

In South Korea, the last decade saw a near doubling of productivity, but only a 50% rise in real wages.

In Germany, productivity is up some 30% over the 90s, yet Germans saw only a 21% rise in living standards.

In Japan, productivity is up 30% over the last decade, but living standards have gone up only 15%.

(All consumption figures include government spending)

If the Japanese, Germans, Koreans, Brazilians and Mexicans don't enjoy the full benefits of their productivity who is it that enjoys this margin between productivity growth and living standards? Could it be us? If nearly everyone around the globe is producing more but consuming a smaller portion of their production, who is it that is consuming more than they produce on a consistent basis? Americans perhaps?

Could that be the reason the dollar maintains value and the process of "reverberant doubt" is delayed?

At this point, without looking at later consequences and without viewing the details of how this is done, I can more than agree with you, Aristotle, we not only have a workable system for ourselves, but perhaps the BEST possible system FOR US – if we can make it last.



Netking (7/5/2000; 0:46:39MT - usagold.com msg#: 33191)
@Black_Blade
....So as a result you got stuck with President Bill when you could have had Queen Elizabeth 2nd and some real culture too!<smile>.


Black Blade (7/5/2000; 0:19:35MT - usagold.com msg#: 33190)
Patriot: Acurate? of couse not, its Hollywood, but.............
Say what you will about General Francis Marion, he was successful. He rose through the ranks from private to brigadier general. He was a semi-literate genius who grasped the rudimentary principles of guerrilla warfare and used them quite successfully against the British who were incapable of fighting a guerilla-style war. They were too regimented and therefore unable to adapt. This seemed to paralyze the British military time and again. A more recent case is the comparison between US General Patton and Brit General Montgomery. If one wishes to achieve victory, then use the more vicious bulldog, and not the timid prim and proper terrier that must stop for afternoon tea. In other words, "Don't bring a knife to a gunfight". The British military never understood this, and as a result suffered the consequences. This attitude plagued the Brits during the revolution in the colonies as well. King George III was a raving lunatic and his policies toward the colonies resulted in revolution. Of course as a US Citizen I have never understood the need or desire of a people to be ruled over for centuries by a family of inbreds, but then that's just me. Perhaps some would relish the idea of a monarchy in the USA, however, I find the idea has a certain stench to it. Granted, most Americans are idiots, just look at whom they elect for their political leadership. All the whining about the bad dirty fighting colonials and the righteous Redcoats is almost humorous. Get over it, it's done.



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