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ARCHIVED DISCUSSION FROM 5/7/2000
All times are U.S. Mountain Time
(Yesterday's Discussion.)
ThaiGold
(5/7/2000; 23:04:42MT - usagold.com msg#: 30105)
Soaring Silver Imports
The Trend of the Future Has Begun.!.
================================================================================
5-7-2000
To ALL:
I recently received some email from a friend. (Believe it or not, I have one).
He was telling me that his lady friend had just purchased a brand new car...
From Saturn.!. With a Silver paint job. Or perhaps more cheaply, simply Silver-plated.
She traded in her outdated Izusu SUV. From Mars. Upon someone's Forum advice.
And I quickly wrote back, saying that I was surprised to hear they had dealers
now, here on Earth. She at first had considered a domestic: A Buick. But the
sticker price of it was out of this world. So she went elsewhere. Where prices
were more down to earth. Well, almost Earth. It may have cost as much as the
average EarthRanch. If inflation is taken into consideration. And POS and POG.
I've often wished I could visit a Saturn factory. It must be an amazing
sight to see all those little green men. And women. Working feverishly
on their assembly line. With their pointy little ears. And dual-antennae.
Workers at the Pluto factories, I'm told, have bigger, floppier ears. But
I have no information about their antennae, if any. Is anyone here in the
Forum from Pluto.?. Or perhaps been there panning for Gold.?. Or wood.?.
I asked if it had lotsa headroom.?. Probably does. Especially if they think
Earthlings have antennae atop our heads too. Ideal, I mused, for drivers
from Rio. Plenty of room for their fruit basket hats. And too, even for
some Americans. Around Easter. Or in Europe, for those with French HairDo's.
What's that word.?. Bouffant.?. Or Brussels Sprout.?. Something like that.
She enjoys it's massive 4-channel stereo. How ironic. The Saturn designers
assumed humans have four ears. Too. But it's an ideal car for the current
era. Most motorists nowadays, to conserve expensive fossil fuel, simply
turn off their engines. And cruise with the speaker-blast pointed rearward.
Most even drive with all their windows open. So others drivers can see
-and hear- that they are being responsible and conservative. And curteous.
The Saturn vehicle apparently has round wheels. But I'm still wondering if
they already had that technology. Or did they have to reinvent it there.?.
Doesn't matter much. Most laws of physics are ...er.... Universal. We know
that to be true, by watching the Paper Markets. What Goes UP.. Goes Down.
Or viceversa.. Or is it Vice-Vice. Or Vice-VP.?.
Or like Off & On. Hot & Cold. In & Out. Up & Down. Etc & Etc. Just imagine how
frustrating it would be, if -say- the Saturnistic heater switch was like
my Ford pickup truck's: Off & Off. Why, the buying public would never tolerate
such inconvenience and irregularity. Or at least not for long. -Say- since 1977.
At Ford, "Quality is Number One". Longevity is Number Zero. On a scale of
one to ten, I think. General Motors may be worse: "Quality is Just a Rumor".
That's why they expanded to Saturn. To import some. Wasn't it.?.
Saturn imports are soaring, here on Earth. In the USA. I worry that it may
worsen our Trade Deficit. People here in the Forum should be concerned as
well. I asked my friend, if the Saturn dealer accepted US currency (dollars)
in payment.?. Or did they only accept pie-in-the-sky kited checks.?. Or kited
Gold.?. They haven't responded yet. I suppose GreenPeople, like GreenSpans,
would accept GreenBacks as legal -or even illegal- tender. Does anyone in
the Forum know (yet) what color the EURO's will be printed in.?. Or would
anyone there even want to import from Saturn. Probably trade barriers are
sufficient to rule it out for the time being.
The ride from Saturn is equally out of this world. Else how would they get them
here. Imported vehicles from Mercury don't handle as well. Too splippery. At
one time America musta imported alot from there. We even minted a special
coin to use in the intergalactic trade cycle. It was a Dime. They loved it.
Melted them all down; discarded the useless Silver content; and then recycled
them to America. As obsolete mercuric cars. Canada too. What were they called.?.
I forget the name. but it was an appropriate derivitive. Oh..yes... Comets.
I'm not sure if we import any other vehicles from outer space. But there is a
"used" one, I saw advertised in the NASA want-ads: Mir. There's no warrantee.
And the dealer isn't always very dependable. But the price is good. In Rubles.
NASA will pay it regardless, in Politiks. How many Politiks to one US$ dollar.?.
How many Politiks to 1oz of Gold.?. Or to 1oz of Silver.?. Probably too many.
And when I was a teenager, hubcaps from the Moon were all the rage. And even
my little Suzuki Samurai has a name that's obviously not local. It's probably
built on some planet I've never heard of. Nor been to yet. Isn't Suzuki the
next planet out from Jupiter.?. Sorta mythical. Or is that one Samurai.?.
You know, I think it's all in the name. Importing and exporting and success.
Foreigners probably think Americans are all crazy too. By the odd names we give
to our exports. Like: N-ash; Ply-mouth; Corv-air; Pac-kard; HP; Chev-Ro-Let;
and Hup-Mob-ile. My other friend, Rex, says the Indians lobbied Congress to
pass an export regulation that prohibits the export of any Native Artifacts.
Like: Pontiac; Cadillac; And Similac. Some things are just too sacred to
share with outsiders. Or insiders. Stock traders and such. To stay on-topic.
But I digress.. It's all in the name. I remember, several years ago, Datsun
couldn't sell very many of their cars in the USA. Too much WW-II resentment
toward the Japanese still existed. So they changed their name: To Nissan.
Americans bought them in droves. Thinking it was a deluxe Swiss'un, mispelled.
Very clever of those Japanese. What a mistake it would have been if they'd
named it Nippon instead. Taiwan's Toy-R-Us didn't make the same mistake
either, when they began to export their cars to us. Toy-O-Taz. Sorta sounds
Indian, doesn't it. Rex says he thinks they intended that. To grab market share.
Here in the small town where I live, DavenPork, USA, there's only one single
vehicle dealer. So there's not really alot of choice here. Take it or leave it.
Everyone seems happy however. Driving around, to Safeway, in their John Deeres.
Rex insists that's an outreach name to the local Tribes as well. But I disagree
strongly (as usual) with him. I mean, if they wanted to sell animalish-named
cars and such to folks around here, then Caterpillars would mostly be in vogue.
But they aren't. So that proves I'm right.
Mitsubishi is thinking of expanding their line of vehicle exports too. Mostly
we know them for their fine CRT monitors and VCRs and Floppy Drives. But back
home, they have a big line of Steam Shovels, Forklifts, and even their own
brandname of giant caterpillars. I may get one. Just to be different. Imagine
how envious all the townsfolk will be. When I pull up in my Steam Shovel.
You Can Quote Me if I'm Wrong...
ThaiGold
ThaiRanch@OperaMail.Com
================================================================================
Bonedaddy
(5/7/2000; 22:53:07MT - usagold.com msg#: 30104)
Leland, just read your post
Most of us have spent quite a bit of time trying to guess where the pin would come from that would pop this .com bubble. These computer viruses may have us all talking to each other on ham radios. This cannot be good news for a "new economy". This is much worse news than the Justice Department's case against Microsoft. This is more like a rogue nation having a cyber nuke! The stock markets and bank clearing systems could become very unreliable. Sounds kind of like the Y2K disaster happening at no particular time. I don't like this at all. We are way too reliant on technology. E-banking, I don't think so. I'll be glad to own physical GOLD, impervious to rust, flood, cold, currency debasement, and yes, even cyber terror. As for the internet, I always liked Strother Martin as the Cap'n in "Cool Hand Luke". "What we got ourselves hea'.... is failya'.... to communicate."
VanRip
(5/7/2000; 22:23:49MT - usagold.com msg#: 30103)
What Would You Do?
It seems to me that there must be some very clever folks in Washington and the banking and financial industries that are well aware of the events and topics discussed on this forum. And I imagine that some of these folks are spending considerable time and effort figuring out ways to delay, engineer or even stop the anticipated collapse of the dollar. If you were one of these folks, what strategy would you dream up (legal, illegal, moral, immoral, ethical or unethical)?
Though I haven't a clue, I suspect that the longer this currency drama continues, the more likely it is that some clever and complex scheme will emerge.
Bonedaddy
(5/7/2000; 22:09:08MT - usagold.com msg#: 30102)
Leigh, Gandalf, and Blade
We watch for this GOLD jewelry together, yes? (Personally I'd like to see Maria Bartiromo sporting a GOLD cap on one of her pearly whites.)
YGM
(5/7/2000; 22:08:51MT - usagold.com msg#: 30101)
Dollar Bill...
So What's Your Point....(concerning Bill Murprhy)
Do you have a problem w/ one who fights for his beliefs or "Stands For Something"?...... IMHO...Bill Murphy intimates very seldom or little but speaks aloud his vision of the truth........and his vision is shared by MANY......
Trumpeting the truth (derivative vulnerability) is "Not Needed"...Give me a break buddy....The Truth "IS" all that's needed to set the world right......
I'd like to see you print one sentence that can dispute the mountains of evidence gathered and disseminated by the likes of Bill Murphy and the GATA Team. That dream team consists of alot more than I see you offering,.......YGM.
Most here understand the ramifications of Bills (GATAs) actions....if not! ....they've been asleep at the wheel.....YGM.
Black Blade
(5/7/2000; 21:58:41MT - usagold.com msg#: 30100)
Bonedaddy and Squawk Box
I remember about 20 years ago when CNBC's Predecessor was FNN (Financial News Network) used to have fair commentary including gold and gold stocks. There was a weekly or biweekly program at night called "The Silver Baron" that was hosted by Bill Griffith (now on CNBC) and the Silver Baron was a fellow named Elliot Pearson who was an analyst of mostly small gold producers and exploration companies. BTW, does anyone know if Elliot Pearson is still around or even alive? However, after CNBC acquired FNN, the evenhanded approach to all sectors and investments ended and CNBC evolved into an all day infomercial for brokerage houses. In fact, there also was a woman anchor with a Brit. accent named Liebe Geff who also seemed to put a positive spin on PMs. This was at a time when the network was dedicated to financial news 24 hours a day, but now has pseudo-journalists such as Geraldo Rivera who have orgasms whenever they fawn all over Bill Clinton and how terrible his detractors are. If PMs become the hot sector as the others are cast aside, it will become quite interesting (not to mention quite funny) as to how quick the Ron Insanes, Maria Bartiromos and Joe Kernans start dancing to a different tune.
Dollar Bill
(5/7/2000; 21:31:52MT - usagold.com msg#: 30099)
Is murphy irresponsible
So much for the idea that the derivitive positions could
just be waved away like imagined by John Hathaway and some hathaway converts on the forum.
Murphy himself is convinced that the positions are a possible catastrophy (I agree) and where I differ from him still, is that his trumpeting of the the vulnerability is not needed and dangerously irresponsible.
Alerting congressmen?
He thinks higher of them then I do I guess and since when do regular congressmen have any power in this arena? The commitee chairmen and the party leaders are all on board the fiat bus. The BIS is supporting the gold priceing arrangement.
Murphy intimates that he got hit in the face on the street because of this effort of his.
I say he had a sourpuss look on his face and some passerby took it personal.
I would like to see him type one sentence that indicates he understands the full possible ramifications of his actions.
Canuck
(5/7/2000; 20:46:13MT - usagold.com msg#: 30098)
From FOA / Trail Guide
FOA:
"Gold value today and tomorrow will have nothing to do with economic supply and demand or the cost to mine it. It will be forced to rise in value to help represent trading wealth currently held and trapped in dollars. The Euro could never do it alone. Of course, dollar hyper-inflation will gun the
process, but physical gold in real goods terms is heading way up! That's why I laugh when people talk about $700 or $800 gold being about right. That's not even close."
-----------------------------------------------------------
To 'lurkers' and 'novices' like myself,
This statement summarizes the outlook for gold in the future, guessimates range from a few days/weeks to a few months; few guesstimates look past a year.
The USA is saddled with debt; federal, corporate and personal, dozens of sites verify this claim. Debt, leverage,
derivative speculation and marginalized commitments are at
unheard of numbers. Research for yourself, make yourself knowledgeable, decide for yourself, I merely echo a thought
of another.
The dollar's value is maintained by its inherent ability to pay back debt. What if that debt cannot be paid back?
I can buy goods with my personal cheque; my word is to back the 'chit' and pay down my debt. If I can't service my debt my 'chits' become worthless. If I expand my credit and 'float' my debt to a point where I cannot collateralize
anymore what is the confidence and faith of my 'paper'?
Your decision (partly) to invest in gold rides with the belief in the dollar. If the faith and confidence of the US$
is under scutiny, if international entities liquidate massive holdings of dollars, the value of the dollar will become so diluted and I believe this is the essence of many discussions at USAGOLD.
We watch the US$, the markets, interest rates, and numerous
economic indicators; what lies ahead? Will US policy makers
stabilize the monetary situation or is financial mayhem around the corner. I am positive of one thing, I know not for sure.
My intuition lies with the following; gold is at a very long low, the US$ is at a high, markets are unstable, each day more 'statists' mention dollar instability and economic
uncertainty.
There is one other little thing; the 'guns' on this forum do not have an agenda, in my humble opinion, why would they care if you and I bought gold or not? If a hundred people and another couple hundred 'lurkers' bought 100 ounces of gold that would be what, 10 million dollars, big deal. The USG is in debt 6 trillion; who has the agenda?
I am buying gold and silver with every spare nickle I have.
I do not recommend the same. Instead I recommend you research the data, buy gold if it pleases you and don't if it doesn't. If you elect to buy 'gold' buy physical, gold in hand is yours, there is no claim on it, it has not been collateralized a dozen times, you are the owner.
Canuck
Leland
(5/7/2000; 18:59:30MT - usagold.com msg#: 30097)
This is Sad and I'm Wondering...Is the Internet Going to Survive?
INTERNATIONAL HEADLINES
If you thought the 'love bug' was bad, just wait
By JASON BURKE and NICK PATON WALSH
London Observer Service
May 07, 2000
- You sit at your desk, park your coffee next to your mouse, fire up your computer and
click to check your e-mail. And in that one tiny movement, before you have even looked
to see if there are any suspicious messages, it could be too late.
Just by clicking on your "Get Mail" you could have turned your PC into a pile of useless
plastic. It is every computer user's worst nightmare _ and it's coming soon to a screen
near you. Brace yourself for the supervirus.
Meanwhile, the "love bug" has given us all a taste of what could be coming. Though its
creator must be concerned about the police knocking on his door within hours, he must
also be feeling fairly pleased with himself. The virus he set loose on the world on
Thursday has already caused millions of dollars' worth of damage, more than any other
virus or hacking attack since the dawn of cyberhistory.
The program worked because it was simple. It lay dormant for nearly a week before
surfacing on computer screens in Hong Kong. The message _ seemingly sent by
someone known to the computer user _ said "ILOVEYOU' and had an attachment which
appeared to be a love letter.
Launching the attachment allowed a program to invade the computer, which not only
sent copies of the e-mail to all the addresses listed on the machine but also scooped
up all the passwords it could find and sent them back to the creator of the bug.
Those first clicks triggered a flood. Billions of pulses raced through the world's phone
lines, spattering the virus in all directions. It was the fastest-spreading bug ever,
infecting five million machines within 36 hours. Everyone from the Pentagon to the
House of Commons to New Zealand universities was hit. An estimated 20 percent of the
world's computers were affected.
Yet it could have been much worse. The love bug worked by proliferating at such a rate
that Internet systems couldn't handle the overload. That may cause temporary collapse,
but there's little long-term damage. The damage that this bug _ technically known as a
"worm" _ did to picture and music files did cause problems, but these were far from
catastrophic.
Cyber-sabotage of a more deadly kind by was indicated by a development in November
when researchers at Network Associates, a computer security firm, received a series of
e-mails with the subject heading "Bubbleboy is back!'. As they examined the virus, their
eyes widened. It was, says Vincent Gullotto, director of the company's anti-virus team,
"a watershed."
The Bubbleboy virus broke the long-standing rule that you have to open an e-mail
attachment to become infected. By the time it was in your inbox it was too late.
Thankfully Bubbleboy, though it e-mailed itself to everyone in a computer's address
book, did not have a "destructive payload' and so did little damage. Few took much
notice of the quantum leap that it represented.
Virus writers have made advances in other areas. In April 1999 a virus called Chernobyl
was activated in hundreds of thousands of computers in Asia and the Middle East,
striking on the anniversary of the nuclear accident it was named after. Not only did it
wipe out stored data, it destroyed BIOS _ the basic instructions that tell a machine how
to start.
Now virus writers have married the destructive capabilities of Chernobyl with the invasive
capabilities of Bubbleboy and the speed of the Love Bug. The combination is the
supervirus.
According to experts, at least 50 such superviruses have already been detected on the
Internet. None have yet been launched at the public. Some may not work; some may be
shot down by existing virus defenses; some might get through. And that is the
nightmare scenario.
A hacker known as "Dark Tangent," who heads a group which advises big businesses
on their security, said the only surprise is that a "supervirus hasn't happened yet."
"For the last two years we've all been waiting," he said. "I don't know why we have not
seen one. It could happen next week."
The damage a successful supervirus could do is almost incalculable. "It would be as if
the Millennium Bug has actually done everything it was feared it could do," said one
London-based computer security expert.
The first question confronting law enforcement agencies and commercial outfits hired to
protect companies and institutions against such an attack is who would be likely to
launch it. Authorities are focusing on the threat from terrorist groups, who they fear
might use viruses to extort money or blackmail governments into giving in to political
demands.
"The supervirus is going to happen soon," said a source close to British intelligence
services. "There are people out there with that intention. They may coincide their
actions with protests against the International Monetary Fund and the World Trade
Organisation, just to muddy the water."
Many of the organizations connected with anarchist violence in London number hackers
in their ranks.
Another threat is from hostile governments. The US defence department believes 120
countries pose a serious threat to cyber-security. They include Libya, Iraq, Croatia and
Serbia. The Chinese are thought to have created military regiments dedicated to
cyber-warfare.
Experts say national security authorities are only just waking up to the threat from the
Internet _ a threat that will be magnified when technology allows e-mails to be read on
mobile phone-type units.
Many experts also say the security agencies are looking in the wrong place. Mike
Bluestone, director of Berkeley Security Bureau of London, said those who launch virus
attacks are more likely to be "cyber-vandals," not "cyber-terrorists."
"Terrorists make targeted demands and like a high degree of control over their
operations," he said. "A supervirus is more likely to be the brainchild of a spotty
adolescent than some terrorist mastermind."
(Thanks to THE LONDON OBSERVER, and Fair Use for Educational/Research Purposes Only)
Trail Guide
(5/7/2000; 18:42:15MT - usagold.com msg#: 30096)
Good! our fourum is back up
ORO (5/7/2000; 3:25:29MT - usagold.com msg#: 30083)
Hello ORO,
A few comments about your work.
-------Particularly surprising was how right Davidson and Reese Mogg were about the dollar debt squeeze.----------
ORO, It has to unwind through a reserve transition. Default will only come through inflation after the fact. That is the only way a modern reserve currency can revert back to a regular currency without a complete washout of the global financial structure. Call it what we want, inflation, deflation, default or devaluation, the loss of the ability to expand a reserve fiat further becomes an end time banking crisis that requires the next system to take over. If no replacement is available we all go down.
The problem of when is a currency no longer "reserve quality" is based more on it's expansion qualities than it's comparable exchange strengths. The failing point is reached when the local economic system can no longer supply products or new productive capabilities in sufficient quantity to expand the internal debt base for real use reasons. The money then just expands because it's "Legal Tender" and anyone can get some. This shuts off the real money making engine and forces currency creation only for the sake of it's ability to buy and finance things. Not it's ability to hold a steady value. In other words, more dollars are loaned into existence just because they still have some value left in them to trade for things and that value is based on debt pay back strength. Not because their creation is matched by a productive increase somewhere in the society.
Obviously the US has been on this path for some time. Today, the only reason the dollar still has value is because of this pay back crisis. Dollar denominated debt is so far out of line with it's perceived real economic base, the rush is on to move real world infrastructure debt out of dollars
and leave the rest of these dollar claime sloshing around as trading vehicles. And boy that's a lot of slosh to move around.(smile)
They (ECB / BIS) planed for the day when this could begin and it's here, now! The Euro, warts and all is allowing this transition. In time everyone will realize that dollar demand and strength is gravitating towards nothing more than international currency contract settlement. It has no reflection of US economic conditions or the value of our real assets. For large cross country players and
governments there is no escape from this. They cannot just dump dollars to get their equity back out of it because there isn't enough free "REAL" equity in the whole world to run to at today's prices. The only way is to hold an offset position and let the dollar self destruct through inflation. Is it no wonder the foreign CBs have supported the dollar system by holding and taking in more dollars? How could everyone possibly run out of the dollar? They couldn't and won't for the most part, but will sell what they can.
Gold value today and tomorrow will have nothing to do with economic supply and demand or the cost to mine it. It will be forced to rise in value to help represent trading wealth currently held and trapped in dollars. The Euro could never do it alone. Of course, dollar hyper-inflation will gun the
process, but physical gold in real goods terms is heading way up! That's why I laugh when people talk about $700 or $800 gold being about right. That's not even close.
Again, dollar strength today is a sign of a bad situation and will only get worse. It will gut the productive infrastructure of this country even as the fed super inflates the system to fight that strength.
Your words:
----------The reason a bank debt currency carries a value at all, and does not go directly to 0 is that each unit was borrowed into existence and has a demand by the borrower to return the currency created by his loan. -----------
Yes! This hits right at the heart of why I call our dollars only an illusion of wealth. Truly it's just a contract
that can and is created between two entities with banks as the broker. The person that sees dollar value based on this demand and then holds those dollar assets as his wealth,,,,, is buying into an illusion based on that contract relationship. It's ok to own fiat money based on this concept because the human world has built a lot of value through the ongoing building of currency debt based on real productive efforts. But our money denominations and supply today are nowhere close to that comparison. Unless a free market value for gold can be established where one can
gauge the quality of all outstanding contract relationships (money supply), we cannot know where we stand. Allowing a real gold price to always rise (or contract) with no limits turns it into something better than circulating government money. It becomes a circulating asset that represents
real wealth values at all times to all people. We are on that road today.
Further you make the point that:
---------The BIG GAPING HOLE in this system is that there is no such thing as cash--------
I agree and doubt there will ever be again. This is where gold traded as an asset instead of competing with money would fill that hole.
Thanks Trail Guide
Leigh
(5/7/2000; 17:48:16MT - usagold.com msg#: 30095)
Gandalf, Bonedaddy
Maybe they could convey a subliminal message by wearing gold and silver jewelry. Can't you see Joe Kernan with gold chains around his neck!
Gandalf the White
(5/7/2000; 17:43:40MT - usagold.com msg#: 30094)
But, Bonedaddy !
They talking heads will only speak of buying gold stocks which are only another form of PAPER !!! THEY NEVER will discuss the thought of buying the real thing of PHYSICAL !!!
That would be totally against the rules.
<;-)
Bonedaddy
(5/7/2000; 17:04:21MT - usagold.com msg#: 30093)
The nex momentum play?
Stayed home sick on Thursday. I was lying on the couch watching "Squawk Box" or some other CNBC show. The gold stocks got a little play. The mood was kinda down for this dog and pony show. It got me to wondering, when the "new economy" stocks finally do tank, and that may be very soon, what kind of fodder will keep these relatively new financial talk shows on the air? If their ratings drop, they're toast. They simply must find something to keep the "smarter investor" tuned in. The talk about gold stocks this on day was rather upbeat for a change. One guest even said that investors should start looking for stocks that paid dividends. (now there's a novel idea!) So, the talk shows, to survive, have got to find something of real value to talk about during the crash of the .coms. If that turns out to be gold stocks, some percenage of people will likely diversify into PHYSICAL GOLD! Just imagine what would happen to the price of physical if 5% of the .com money started chasing GOLD. The type of investor that chases momentum is heavily influenced by these shows. And the financial talk networks may be left with nothing else worth talking about except gold stocks. Maybe ANOTHER's price scenarios wouldn't seem so far fetched if they were viewed in relation to the PE ration of a .com stock.
Journeyman
(5/7/2000; 15:16:26MT - usagold.com msg#: 30092)
Where the stock market boom-bubble came from @ ORO, ALL
http://www.mises.org/humanaction.asp
Hint: It didn't come from value creation or productivity increases.
The next time you listen to the heads talking about the "new economy" and
how stocks aren't overvalued, consider that the FED (Federal Reserve) has
been expanding credit at an unprecedented rate since the early ninties - - -
in the context of Oro's post earlier today and the following from von Mises:
The objective of credit expansion is to favor the interests of some
groups of the population at the expense of others. This is, of course, the
best that interventionism can attain when it does not hurt the interests
of all groups. But while making the whole community poorer, it may still
enrich some strata. Which groups belong to the latter class depends on the
special data of each case.
+
The idea which generated what is called qualitative credit control is
to channel the additional credit in such a way as to concentrate the
alleged blessings of credit expansion upon certain groups and to withhold
them from other groups. The credits should not go to the stock exchange,
it is argued, and should not make stock prices soar. They should rather
benefit the "legitimate productive activity" of the processing industries,
of mining, of "legitimate commerce," and, first of all, of farming. Other
advocates of qualitative credit control want to prevent the additional
credits from being used for investment in fixed capital and thus
immobilized. They are to be used, instead, for the production of liquid
goods. According to these plans the authorities give the banks concrete
directions concerning the types of loans they should grant or are
forbidden to grant.
+
However, all such schemes are vain. Discrimination in lending is no
substitute for checks placed on credit expansion, the only means that
could really prevent a rise in stock exchange quotations and an expansion
of investment in fixed capital. The mode in which the additional amount of
credit finds its way into the loan market is only of secondary importance.
What matters is that there is an inflow of newly created credit. If the
banks grand more credits to the farmers, the farmers are in a position to
repay loans received from other sources and to pay cash for their
purchases. If they grant more credits to business as circulating capital,
they free funds which were previously tied up for this use. In any case
they create an abundance of disposable money for which its owners try to
find the most profitable investment. Very promptly these funds find
outlets in the stock exchange or in fixed investment. The notion that it
is possible to pursue a credit expansion without making stock prices rise
and fixed investment expand is absurd.[6]
+
[6] Cf. Machlup, The Stock Market, Credit and Capital Formation, pp.
256-261 -Ludwig von Mises, HUMAN ACTION, XXXI. CURRENCY AND CREDIT
MANIPULATION, 5. Credit Expansion [available on-line - - - click on the
link in the header of this message]
Regards,
Journeyman
da2g
(5/7/2000; 14:19:07MT - usagold.com msg#: 30091)
FOA msg#21
Many thanks to FOA for giving me a sense of the future purchasing power of an ounce of gold (today apparently discounted by a factor of up to 100 times in dollar terms). I guess this was the insight I was originally looking for with my cheeseburger posts. This number absolutely blows my mind.
HI - HAT
(5/7/2000; 13:54:28MT - usagold.com msg#: 30090)
ORO
A question if I may? With the combining of the stock exchange in London and the one in Frankfurt, it seems the Continent is near completion of consolidating their Bourses. The British did not want their shares quoted in Euro's, but they have now reluctantly agreed. Talk is now Nasdaq seeks to enjoin this Powerful network. These are all electronic exchanges. The NYSE is the only major exchange that is not electronic. My question is, are the US exchanges hands tied and do you think they will lose premminance to a vast Continental 24 hour a day electronic exchange, iX ?
Cavan Man
(5/7/2000; 13:39:32MT - usagold.com msg#: 30089)
Trail Guide, my big holiday is......
Saint Patrick's day. Seriouly though, while 'tis good to have your leadership along the trail, why do you spend your time here the way you do? What is your incentive, your motivation?
thanks....CM
schippi
(5/7/2000; 13:33:24MT - usagold.com msg#: 30088)
Gold Roadmap Chart
http://www.SelectSectors.com/gldresit.gif
Multiyear Gold resistance chart:
The above chart displays the current Gold roadmap.
1) A multiyear downtrend has been concluded.
2) Currently we have a well defined sideways trading channel.
3) Presently, Gold is at the bottom of this channel and moving Up.
4) A spike down below this channel is possible, but should be
for only a brief span of time.
USAGOLD
(5/7/2000; 10:38:06MT - usagold.com msg#: 30087)
Test. . .
Test. . .Got a message that our system might be down. Checking.
Henri
(5/7/2000; 7:17:03MT - usagold.com msg#: 30086)
Thoughts for a Sunday Morning
The truth is to the human mind as the sun to a tree. The leaves of a tree are as thoughts reaching out to capture the greatest amount of illumination possible from their limited reach. Often the intensity of the light is diminished by those leaves occupying a higher position than themselves yet they reach out nonetheless for what meager scraps of brilliance are left to them. From this light the leaves create nourishment and structure to reach ever higher in the pursuit of those elusive beams. The wind rustles the leaves above confusing the leaves below as to where the best position might be to capture the most light. First it is here, then it is there. How is a leaf to perform well in these squalid conditions?
Then slowly but surely the light dims everywhere. Where has all the light gone? The source of our life and structure. Surely this is the end of life as we know it. Darkness sets in for what seems an eternity. The leaves so intent on the higher pursuit of the light of life become as all other creatures, mere consumers of earth's bounty.
Then the dawn begins sending out its dim tendrils of hope. The leaves quiver in revelation. The cycle renews. The light becomes brighter. The leaves of the highest trees look down upon the lowly subsistance below them. See how we confuse them and take all the sustenance for ourselves. Surely we are superior to that below and deserve to rule over their antics. See how they stretch to catch a glimpse of the bounty we choose to allow them. See how they cast their seeds in the hope of attaining a better position in life where they may be free of our influence. They see how we starve them as we take not only their light but the major share of the mother earth's nutrients and water.
But the upper leaves are deluded. Since they cannot conceive of existence from the perspective of the lowly, they do not realize the perspective. No matter how much light they obscure form the lower levels, no matter how diminished the intensity or quality of the light, the essential essence of the light remains unchanged. The purity of its purpose is so simple it cannot be diminished in essence...only in quality and intensity.
The lofty have ample opportunity to learn of this amazing fact when clouds obscure their own light. What affliction is this that brings the darkness upon us! Surely it is evil. They see not that it brings life as surely as the light. The rain wind and lightning ravage their ranks. This can not be a useful thing. We all know the water comes from the great beyond and is carried by the sacred river to bathe our deep roots. Yes, and our roots too are superior those of the lowly for we can drink deeper and deprive them of the moisture they require. They worship the rains...the bain of our existence...see how they cavort and celebrate its arrival. They mock us as our leaves are shredded and our limbs buckle. See how they race to fill the ground below where the rains have provided them a bright spot not occluded by our magnificence. We cast our seeds among them but they choke our children before they have a chance at life.
The lofty choose not to see that which is. They know not that the source of all is constant and unrelenting and if their leaves should ever encounter its true intensity,they would wither and burn in its glory.
They do not realize that it is only the love of the earth mother in its eternal love dance with the sun that gives the illusion of night and day, of winter and spring.
May we all strive to find the truth by observation of only its pure essence whereever it appears. That which obscures the truth worships false gods. While they thrive they lose touch with the joy of a simple rainfall. It is they that are the inferior life form.
THC
(5/7/2000; 5:19:36MT - usagold.com msg#: 30085)
Towncrier
Good morning!!!
Japan's GOLDEN WEEK Holiday is now coming to an end......
Thank you for proposing the "exercise" the other day. Taking the other side of a debate/discussion is a great way to maintain an "objective view" of things.
Let me first clarify:
*I don't doubt that the US gov't has an interest in keeping the POG low.
*I don't doubt the importance of physical metal as an insurance hedge and "store of wealth."
I just have trouble accepting the concept that the price of physical metal will soar, while the expiry price of futures contracts (which can be converted into gold) would dive.
Regarding your "exercise," Ted Butler has described how the US futures exchanges favor shorts over longs, and the issues he describes may be important for manipulation.
However, we must keep in mind that all short positions must eventually be closed by:
1. Buying back the position
2. Delivering the gold
The fact that we do not have a gold shortage at present indicates that the current price level has been sufficient to get metal to those who want it. Not that this will never change, as this is all HISTORY.......tomorrow is a new day.
Good luck to all!
THC
Elwood
(5/7/2000; 3:38:22MT - usagold.com msg#: 30084)
Late Night, Early Morning
Trail Guide (5/7/2000; 0:09:23MT - usagold.com msg#: 30082)
Thinking about taking a Yen/Gold cross. Get the Yen for next to nothing, and exchange for physical. Easy money. I prefer Pepsi, btw. It tastes better.
All, thanks for the kind words, and all the mail on the GoldTango analysis. If only a tiny fraction of the people who read it sent a comment then we PGAs are an army indeed.
Harley, sorry to hear of your "loss." I'll raise one for your hawg.
Oro, love your work, keep it coming. Specifically, what's magic about the $450 billion number for the trade deficit?
SimplyMe, gambling risk is created risk for the excitement of the game. Speculative or investment risk is transference to another party of an existing risk without regard to the intelligence, or lack thereof, possessed by the assuming party.
Regards,
Elwood
ORO
(5/7/2000; 3:25:29MT - usagold.com msg#: 30083)
Town Crier - 2 turning points of sorts +1
In March I finished an analysis of the BIS data on external debt put in terms of currency demand and currency supply.
Working out the mechanics of it was very much an eye opening experience. I followed a line of thinking which I have been arguing for quite a while in a detailed mechanical way, and was astounded by the results. How these debt positions dictate strength and weakness of economies and currencies, and how the relative debt positions in currencies determine the flow of imports and exports and distort prices. Particularly surprising was how right Davidson and Reese Mogg were about the dollar debt squeeze.
The second item, of which I am not quite certain yet, is "The Derivative" in the currency markets that connects all the currencies to gold and to each other via interest rates. The determining factor being interest rates. I have yet to work out all the mechanics, however, the first few tries at the data indicate that there is a defacto relationship that dictates a gold price according to interest rates that a central bank can maintain. The lower the interest rate the CB of a major state can charge without destabilizing its currency and economy, the lower the price of gold EVERYWHERE.
The question I asked myself was what if Greenspan had his way, and the US did issue particular bonds to central banks at a fixed conversion to gold at maturity, and at a fixed interest rate ? What if he, the obscure economist, was selected to head the Fed, because it was his concept that was being used to keep the currency markets from cracking after the 1985 currency crissis that eventually cracked Wall Street in 1987 ? What if he was maneuvering to maintain equal interest rates on both types of bonds? What if the fixing was done at the IMF through the SDR, and it was the SDR that was fixed?
Then, after some attempts to see in the interest data what is happening, I came to the conclusion that it is likely that there was such a derivative. The question was then shifted to what the fixed values were. For kicks, I started by plugging in the values from the Phillipine gold contracts, $280 floor, $442 at maturity, 9% interest. It worked for many periods of 3-5 years since 1983, though it was way off at some periods. So this gave some credibility to the Phillipine gold story in my eyes.
Then I thought of the nature of a modern currency as "that which the borrower must return". What made for a national (or regional) currency being different from one nation to the other was the location of the borrower and the government controlling the central bank. Borrowers are different in different regions, but it is their action of seeking currency units that provides value to these units (something I was arguing with Aristotle a wee bit before). If the borrower gave up (bankruptcy) seeking the currency (deflation), its value would fall. If the borrower had no problem obtaining currency (inflation), its value would fall. If some borrowers HAD TO reurn loand and some borrowers were not under such pressure, the Have To borrower would have more pressure to sell more goods/services for the same currency units. If the Have To borrower were outside the currency zone (nation or region), then a discrepancy in currency buying power would be expected between the two areas. If interest rates for a currency were higher outside the currency zone than within - say because the borrowers within could borrow from the central bank, but the borrowers outside could not - then the purchasing power discrepancy would be even greater. This is "old hat" so I'll leave it at that.
Going back to the nature of currency, we have, in essence, a single currency with local colors that vary according to the nature of the local borrowers, the local legal terms regarding debt obligations, and local central bank policy. Economic activity and tax, as well as other issues are not touched on yet, and we already have a common denominator and a difference between currencies. Under a gold standard, the different zones would only be distinguished by the interest rate charged there. The rate would be determined by the following for each region:
1. Upper limit, the borrower's perceived or actual return on borrowed funds.
2. Bottom limit, 2.1. the lender's estimates of credit worthiness - the risk of funds not being returned, 2.2. the lender's perceived or actual opportunity cost from not using the funds immediately, or conversely, of not having an income.
3. Actual value of the interest rate - the "market clearing" rate - allows the borrower his return, and the lender is provided his income at the appropriate risk to funds.
Under duress (the shortage of gold caused by over extension in banking), the borrower will pay any rate in order to avoid immediate bankruptcy, while the lender will perceive high risk, thus rates would rise initially. After the squeezed borrowers are bankrupt, the lenders still need to turn their remaining savings into income, however, and will lend again soon after the crissis is over; which is when the distressed borrowers are taken out of the markets.
This simple theoretical description provides the background to the next leap. Having come to the conclusion of there being a gold derivative at the center of the currency and debt markets, the question then becomes what is the status of currencies then?
Often, people speak of the backing of a currency being the assets in the country of issue. When a government bond is issued, the country of issue has its tax base to support the payments of the bond, and a central bank that can issue further currency by taking government bonds off the markets. Indeed, this is the Anglo - American concept of central banking as that symbiotic relationship of banks and government that makes it possible for government to float a currency. Banks need a way to sell their wares at maximum capacity (in essence, banks sell other peoples debts). The reason a bank debt currency carries a value at all, and does not go directly to 0 is that each unit was borrowed into existence and has a demand by the borrower to return the currency created by his loan. Banks want to eliminate the competition for their product - namely any form of cash. Cash would be a physical commodity money or a government (or private)issued paper that has no debt associated with it.
Governments have attempted many times to create paper cash. They had failed miserably even when death penalties were given to those refusing use of the government paper. Failure came from the obvious reason that there was no natural demand for the government's cash currency.
Beginning with the Bank of Venice and culminating in the old BOE, which later evolved into the BOE's gold standard of the British Empire, banks and governments formed a partnership in which the government gets to issue currency through the issue of debt, and banks get the competition from cash eliminated from the market. The government does not get the full benefit of segniorage from this endeavor, but the currency created out of its debts is inseparable and indistinguishable from the currency created out of the honest debt of individuals and corporations. Thus, the government's currency wins the demand from other borrowers seeking to return the currency they borrowed.
This is the core of the Anglo banking model and has served both bankers and government well over the years, though it has paupered billions and made everyone a serf of sorts since no money is independent from the will of others to seek currency to return to the lender.
The BIG GAPING HOLE in this system is that there is no such thing as cash. Furthermore, the system is highly deflationary, since future demand for money is allways greater than current supply, and new supply can only be created by new debt. In the event of a debt liquidation due to an economic problem, the currency will implode in cycles of hyper inflation and severe deflation. Even with the best run central bank, the best that can be had is a delay in the date of destruction.
Now comes the point of this discussion: In order to keep the global economy functioning past the nose dive of the dollar in the 70s, it was necessary to reestablish a gold standard. However, a gold standard makes all currencies equal - a definite no-no for the Paper Empire of America. Furthermore, it would have reestablished a cash gold monetary system - the nightmare of government and banking alike. What was necessary was a credible Gold DEBT standard - FOA's "paper gold". That system would work by allowing the interested party to exchange dollars into a gold bond that converts into gold at maturity.
Each country can issue such a bond and the credibility of that bond would dictate interest rates, just as the true economic performance within a country would reflect in the local debt and currency creation rates and the interest rates necessary to maintain stable purchasing power without destroying the banking system. Thus the lowest interest rate available from any of the members in the scheme would dictate the value of the gold bond - and the POG. The lower the rate, the lower the POG.
So why the Euro?
To the Continental European, Asian, and Eastern view, this cash free system still contains the fatal flaw of debt unwinding. Furthermore, experience has shown repeatedly, that government participation in the debt system ends up with a major issuance of government notes and the monetization of these notes when the deflation and economic contraction occur.
The key differences for the Euro are (1) that eventually there would be a cash version for debt settlement, namely gold, (2) The governments of members can't enjoy seigniorage because the currency is issued by a separate structure that is forbiden to lend to governments, but hold only commercial and retail debt.
Perhaps more later.
Trail Guide
(5/7/2000; 0:09:23MT - usagold.com msg#: 30082)
Note
TownCrier (5/5/2000; 21:00:38MT - usagold.com msg#: 30028)
-----------------------------
If they are giving up their own ability to print money, why all the trouble to form a new currency unit instead of just joining the dollar and the currency union of 50 states plus assorted banana republics that use the dollar? The reasonable answer is that the intended objective is a
fundamentally new monetary architecture not available through the current dollar system.------
Hello TownCrier,
You hit the nail right on the head! The whole purpose behind all of this was to get away from the dollar, not imitate it. All the hard money people that pounded the table about the dirty float (80s decade) in dollar exchange rates now want the ECB to intervene. No sooner do we have a currency system that let's the market rule it and everyone says "Oh no! We need to do something".
I can tell you why they want something done and it's not the saving of the Euro they are interested in. They (the dollar faction) want the Euro up because it is gutting the dollar infrastructure at these rates. Just let it set around .90 for the rest of the year and the dollar will be toast. The ECB won't spend it's dollar reserves buying Euros because the Euros they would take in won't be the international float like our dollars (eurodollars?? damn confusing to use that term now a days) overseas. It would be the domestic zone supply. We forget that they are running a trade surplus
that is building local assets denominated in Euros not dollars. Not adding to the mountain of dollar liabilities like the US trade deficit is. If the carry trade wants to create Euros against their own equity just to buy dollar assets, let them. It's not hurting the international Euro float because all of it is being sucked back into their (Euro) economy. The carry group thinks this is the same act as Japan, but it's not. The Yen is being destroyed as they compress and rates are held at 0%. Yen demand for business is dead. Contrast this against Euro demand and economic growth and we can see a massive trap for Euro shorts in the making.
I think this is all coming to a head now and gold is going to be in the middle of it. Before this is over, the ECB is going to begin unloading dollars for gold through the BIS offices. This may be happening now as gold moves from our shores. Then they use gold to buy excess Euros from the
ECMBs. That same gold could be used to lend Euros again because it's marked free value reserve asset. No different than the IMF play. Beautiful!
Trail Guide
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