Monday, January 23, 2012

Yonder ...thur be DRAGONS!!

块大金条出现在江苏南京新街口一家商场内,配备了两个保安持枪现场保护。据现场工作人员介绍,这块“金条王”总重为99.999公斤,目前全国仅有一块,且纯度、重量都创下历史纪录。

Below is a fun little Chinese New Year guest post by Sir Topaz, aka One Bad Adder (although he seems to be pretty good at math to me). Just a little "food for thought" as he says...

9 月 8 evening Yan’an Road, Shanxi Road intersection, north-south and east-west traffic to each other and lack of traffic police to ease, crossing continued congestion. Post intern reporter Wang Ju Liang Yang deep to figure

The Shanghai Transportation System – an analogy
by OBA

In China there generally exists a feeling of the presence of “authority”. In almost all cases this is reassuring for the visitor …not so however on the streets of the cities.
There, chaos seems to rule …and it would be a brave, nay foolish “westerner” who would even contemplate getting behind the wheel without spending a lot of time to first study and absorb the “local” way.

After the initial shock, the traffic chaos begins to take on a semblance of order as one realises there are very few accidents evident and largely the only obstruction to the (albeit slow) traffic flow, is the occasional breakdown.

Seemingly, the “secret” to navigating your way in Shanghai traffic is to quickly develop an understanding of (a) the user, (b) the signalling …and lastly (c) the law.

The Chinese motorist, bike-rider and pedestrian all appear to have what I regard as a highly developed “respect” for one-another. This, above all else is the key to maintaining a smooth flow of traffic and getting to where you need to be.

Wherever they’re installed, the ubiquitous Traffic Lights are essentially used to complement this level of individual respect where: - GREEN means GO (cautiously) …and RED means STOP …and GO (slightly more cautiously)
There are few (if ANY) Walk – Don’t Walks …and I’m yet to figure out what AMBER means ;-)

The ever-present “authority”, when applied to traffic management, appears to be treated with a certain level of disrespect …not necessarily contempt, apparently something more akin to “I’m alright Jack! – we’ll manage it amongst ourselves”.

“Management” approach to the Shanghai Traffic System du-jour and I might add to life in general in China …to all intents, appears to be a case of “let-it-be”.

My apprehension in Chinese traffic is also compounded by the fact that I’m used to driving on the Right-(correct ;-) hand side of a vehicle!

It is worth also mentioning here that trying to grasp the exponential increase of motor vehicle uptake in Shanghai …and China in general, now and into the future, completely boggles this layman’s mind.


So …on arrival at Shanghai airport you get a Cab and experience all this with trepidation from the passenger seat as you meander into town 1 or 2 hours away (on a good day)

Shanghai taxi driver ID includes a registration number 111,892 where the lower the number the more earlier the driver was registered. One colleagues opined that he would get out of taxi where the registration was recent – currently around 3xx,xxx, simply because the driver would need help understanding directions. The higher number of stars denote better quality of service, and to some extent whether or not the driver is likely to understand some English.

At the other end of the Shanghai Transportation spectrum …albeit separate to it, is the Mag-Lev Train.

Going from the outskirts of the City to the Airport, this state-of-the-art service delivers you in comfort and on-time at speeds never before attained for mass-transit travel “on” Earth.

A truly unique experience - as you hurtle at 431kph to or from the Airport. The thing actually backs off to 380k’s to pass the one coming the other way …wwwoosh …they pass each other in 0.7secs …exhilarating stuff!


It was so enthralling at the time we experienced it, we ended up having several “goes”.

What a contrast …City – Airport …2 odd hours in traffic …or several minutes via Mag-Lev.
They built it …and the people came – well not quite in numbers to guarantee the sustainability of the thing economically, but come they did.
It goes nowhere, it’s too costly to build, tickets are too expensive, were common complaints but, believe you me, it serves its purpose admirably. Accordingly, they plan to extend this service to the city-centre …and I understand they’re installing a similar longer one from Shanghai to a neighbouring City as I type. (Probably be finished and have it operational by the time I get this posted ;-)


We can look at the STS as described above as an analogy for what might end up developing as a Global Financial System courtesy of our Oriental cousins-in-trade.

In Shanghai / China, if they were to adopt and enforce similar draconian rules and regulations that govern western traffic flow, the System would grind to a halt in a heartbeat, so to maintain the integrity of our analogy, we can assume China en-masse follows “let-it-be” principles in all facets of their activities …and essentially I believe they DO.

In this Laissez-faire Society / System, “respect” both for the individual …and transactions between parties, is sacrosanct.

Management essentially is kept to a minimum …a-la the STS.

We can also consider the Mag-Lev as representative of a functioning Free-gold option - included in the System but not necessarily part of it - where participants can opt out of the System if they so desire …be none the worst for it …and in fact gain by the experience.

Free-Gold then acts as an arbiter of the System whereby IF participants begin to stray too far from courteous interaction and behaviour, those potentially disenfranchised simply move to Gold.

Of course the Cab drivers are represented in this analogy by the various Financial Advisers, Accountants etc. who would not necessarily benefit financially by pointing you to the Mag-Lev …and ultimately perhaps would do so quite reluctantly.

Opting out (of the traffic) and onto the Mag-Lev does also have its limitations and suitable only for the few – as per Free-Gold ….but there is (and will be) absolutely NO RISK in doing so as the Human condition ultimately guarantees an upward new-currency evaluation of REAL Gold.


Can a similar “Laissez-faire” Financial System exist WITHOUT an escape option a-la Free-Gold? I really don’t think so.


(Pictures and music added by FOFOA)

305 comments:

«Oldest   ‹Older   201 – 305 of 305
One Bad Adder said...

Nickel: -
I'll go visit as time allows Nickel ...It appears we're essentially on the same page.

JR said...

cont.

Here's the same FOFOA comment I linked above in discussing base replacing credit and HI being changing the nature of "money," of the idea "hyperinflation is the process of saving debt at all costs, even buying it outright for cash.".

And what's neat is in the *the SAME* comment, he also discusses this exact point, presenting an excerpt from Mr. Johnston's letter from Hair of the Dog? and then getting into how to think about the BIS. Hopefully everybody reads this, because its an amazing comment from another site that succinctly kills it on many levels. Enough of my bluster, FOFOA wrote:

"Now I think that in this, it is very important to NOT think of the BIS as a discrete entity. I think you should think of the BIS as a joint operation run by European CBs and "old money interests" in Europe, or as Another called it, (and as opposed to the NWO):

The "Old World Order" (OWO)

MK: Is the Euro a child of the forces of the New World Order, or the forces of regionalism/nationalism/tribalism?

ANOTHER: Sir, I would say, "Old World Order" to return. […]

MK: One other item you might clarify for me is "Who is really behind BIS?

ANOTHER: Perhaps, "who control them"?

MK: The Swiss?

ANOTHER: Yes.

MK: The eurocentral banks?

ANOTHER: Yes.

MK: Who does BIS really represent?

ANOTHER: "old world, gold economy, as viewed thru modern eyes" or " way to move from US$ without war"."

JR said...

FOA on currency war

We will see the beginnings of a currency war like no other in our time...

Several years ago, many gold bugs and gold advocates missed the path as the trail turned. Something I pointed out at the beginning of these "message" talks. As most of you will no doubt agree, almost all gold discussion still centers around "the dollar's war with gold". Truly, the evolution of this story will be how that war ended then and now the dollar's war with the Euro began! A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market. Inflating the gold market place with so much "paper gold" that we would eventually have to bankrupt ourselves just to keep the dollar in the war game against the Euro.

Yes, the war now is between the Euro and the dollar! The Washington Agreement placed gold "on the road to high prices" as it signaled a phasing out of Euro support for our American gold values. How fast gold can, now, rise will gauge how much staying power the dollar has in all this. If there is any gold war now, it's to be in just how fast the dollar gold market can disintegrate into worthless IOUs! So, don't count on this destruction of our paper gold market to mark the real value and availability of physical gold; that ratio will split somewhere down the goldtrail. This action will scare most harden gold investors to death; especially the ones in leveraged gold stocks and lesser white metals!

The war between gold and the dollar has been over for a while now. The action, today, is between the dollar and the euro arena and this is what will break the price lock on gold. Leaving gold bugs with a lot of questions that ask why this: both systems will strive for a higher currency price for gold; one doing it because they have to; the other doing it because they want to! The casualty on this battlefield will be the world gold market as we know it. A market caught between how Western perception thinks gold's price should be "discovered" and at what price level trading in physical gold craters the entire paper structure. A structure of American based "paper gold".

We have been saying for some time that this will be "the" show to watch unfold; but only if your holdings allow you to stay still in your seat as it happens (smile).

They shifted their war on gold to become a war on the Euro,,,, only too late. Now, knowing that the Euro is a fact, we must have a super gold price if the dollar is to stay in the game! The question becomes one of supporting a cheap paper price for the sole function of keeping the market and all its bullion players alive. With the war on gold over, they need to turn their tanks around to face the real enemy but cannot.

FOA (10/3/01; 10:21:26MT - usagold.com msg#110)

Now that the Euro block is passing a point where the Euro currency is viable; this same past dollar support that built American's illusion wealth will now fall away. In its place we will see the beginnings of a currency war like no other in our time.

JR said...

Hi victory,

Key in on this:

"A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market."

==================================

You wrote:

I suppose I had a disconnect when reading the article because the author talks about the BIS in the context of being against the US so I was thinking the author was referring to the BIS' (the entity) balance sheet as opposed to its aggregate CB member gold position.

Another wrote:

Q: ***Your associate says that BIS helped China increase its gold holdings. Please tell me what the source of that information is, or is it simply a speculation on his part. ***

A: The BIS is the gold broker for all interbank sales/purchases. Bullion Banks are for sales to other entities. I think, at first, China was leverage against the oil producers. Then Arabia was allowed into BIS for Euro.


and

The BIS will not allow the distribution of all gold to settle claims.

FOA told us

Somehow, the BIS and the major private gold holders know the total claims, as does Another. The Euro group is going to force those claims into real bids instead of just claims!

cont.

JR said...

cont.

I'm almost done, hang in there. Back to Go Go South Korea:

The news reports said the BoK "entrusted all of its gold holding to the Bank of England for possible use in gold lending and other related transactions in future." That sounds like an "interbank IOU for gold" doesn't it? Perhaps it's even in a BIS sight account!

[Another:]Now, what if CB hold one ounce of gold, and sell it twenty times, that one ounce is now worth $6,000, no? The difference between you and CB? The persons that hold "interbank" IOU for gold, value it at the multiple of leases/sales made against reserves. This leverage, it is held for performance on bank part. The BIS, it force performance, on any economy! You ask Korea about gold, yes?

Aww gee, do you think maybe there's a difference between you and the CBs when it comes to gold? Could it be? I wonder why the CBs call their gold "monetary" gold while your gold is commodity gold or non-monetized gold.

Physical gold is different than modern currency. At the CB level, it rarely gets moved. This was a big reason for the creation of the BIS in the first place. If you think about the purpose of the BIS as a clearing system or gold broker for interbank sales, it makes perfect sense that most of the gold deposited with the BIS would be sight or unallocated.


==================================

Now lets look at Open Letter to EMU Heads of State. Please read the whole thing, its basically all about the BIS and what the CBs do with it! :)

"So here's what's going on: The regular gold market suffices for the general public, some of the "big money" like the ETFs and hedge funds, and the hedging needs of the commercial banks. The majority of this demand for gold is for hedging against a currency crisis like... uh... this one! And the banks are perfectly happy with their contracts to show on paper that they are hedged. Fine. Whatever. But what the regular market CANNOT handle is the really big physical gold transactions. That's where the BIS comes in.

So this is what the BIS is doing, and has been doing for probably 20 years. It is making the market for a second-tier, physical only, sovereign and central bank gold market. This market is totally separate from the LBMA and the COMEX because it has a separate market-maker and... a separate price! More on this in a moment, because we do have a clue as to what that secret price might be!

Now, before you run to your respective national central bankers to verify my story, let me just say that this is a very small secret market. That is, there are only a small number of people in positions of authority that know about it. And I don't know if all the EU member states' national central banks ever participated in the "bid and offer" portion of this second-tier market. It probably started during the run-up to the euro launch and the BIS might have been dealing with EU members differently.

You see, before 1971 central bank gold transfers were part of the monetary adjustment mechanism. And during the run-up to the euro launch it is reasonable to assume that eurosystem gold was returned to this function. So inter-central bank gold transfers within the EMU during the 1990's were likely "managed" by the BIS to smooth the monetary transition, rather than being a free market system of bids and offers. So go ahead and ask them, but if they don't know what I'm talking about that doesn't mean it doesn't exist."


Cheers, J.R.

Aiionwatha's Nation said...

Michael H,

I agree, a break to the historical median of around 8% would be a 54% capital wipeout. What kind of risk return dynamic is that? The spread players would only buy with a floating rate swap on the other side because their funding duration is probably near 5 years at best. Somebody has to take on that risk by writing the swap to keep the price in check meaning that if you track derivatives growth you can visually see how far out of line bond prices are.

You can also transfer that risk return dynamic to almost every asset class in this environment except for the offset (gold or real goods). The Fed, USG and the incentive structure of the FI's simply offset that, but as FOFOA has said (I think) they are only futher devaluing their own instruments in the name of confidence in the form of nominal performance.

Value a stock assuming recessions exist or that the company will eventually go out of business and see what kind of PE that yields.

Value a sovereign bond assuming the market would refuse to accept the risk of interest payments received from new issuance.

Stuff your money in the bank at 0% while prices are rising and the offsetting assets are being crippled by defaults.

Grab a sack of cash while the FED just prints more and more making a mockery of the labor you traded in to get it.

It goes on and on through the entire spectrum.

Robert said...

Badd Ader said: <>

This is exactly as it should be! Have your cake and eat it too. Make provision just in case the worst case scenario happens, but live your life on the 90% chance your worst fears will not play out in your lifetime (even if your are ultimately right in the end!!!!!!!). Is this not the path of Giants?

One Bad Adder said...

"Strange" Ideas.
As a refugee from the old USAGold Forum - where a proverbial team of NFL All-Stars gathered - I MAY HAVE got a gig as the Water-boy!

In the current climate however I just feel it important to have a point of reference covering all contingencies. ...thereby minimising collateral damage should events transpire as I anticipate.

The Gnarls Barkley of the FreeGold Fraternity ...if you will!

victorthecleaner said...

OBA,

Nothing "nominal" about it Squire

I still don't get it. The real rates have been negative for some time. It depends on how you measure inflation, but even with headline CPI at above 3.5% and a 10-year yield of 2% you are well in negative territory. Have been for a while. Still, everything looks like business as usual.

Again: Why now?

Gary,

the ECB could be caught with the pledged LTRO assets on its books, no willing buyers, and effective values (of crappy paper) of zero.

Even if the ECB had negative equity, who cares? A writedown just means that the base money created for the LTROs has become permanent (unless they sell some other reserve asset). As of today, they have some 400bn Euros in equity, and so there is quite a buffer. Finally, the ECB can always blackmail any individual government to exempt them from the haircut in case of default: "Did you say you want us to rescue your commercial banks ....?"

AD,

kicking out Greece would not make a big difference for the Euro zone, but it would certainly cause a huge uproar in the banking sector *outside* Europe. I would therefore keep this possibility in mind although I think Greece is more likely to default and stay in the Euro.

So I am saying it might suffice if Greece gets a hard haircut with CDS triggered and then, Portugal is the next one who asks for a voluntary cut. Just make sure that government debt is never again perceived as risk-free.

Aquilus,

Why kick Greece out?

That's what I expect. Greece will default and stay in the Euro zone. Then, after some time, it's Portugal's turn. Finally Ireland. Keep up the heat.

Victor

Franco said...

One Bad Adder:

What about other possible outcomes? What if the biggest governments and central banks agree to just discharge most sovereign and inter-bank debt? A reset of sorts? What about if along with that a "worldo" currency is created to supplant the USD, EUR, and JPY?

mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
costata said...

VTC,

This is an interesting observation:

Just make sure that government debt is never again perceived as risk-free.

Thus forcing the market (and the banks) to price risk correctly and at the same time focus attention on physical gold as the only risk free reserve asset in the system.

Folks who look at the CBs and governments in Europe as being "on the same side" may find this a difficult notion to grasp. But for those of us who look at this from a "Bundesbank model" perspective it makes sense.

Force the EU governments to align with the ECB Eurosystem model even if they lack the political will to restructure their banking systems voluntarily.

Now looking at this situation differently. The battle between the banks and government becomes clearer. The financiers want to make the sovereign debt risk free at the expense of the taxpayers through "austerity" etc.

But since the debts of some of these countries simply cannot be repaid the bankers and their respective governments look for other avenues to socialize the losses.

When they look toward the currency as the mechanism to socialize the losses they are confronted with the ECB's resistance deflecting them back toward "voluntary" restructuring of the debt. Round and round we go.

costata said...

Off topic but this could be an interesting slant on the politics around the Mediterranean Sea.

Why is Russia helping Cyprus?
http://en.rian.ru/business/20120126/170965548.html

Perhaps some huge gas discoveries off Gaza and the potential for more discoveries offshore in the waters of Cyprus and Greece.

Report from January 23, 2011:
http://www.athensnews.gr/issue/13427/36582

Enter Israel

But the key new player in the equation is Israel, whose cooperation with Cyprus - and more recently Greece - is already shifting the geopolitical tectonic plates in the region.

The announcement by Texas-based Noble Energy in late December (2010) of huge natural gas deposits in Israel’s Leviathan block (and Tamar earlier) (Ed: offshore in waters that could be claimed by Gaza) hiked expectations that Cyprus’ block 12, just 34 kilometres away, may have similarly enormous deposits.

Cyprus made an agreement with Noble in 2008 for the exploration of its most promising exploration field, block 12. Noble will get a second permit, which will run from October 2011 to October 2013.

That idea was reinforced when Israel’s Delek Energy group recently proposed in a letter to Cyprus President Dimitris Christofias the creation on Cyprus of a liquefied natural gas (LNG) processing plant that will process both Israel’s and Cyprus’ gas. Cyprus will decide with Noble on February 10 when to begin drilling.

....As for the Delek offer, Kassinis said he proposed an LNG processing plant for Cyprus years ago. Kassinis cites the US Geological Survey estimates for 122 trillion cubic feet (TCF) of gas in Leviathan, and 167 TCF in the Herodotus area, which lies mostly in Cyprus’ EEZ.

Kassinis is among those who urge Greece to declare its EEZ and says this could start with Libya, where Turkey has no objections.


It's also interesting to note that Israel has been routing gas via Egypt.

As a wise man once remarked "countries don't go to war over gold" they go to war over oil (and oil equivalents?).

enough said...

OBA

"It's a funny thing, although I'm firmly convinced we are but weeks (days) away from a Systemic Meltdown, I still go about my business etc"

me too, but with.......

80 gallons of petrol in my suburban yard, a fully gassed up RV, 40 acres of high & dry land teaming with wildlife in the backwoods of rural AL. and shrink wrapped cash money.

And of course lots of yellow bling.

Like most americans, heavily armed as well :-)

I hope for the best (the reset)and plan for the worst( the way things are now)

I don't know if the coming reset will have a chaotic phase that requires mobility/isolation/self sustenance or not but if it does, this hombre is ready for anything!

And if not I think I'll just take my girl and the labs on a tour of the national park system :-)

If you are correct about the reset being days to weeks away then I wish you all good luck and stay safe. best, E.

AdvocatusDiaboli said...

Hi enough,
for me it is basically the same, farmland, rural area but still bigger city in reach, food for 2 years, firewood, tools, fuel, fortified home, debt free, cash, animals.... (expect the weapons, since I am in europe and firearms are not the topic). I even hold 10000 ounces of silver, not because I believe in silver, but maybe some sucker will accept it for barter (in order to defend the shinny yellow)
@all
dont you also feel sometimes kind of stupid?
Hell, I am CEO of my own company (100% owned, debt free) and see the sheeple coming to work every day not noticing anything. Am I stupid, paranoid whatsever... or is it the other onces being right?
Sounds funny, still this question is remaining. Comments? How do you feel? Or should I better watch a psychiatrist and sell all PM?
Greets, AD

enough said...

AD,

It's clear (to me anyway) everything is not ok. How long can it go on for I dont know. Not very much longer I suspect. But all these things we have aquired have dual uses in case the chaotic phase does not occur.

Where I reside 75% of the time, we are in hurricane alley. The RV serves a useful purpose when the power goes out for a week at a time, Which has occured at least three times in the last ten years.

Same with the extra petrol with stabilizer in it. Lasts years with the additive.

Having a place in the country is a wonderful retreat from the pace of urban life. At $1500 an acre for rolling, old growth timberland, it's cheap as well.

Gold (and silver) have done great so no regret there either.

These preparations don't have to cost a great deal in either time or money so it is definitely worth the effort IMHO.

There is going to be a reset but will the "survival stuff" be needed? Dont know but I'm super glad I'm prepared for it. In case it all proves unecessary for it's intended purpose, I'll certainly make use and enjoy of all of it anyway.....best, E.

Bogey said...
This comment has been removed by the author.
victorthecleaner said...

Mortymer sent me this bit:

2000 January 19: Mr. Greenspan elaborated on his 1998 congressional testimony: "This observation simply describes the limited capacity of private parties to influence the gold market by restricting the supply of gold, given the observed willingness of some foreign central banks -- not the Federal Reserve -- to lease gold in response to price increases."

Obviously, I don't know if he is telling the truth. But as a thought experiment, let us assume he does. This gives us an interesting interpretation of what happened:

Initially I thought that the US were behind the gold for oil deals. Why this? Somehow people mention the Strong Dollar Policy of Rubin and Summers, and you can easily think this means dollar strong relative to gold, and then you are on a certain path.

If you take Greenspan literally, then it was not the Fed, but the Europeans (only!) who started the gold for oil deals. (I think we can rule out that it was the BoE or Canada.) This matches the following pattern:

1. Around 1971, the US wanted oil more expensive in US$. This is the story around the interview with Sheikh Yamani and the end of the gold convertibility, hoping that this would rise the price of oil in US$ more than if they just devalued the dollar against gold inside the Bretton Woods system. So the US want oil expensive!

2. From the documents 1973-1976 that Mortymer uncovered, we learn that, for example, Italy and France initially had difficulties obtaining US$ in order to buy oil. They had a lot of gold though and wanted to use the gold in order to buy oil which the US blocked in the negotiations: no gold settlement among official parties (=governments and CBs). So the Europeans want to use gold to buy oil!

Now think about the Strong Dollar Policy. What do the US want? Do they want oil expensive or cheap or sometimes this and sometimes that?

Here is Triffin's Dilemma: Using the US$ as the world reserve currency leads to two sorts of difficulties:
1. Foreign countries, depending on their trade position, may have difficulties getting enough US$.
2. It becomes particularly easy for the US to run a trade deficit with lots of incentives not to balance their trade account.

Concerning 1, that is Italy and France above. Concerning 2, this is the exorbitant privilege: Whereas foreign countries need to export something in order to acquire US$ that they can use to buy oil, the US$ just needs to increase the money supply.

Oops. There we go. How does the US maximize their own advantage in this game? Sure, by making oil expensive in US$. Why? Firstly, it is good for domestic US oil companies. Secondly, it makes them less dependent on oil imports (yes, because of the trade deficit, they will always depend on some imports, but it is certainly better to depend on consumer gadgets than to depend on oil). Thirdly, as long as importing the oil is debt financed, it does not even matter to them if oil is expensive. Think only about the bottom line: they expand the credit volume, either for government use or for consumer credit, and use this to purchase the oil. They have the real asset (oil) immediately whereas their trade partners who eventually buy the US$ debt only get the paper and all the risk. In addition, this gives them an advantage over Europe because the poor Europeans have to pay the full price for the oil and cannot print US$.

If I were a European and had figured out that the US deliberately tried to make oil expensive in US$, I would be upset.

Is this compatible with the Strong Dollar Policy? Absolutely. A high oil price in US$ creates a lot of what FOA called usage demand for dollars. Perhaps the 'strong' in Strong Dollar Policy refers to strong because of the usage demand and not strong relative to gold. Thinking the US might have suppressed the price of gold may just be the GATAesque hard money socialists' fallacy.

...

victorthecleaner said...

Going even further. What is the currency of the US$? It is oil, isn't it. They are keeping their own currency (oil) strong in US$. The US$ is just the 'bancor', some paper that the others use to settle trade balances. So Rubin-Summers ran a Strong Oil Policy.

Where is Europe in this game? They are upset that the US keep screwing them with the price of oil. So they know that the Saudis like gold, and so the Europeans set up the LBMA gold for oil scheme, i.e. leasing gold to the BBs, inflating the supply of credit gold, providing ample funding to mining companies, hoping for increased production in order to service the forwards. The Europeans mess both with gold and with eurodollars (LBMA), but they keep their own currencies clean. Nasty.

The Fed watches. First they find this amusing, then strange, later worrying and finally they panic. The Europeans keep feeding the monster until it bursts.

Cui bono?
1. The Saudis. They get a lot of cheap gold for their oil, probably way too much if you compare this with what they could have obtained in a gold-centric world monetary system.
2. The Chinese. FOFOA showed us Another saying that the BIS helped the Chinese acquire gold quite early on. Big Trader?
3. The Europeans.
3a) Was this a smoke screen right before introducing the Euro? The documents that Mortymer discovered show that the Europeans were suspected to aim for a gold currency quite early on. When the US saw them lease gold and suppress the price, perhaps this confused them and they did not suspect too much. Could the US have sabotaged the Euro had they known the plans (high gold reserve, marking-to-market) in advance?
3b) When the LBMA blew up after the introduction of the Euro, this had the potential to destroy the dollar. In any case, it gave the Europeans a lot of leverage in negotiations on the future world monetary system with the US.

Who got screwed?
1. All the private gold owners who saw the price fall and sold their physical because they did not understand what was going on.
2. All the others (Canada, Australia,...) who say the Europeans lease recklessly and who trusted the US that gold would be phased out of the monetary system. Second half of the 1990s. Internet stocks were in fashion. Who suspected anything to happen in gold-space?
3. The US because ultimately it was an attack on the US$.
4. The UK.

Where is the BoE in this picture? I have know idea which side they were on. Perhaps they were split. In any case, they might have just been the poor sucker who had to clean up the debris when LBMA blew up around 1999. The Brits got abused by both sides.

There are some peripheral questions as well:

Firstly, Barrick Gold was somehow set up in order to bundle all the forwards and hedges for what had been several independent miners before. Were they used or were they in on the scheme?

Secondly, if the Europeans intended to eventually blow up the LBMA, they knew that the gold for oil scheme would end. So they needed to have an understanding with the Saudis as to how to proceed afterwards. Did the Saudis agree to switch to Euros as soon as all was done? Somehow the US have managed to block this. It did not happen. Everything stalled in 2001, except that gold in US$ rises nominally exactly 19% per year like clockwork.

Finally, where does this place Another and FOA? If they were on the Euro/BIS side, why did they disclose it? To help some small investor/goldbugs to secure their savings? I doubt it. Either is was an inofficial diplomatic channel to get some information to the US that could not be passed on officially (mortymer's idea). Such as: you are a walking dead, you really need to reconsider your position and start talking to us. Or they had an idea of what was going on and wanted to warn someone. A rift inside the BoE? Warn the US before it was too late. At least the US and UK managed to put LBMA back together somehow and keep the show going for another decade.

Victor

victorthecleaner said...

Concerning the 'cui bono?' part:

The Eurpeans paid both the Chinese and the Saudis (in gold) for them to align with Europe when the day X arrives.

Is this favour still due?

Victor

victorthecleaner said...

Quite obviously, there have been several events and an entire policy framework in the Middle East that had the effect of making oil scarce and expensive in US$.

Victor

costata said...

VTC,

Quoted below (my emphasis):

Oil remains the world’s leading fuel, at 33.6% of global energy consumption, but oil continued to lose market share for the 11th consecutive year.

I think you and mortymer should read this;

http://gregor.us/americas/for-a-million-btu/

The energy content of natural gas is trading at an 83% discount to WTIC Oil, and at an 85% discount to Brent oil.

And this;

http://fofoa.blogspot.com/2012/01/yonder-thur-be-dragons.html?commentPage=2#c6821034790671012729

And watch this:

http://www.bloomberg.com/video/84367840/

That quote I lead with is from the 2011 BP Global Review Of World Energy (my emphasis);

Oil remains the world’s leading fuel, at 33.6% of global energy consumption, but oil continued to lose market share for the 11th consecutive year.

http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2011/STAGING/local_assets/pdf/statistical_review_of_world_energy_full_report_2011.pdf

Then let's revisit this discussion about the politics and pricing of oil prior to 2000 and post 2000.

victorthecleaner said...

Yes, costata, this is also consistent with my previous comments on the Brent/WTI spread and the fact that the US government just refused planning permission for the Keystone XL pipeline.

The scary part is that this allows us a prediction of what is going to happen in the coming months: They will create a hell of a chaos at the gulf and drive oil in US$ sky high for the ROW. Gambling!

Victor

mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
costata said...

Mortymer,

I like you a lot but stop posting any more comments for a few days. It will give me time to formulate an explanation to you of why you are giving me a screaming case of the shits without expressing this fact in a rude or abusive manner.

mortymer said...
This comment has been removed by the author.
mortymer said...
This comment has been removed by the author.
Motley Fool said...

costata/nortymer

My view is simple. Official documents are dry and boring. I do not salivate at the possibility of being lucky enough to find hints dropped here and there.

For me a logical theoretic construct that describes reality accurately is sufficient. I have seen enough 'official documentation" to collaborate the theory, and nothing to gainsay it. More pertinently, real world economic data supports Freegold. Officials be damned.

To each his own.

I appreciate mortymer doing the effort, but to be honest I simply skip almost all of his comments.

TF

mortymer said...
This comment has been removed by the author.
JR said...

LOL

"Me: giving you just the date and detail. what else to tell?"

Something that makes sense?

JR said...

And people thought Ash was unbearable.

Michael H said...

victor,

Will you be putting up your excellent multi-part comment as a post on your blog? It would be great to have it around for future reference.

Lots to think about in there. I had always thought the oil-for-gold deal must have been from the US side, but you are right that the logic of it is suspect: why ship gold, when you can give the Saudi's dollars and have them find their own gold?

From the US side, the oil-for-dollars-only deal with the Saudis was the key. I think the existence of this deal made me just assume the same parties were involved in oil-for-gold deal.

Anyone know anything about the oil-for-food deals with Iraq, or Iraq selling oil for Euros? What countries were involved in planning, etc.

JR said...

That's interesting Michael H,

So you are saying you too have never read/understood It's the Flow, Stupid and Flow Addendum, or one of the most re-posted quote on this blog:

Several years ago, many gold bugs and gold advocates missed the path as the trail turned. Something I pointed out at the beginning of these "message" talks. As most of you will no doubt agree, almost all gold discussion still centers around "the dollar's war with gold". Truly, the evolution of this story will be how that war ended then and now the dollar's war with the Euro began! A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market. Inflating the gold market place with so much "paper gold" that we would eventually have to bankrupt ourselves just to keep the dollar in the war game against the Euro.

I could keep going on like this, but hopefully the point is painfully obvious.

Michael H said...

costata,

"Oil remains the world’s leading fuel, at 33.6% of global energy consumption, but oil continued to lose market share for the 11th consecutive year."

"Then let's revisit this discussion about the politics and pricing of oil prior to 2000 and post 2000."


You imply that the politics/pricing of oil changed ca. 2000, leading to the 11 year decline in market share (in terms of energy) of oil.

I don't know where you stand on Peak Oil, but to me this is an ominous sign, and fits with the overall picture:

When US oil production peaked and started to decline in the 70's, the US wanted oil expensive in USD to give itself an advantage in procuring foreign oil.

Now that world-wide oil production is reaching a peak, the US is circling the wagons and trying to prevent North-American oil (and gas) from being shipped overseas.

JR said...

The View: A Classic Bank Run

"My view is that this was an all-paper deal, all around. That the BBs lent their own "gold liabilities on paper," claims against their fractional physical reserves, to the miners… on paper! In reality they gave the miners dollar cash from the sale of these "paper claims" to the Western gold bug marketplace, and booked as an asset the miners' obligation to repay the loan back in physical gold units.

So the BB was short paper gold to the market and long future physical gold payments from the miners. Of course this has the same effect on the market price of gold as the gold bug view above, but it does shift the causal relationships around slightly. Let me explain.

All that BB paper gold that was sold into the marketplace to fund mining operations (to hopefully spur growth in the physical stockpile) was redeemable on demand from the BB "gold window." And the most common way you take delivery at "the window" is you pay a little more to have your gold put in allocated storage.

Another wrote that the Western gold bugs were willing and excited to not only hold paper (unallocated) gold rather than the real thing, but to also trade in their physical, that had been sitting around collecting dust as a dead asset from 1981 through 2001, for this new paper gold. In other words, they gave up their physical to the BB pool of unallocated reserves in exchange for tradable paper BB liabilities. This was a kind of "reverse gold window" in the 1990s, taking in physical gold.

So, imagine two "gold windows" at the Bullion Bank. One is marked "incoming" and the other is marked "outgoing." At the "incoming window" you have "the West" lined up to turn in their physical gold for exchange-tradable paper liabilities. And right around the corner you have "oil" lined up taking delivery or allocation. It is this flow that allowed the oil for gold deal to go on as long as it did. But then something happened.

The thing was, the incoming flow from the mines was not exploding as hoped and expected. And the overall flow from the mines combined with the Western gold bugs puking up their private stashes was nothing compared to the sheer volume of the "oil" wealth in line around the corner. At the current price there was literally unlimited demand at the "outgoing" window and a limited supply coming in. This is what Another meant when he wrote that the oil states had already (almost inadvertently) cornered the gold market by 1997.

ANOTHER: "People wondered how the physical gold market could be "cornered" when its currency price wasn't rising and no shortages were showing up? The CBs were becoming the primary suppliers by replacing openly held gold with CB certificates. This action has helped keep gold flowing during a time that trading would have locked up."


cont.

JR said...

cont.

What he's saying here is that when the CBs lent gold to the BBs, it was in a banking backstop or lender of last resort capacity, not unlike when the Fed created trillions to backstop the frozen interbank lending market in 2008 or when it swapped billions with the ECB in 2009 as a Eurodollar backstop. All the BBs ever got from the CBs was paper, "CB certificates." Think of it in commercial banking terms. These "CB certificates" would have been analogous to "reserves held at the Fed." Reserves held at the Fed fill a void of cash in the vault for the banks, just like these high powered certificates acted like physical reserves to the BBs.

ANOTHER: "This whole game was not lost on some very large buyers WHO WANTED GOLD BUT DIDN'T WANT ITS MOVEMENT TO BE SEEN! Why not move a little closer to the action by offering cash directly to the broker/bank ( to be lent out ) in return for a future gold note that was indirectly backed by the CBs. That "paper gold" was just like gold in the bank. The CBs liked it because no one had to move gold and it took BIG buying power off the market that would have gunned the price!"

But then, like I said, something happened:

ANOTHER: "The Asians are the problem, by buying up bullion worldwide and thru South Africa they created a default situation on all the paper, for the oil / gold trade! …Asia put an end to a sweet deal for the West! From the early 90s it was working very well. But now: The problem with gold physical supply is very real indeed! … The oil "understanding" was broken by the Asians. More gold has been sold than can ever be covered! This market is not the same as the past. … The great mistake by the BIS was in underestimating the Asians.


=================================

See that, the BIS is the one who made the mistake in underestimating the impact the Asian demand.

cont.

JR said...

moar on a theme covered extensively in these comments - who is the "BIS" that was behind this: "A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market."

==================================

FOFOA comment

"Capt Goodvibes wrote:

“One seeming anomaly is the presence of the Fed chair on the BIS board since the late '80s. There are many different regular meetings of various BIS committees etc, but I would have thought the board would be privy to the activities of them all. In other words if it is the goal of the BIS to remove the dollar as reserve currency without war, then Bernanke has been in the loop for years, as was Greenspan.”


Hello CG,

So you find the Fed sitting at the head of the BIS table somewhat contradictory to my hypothesis?
I would say that the G20 is a good analog to the BIS. When Obama shows up at G20 meetings on his 747 he gets the best seat in the room and big fanfare. But from his perspective, I'd say his attendance is a bit patronizing. Kind of like, "you other 19 countries like to think you have a say in the world? Okay, I'll play along."
Now remember, the Fed had its chair when ANOTHER answered these questions:

MK: One other item you might clarify for me is "Who is really behind BIS?
ANOTHER: Perhaps, "who control them"?
MK: The Swiss?
ANOTHER: Yes.
MK: The eurocentral banks?
ANOTHER: Yes.
MK: Who does BIS really represent?
ANOTHER: "old world, gold economy, as viewed thru modern eyes" or " way to move from US$ without war".
Do you think Obama is in on everything the G20 is up to? Do you think the US is in control of the G20? Do you think the G20 might have some anti-dollar plans up its sleeve, even as Obama sits in the best seat in the room?
The Fed views itself and the IMF as much more relevant than the BIS, just like Obama views himself as more relevant than the leaders of, say, Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey... combined.


How do you think that makes the G20 (as a unit) view Obama? And how do you think the BIS views the Fed? As its fearless leader? Ha!

MK: One other item you might clarify for me is "Who is really behind BIS?
ANOTHER: Perhaps, "who control them"?
MK: The Swiss?
ANOTHER: Yes.
MK: The eurocentral banks?
ANOTHER: Yes.
MK: Who does BIS really represent?
ANOTHER: "old world, gold economy, as viewed thru modern eyes" or " way to move from US$ without war".


Capt Goodvibes wrote:

“To avoid this being contradictory...”

I don't find it contradictory, therefore I don't feel the need to explain it.
Sincerely,
FOFOA"


=================================

cont.

JR said...

cont.

so back to The View: A Classic Bank Run

Now the real picture is starting to emerge. "Oil," lined up at the "outgoing" gold window, had the physical flow already cornered because of oil's indispensable value to the West. Then the Asians showed up at the window. Well, not completely. They were also taking supply right out of South Africa so it never made it into the Western paper liability system, the BB reserves. This caused the BB reserves (think cash on hand in a bank) to shrink.

The CBs stepped in to backstop this run on the BB's reserves with their "CB certificates." (A backstop prevents price from running away, the same way Bernanke's 2009 currency swap calmed the rising dollar.) Additionally, they convinced "oil" to take "repayment contracts" removed from the asset side of the BBs' balance sheets in lieu of actual physical reserves. These contractual assets were (now) as good as gold in the hand because they were backed by the BB's reserves which were (now) backstopped by CB gold, still sitting in the CB vaults.


===============================

The CBS stepping in to backstop, sounds like the "BIS" that was behind this: "A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market."

=================================

ANOTHER: "Some big traders said they would buy it all below $365+/- and they did. That's what forced LBMA to go on a spree of paper selling! Now, it's a mess. … Instead, the BIS set up a plan where gold would be slowly brought down to production price. To do this required some oil states to take the long side of much leased/forward gold deals even as they "bid for physical under a falling market". Using a small amount of in ground oil as backing they could hold huge positions without being visible. For a long time they were the only ones holding much of this paper. Then, the Asians began to compete on the physical side."

See that - Instead, the BIS set up a plan where gold would be slowly brought down to production price.

So it was the BIS, yes?

cont.

JR said...

cont.

But then the FOFOA view is that the system itself is, and always has been, the culprit. And that the bullion banking system must and will revert to a non-fractional, non-lending, 100% reserve banking system. Not the fiat banks. Just the Bullion Banks. The CBs demand this, as Another told us a long time ago, because physical gold is cornered by real wealth at these prices, and they (the CBs) will not give up any more of theirs.

I'm sure there are still "tonnes" of those "CB certificates" in the reserve accounts of the Bullion Banks, as all their paper gold liabilities must be backed by either assets or reserves on their balance sheets. But those certificates will never be cashed, except by a very few "important clients" of the type you do not default on because they have something you need.

ANOTHER: "Banks do lend gold with a reason to control price. If gold rises above its commodity price it loses value in discount trade. They admit now to lending much where they would admit nothing before! They do this now because of the trouble ahead. Does a CB [receive] collateral to lend its gold? Understand, they only lend their good name on paper, not the gold itself. The gold that is put on the market in these deals belongs to someone else! The question is not "Are the CBs worried for the return of gold?" but, "Has our paper been lent to the wrong people?" The BIS will not allow the distribution of all gold to settle claims."


================================

So the CBs who wanted a physical only gold market (not all CBs, but the cbs behind the BIS) supported the paper gold market bubble to hasten its demise and ensure it blew up quicker because, as Another told us a long time ago, physical gold is cornered by real wealth at these prices, and they (the CBs) will not give up any more of theirs!

See that - the faction of CBs that were fed up with the current monetary system and favored a return to gold as an international reserve asset were behind the paper gold market. They did it by lending paper, not gold, and because they are trying to effectuate international monetary change form the $IMFS to a free, floating physical gold system, they won't be allowing the distribution of physical gold to support the paper gold market they worked so assiduously to assist on its way to over-inflated bubbledom.

Understand, they only lend their good name on paper, not the gold itself. The gold that is put on the market in these deals belongs to someone else! The question is not "Are the CBs worried for the return of gold?" but, "Has our paper been lent to the wrong people?" The BIS will not allow the distribution of all gold to settle claims.

cont.

JR said...

So again Michael H,

What is so interesting and excellent about Mortymer and VtC failing at trying to recreate a story that FOFOA has already set out, in far greater detail than they could ever hope, years ago.

Isn't it surprising to you that they have been posting here so long here in the fashion they have while being utterly ignorant to basic, fundamental points that have long ago been addressed by FOFOA.

You would think, based on their posturing, they had a firm grasp of these elementary matters and were trying to shed a deeper light. But hopefully now the wool is now slightly less pulled over your eyes, so that you can see a small glimpse of how clueless they really are.

Best of luck navigating your way Michael, its a tricky journey and there are lotsa shady characters trying to mislead you astray! Stay on target and you'll get there.

Michael H said...

JR,

The reason I think victor’s post was ‘excellent and interesting’ is because it summarizes the topic at hand in a different light to what I have seen presented before, leading to an “Ah-ha” moment. Connecting the dots for the stragglers like me, if you will. After all, since A and FOA laid it all out a decade ago, why do we need FOFOA?

I picked out some quotes from “It’s the Flow” to show some examples of where a straggler like me might get confused as to the origin of the oil-for-gold deals:

"Aramco, required to pay royalties and other payments in gold to the Saudi government, could not obtain the gold at the monetary price fixed by the United States so the U.S. government specifically began to mint the “discs” – actually bullion in coin form for these payments."

Now granted, this was in the late 1940's, but if you don’t pay attention then you might think the US continued to ship gold for oil.

"No longer did the US Treasury have to supply ITS gold, the market was supplying gold for it."

"The Western governments needed to keep the price of gold down so it could flow where they needed it to flow. The key to free up gold was simple. The Western public will not hold an asset that's going nowhere, at least in currency terms."

If one incorrectly assumes that “Western governments” = US Treasury, one might come to the assumption that it was the UST who wanted to free up western gold.

"And what the euro CB's figured out was all that mattered to the producer/savers of the world was the guaranteed FLOW of physical gold, NOT the guaranteed price or weight/mass. (And this is why we pull it out of the ground: so it can FLOW!)"

"This is what the euro architecture guarantees in the case of a dollar (paper gold market) failure: that physical gold will flow… uninhibited!"

Euro CBs figured out that the flow mattered, but what did they do about it? Assumption was that the result was the Euro architecture, not oil-for-gold deals.

"A wise oil nation can strike a deal with the paper printers and in doing so come out on top. Go back a few years to the early 90s. Oil is very high, you offer to lower the US$ price in return for X amount of gold purchasing power."

It was easy for me to read ‘paper printers’ as the US, especially since US$ is involved.

"A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market.”

The key here is what is meant by ‘expanding and supporting’; without the underlying logic of *why* it is advantageous to Europe to exchange gold for a lower $-price of oil, the meaning is difficult to figure out. Does it mean as little as leasing a bit of extra gold into the market, or does it mean starting the whole game by setting up mining forward contracts, etc. etc.?

"Instead, the BIS set up a plan where gold would be slowly brought down to production price. To do this required some oil states to take the long side of much leased/forward gold deals even as they "bid for physical under a falling market". Using a small amount of in ground oil as backing they could hold huge positions without being visible. For a long time they were the only ones holding much of this paper. Then, the Asians began to compete on the physical side."

Here’s the meat of it, but again, without a *why*, the context can be difficult; when was this plan started, for example? So, for a straggler like me, victor’s comment is valuable.

Peter said...

http://www.youtube.com/watch?v=CGTvWkmEAtM

Matt said...

Victor the Cleaner's comment as spurred on by Mortymer was phenomenal, pull your head in Jack Russell.

Mortymer thank you for your continued efforts, you are adding structure to the body.

DP said...

I think only FOFOA (BTW did I mention that this is his blog) can decide who and what.

Meh-eh-eh

Jeff said...

Victor, you wonder why A/FOA posted. Unless you discount everything they said, perhaps you will believe FOA's answer.

FOA (2/3/2000; 8:11:45MDT - Msg ID:24209)
Changes

His (Another's) message is so strong and political that it will always draw out "verbal assassins" in an effort to destroy the concepts (MK understands this and communicated it to me also)...

Some time ago (many years), he privately planted these Thoughts very deep in the minds of a few. Only recently were these items produced on the Web for all to see. It was done in a way that did not betray things gained in confidence, but still made people see the world as others did. Another withdrew when the attacks (he knew would come), arrived...

Truly, other major changes in world affairs are coming. Once they are visible, I believe Another will return and comment. Again, he does not write to engage people, he writes to place other minds "in the pipeline of political thoughts and directions". I truly think it has more to do with ethics and honour than the love of man. This may be a harsh observation on my part, but some cultures (as well as individual standards) require this.

Nickelsaver said...

So Mortymer has deleted his comments and locked out but invited users to his own blogs.

What a shame.

Mortymer,

I respectfully request permission to access your blogs. My email address thecomingparadigmshift@gmail.com

Also, I welcome you to post all your material to my open forum at thecomingparadigmshift.bogspot.com

Mike said...
This comment has been removed by the author.
Nickelsaver said...

correction

thecomingparadigmshift.blogspot.com

JR said...

On the BOE and the $/IMF faction and how they fit in Via FOFOA's post Brown's Bottom from back in 2009:

This all leaves us in the present political situation, where the IMF entity, that was formed to replace the gold standard, is now trying to back the present paper gold with physical to prevent a run on the dollar. It is a futile effort as the ECB / BIS have grown the gold market into massive proportions by encouraging the many year expansion of holders through paper securities.


=================================

Brown's Bottom:

"The day after Brown's announcement...

FOA (5/8/99; 20:16:12MDT - Msg ID:5772)
BOE!

ALL,
Well, by now everyone must be aware of the "open management" of the gold price. "Another" had been bringing this picture to light long ago. In puzzle form, he offered ideas, Thoughts and directions for consideration. Only a short time ago most analysts completely wrote off such "thinking" as being absolutely "on the fringe of reality"! Today, the "absolute fact" is that gold is used and managed as a "world currency" of major importance. After the BOE announcement on Friday, currency traders are grasping the concept that gold is, as never before "at the center of reality"!

Many different factions are maneuvering gold these days, and each has their own agenda. The IMF / dollar faction, many years ago, went along with Europe in lowering the gold price in dollar terms. It made the dollar look stable and enforced its continued use as the "currency of settlement" for strategic commodities. Any country running a balance of trade surplus of dollars, was free to buy gold at a stable to lower price, and partially replace the paper dollar reserves. Because the dollar is the "world reserve currency" many countries ran dollar surpluses with trading partners outside of the US. In this light we can see how the integrity of the dollar was expanded, even in countries of nonnative dollar origin!

Not only was physical gold purchased, but paper gold with distant CB backing was also accepted. Ever wonder how all of this gold was placed? You see, over the last many years, there has been a quiet boom going on in gold ownership. The sheer number of world gold buyers has more than doubled, along with the amount of gold owned! The problem is that the amount of physical gold in existence has not doubled, only the warehouse receipts.

Most of it never, ever left the vaults, as the true placement was done in receipt form. Yes, slowly, over the years, even major private bullion holders offered up their physical for "convoluted, future delivered, leased and released gold". Much of what is now held is little more than a form of gold options for "future deposit". Not unlike the "cash dollar that is supposed to be in your bank", but really isn't? As the bank only holds your deposit as a "credit" to your account, so is much of the world traded gold "only a credit of account"!


cont.

JR said...

cont.

When Central Banks (mostly the European, at first) began to lease / lend gold, they were beginning what was to become "the master plan". The creation of a broad, liquid paper gold market that would ultimately undermine the dollar, in time. As I said above, initially it was offered as an "appeasement" for continued dollar use. However, even the IMF / dollar faction never expected the successful creation of another competing reserve currency, the Euro! Right up to its offering, the political money was on the side of a complete failure, 100% with ten to one odds.

Not only did they lose, the Euro even accepted a percentage of gold as Euro reserves. If that wasn't enough, the ECB also instituted a policy of "marking to the market" its gold reserves and effectively blocking any new sales or leases. These actions, as subtle and misunderstood as they were have had the effect of officially making gold money again. Yes, this new broadly traded paper gold market, standing side by side with the physical market has become a world currency.

The problem this creates for the IMF / dollar is that most, if not all of this new gold market is settled in dollars! Dollars that broke a contract with the world in 1971 and went off the "gold exchange standard" at $41 to the ounce. The same dollar reserve currency that is not supported when the gold price rises. If the ECB does nothing but stand firm by not allowing physical out of its vaults, the dollar will be trapped by gold. The US treasury cannot use gold as a backing reserve as the ECB does, because the BIS would claim it at $41 to settle trade imbalances. They have that authority and as such it leaves the US the only option of outright gold sales. However, with the dollar as "the" reserve currency, we can expect many nations to bid "aggressively" for any US gold. China, among others comes to mind! That is what America found when they tried to auction its gold in 1978. The Euro carries no such baggage.

This all leaves us in the present political situation, where the IMF entity, that was formed to replace the gold standard, is now trying to back the present paper gold with physical to prevent a run on the dollar. It is a futile effort as the ECB / BIS have grown the gold market into massive proportions by encouraging the many year expansion of holders through paper securities. All denominated, ultimately, in dollars. We will see $10,000 gold, count on it! It's the only way this can be resolved. That same figure will create massive backing for the Euro and hasten its journey into world reserve currency status. Expect most of the ECB liability for gold to be easily converted into Euros at the dollars expense.
"

Jaqship said...

Nickelsaver

FYI, your link still brings only "Server not found".

victorthecleaner said...

JR,

perhaps you can shut up for a moment and stop trashing this discussion with pieces of FOFOA that everyone here read and understood long ago.

Perhaps I can help you understand the matter:

You fail to explain why Another posted the inside information, and why he did so on North American websites (first Kitco, then USA Gold). Just to help some American goldbugs secure their savings before the grand reset? Dream on!

He was a traitor. He gave the BIS' master plan away so the US could start working on fixing things before it got totally out of hand. I don't know what exactly happened in 2001, but the Saudis did eventually not demand Euros for their oil.

And sure, Another was upset that the Chinese were let in - which contributed to eventually blowing up the scheme. He knew only a part of it which was enough to make him worry. He may even have used FOA. FOA was perhaps just fascinated by the end-of-the-dollar story and the architecture of the new gold based system. That part was real, and FOA delivered and explained it in a fantastic way.

You see, I turned around only one assumption: That the US were not interested in cheap oil, but rather in expensive oil. This leads to some reshuffling of the main actors and a slight regrouping of the different camps.

Now you need to decide which point of view explains more.

How do you explain
* why Another started posting
* why the ECB/BIS never publicly advertised the new role of gold in the Euro architecture - it is completely off the record to this date
* why the Chinese were let in - if you want to switch international trade to gold clearing, everyone of the major blocks needs some healthy initial balance, otherwise they don't subscribe
* which side the Saudis are on?

Victor

victorthecleaner said...

Further, the Euro architecture is completed only when
* gold is the risk-free asset to save in
* international trade is cleared in gold (and then as a consequence, by convenience, perhaps in Euro)

In 2001, both aspects of the Euro freegold project stalled. Why? Although it is clear that the fuse on the dollar as a paper currency had been lit (FOA is perfectly right about all this), they can switch to international gold clearing only if all the major blocks join in. At least oil is required.

But as long as the US can keep controlling oil and prevent them from joining the new architecture, gold is not going to be the medium for settling international trade balances. Without that, the international part of the Euro architecture won't fly.

This is why everyone has been waiting for Godot since 2001.

Sure, the US$ as a paper currency is going to drop down a cliff some day. But as long as the US control oil, how do you switch to international clearing in gold?

Victor

JR said...

Dilemma

"Please think back to what the rise in gold during the 1970's did to the dollar and the international monetary system. It panicked European central bankers to the extent that they confronted Paul Volcker in October 1979 at an IMF meeting in Belgrade, Yugoslavia with "stern recommendations" that something drastic had to be done immediately to stop the dollar's fall. The fear among the European central bankers at the meeting was that the global financial system was on the verge of collapse.

Now compare that to today. As the gold price rises, the euro's monetary reserve assets rise in both value and confidence. They know that even if the dollar collapses today, the gold portion of their reserves will more than compensate for the loss of dollar-denominated assets. And they also know that today, unlike in 1979, there is an alternative currency of sufficient size and scope to pick up the global financial slack. No need to panic like 1979."


An alternative now that was not available then - they supported things things until the alternative was available.

================================

The Gold Trail:

FOA (10/3/01; 10:21:26MT - usagold.com msg#110)

"For decades hard money thinkers have been looking for "price inflation" to show up at a level that accurately reflects the dollar's "printing inflation". But it never happened! Yes, we got our little 3, 4, 8 or 9% price inflation rates in nice little predictable cycles. We gasped in horror at these numbers, but these rates never came close to reflecting the total dollar expansion if at that moment it could actually be represented in total worldwide dollar debt. That creation of trillions and trillions of dollar equivalents should have, long ago, been reflected in a dollar goods "price inflation" that reached hyper status. But it didn't.

That "price inflation" never showed up because the world had to support it's only money system until something could replace it. We as Americans came to think that our dollar, and it's illusion of value, represented our special abilities; perhaps more pointedly our military and economic power. We conceived that this wonderful buying power, free of substantial goods price inflation, was our god given right; and the rest of the world could have this life, too, if they could only be as good as us! Oh boy,,,,,, do we have some hard financial learning to do.

...


For another currency block to be built, over years, the current world economy had to be kept functioning. To this end the dollar reserve system had to be structurally maintained; with its IMF agenda intact, gold polices followed and foreign central bank support all being part of that structure. Truly, the recent years of dollar value was just an illusion. An illusion of currency function and value, maintaining the purpose of holding the world financial and economic system together for a definite timeline. Politically, the world does not hate America; rather they hate the free lifestyle our dollar's illusion value brought us yesterday and today.

Now that the Euro block is passing a point where the Euro currency is viable; this same past dollar support that built American's illusion wealth will now fall away. In it's place we will see the beginnings of a currency war like no other in our time.

...

To this end, I have been calling for a hyer inflation that is being set free to run as a completed Euro system alters Political perceptions and support."





FOA (10/25/01; 17:19:54MT - usagold.com msg#125)

"Inflation runs crazy when a money system is forced to "print out". We will "print out" our dollar, too. Getting there just takes time and an alternative system to cause it."

JR said...

Hi Victor,

Keep trying!

victorthecleaner said...

You also fail to explain why the US never sold or leased any of their own gold.

Victor

victorthecleaner said...

Every single snippet of FOFOA that you reproduced is perfectly compatible with the story I outlined above.

Victor

Jeff said...

I hate to get in the middle of a pie fight, but Victor, why do you say the euro architecture is not complete? And why do you seem to assume that the US has stymied freegold since 2001? Freegold and the euro, not the same. I know you probably don't want another FOFOA quote, but for the jury, here it is:

"The euro architects knew the difference between the monetary functions. They knew that the infinite growth, store of value function was the dollar's Achilles' heel. So they designed the euro to be a stable transactional and accounting currency even if the world chose non-euro physical assets as a store of value. The dollar does not have this design.

This is not to say that the euro will not devalue against gold right along with the dollar. All infinite, symbolic, transactional currencies will, which is to say all currencies will. And to a lesser extent, all currencies will have to devalue against the rest of the finite real world as well. But they will not all hyperinflate to infinity in the aftermath as the dollar will be forced to. Some will. Others will not. The euro probably will not.

This is freegold. It is coming whether or not the euro uses its secret weapon. Like I said, they would prefer not to be seen destroying the paper gold market proactively. They would rather just wait until it destroy itself (which, by the way, it is doing pretty well)."

One more:

Conclusion

Freegold is our destination with or without the euro. Even on the outside chance that an SDR or a similar super-sovereign currency is accepted as the new global reserve currency, it would have to contain gold at Freegold valuations in order to be viable, accepted and trusted, in the same vein as Randy's comment about an EMF. So any way you cut it, the future comes to us with really high value gold by today's standards.

Jeff said...

How long would it take saudi to switch to oil settlement in euros? Isn't this simply an accounting entry?

victorthecleaner said...

Jeff,

why do you say the euro architecture is not complete?

The Euro is more ambitious than just to be yet another paper currency. The aspect of the Euro that has been in effect since 1999 is this:
* balanced trade account insulates Europe from disruptions in foreign currencies (read: dollar)
* Euro zone is set up for phasing out dollar and replacing it with gold (MTM policy)
* ECB mandate promotes in general: small government, free market, free adjustment, honesty about investment risk

But the Euro also provides a blueprint for the next international monetary system, one that does not have all the flaws of the old one: settling international balances in gold. This is a choice, one that has the potential of guiding the ROW when the dollar goes out of business. Europe is an important trade hub: resources in and industrial goods out, and so they are in an influential position to tell others which system to switch to.

But as long as trade balances are not yet settled in gold, even the Euro zone suffers from some of the flaws of the debt based system. The present sovereign debt crisis is a consequence of the balance of payments imbalance inside the Euro zone. This is a consequence of the fact that surpluses are still being invested in debt rather than in gold.

Although the Euro is ready for the new system, the architects have so far never promoted the idea of saving surpluses in gold, neither internally to their private savers not externally to other surplus countries.

At least none of the surplus countries (mainly oil) have accepted the choice that the Euro zone has made.

Victor

Mike said...

thank you mortymer

Victory said...

vtc,

"You also fail to explain why the US never sold or leased any of their own gold."

let's not totally discount the alleged several thousand tons of tungsten filled bars Slick Willy fabricated in Mena Arkansas, hehe!

but on a more serious note I'm really enjoying the creative dialog going on gentlemen

-v

victorthecleaner said...

The relevant message by FOA is (5/8/99; 20:16:12MDT - Msg ID:5772) at

http://www.usagold.com/cpmforum/archives/819995/default.html

Here is where he gives it away:

When Central Banks (mostly the European, at first) began to lease / lend gold, they were beginning what was to become "the master plan". The creation of a broad, liquid paper gold market that would ulltementally undermine the dollar, in time. As I said above, initially it was offered as an "appeasement" for continued dollar use.

interpretation: The Europeans were fed up with buying expensive oil in US$ and wanted to go back to their earlier idea from right after 1971 that they could use gold in order to pay for oil, thus lowering the US$ price of oil, but also shipping gold to the Saudis (too much per oil).

Apparently, they had an agreement with the US, and so the Americans knew it although it was a European project.

What the Americans did not know was that the BIS master plan was to drive the leasing up until LBMA would break and destroy the dollar.

Now if this is not hostile, then I don't know. And FOA gives it away on a US website. Did he think is was irreversible at that time, and the dollar was already finished?

Victor

FOFOA said...

Hello Mortymer,

You wrote me via email: "I wanted to leave… since I feel I am not welcomed anymore. "

That's not true at all. Many people appreciate what you are doing. It's just that your style of commenting (on my blog in particular) is annoying to a lot of people. One of the people that is supporting you in the comments even emailed me and said so. He said that he enjoys what you are doing on your two blogs, but your comments are out of control. 13 comments in a row is way too much.

Honestly, it drives people away from the comments no matter how relevant they are. And many of those that stay just skip over your comments. Your style of comment dumping as you come across things is counterproductive to your goals and that’s why we are where we are today. If you don't believe me (as you’ve expressed in the past when I’ve brought this up) that's fine. But I'm telling you that's what the issue is. It’s not the content, it’s the style that is causing this problem.

Do whatever you need to do, but if you want to stick around (and I hope you do), I'd recommend that one comment would have been sufficient instead of the 13 in a row that you posted earlier. Put yourself in the slippers of one of my New York readers just waking up with his coffee while he tries to catch up on the comments and coming to a massive block of Mortymer documents. It would be more considerate to compile that info on your own blog and then let people know it's there rather than dumping it in the comments on mine in real-time as you come across new stuff.

Quoting from dry, official material is different from original prose in this regard. Larger quantities of original writing are at least palatable in comments while your style of quoting is best kept to a minimum. And while I’m on the subject of comment etiquette, it is unappealing when the bulk of anyone's comments are links and references back to his own blog or pet project while it is fine once in a while.

Along these same lines, deleting all of your comments and closing your blogs to public viewing suggests this is about ego rather than a genuine desire to contribute to the dialogue. I’ll note that I just added well-earned links on my sidebar to both of your blogs earlier this month which, unfortunately, I just took down since they now link to nothing. Again, it is irrelevant how important you think your information is because 13 comments in a row is too much, even if you think you just stumbled upon the Holy Grail.

Sincerely,
FOFOA

Aiionwatha's Nation said...

Was pondering on the concept of game theory a little bit and it ocurred to me that the natural equilibrium in a fiat currency is tit for tat with a high incentive to cheat last to win.

Let's assume the same game is being played and gold is the real arbiter of value behind the scenes. What would be the optimal cheat to call the gold out to its rightful place and the players back to reality?

Wendy said...

Whoa, I've gotten behind in my reading.

JR, FUCK OFF and stop bulling mortymer, and it's not just now, you've done this in the past to him and others.

Everyone has a voice here, and mortymer's voice is amazing IMO

JR said...

I'm not bullying Mortymer, he's bullying FOFOA.

And as I've made absolutely clear, I like FOFOA. And I dislike people who crap on his blog. Especially after multiple pleas to stop crapping.

He made clear how little he respects FOFOA, and I made clear that if he continued, someone might point out how little he knows and how hard he blows.

Diarrhea sucks, but YMMV.

JR said...

Like maybe you missed this FOFOA comment and how Mortymer followed it up with his own egomanical spam of a bunch of stuff trying to prove the exact opposite point! And despite his best efforts, the crap he spammed (surprisingly) didn't really contradict FOFOA, even thought he thought it did.

Seriously, wtf is his deal - spamming documents he doesn't understand to try to undermine FOFOA on FOFOA's own blog?

And then there's this absolute disaster, with the Victor-Mortymer show trying to confuse, contradict and discredit the complex story FOFOA has spent years kindly sharing with us. Seriously, its shameless arrogance that I can't comprehend to show up here, blow off our gracious host and spam their own crap that directly contradicts A/FOA/FOFOA.

Ash was never this disruptive, and he never played the dishonest trojan horse credibility game. You always knew he was clueless. Mortymer and VtC cloak their undermining haterade in a false dose of see, I know the story. And FOFOA's a real nice guy. Maybe too nice.

Not all jobs are neat and clean, but as they say, the world needs ditch diggers too

JR said...

Wendy,

I wouldn't worry too much, someone far more articulate, informed and insightful may be arriving to set us all straight, including of course me too!!

Look up and to the right!!!!!!!!!!!!!!

Contributors
Aristotle
FOFOA

victorthecleaner said...

Wendy,

JR, FUCK OFF and stop bulling mortymer,

JR is probably running red hot - right at the limit of his intellectual capacity.

Take a look at the FOA snippet I quoted above,

When Central Banks (mostly the European, at first) began to lease / lend gold, they were beginning what was to become "the master plan". The creation of a broad, liquid paper gold market that would ulltementally undermine the dollar, in time. As I said above, initially it was offered as an "appeasement" for continued dollar use.

He says the gold for oil deals were 'appeasement' for US$ use.

So the Europeans were fed up with having to first get dollars and then buy oil with it that the US kept artificially expensive in US$. So they went back to their old idea from the early 70s that they could use gold to get the oil.

Well, if you set it up right, you keep the price of gold down by flooding the market with leased gold to suppress the price, try to find some weak hands that effectively sell their gold to the Saudis, and try to provide excessive funding to the Barricks hoping you can eventually increase the mine supply a couple of years down the line.

The US are happy:
* they can keep the US$ price of oil high
* the Europeans are partially satisfied that they have found a way around it and stop making problems
* but the Saudis don't get your gold, but rather someone else's gold. In particular Europe will probably effectively lose gold (where it could be a political weapon in the future) while the Saudis accumulate it (where it will lie still and not become a political weapon - their weapon is oil).
Nice, isn't it? Until the Europeans turn their weakness into a strength by over-feeding the market.

Greenspan must have had a lot of fun during his tenure at the Fed. He is asked why the price of gold is capped and replies 'this is because some other CBs lease gold whenever the price rises'. Isn't he cool? He knows exactly what the Europeans are up to, including eventually blowing up the LBMA, but nobody else gets it.

I always had the impression that Burns and Greenspan were gold-friendly while Volcker was gold-hostile. Burns was loyal and must have left his office in deep frustration about Nixon's politics. But he never spoke up and so he retained enough influence to protect and advance Greenspan. Greenspan helped a lot. Once he saw that 1999-2001 did not do the job, he provided an absolutely fantastic amount of rope.

So, can someone perhaps reboot JR? He seems to be malfunctioning, perhaps some spasms while having the finger on the paste button of his mouse.

Victor

JR said...

Hi Victor,

Mortymer sent me this bit:

2000 January 19: Mr. Greenspan elaborated on his 1998 congressional testimony: "This observation simply describes the limited capacity of private parties to influence the gold market by restricting the supply of gold, given the observed willingness of some foreign central banks -- not the Federal Reserve -- to lease gold in response to price increases."

Obviously, I don't know if he is telling the truth. But as a thought experiment, let us assume he does. This gives us an interesting interpretation of what happened:

Initially I thought that the US were behind the gold for oil deals. Why this?


Probably because you hadn't read and/or understood stuff posted years ago on this very blog, like

It's the Flow, Stupid, or Flow Addendum, or even more recently The View: A Classic Bank Run.

But I guess I can symapthize with you a bit, its not like FOFOA already went out of his way to dedicate a whole post to explaining this to YOU despite your grand understatement:

"I have read a few of your postings with great interest although I admit by far not all of them"

marc said...

This blog is the most erudite and polite I have ever seen (and I never want it to descend into the trite name-calling rubbish that is ZH). For that I am most grateful (and thus, contribute to FOFOA). Just for the record, I continually skip JR's tedious regurgitations of previous FOFOA, FOA, A posts, and his basking in reflected glory. I have found Mortymer's hard work in delving into genuine and meaningful historical documents way more beneficial and enjoyable. (Note to self: but perhaps 13 in a row may be OTT!). Please Mortymer, don't be discouraged; progress is made through hard-won research, not rehashing others' work or mindless arm-waving. The documents on Kissinger et al. were awesome.
Best, Marc
PS Maybe I just mean what Wendy said!

Winters said...

If I may interject with a totally off topic question:

It is often written that the European Union helps prevent internal wars in Europe - eg: stops France and Germany going at it.
I don't particulary understand why this is the case?

PS: FOFOA and Aristotle now listed as contributors - interesting!
I wonder how FOFOA validated the identity of the present day Aristotle against the 2000 era one. No doubt some very in depth discussion on bullion banks that mere mortals like me wouldn't be able to pull off :)

Phat Expat said...

Hey all; just recently made the move to China (South China area) and have to smile at the article written by OBA; especially about the driving. I didn't spend much time studying their habits but I do subscribe to the "...emulate the natives..." philosophy.

Comments about the business environment, however, leave me somewhat baffled. I don't know the history of OBA but I wonder if you live here or were here, briefly, for tourism/business. Either way, happy to provide feedback as I observe and learn more during my stay.

/SleepingVillage/ said...

I enjoy JR's quotes as they help to address issues, in a concise form, that FO/FO/A have covered going back many years. JR puts them into an immediate context that flows with the ideas being presented here by others. I find it helpful for a lazy gold/knowledge miner like myself:)

I like it all, though I understand the trouble with massive comment dumps. If we can all show a little constraint (but not too much!) hopefully we can all continue to learn from each other. Check the ego at the door, my friends:) I know it's tough when you get a room full of really smart dudes like we have here, but it must be done.

Aristotle, if you're reading this...

Judas Priest and Zeppelin! Excellent taste, sir.

Thanks again to all of you.

DDT

Zenscreamer said...

Hi all :-)
I know that the latest noob dustup has been defused, but I was prompted by my frustration (akin to what costata described as a screaming case of the shits) to write my very first blog post. It's not rude, or abusive, and I hope it makes a convincing case for civility in our intellectual explorations in this vibrant forum.

In case anyone's interested it is here:
The Observatory Tearoom

Edwardo said...

http://www.zerohedge.com/news/greece-politely-declines-german-annexation-demands

A key quote:

"But who will bailout the world's central banks which already collectively hold over 30% of global GDP in the form of "assets", or as this term is better known these days, debt?"

It's not a question of who, but, rather, what.

Bogey said...
This comment has been removed by the author.
costata said...

Zenscreamer,

I read your post and agree with MF. Well said. I hope you will continue to post when you feel inspired.

One Bad Adder said...

Thanks Blondie - but I'm unable to access the 200 and upwards comments without posting this - Maybe it'll roll over when this gets filed.

Nickelsaver said...

OBA,

Right below the last comment you will see that you can go back and forth between the sets of comments older or newer.

Nickelsaver said...

you can also pull down your URL history:

http://fofoa.blogspot.com/2012/01/yonder-thur-be-dragons.html?commentPage=2

One Bad Adder said...

Hey Phatty: -
My limited experience in China has been at the visitoe and small-business level.
I was impressed by "things" there ...but can't envisage living there.
Please submit your observations as time allows.

至于 ...;-)

One Bad Adder said...

Nickel: -
Struggling mate, as I'm inevitably needing to post a comment to gain access to >200. - I'll get it sorted sooner or later ...sure can't lay claim to being the sharpest Cyber-arrow in the Quiver.

VtC: -
It's the Zero point on the short end of the Curve where the problem lies - nothing to do with "inflation".

One Bad Adder said...

I always wondered why people just wrote "comments"

Wendy said...

Sir Adder,

I don't know if can read this, but FOFOA has graciouly fix your problem, as he has done for me in the past, by opening a new post called "open forum"

Bogey said...

In this case, it appears the issue is affecting more than Sir Adder due to the number of comments containing just "." or "comment" or deleted comments. I wondered about the purpose or reason for such comments in the past as well, until I encountered the same problem myself. It appears blogger allows the viewing of 2nd (or 3rd or 4th) pages of comments only after one has commented.

Wendy said...

Bogey,

In the past I have haad difficulty getting beyound the first page and 200 comments. People do the ... comments or .. suscribing to comments thing to get all the comments delivered to their email address.

I hope this helps, but i'm not sure it does

Motley Fool said...

VtC

"Sure, by making oil expensive in US$. Why? Firstly, it is good for domestic US oil companies. Secondly, it makes them less dependent on oil imports (yes, because of the trade deficit, they will always depend on some imports, but it is certainly better to depend on consumer gadgets than to depend on oil). Thirdly, as long as importing the oil is debt financed, it does not even matter to them if oil is expensive."

I glossed over your comments at the time you posted them, simply because they seemed silly to me.

I didn't expect it to evolve into such a serious argument.

So. I decided to reread them.

I have some issues here.

Point one and two. It depends on what your goals are. Personally it makes more sense to me that the USA wanted to protect their oil reserves for after they had depleted most of the middle east with their paper for oil scam.

If that is the goal, then a low dollar price is better. It makes it unprofitable to extract american oil. Further more their general policy of blocking oil exploration seems to align with this.

On your third point. Of course it matters. If we extend your argument then $100 oil is better than $50 oil, and $1000 dollar oil better than $100 oil, and $10,000 dollar better than...you get my drift.

Which is absurd. That would rack up their debt to unsustainable levels much faster and end the dollar hegemony much faster.

I would argue the current deal favours the usa. They don't expend their own gold, true. They manipulate the market lower so others sell their gold, and manage the price.And keeping oil as low as possible as long as possible keeps their racket running the longest. Additionally it is much easier to manage gold with a lower oil price.

So yeah. I don't buy it. :P

TF

Michael H said...

MF,

"Personally it makes more sense to me that the USA wanted to protect their oil reserves for after they had depleted most of the middle east with their paper for oil scam."

I think victor is on the right track. At least, the difference between what he wrote and the A/FOA/FOFOA quotes that JR responded with are too subtle for my weak mind.

"A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market. Inflating the gold market place with so much "paper gold" that we would eventually have to bankrupt ourselves just to keep the dollar in the war game against the Euro."

- The paper for oil "scam" came out of Europe.
- The goal of the US in 1971 was not to protect their reserves, but to make their extraction 'economical' by raising the $ price of oil.

"I would argue the current deal favours the usa. They don't expend their own gold, true. They manipulate the market lower so others sell their gold, and manage the price."

Of course the current deal favors the USA; they didn't call it 'exorbitant privilage' for nothing.

But the 'they' who were manipulating the gold market lower was not the USA, it was European CBs. This was a way to get around USA's favored position vis-a-vis oil.

JR,

Honestly, after a few days of thinking about it, I am still confused by your reaction to victor's comment.

Maybe I'm stupid, but the quotes from A/FOA/FOFOA seem to support what victor wrote. So what is it that victor got wrong?

Is it his questioning of why ANOTHER would speak out?

tristramboris said...

Folks, long time reader, first time poster. Please keep this forum civil so the word continues to spread. My first referred acquaintance has already started reading here and given up....another lost soul.

On the debate re Mortymer...none of us ought to be against the posting and linking of primary evidence in support or in opposition to the observations and arguments of FO/FO/A. However, let's share those sources in a thoughtful manner.

«Oldest ‹Older   201 – 305 of 305   Newer› Newest»

Post a Comment