Building a coherent and cohesive narrative around events of the past is a natural part of our process of understanding. And every good story has a beginning, middle and an end. But what if the end of a particular narrative is still in the future?
Mencius Moldbug coined the term "slow history" in these two posts to describe his hobby of reading really old books and diaries (especially ones written by those outside the political mainstream of their time). He writes: "The student of slow history, who has no faith at all in consensus wisdom, official truth, and 'everybody knows' chestnuts, is willing to rest enormous judgments on a single, indisputable, authentic primary source."
He draws an analogy with fast food versus slow food. Fast history is consensus history. It is that history which "everybody knows" because it has been homogenized for the masses. It is like fast food in that it is theoretically the same as slow food because it contains the same initial ingredients, and yet it has been processed, filtered, packed and shipped, each step of which does its small part to reduce the initial ingredients to little more than flavored styrofoam.
I like the idea of reading that which was written at the time history was unfolding (slowly, as it seems), in addition to the narrative put together by consensus after the fact. They both have their uses of course, but the story you uncover while reading what was written at the time might just be a little different from what you'll read in a history book that has been processed and filtered through societal biases and the consensus perspective.
Since it is in our nature to seek out neatly packaged stories with clear conclusions as part of our process of understanding, the consensus view of individual past events tends to be one that fits a narrative that was also concluded in the past. For example, the Great Depression which ended the gold standard is the conclusion of a story that begins at the end of World War I with the middle being the Roaring 20s. The Nixon Shock is the conclusion of a story that begins in Bretton Woods with the middle being the London Gold Pool in the 1960s. And gold's parabolic blow-off top in 1980 is the conclusion of a story that begins with the Nixon Shock.
These neatly packaged stories, stacked one on top of the other, allow us to view the present as if it was merely the result of the most-recent past, and to look forward to "history repeating" (or at least rhyming as the saying goes). With this kind of a consensus view, we might expect history to repeat the 1970s with regard to the miners, silver and a boom followed by a bust in the metals. Or we might expect to go back onto a US government-sponsored gold standard after a new "Bretton Woods 2" conference.
But what if the end of a particular narrative that begins after WWI is still in the future? If that's the case, then we are still living through history (slowly, as it seems). And that's the case with ANOTHER's narrative as I see it. So perhaps a better way to view events that play an important role in this narrative is through words written at the time those events happened, rather than the summary encapsulation (after the fact) by someone who views those events as part of a story from the past rather than part of the present.
With this view, I read ANOTHER differently than I read other gold analysts. When I see a consensus view held by other gold analysts that differs from ANOTHER's view, I know I am reading a form of "fast history". But when I read ANOTHER it feels more like I'm listening to an old-timer explain the slow history he lived through, observed with his own eyes, made with his own hands, with a special emphasis on why and how reality sometimes differs in monumental ways from the consensus view. To me, reading ANOTHER is like I imagine it is for Moldbug reading the diaries of Ulrich von Hassell, Thomas Carlyle or Clarendon's Great Rebellion.
So I thought I'd give you a few bite-sized pieces of slow history—in the form of really old newspaper clippings—to chew on while you are still holding the Checkmate view in your mind's eye. These are a few random selections from a much larger hoard of news clippings that were given to me. In other words, there are plenty more where these came from. To the Moldbug purists (and to MM himself who was kind enough to explain his precise meaning to me by email the other day), I realize I am taking some liberties by using his term "slow history" in this way, and so I apologize.
1947
To begin, we'll start with a short clipping from the Leader Post, a Canadian daily newspaper, from October 9, 1947. The headline is "Britain sells gold". You'll want to click on the newspaper images so they open in your browser, then you may need to click on them a second time to make them readable at full size because some browsers will automatically fit the image to one page.
I hope you noticed some of the neat details in that short article! In Checkmate, I called the period from 1950-1957 "the top of the hill" in terms of the dollar's finite timeline. This was the period in which the US had about 20,000 metric tonnes of gold. For the first five years of the new Bretton Woods monetary system which began in 1945, the US experienced an inflow of gold, including that British gold in the article. This inflow raised the US stockpile from 17848 tonnes in 1945 to 20279 tonnes in 1950. Then in 1958 it started rapidly draining away.
For reference, here is the size of the US gold stockpile during the years from 1945-1972:
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1960
Next we jump to November 23, 1960, with an article from the Reading Eagle, a daily newspaper in Reading, Pennsylvania. The headline is "U.S. Action About Gold Is Explained" and it is referring to actions taken while attempting to stem the bleeding-out of US gold.
More fantastic details in this article! One that especially caught my eye was that it was common knowledge in 1960 that $11.5B of the US gold was never going to be shipped as it was the required reserve backing the US money supply. That left only $6.5B, or 36%, of the remaining stockpile for the rest of the world, as long as the price remained $35/ounce. And at the rate it was draining away in late 1960, it would be game over in a little more than a year.
No wonder so many people were betting on a gold revaluation all throughout the 60s. It was simple math, and it was in the newspapers as early as 1960, even in Reading, PA. Talk about overdue! If I pull out my calculator, I see that the US stockpile in 1972 (8584t) had fallen to only $9.66B at $35/oz., well below the $11.5B limit. But let's see, if I revalue that same amount of gold up to $42.22, well then it's back up to $11.65B. Voila!
1961
Here's a quick little article from the New York Times on January 13, 1961. You may have clicked on my link in Checkmate to US Mints ‘Gold Disks’ for Oil Payments to Saudi Arabia. I included this article because it mentions the Aramco fleet of three DC-6s carrying "8,000-pound cargoes of gold to Saudi Arabia's late King Ibn Saud, who distrusted paper money."
1967
Our first newspaper clipping from 1967 comes from The Miami News on July 17. The headline is "U.S. Pushes 'Paper Gold'".
And the second one comes from the Modesto Bee on December 13, 1967, the beginning of the end of the London Gold Pool.
1968
This next one is a great article that was written only three months after the London Gold Pool came to an abrupt end. It comes from the Milwaukee Journal on June 27, 1968. It talks about France dropping out of the pool and the US picking up France's 9% share which raised the US share to 59%. It details several meetings leading up to the end of the gold pool, including one at the BIS which it says cost the US $210 million in gold for the simple mistake of having a Treasury official fly to Basel which is a central banker sanctuary where the US Treasury would not normally be present. And it explains how it all ended just four days after the US said it would defend $35/oz. "down to the last ingot", when the US Senate passed an emergency bill on March 14 making the dollar a strictly fiat currency.
1969
This next one comes from Henry J. Taylor, former US Ambassador to Switzerland and a syndicated columnist in the 60s and 70s. It is titled "Our 'Paper Gold' Quite Uncomfortable" and comes from the Herald-Journal on March 16, 1969. It talks about the new "two-tier paper gold system" and concludes that "paper gold is no remedy."
1973
We next jump to 1973 with a short article from the Vancouver Sun on June 27. In it we find Treasury Undersecretary Paul Volcker speaking to Congress about the "free market" for gold in the context of—and giving his tacit approval for—foreign central banks selling gold directly to the free market. This would, of course, happen at the free market price which was $122/oz. at that time, making foreign central bank gold reserves de facto worth the free market price in dollars rather than the official price of $38. The official price was changed one last time, four months later, to $42.22 where it remains today.
1974
In the first of six newspaper clippings from 1974, we hear from Rene Larre, the general manager of the BIS who also happens to be French. This one comes from The Morning Record in Meriden, Connecticut on January 19, 1974. In it, the general manager of the BIS says he sees a time coming when the CBs will trade gold "at the free market price" as opposed to "the fixed monetary rate of $42.22 an ounce." Furthermore, he says that by trading at the free market price, "the central banks will be able to revalue their reserves" which will help their countries pay for oil.
Next we go to the Montreal Gazette on March 1st where we learn that an "Arab buying spree increases gold prices" when three Arab countries plus Iran buy about a billion dollars in gold in only two weeks. At the going price of $167/oz., that would have been about 186 metric tonnes flowing from the West to the East in exchange for their oil. To put that into perspective, annualized that would have been a West to East flow of 4,842 tonnes of gold going to only four Middle Eastern oil producers, not including Saudi Arabia!
On the same day, March 1, 1974, we get a similar article from the New Straits Times, an English language paper out of Kuala Lumpur, Malaysia.
This next one comes from the Wall Street Journal on April 23, 1974. The poor quality of the scan makes it difficult to read, but I'm including it for the headline alone as it mentions European gold for ME oil: "Gold Price Rises as EC Nations Get Closer To Using Official Holdings to Pay for Oil."
A day later, on April 24, 1974, in the St. Petersburg Times, we learn that European Finance Ministers led by Wim Duisenberg have tentatively agreed that central banks should be allowed to buy and sell gold on the free market and thereby settle official debts at the going market price. The article also notes that by the simple act of selling gold on the free market, central banks will be able to quadruple the worth of their gold holdings. Can anyone say MTM gold? The price of gold on April 24th was $170/oz., quadruple the official price of $42.22.
On November 12, 1974, from the Montreal Gazette, we learn that OPEC revenues have increased even more than the price of gold. While gold has risen from $35 an ounce to $180, the revenues of the oil producing countries have jumped from $15B to $110B in two years. In oil terms, gold hasn't been revalued at all.
I don't know about you, but when I read this article it is just so obvious that Freegold is the solution to the problems explained in the article. The article talks about vendor financing, "a common enough practice," but even the Fed chairman Arthur Burns admits that with a consistent net-producer like OPEC, vendor financing equates to "piling debt upon debt and more realistically piling bad debt on top of good debt." And yet the real problem is that the consistent net-producer is consistently accumulating excess currency that needs to be recycled. Two solutions: lend it or spend it. How about if they spend it on a physical asset with no counterparty, so there's no piling up of liabilities? And how about if that asset can simply float in relative value without ravaging the economy with inflation or deflation since it is only used as a reserve asset? All of the currency will still be recycled, whether they lend it or spend it.
1975
On January 10, 1975, from the Windsor Star in Windsor, Ontario, Canada, we learn of the very first Snapshot day (January 7, 1975, when the London afternoon gold price fix was $169.50) and its subsequent MTM party!
1979
Finally, I thought I would conclude this post with a secretive "gold for oil" deal in 1979. This one comes to us courtesy of the Gadsden Times out of Gadsden, Alabama on February 5, 1979. This paragraph in particular caught my eye:
"Officially, the [South African] government refuses to say where its oil is flowing from. But Western diplomats here believe that gold-for-fuel deals were struck with Saudi Arabia and other conservative Middle East states 'at a high premium.'"
I called this post Checkmate 2 not because it details the checkmate scenario, but because it is meant to be a companion piece to my last post which explains the narrative. Perhaps I will do a Checkmate 3. I don't know, because I never plan future posts ahead of time. I just do them as I please. But like I said, there are a lot more newspaper clippings where these came from, and I haven't even gone through them yet!
As for the slowness of history, it would be a mistake to think that my intention with this post was to imply that it will continue unfolding slowly. At the end of the line, change transpires in the relative short term:
FOA: Over time, one could never compare the returns of investing in stocks and bonds to owning gold. This is simply because when gold is entangled in currency schemes, its fiat value is falsely presented while the currency system ages. Only the commodity use of gold is reflected, not its much higher wealth "reserve asset" function.
However, this present era has become one of those unique periods in paper money history when gold will take a great leap in value during the relative short term.
One day this blog will end with little or no notice, just like The Gold Trail and the USAGOLD forum. One day I will grow tired of doing this, or perhaps I will find a better use of my time. Bear in mind that I am not selling anything, and so far I've been here for 4 ½ years, longer than ANOTHER (THOUGHTS!) and The Gold Trail combined. But unlike the original Gold Trail, here you can at least cast your vote to postpone the arrival of that inevitable day by clicking on this button. If, on the other hand, you'd prefer to vote for me to move on to something else, that's even easier… don't click the donate button. ;D
Sincerely,
FOFOA
478 comments:
«Oldest ‹Older 401 – 478 of 478Wil (fac)
for the record I don't have a problem with debt as wealth. If I knew you to be a good and honest person with a track record of paying his debts, I would gladly take your signature as a promise of wealth to me in the future.The out cry over debt money always seems to be attached to a video of Jim Carey in 'Dumb and Dumber' holding an IOU for a Lamborgini. He proclaims 'that is as good as money'!
If the note was from him I'd have second thoughts but I am not repulsed by the idea of a loan and the idea that the note might be passed on as money...at least in principle.
MdV,
We agree to disagree then on debt as wealth. I definitely have a HUGE problem with it.
Debt is risk. Gold is wealth, i.e. "payment in full".
Even as you say "wealth to me in the future" I say "risk to me now" and "possible return on risk with profit in the future". After all it is the "futures" market that is set to topple today, as a result of "too much debt".
But more to the point, all FIAT currencies now represent debt (and a future promise of the acceptance of systemic debt expansion).
Upon that premise, we witness the systemic "risk on" adrenaline which fuels the fraudulent securities that blew up the IMF$ in 2007.
The bailout queens took on the "risk" to defraud investors with hyper-leveraged "shit" like sub prime CDO's and MBS's -- PURELY because THEY KNEW those losses would be bailed out with freshly printed nominal FIAT DEBT. It was a wholly premeditation coup.
So in fact, there was NO risk, only a rigged casino with the FED as the house. And they timed this to be able to transfer that FIAT into true wealth while CONfidence in the debt-based FIAT system still prevailed, still giving it purchasing power.
These bailouts would NEVER have happened with a free market currency that is tied to gold as a brake and spur mechanism to manage hyper-printing (:as we will soon have we hope:). When the dollar becomes worthless my friend, so will dollar based bailouts.
So clearly, I blame the end run of a debt-based system on everything we have seen in the last 3 decades that makes you want to puke up a lung full of bile at the wholly immoral, socially irresponsible destruction that the fiat money changers have burdened the working classes with in their "front lawn dump".
Now the object of all efforts is to sustain the system long enough for shrimp to work off the dump, or if not, just take it from their deposit accounts (MFG, Best, Cyprus and the next dozen scream-fests about to take place) and/or inflate it away as the final "solution" to enable freegold.
That said, haven't the FED's merry men stolen enough "deposits" from the world and converted them into enough coke, whores, Lafitte, Mansions and Penthouses, Jets, Islands and bunkers full of gold to finally let the remaining debt clear?
No, I don't think so. Not those obsessed money-monkey-junkies. That is what "debt as wealth" perpetuates.
When people stop believing that debt is wealth (and they will) and start understanding that "gold is wealth", "oil is wealth", "houses and cars and homes and land WITH CLEAR TITLE are wealth" the world will truly be a better place to live, and thrive in.
And banks will behave a bit more responsibly, don'cha think?
Watch in amazement as the paper IOU's of "gold debt as wealth" PLUNGE to $1540$ and below. Meanwhile, the paper longs shit their pants, frantically scratching their heads and nutsacks, wondering what in the blue fuck is going on.
What cockamamie explanations will Sinclair, Sprott, Turk and the rest of the paper gold cheerleaders belch forth today as their credibility plunges and their clients sharpen pitchforks of silver to similarly plunge into their rectal cheek pads. High comedy is sure to ensue. Get out your lawn chairs and popcorn (extra butter please).
Paper gold is doing EXACTLY what no what expects physical gold to do, but in the world of opposites people still confuse the face in the mirror with the one on this side.
One is merely a reflection of the other, while the other is the real thing. See the difference as the real thing reaches to the stars and it's paper reflection reaches below dirt.
Time grows short, as it proves all ...
@Wil
So in fact, there was NO risk, only a rigged casino with the FED as the house.
Yes it is a rigged casino. So?
It will be a rigged casino as long as there is a govt involved. If you don't plan on living alone in a forest you will have a govt. As long as there is a govt, people will want facilities from the govt and will not want to pay taxes. As long as that happens there will be deficits. As long as deficits happen, there will be confiscations. You have to decide whether you want gold confiscations or confiscation by inflation.
Remember what happened when US was too pressed for gold in 1934. Yes that was the time when the govt had not enough gold and you had gold standard. Your dollar become inconvertible, and your gold was confiscated. Do you want that again?
Get used to the fact that the game is rigged. If you store your wealth in paper you are going to lose. So get your wealth in gold and in your possession. There is no other solution. That is what is freegold. You have a fiat currency which you do not believe in. You use it for all transactions, but never consider it wealth. Buy your gold and protect it as wealth.
@ Micheal DV
"but I am not repulsed by the idea of a loan and the idea that the note might be passed on as money."
So would denominate your savings in consumption loans ?
Well, folks, our present condition vis a vis "gold" is, from where I sit, potentially, quite meaningful. You now have, from a technical standpoint, about as good a setup to "go long" in paper gold as one could have. The monthly stochs on spot gold certainly have room to move lower, but it's getting into the zone where bottoms are formed. The daily indicators are oversold, and, yet, the new lows that have been hit in paper gold faves such as GDX and GDXJ are now sporting momentum divergences that can be seen from across the room even by those without their specs. If paper gold can't get off the mat here...well, let's just say it won't hurt the "2013, year of the window" case.
Anand,
Your last paragraph makes my central argument well and could serve as my epitaph. However I think that gold (in particular freegold) is a way around confiscation by inflation.
Beyond that, if a "government" were to try and "nationalize" my few ounces of gold, I might move to a forest and make my last stand there (double smile). Where I come from, we know our roots and plant them well.
HOWEVER ... governments today practice a form of global fascism (or corporatism if you prefer) solely to enrich themselves and their "public/private" partners in crime, not so much their poor, facility seeking or tax avoiding constituents.
For the great unwashed they do the very least required to maintain social order up to and including many new laws to dispense with them like the "enemies of the state" they may become.
Our Wall street mascot has signed a number of executive orders to that end that I am quite sure you are familiar with.
But here in the USA, some of us did learn the lesson of a limited government, and a constitution, and a bill of rights, and a republic, which we sadly could not keep.
I have great hope for the planet Mars :)
Edwardo,
Trade away mon ami. The game's afoot and you gotta play to win.
I am very much not a fan of the phrase that gold is "payment in full". It's not. Gold is simply a different (more suitable) way to hold wealth over time. We don't save to sit upon a pile of gold - we save so that some future day, we can purchase the things we truly need (food, shelter, healthcare, etc). Most people, at least in the US, save in currency or currency derivatives. Others choose to save in gold. But in the end, those savings will eventually be put to their only purpose - to be spent. That's the real moment of payment.
When I work, my excess labor can be stored through time in the form of savings. Gold is best suited to this job, although the way gold is viewed/traded today hides this fact. But whatever form of savings I choose, if it does its job correctly, then magically my previously stored-up excess labor can be put to current day use. Labor, built up, transported through time, and then put to use. That's "paid in full".
I'm very happy to get currency in exchange for my work. I can use it to pay my bills and all my current needs. When I spend that currency, it is then that I am getting "paid in full". If I want to put off getting "paid in full" to some future date, I can use gold to help transport that wealth through time. But it's the spending that gets me to "paid in full". Not gold itself - gold is a means, not an end.
According to the 'Barbarian' series on YouTube, the Celts mined 70 tons of gold in about 100BC. They claim Cesar waged war in Gaul to get the gold.
http://www.youtube.com/watch?v=Wl96VLPCAqw
Just some gold history.
M
So would denominate your savings in consumption loans ?
I would not have a problem voluntarily saving some wealth in a good loan to a good risk candidate for a good return.
Wil
Just because we see gold as an excellent savings vehicle does not mean I would choose to be just a saver!
I gotta wild side!!
I might just loan my in-laws money, hell I might buy some stock if the risk/return was right.
In fact I am doing that now!
Yes, even with freegold revaluation just around the corner, I still have found an ETF that serves me better than holding gold!
Call me crazy and wild...even reckless?
Hi FOFOA, did you sell your bitcoins yet?
I read that the supply of bitcoins is worth about 1 billion dollars at $150 per coin. I also read that it was selling for 5 cents in 2010. So you could have bought the entire M1 money supply of bitcoins for $333,333 at that time. Good luck selling them all for $1B.
I'll stick with gold.
Another bit of barbarian era gold history:
In about 300AD Emperor Tragian relieved the Dacians (modern Transylvania) of 1600 tons of gold they had mined in the area.
It seems ancient Rome was regularly short of funds.
https://www.youtube.com/watch?v=VtxSeGkeyKk
@Wil
I agree, US had one of the best constitutions. But the best things also deteriorate :-).
Anyway the reality is that we have to have a monetary union to get out of thieving govts. A gold standard will not help. At least a fiat currency allows a govt to recover without gold. Remember how Germany came back up, although it did not have any gold. It just needed to reduce the deficits, and then come up with a currency, that it did not over print. Everything fell into place without the need of gold. Due to this reason the govt will not have to do gold confiscation. Gold confiscations were a relic of gold standard regimes.
I also think that the present way democracies are arranged in the world is not the ideal way.
Too much concentration of power in the center. This happens when monetary powers get concentrated at the center. If the center collects Income tax you are doomed. Income tax if it needs to be collected, it must be done by the local municipal govt. When the center distributes money, it plays favorites. If it instead needed to tax the municipal govts, then its powers would be that much reduced.
Also there should be no parties. Parties allow the voters to get complacent. They chose one party and forever vote for the candidate fielded by the party. If you remove the party, the voters will have to think about whom to vote. This makes the voters more aware what is happening around them. And also require voting for two persons, and make sure that the winner gets 50% votes of the people, adding the two primary and secondary votes, not just people who voted.
@Edwardo:
(…) by my rough calculations, From January 2, 2013, the current puke rate is averaging 2.3 tons per trading day. If there are approximately 250 trading days a year that comes to a projected loss of 575 ounces over the course of the entire year if the trend continues.
Please, could you elaborate a bit on this statement?
(First: You’ve meant "575 tons", right?)
Has your statement to be read like this:
Less and less people/institutions are engaged in paper gold (GLD), and if this trend continues until the end of 2013 there will be no investment in paper gold at all.
If this is the correct interpretation would this mean that those who were engaged in GLD have realized their risk early enough?
Would this mean that one of the two scenarios for FG to arrive (collaps of paper gold) is closed?
So that the other FG scenario is most likely then: Sudden collaps of trust in all paper values and therefore run into gold (physical)?
For the case I could get the answer by further reading of older posts: I am reading, but it takes time …
Hi all.
March 2013 was the first month with less than 2 posts …
Think we have to live with the idea of a FOFOA stepped back letting things happen as they want to evolve from now.
Yet there seems still to be a lot of interest in communication about FG.
Would it not be nice to have a FG Forum? The comment section of a blog post is not very convenient for ongoing discussions.
As far as I am concerned: In the moment I do not have the time for the management of such a FG-Forum …
Anand,
Good thoughts my friend. I do truly feel that we have developed into a form of corporatism in the West (perhaps even including "Communist" China), but my experience and view of other countries and other peoples is somewhat limited by my own "perception box".
Though it may be thought heretical to say it here, I accept that Freegolder's capitulate to this corporatist state of affairs, to some degree, i.e. "if you didn't like the last system, you won't like this next one." More specifically, it is giants who decide the way of things in this world, and it the job of governments, their partners, to convey this in a way the electorate can accept.
Though in the past, these partners have quarreled over power, as in who in fact is truly in the "driver's seat". It may well be that JFK's term ended badly thus.
I am still a bit uncertain as to the ECB's "separation of church and state" that "church" being the corporatist element of the nation-state. Politics has strange bedfellows indeed.
Dr. O,
I agree with your words above, but it gives me no indigestion merely to view gold as "payment in full" when taken in the context of debt based currencies. It is within that context that the distinction matters, whereas all "completions of a trade" can be viewed as payment in full. So I defend Another in that regard, as these are his thoughts as I interpret them.
I think where we stand now is all very much in accord with Another's thoughts and predictions. What we have seen in Europe, and what we are seeing in Japan, is playing out, with each new "experiment" testing the boundaries of the present IMF$ to the point of ... who can say??
I don't know if it was recognized here before, but of all people Dave in Denver found a link to something from 2011 that might have been missed:
http://www.financialstabilityboard.org/publications/r_111104cc.pdf
The objective of an effective resolution regime is to make feasible the resolution of financial institutions without severe systemic disruption and without exposing taxpayers to loss, while protecting vital economic functions through mechanisms which make it possible for shareholders and unsecured and uninsured creditors to absorb losses in a manner that respects the hierarchy of claims in liquidation.
If Dave's interpretation is correct, it appears that the BIS laid out the terms for Cyprus two years ago. And what that says to me is that the BIS is ready for a change. First you provide the "wake up call" then change begins.
We shall see. Time is slow, as in slow history in the making, but it eventually proves all.
Seen? "Unqualified Reservations" on Bitcoin.
Dr. Octagon,
Re; "Payment in Full"
A very clear and simple (but I repeat myself) "lightbulb moment"
Thank you.
Dr. Octagon,
I think the term paid in full is used properly.
In a pure barter system, one would be paid not with currency, but with something of intrinsic value. Ex: In return for labor, you receive food. The food has intrinsic value. You have been paid in full.
Gold also has intrinsic value.
Currency has perceived value. It is nothing more than a debt marker. You have not been paid. You have simply been issued a currency that states something is owed to you. When you spend it, you will have been paid. The longer you hold on to it, the less your debt marker will be worth.
CB
Ein anderer
I personally hope that this blog lives beyond reval. There are so many respectable minds here. I believe I'd need the guidance through such an exciting and scary time. I hope you all have been hitting the donate button
CharlieBravo - it's true that currency looses purchasing power over time. That's a policy decision of the currency issuer, and not a direct result of it being created through debt. Ask anyone in Japan.
The main value of gold is its ability to carry wealth through time. I can also see a small amount of value associated with it being nice to look at, such as with gold leaf. But it's the wealth-carrying quality that gives gold almost all of its value. So in this sense, you could say that gold has intrinsic value, but I think when people say gold has intrinsic value, that's not what they mean. And I assume the same is true in your case - when you say gold "has intrinsic value", you mean the gold itself has value for reasons other than its ability to carry wealth through time. That value is not just what you get in return when you sell your gold, but that the gold has intrinsic value outside of its purely monetary function. That getting gold is getting "paid in full" at that very moment, yes?
If so, imagine a scenario where gold's ability to carry wealth through time is compromised. For example, the world finds a way to synthesize gold effortlessly, making it plentiful, or maybe everyone else just decides one day that they don't care about gold anymore, and so you can have as much as you like for free. Basically, gold doesn't buy you anything. You've lost the monetary value, but still retain what you consider gold's "intrinsic value".
Looking at your pile of gold coins, do you still think they have that same amount of intrinsic value, if they don't buy anything anymore? If I hire you to perform manual labor for a month, and pay you 1 ounce of gold at the end, have you been "paid in full"? Think about this.
Again, gold's value is its inherent ability to transfer wealth through time. This is what gives gold value. The wealth is not the gold itself - gold is just a carrier for wealth.
EA,
The forum idea was proposed many times in the past and abandoned all those times. In my opinion, and since I NEED to read all the comments, a forum is a bad idea since I cannot follow all threads easily (when Turd Ferguson started the forum in his blog, I left).
The way we have this blog now is ideal because it allows to read comments in strict chronological order, and the topic is selected tacitly by all the participants interests, it is more "democratic" than a preordained category set.
Just MHO.
Hi ein anderer,
Do you want clarification on the numbers I came up with, and/or clarification on whether what I said about GLD being drained of physical means that...
less and less people/institutions are engaged in paper gold (GLD), and if this trend continues until the end of 2013 there will be no investment in paper gold at all.
And that this, in turn, means that...
...those who were engaged in GLD have realized their risk early enough?
Would this mean that one of the two scenarios for FG to arrive (collapse of paper gold) is closed?
Please consider that those who panic first panic best. This is not to say that there is necessarily a panic occurring over the last three months as approximately 144 tons have been drained from GLD, but we may be in the early stages of something like a run on the gold in GLD. If so, do you imagine that the current drain will continue in an orderly fashion, or that things might develop into something a tad more dramatic as those who actually have claims on the actual metal-or think they do-begin to break a sweat as they watch the present trend not merely continue at the same run rate, but gather momentum? The manner in which more and more entities are disengaged from paper gold will have everything to say about the ultimate fate of the paper gold markets and the arrival of freegold.
CB, another way to run the thought experiment is to imagine that whatever you get paid in, you are not allowed to re-spend. So if you're paid in food, you can do whatever you like with the food (eat it) but you cannot trade it for anything else. Now, would you like to be paid in gold? If it had intrinsic value, then perhaps you would. But it doesn't in this sense, and I imagine under these conditions you would prefer something that does (like the food). Gold IS payment in full, in the sense that it has proved itself as the focal point for wealth over the past thousands of years. Beyond that, you need to trade it in order to realise the wealth it stores. Gold stores wealth, food is wealth (but doesn't store as well :).
ampmfix,
I see your arguments and I agree :D
When the world changes in a major significant way, it does’nt just happen suddenly overnight. Take for example the Internet and the WWW. One of the best examples of “Slow History” would have to be the Request For Comments (RFC) which document the step-by-step development of these game-changing technologies. You can follow in exquisite and painstaking detail, starting on this day (April-7) in 1969 the development of these landmark standards and protocols that have shaped our modern digital lives.
(Similarly with the “Ethernet” Local Area Network standard. It all stated way back in 1980 when the first IEEE 802 Standards Committee convened, but most of us only saw the first working networks in our offices in the 1990’s).
Other major game-changers such as the structure of DNA also did’nt suddenly come as a bolt from the blue courtesy of Watson and Crick in 1953. Many other researchers such as Franklin, Pauling and Wilkins had published years earlier and were “closing-in”.
The point is, astute observers would have seen these developments coming years before they actually became mainstream, simply by reading the relevant academic journals. I guess none of the above examples could be classified as “emergent systems or emergent discoveries”?
So why is it different with monetary science and International Central Banking? Or perhaps I should ask “Is it different?”
Which of course brings me now to Freegold and Ari, who we are told subscribes to the Journal of Central Banking at great cost, and reads all the boring articles each quarter. Surely the “protocols” for Freegold must be debated and discussed in great detail therein, similar to how it works in the core sciences? And if not – why not?
Dr. Octagon,
“Intrinsic value” is perhaps a poor choice.
If I was to build a shed and you where to build a trailer, we have both invested labor and expertise. Both items have value. If we were to trade these items, we would both be paid in full.
Gold, like the shed and the trailer, cannot be simply created by key stroke. Capital investment and labor are required. This time and labor is what I was trying to express with the term “intrinsic value”. Something has been invested (sweat, knowledge, ect.) in its creation. Any transaction would simply be an exchange of sweat, knowledge, etc. Once the transaction is complete, you are paid in full. What you do with this payment later (exchange it again for something else) doesn't change the fact that the original transaction is complete.
Fiat differs in that its main characteristic is medium of exchange. It simply lubricates the transaction (Unit of account and short-term, store of value could be considered secondary). It takes virtually zero effort to create and is somewhat limitless. Its sole redeeming quality is that it can be traded for something else. Until it is traded, its purpose is not complete.
If Gold where to one day lose its characteristics and be easily replicated than it would no longer serve its current purpose. With the current stock available, and the ensuing flow, it would very quickly become worth less than dirt.
Jesse
Your experiment may frighten a shrimp, which is why we must think as a Giant to understand gold. A Giant can gain all of the food, cars, houses, and other things it needs with its monthly production, and will still need a place to store additional excess. Giants will always choose the focal point (currently gold). You do not get to value this focal point, Giants do. Your opinion does not even register with them. Do the owners of a fine painting care what the man on the street thinks it is worth?
@ Dr Octagon
"We don't save to sit upon a pile of gold - we save so that some future day, we can purchase the things we truly need (food, shelter, healthcare, etc)."
That isn't true. That is why I partly disagree with FOFOA that gold will spur and brake net producers into consumers. My family is Dutch. We do indeed work just to sit upon a pile of savings. And I know a lot of people like this. My Dad is not a spender, he never will be. He will net produce and save til the day he dies. He has no intention of ever spending the money he has made. It is a never ending game of trying to be richer then the next guy. The only time I will sell my gold is when I have enough to live off investments and I can stop working.
@ Dr Octagon
" The wealth is not the gold itself - gold is just a carrier for wealth."
I disagree.
Gold is the wealth. Gold has physical qualities that make it desirable to the super rich. If a net producer who doesn't want to reinvest his money into more and more headaches is stuck buying gold and always will be. Net production = gold. Gold =wealth.
The longer time goes on, the more important gold becomes because technology makes for more and more net production.
Since the concept of Giants is so central to the Freegold story, I would like to propose that we make a real list of all the Giants in the world (a bit in the same spirit as Screwtape files, which has gone to painstaking detail trying to ascertain the location of serial numbered bars in ETFs).
A place to start is obviously the Forbes Billionaire list. There are now 1,426 billionaires in the world.
Since the poorest of this bunch has barely a billion, let's assume he puts 5% of his money into gold, that is about 1mt of gold. On the other end of the spectrum is Carlos Slim with around 75mt. Do these numbers make sense and fit into the 170,000mt picture? (note that if they buy at Freegold prices the tonnage is much lower).
In other words, Giants have between 1,426mt to say 20,000mt, but then the Indians have 20,000mt?? then the giants do NOT decide that much and this Freegold argument fails. So, if the Freegold argument must hold, it means that the Giants have way above 5% of their wealth into physical gold. If they had 100%, it would amount to around 5.4T (Forbes again), and this seems like it is too much according to the list Motley Fool made up. So which is it? Any ideas?
Cheers.
"Since the concept of Giants is so central to the Freegold story ... "
'Giants' (super-rich individuals and families) are superfluous to the design and implementation of the Euro/Freegold.
The project only requires the cooperation and understanding of a few state– or CB-like entities;
- Eurocrats (Duisenberg and the original Euro architects)
- BIS
- A handful of in-the-know Euro politicians
- Main OPEC politicans/CBS
- Chinese politicians/CBs
- Maybe Russia? Others?
Aside from being a useful metaphor of perspective – inherited from FO/A, I'm not sure why these Giant individuals/families are given such weight.
It seems implausible that, say, the Rothschilds demanded the creation of the Euro, or get a major say in FG implementation.
@CharlieBravo - I see your point that it takes real effort to retrieve gold from the ground, and so real value is used to create a gold coin. And I fully agree. But I don't agree that this effort is directly tied to the coin from that point forward. For example, I may spend months of my life painting on a single canvas, and since I have no talent to paint, it's hideous. What's the value of this painting? If the effort to create it is the measurement, then it's worth several months wages, but if the effort to create it is only a minor function of its end value, then it's worth nothing. I'd bet at auction, it would sell closer to nothing than several months wages. The value of something is much more dependent on its current-day use, rather than what it took to produce it. That's why computers go down in value over time, and fine art goes up in value over time, even though the effort to create them has not changed. Why do you believe that the labor to produce gold stays with it over time, when it doesn't for other items?
@M - you say: The only time I will sell my gold is when I have enough to live off investments and I can stop working. Compare this to my "We don't save to sit upon a pile of gold - we save so that some future day, we can purchase the things we truly need (food, shelter, healthcare, etc).". These are much more similar than they are different.
Regarding your second statement... net-producers and the super-rich don't have to buy gold. They can simply spend their wealth, and for a giant who can't spend it all, they can easily give it away. There are plenty of organizations who can put that money to good use, helping others throughout the world. I'd argue that gold isn't attractive to the super-rich because of its physical properties. Gold is attractive because it can carry wealth through time, allowing them to live off of it later in life, and leave it to their descendants. And that's a quality that appeals to the super-rich and non-rich alike. I don't need the super-rich to be attracted to gold for me to make use of it myself.
A billionaire is not a giant. He may not even be a saver. For instance warren buffet is a debtor.
I see your point that it takes real effort to retrieve gold from the ground, and so real value is used to create a gold coin. And I fully agree. But I don't agree that this effort is directly tied to the coin from that point forward.
I don't believe gold's value is tied to this effort. I mentioned that if gold where to lose its current redeeming qualities, it could very quickly become worthless. That being said, it is valued today. If you decide to trade your labor for this particular item, then you are paid in full. The deal is done.
If you were to instead purchase a house (free and clear) with your labor than you would also be paid in full. If said house was to burn the next day (akin to gold losing its redeeming qualities) you would have still been paid in full. Regardless of the now worthless house.
Contrast the above two items with fiat which is by design a medium of exchange. It is nothing more than a debt marker. It is not the end, but the means. It is the go between. It is an IOU.
You are not paid in full until you exchange the IOU for something else. If you are holding an account full of IOU's, one would expect you to redeem those IOU's (get paid in full, or complete the transaction) at some future point. Until that time, you have only completed half the transaction.
Why do you believe that the labor to produce gold stays with it over time, when it doesn't for other items?
I don't. The value is decided at any given time by the super organism. In reading my previous comment I can see where I gave that impression.
Thank you for taking me to task. This is one of those thoughts that I believe I have a grasp on. However, it is either difficult to express or I lack the language skills required to impart the information.
Perhaps it would have been better to simply focus on the role of fiat (medium of exchange).
Apparently gold price does correlate with oil price. The reason gold price has been slumping since the middle of 2011 is because oil price has been slumping since the middle of 2011.
what's the freegold explanation for the close correlation of gold and oil price?
"But it's the spending that gets me to "paid in full". Not gold itself - gold is a means, not an end." -- Dr Octogon
This ongoing conversation seems a bit like splitting hairs... so I thought, why not pull out my meat cleaver and weigh in?
The means are the end.
Deeper than one might suppose....
Simply, gold is payment in full.
Sidcup, so billionaires are not Giants, instead, the list you provided? Fine, so the control of the gold future is done by people holding only around 30.000mt and political/monetary power? Large clusters of people, holding a lot of gold (20,000mt?) like the Indians, must be a part of the equation, no? I find hard to envision that they are not.
ampmfix said...
It seems to me that 'Giant' is used interchangeably around here to refer at various times to;
(a) States/Central Banks that are co-operating to bring about the end of $IMFS.
(b) super-rich individuals and families who own gold in hundreds/thousands of tons.
I see group (a) as central and necessary to the implementation of freegold, but not group (b). The concept doesn't need them. Aside from interesting discussions of their castles and marginal utility of their gold, they are peripheral*
The architects of the Euro wanted a currency/CB system freed from government meddling, so I doubt they gave the requirements of a few super-rich families much consideration.
*it may well be different in the OPEC states where the strands of government and family are deeply intertwined.
I am surprised that there has been little discussion of the recent decision of the BoJ to double its monetary base by the end of 2014, and what, if anything, that portends. It seems calculated to spark a rotation out of Japnese bonds into US Treasuries. Will this provide structural support for the US $ dollar for another year? Any thoughts?
A SMALL piece of gold may change hands many times in the course of a millenium. Each time it is traded for something, often a "currency", which is more easily divisible and fungibly "current".
But as that small piece of gold moves from owner to owner, it provides a measurable utility to each owner - each ultimately receives something desired, tangible, and valuable in trade for that gold.
Currencies may have been used as a temporary intermediary of those many trades, but each time possession changed, the gold endured, and either moved on or sat still. The currency intermediators used to fine tune the trade valuations do not endure over the centuries.
Find me one from 300 or more years ago which competes with a currency of today as a utility by which to fine tune the valuation of a trade settlement. They are now reduced to quaint historic collectibles with ZERO utility in this regard.
So whether you choose to call gold the "completion of a trade", or "payment in full" or "wealth" may depend more on how it is being used, rather than some intrisic quality. The intrinsic quality is endurance.
I suspect that LARGE gold under the possession of a single generational banking dynasty lies relatively still, beacause there is no pressing need to move it during "normal" times. There is probably a steady trickle of discounted "spot" flow moving into it until the spot price rises enough to restrict the trickle even further.
While this is true of gold, in the background, central planners / bankers (CPB's) have a singular purpose. To mitigate rapid social change in the form of collapse, social disruption and of course outright global wars.
They have, with the implicit cooperation of other important elements, nearly managed to vanquish the concept of an actual violent world war, where superpowers like Russia, China and the USA would engage in an all out hostile military exchange.
It's not an impossibility, but the odds are slim when you consider that a more sophisticated war of economic destruction is less costly, more practical/pragmatic and leaves the spoils intact. This is what it means to be "developed", whereas "emerging" is full of turmoil.
What the CPBs are tasked with doing is to tediously and slowly manage the unwind, preserve the illusion of hope and sustainability, minimize the outrage and visible signs of collapse, and extend and pretend until they simply can't.
On the Freegold side of that equation, you have fair agreement with the above, but contend that at some point during this incredibly delicate experiment of balancing the impossible against the inevitable, confidence will suddenly *snap* and the dominoes will tumble fiat into the fiery inferno below dirt.
In that time, moving through it, perhaps a matter of weeks, the system is perhaps out of the control of the controllers.
This is the wildcard scenario. Large gold could move during this time, with globally important reason. It could bear on a decision of war, the control of vast resources, the genocide of a particular people, or a change in the future development of energy on earth.
But all who have the power to impact important events or change are vested in the status quo. Nothing is more important to them than maintaining control, which means "maintain the status quo at all reasonable costs".
The slow and inexorable death of the dollar is the current status quo. It benefits no one other than a crazy handful of evil gold hoarders, jerks, time misallocators and brainwashed cult members to try and "speed things up".
So the slow history of Another's 16 year anniversary of freegold "in our time" continues to play out, until Giants lose control of their system.
... or relinquish it willingly to gold.
freegold friendly? Yes.
ampmfix
I recall a story about a new wealth fellow bragging about a 100ft or so boat, and an old wealth person coming in halfway in the story and commenting. I believe it was a story FOA shared. Perhaps those with more familiarity with the archives can look it up for you. It relates to your question.
TF
ampmfix, I'm not sure if your logic holds - it's the flow that matters, not the stock - given this, is it even possible to work backwards in this way? i'm not sure...
"What's the freegold explanation for the close correlation of gold and oil price?" -- Unknown
Freegold would be in evidence by the act of divergence between the gold price and the oil price heavily in favor of gold. This might well serve as the very definition of the onset of freegold.
Nice FG summary of Victor the Cleaner.
Just had a look here after a bunch of beer.. And saw Anand coming down on Bitcoin.. Well, I have this to say about it.. How do people who bear the brunt of human labor in the world get paid? In Bitcoin? Do they attach value to Bitcoin? This is where the problem with Bitcoin lies.. No one attaches any value to it. Sure it could for all technical purposes act as a reserve currency(but not a currency for trade). This is the reason Indians buy gold, that's something they attach value to, it's seen and understood by many as "precious", a mindset the rupee struggles against... The big upswing in the price of Bitcoing is entirely because of Iran conducting almost all of its trade in Bitcoin since they got cut off from the monetary system. It's that simple. The bankers shot themselves in the foot when they tried to shut down trade with Iran through blocking their access to the banking system. Not they transact with Bitcoin.
Lord Sidcup, consider that when gold in size must be coaxed out of hiding, group (b) will, indeed, play a pivotal role.
Thanks all, appreciate the help.
@ Octogon
Compare this to my "We don't save to sit upon a pile of gold - we save so that some future day, we can purchase the things we truly need (food, shelter, healthcare, etc).". These are much more similar than they are different."
No, they are not similar. I want to sell my gold to buy a capital asset. I do not need this capital asset. I could work if I want but I don't want to.
No millionaires or billionaires want to give away anything. You must not know any. I know it is cliche but you don't get rich by pissing your money away. My Dad has everything he wants already but he still runs his business and saves. And he is nothing close to a giant.
M, I think you are absolutely right . . . at least when it comes to individuals. Once a saver always a saver. Though what holds true for individuals does not necessarily hold true for families. There is a Chinese proverb: “Wealth does not pass three generations.” Eventually the spendthrift children and grandchildren who grow up with a misplaced sense of entitlement get their hands on the money and squander it. Families need to work very hard to make sure this does not happen, but I think it happens most of the time anyway.
Even so, as FOFOA has already observed: Hard money regimes typically end in bloodshed, and I think you have identified the reason: No millionaires or billionaires want to give away anything. Freegold is not a divine solution to the human condition and will not change human nature. From a political and social standpoint, it will probably lead to war in due course. But it doesn't matter whether freegold is good or bad. The question is whether it is the inevitable next step, no?
@M - of course millionaires and billionaires want to give away money. Look at the Bill & Melinda Gates Foundation, and Warren Buffet. These are both cases of billionaires who have no intention of leaving their fortunes to their children (some, yes, but the vast majority no). The fact that Warren Buffet has no intention of preserving his wealth for future generations meshes well with his distaste for gold, does it not?
It's true that I do not know any millionaires, let alone billionaires. I will never inherit anything from anyone. This almost certainly has an impact on my thinking. You appear to be in a different position, with a likely (substantial?) inheritance. This makes the conversation about inter-generational wealth preservation much more personal for you, and impacts your thinking as well.
@CharlieBravo - I agree that fiat is simply a medium of exchange. I personally also view gold as a medium of exchange, but one with a very different nature from fiat. Obviously most here disagree with my view, but that's ok with me.
Freegold isn't a hard or easy money regime, so why should it lead to war?
FOFOA: Freegold is not about making easy money a little bit harder. On the contrary, it is about the debtors and the savers coexisting without the perpetual monetary conflict embedded in all prior systems.
...
Currency’s main purpose is to lubricate the flow of value. Gold’s main purpose is to store or stockpile value. Stock and flow. Gold and currency. Currency will also store value for periods of time, but that is not its main purpose. If currency happens to behave as a temporary store of value, that’s only a secondary effect created by its suitability to its primary role. Mises said as much (which is in my Honest Money post):
Mises: Money is a medium of exchange. It is the most marketable good which people acquire because they want to offer it in later acts of interpersonal exchange. Money is the thing which serves as the generally accepted and commonly used medium of exchange. This is its only function. All the other functions which people ascribe to money are merely particular aspects of its primary and sole function, that of a medium of exchange.
...
The purchasing power of gold can be rising or falling regardless of whether currency prices are inflating or deflating because gold is like an isolated circuit. Savers choose to hoard or dishoard (produce more or consume more) based on the changing purchasing power of gold, not currency. So the savers' savings is circulating in a closed circuit where it can be experiencing the same or opposite effects as the currency.
With news this good, who needs comic relief: Via Bloomberg TV: Betty Liu
One ton of gold, worth $7.5 million was seized from a small car by Italian
police at a Swiss border crossing. (The gold was concealed behind panels)
Sooooo, smugglers are smuggling 3.6 karat gold now. I can hear the voice
of Austin Powers ransom threat......
A new german Gold blog is born: edited by a professional journalist (Nikolaus Jilch, Die Presse, Wien) and obviously very open to FOFOA and friends. Good luck!
Jeff, freegold is the ultimate hard money, but in a system that coexists alongside an easy money system. What changes in freegold is that it is no longer either/or, but both (at least in the beginning).
I think freegold ultimately leads to a return to feudalism. As FOFOA has acknowledged before, gold only works well as a store of value if it is widely held. As M has observed from experience, and which my experience also confirms, in practice many hoarders (especially large hoarders) are not so willing to dis-hoard. I would go a step further and say that families will be especially reluctant to dishoard if they perceive that it would be more difficult to re-hoard in the future. Ultimately the rich-poor gap will grow to extremes. If the purchasing power of gold increases in the future, which is sure to happen as gold moves into stronger and stronger hands, the flip side is that the earning power of work drops. The elite can later dishoard ever smaller amounts of gold, but up more of the land, housing and other necessities, and force the vast majority into penury.
The end result is social unrest, war and revolution. In the long run, Freegold is no utopia unless you are one of the feudal lords.
Dr Octagon
" I agree that fiat is simply a medium of exchange. I personally also view gold as a medium of exchange, but one with a very different nature from fiat. Obviously most here disagree with my view, but that's ok with me."
On the contrary I think many here agree with you on that. I certainly do. Fiat=Primary MoE+short term SoV, Gold=Secondary MoE(=liquid asset)+Long term SoV.
@Woland
Homeopathic gold! :-)
What we are seeing now, through a rather panoramic lens, is the open confiscation of deposits, the revelations of 2 year old BIS plans to openly confiscate deposits, the latest FDIC plan, and the pronounced expectation of systemic contagion, all beginning to leak into main stream information outlets.
This represents a definitive "next stage" in the "socilization of losses" (as clearly foretold by Another, et al) which is simple and overt. Far more than "one man in a million" understands this "in your face" process than the gradual theft of inflation.
So I would count this as a fairly wind-proof lit match under the tinder of freegold.
As to Japan's professed doubling of it's monetary base (which someone mnentioned a few comments back), YES, it is indeed germain to the discussion, but I think Kyle Bass has covered this well, to the extent that they are now reposting 3 to 6 month old video interviews at ZH (yawn).
Kyle has placed substantial capital where his mouth is and was, and had referred to Japan's situation (and possible response to it) as the possible chain reaction domino to systemic IMF$ collapse.
So it's truly Krugman (Keynes) vs. Bass. I'd like to see Krugmen place half his net worth on a positive outcome for Japan and a wonderfully Pollyanna replication of QE on steroids (based on that great success) across the globe.
If that is in fact sustainable, I'll be dancing in the streets with no need of gold, as all people will be happy and prosperous with no need of employment, and no need of savings ever again - happy meals will be tossed from Bernanke blimps blackening the skies above like an Apocolyptic swarm of locusts, as we all drink milk and cookies with a bedtime for Bonzo story, nestled up all snug in our beds with fairies and sugarplums deep in our heads.
Robert,
The reluctance of goldhoarders to dishoard is temporary because they are expecting a one-time revaluation.
After the event gold will only be allowed to track inflation which is not an increase of purchasing power but a status-quo.
Because of free convertability between currency and gold,gold will always be available,for shrimps and Giants alike,to conserve their purchasing power over time.
If you want to make money you will have to sell some gold and invest.
If you buy more gold with that profit that's not
feudality but meritocracy.
Will,
Didn't Krugman file for bankruptcy a while ago?
Half his net worth doesn't impress me very much.
Unless he's a crypto goldhoarder of course.
Comex Gold Inventories Collapse By Largest Amount Ever On Record
According to chart sage Nick Laird, this data indicates that, “Eligible stocks which are owned in LBMA/Comex good delivery form are being drawn down—which means they are being removed from the warehouses. As to how and why they are [being] removed, that is a mystery. [Up until now], eligible stocks were on the continual increase throughout the bull market. Now that trend has changed.”
http://bullmarketthinking.com/comex-gold-inventories-collapse-by-largest-amount-on-record/
Krugmen = men who think like Krugman.
Noone will read this except for some three letter agencies.. But I want to ask you all about this.
-What militarty/police force can be bought with bitcoin? This is the essence of power. If you cannot buy it you don't have it. As simple as that. What military/police force can be bought with gold?? -We're about to find out... Very soon.
@steerpike - http://krugman.blogs.nytimes.com/2013/03/11/breitbarted/
Will,
Nobody concocts Krugrants like you do.
For those that are interested in helping find historical documents chronicling the IMS evolution, take a look at
http://wikileaks.org/plusd/
And if you are so inclined, please post your finding at
http://anotherfreegoldblog.blogspot.com/2013/04/fg-wikileaks-documents-mortymer-and-jeff.html?showComment=1365529441557#c4949888807614862115
Make sure you got your popcorn ready!
Milamber
Steerpike:
After the event gold will only be allowed to track inflation which is not an increase of purchasing power but a status-quo.
And who will control gold?
No. After revaluation gold will be free to go up and down depending on whether the market is going up or down. This is what it has done all the time. The currency will provide you with price stability, but gold's price will be anything but stable. It will probably increase faster than inflation in the long rung.
Robert:
Gold will be hoarded as it has ever been. But gold hoarders don't do violence. Powerful men who want gold do violence. Gold may give them power, but those are not savers. They are the spenders. Who will spend their gold for getting more power, and possibly to find more gold with the help of this power.
It is a law of nature, that power corrupts, wealth provides power, gold is wealth. Freegold can't change this. If somebody gets power without gold, the corruption still applies.
Steerpike, I do not even know where to begin. I could not disagree with you more. First, consider the Giants. They are by definition superproducers who regularly generate a surplus. After a revaluation, how many more yachts do you expect them to buy? They will never dishoard. Second, as M has observed, hoarding is very much connected with individual personality and not cold and indifferent cost benefit analysis. There are plenty of people who are simply wired to be savers. Can you disagree? Third, most people who hold gold are unaware of Freegold theory and are not "expecting a one time revaluation." I agree that there would be a lot of short term dishoarding after many people are surprised by the revaluation, but my comment was more a long term observation (think decades or even centuries) of the ultimate direction things will go. Fourth, there is absolutely no assurance that "gold will only be allowed to track inflation." Fifth, your comment that "gold will always be available,for shrimps and Giants alike" misses my point. Even if gold is theoretically available, it is only available to people who have a surplus. The whole point of a feudal system is to make sure that the serfs never have a surplus.
It is a serious mistake to embrace the Freegold concept as if it were a policy prescription to all the world's economic problems. Yes it can reset the system and correct imbalances over the short term. But long term it will come with plenty of undesirable socio-political consequences.
Robert:
Why do you equate gold with feudal system. There were plenty of feudal systems with Paper currencies. Check out China.
Paper currencies was not what brought the demise of feudal system. It was information, which became easier to disseminate after Gutenberg. Now information flows even easier with Internet.
Feudal systems in a world of Internet will not survive. Gold is just allowing the producers to save their excess outside the kleptocratic systems. If you think only the rich will be able to buy gold and will be able to prevent the poor from buying gold, look at India. Here much of the gold is with poor farmers.
Surplus is less a function of income, more of frugality. The middle class earns more but spends even more, chasing popularity within his peers. And those are not in any way savers. They are debtors.
Dear Anand,
as an Indian you should know better than everybody else here in this enlightened circle :D that power alone NEVER corrupts. It is ALWAYS the status of collective consciousness from which the thinking and action of those who have power depend. "Tat sannidhau vaira tyagah. - In the vicinity of coherence (yoga), hostile tendencies are eliminated." (Yog-Sutra, 2.35)
It's a reciprocal thing. The Hitlers, the Alexanders and the Stalins - don't forget the Bushs and the Kim Jong Bumms - always need thousands and millions of weak and incoherent people to come into power and to slave the world.
ein anderer
But to rule you don't need the masses to like you, you only need the support of a vocal minority, which is big enough and loud enough to support you there. Divide and conquer works very well. We Indians know about it, but still succumb to it.
From MARTIN NIEMÖLLER
First they came for the Socialists, and I did not speak out--
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out--
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out--
Because I was not a Jew.
Then they came for me--and there was no one left to speak for me.
Dear Anand,
for creating coherence (yoga) you don’t need masses either.
ein anderer
I haven't read anything about Mahesh Yogi. And I am a bit removed from abstract philosophy.
" It will probably increase faster than inflation in the long rung."
Anand,I agree with you dat gold's price will be marketdriven and anything but stable,but it's purchasing power will be/should be stable.
That's the very essence of the freegold concept:
one can carry one's purchasing power uneroded
over time.But there is no yield to be gained at the end of day.
If their was that would be an incentive to hoard which would eventually undermine the very FG concept.
So,could you please explain why you think it will increase faster than inflation in the long run?
BTW:I consider hoarding gold different from holding or saving gold.
Hoarding gold can mean 3 things:You either have an Obsessive Compulsive Disorder or you expect a windfall(or profit) or you distrust the currency.
Saving doesn't need an incentive:it's natural act.
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