Saturday, April 4, 2015

The Golden Phoenix


This work started back in 1988, not long after the 87 crash.
Important people were asking some very serious questions
about the timeline of the world monetary system.
They expected a long term evolving report that would expand
ongoing events into a format of true life context.

I cannot offer the full report or its complete ongoing
analysis. But, the effort you have seen to date is one
of sharing somewhat for the common good of all.

To the best of my knowledge, the ones that initiated this
were major oil producers. Strange as it may seem,
the very first questions came from a US natural gas producer
in 1985+/-. Later the initiative came from outside the US.

The above is from a post that FOA wrote back in 1999, prior to the Gold Trail. In it he apparently explained how, when and why what we know today as "Another's message" began. In the post, he talked about an ongoing and evolving "report" that began sometime around the global stock market crash of 1987, when some "important people" started asking serious questions about the end of the dollar reserve system's timeline, and how best to transport wealth through such a transition.

In a later comment, he referred to it as a "study" and confirmed that he was not personally part of it, but that the $30,000 gold revaluation was a projection that came out of this "study". So without further ado, here is that post (highlights, underlines and brackets are my emphasis and contextual notes):


FOA (09/13/1999; 09:09:03 MDT - Msg ID: 13518)
Reply

ORO, Some things I know.

This work started back in 1988, not long after the 87 crash. Important people were asking some very serious questions about the timeline of the world monetary system. They expected a longterm evolving report that would expand ongoing events into a format of true life context. A context to be understood at all levels of economic exposure. In other words, it had to do a better job of explaining the (then) recent illogical swings of world economic affairs and the effects of those swings on various national economic groups. Were we progressing into a new, better age, or was our system responding in a death like downtrend?
[To put the "swings of world economic affairs" he mentioned into perspective, the world's stock markets had just crashed in October of 1987. The dollar's exchange rate had reached its all-time high of USDX 164 in 1985, followed by the Plaza Accord to devalue the dollar in September of that year, the Louvre Accord to subsequently halt the dollar's devaluation in February of 1987, and the stock market collapse eight months later. Also, the price of oil had just dropped by more than half in 1986, and the Dow reached its all-time high in August of 1987, less than two months before the crash.]

Because the questions grew from a fear that the world economy would indeed contract in the future, leaders wanted to know how one could retain the most wealth during such an event. It was thought that if the basic extended family blocks of a nation could survive such a collapse, savings intact, those nations and their children would be a benefit to economic affairs of the future. In effect, negate a possible return to the Dark Ages of European history. Our time frame was outward some 20+ years. I cannot offer the full report or its complete ongoing analysis. But, the effort you have seen to date is one of sharing somewhat for the common good of all. [So Another was involved in presenting this "report" spanning or projecting out 20 years starting around 1988, which was requested by some "important people" who were concerned that the $IMFS would eventually end and wanted to A) make it through with their wealth intact, and B) avoid returning to the "Dark Ages".]

In a search for reasoning, they looked first, not only at the most broad perspectives, but ones that had the effects of history for confirmation. Often the record of historical human reactions are the only precedent that can refute the use of modern day financial theory. Especially if that Theory is in a "practice for proof" stage that might last for a generation or more. [So Another and his group thought that it was more useful for the specific purpose of this "report" or "study" (being one focused on a transition period in particular) to favor known historical human reactions over more recent theoretical economic analysis.]

1. They found one absolute repeating event that shaped the lives of countless individuals. Its effects upon the destiny and life directions of recent society had no equal. That one most striking and frightening observations was of the failure of paper money. With irony, we stood here in the middle of 1988, a time of advanced thinking using higher education for guidance and could easily document that no paper money ever put into use had ever survived. Whether backed by precious metals or in stand-alone form, not one lasted! Yet, we were hip deep in an entire economic world that based and denominated its wealth upon the further extensions of "fiat paper money".

2. The second major observation was in the evolution of what debt is. From the very beginning of time humans have borrowed and owed, from and to each other. During most of history, the period of time between a debt owed and a debt paid was looked upon as "a period of risk". The accepted longline historical concept was that the item borrowed may not be returned to the owner. In addition to this view it was ingrained that the primary real loss came from not being able to replace the "item" lent, not the secondary loss of not receiving the medium of exchange. Yet in today's world (1999), the "thing" that is usually at risk in a debt is the currency. Modern common perception stands that no one should have to accept these losses. In concept, governments nurture these perceptions only because they "can" replace the currency with ease. Yet the actual physical structure of the debt (the economic good that the loan was based upon) is never regained. This engine alone is a major force in the destruction of currency systems. Its effect is to shrink the platform that creates real wealth and expand the financial instruments whose value depends upon that platform's continued function. Indeed, it is a complete conflict to historical, natural human interactions.

From these two grand perspectives we view the unstable trend lines of our modern economic structure. It is from this present structure, that many entities, both large and small now attempt to retreat. But, in order to transport wealth with assets intact, they had to understand these money dynamics as an ongoing breakdown of our economic system. A breakdown that ebbs and flows with a political posturing that makes this journey very uncomfortable without a stable, long term grasp of the process. As the river Nile floods and withdraws in its endless rush for the sea, so too will the energies of paper currencies be eventually absorbed into the ocean of history.

Onward:
Michael Kosares of USAGOLD knows well the very early coins of gold. Money coins that by their very existence today prove victory over the past creations of mankind's fraudulent commerce. The value of these coins now reflects an even higher value as art. Another minor means of wealth transportation that has historically outperformed money gold.

But, in distant times past these same coins performed a far more noble role. They remained the only existing money stock after "major economic societies failed". This particular function of gold is not important for 99% of time that economies function. One small evidence of this is present in the old Gold standard. With ragged inefficiency, paper currency circulated as gold deposit receipts along with gold coins during the course of normal financial dealings. However, after we endure that once in a "several centuries failure", the gold money stock becomes the vital building block of the next generation. History has shown that during that brief time, the owners of every ounce of gold provide the only efficient medium of exchange that rebuilds the marketplace. In transition, these latter day gold owners never rule the financial world. Rather they perform the act of energizing a dead economy by transporting buying power into the next expansion. The history of past human interaction was never one of hoarding money so much, as it was that of trading to gain life's things.
Life goes on.

Viewpoint:
It was pointed out that one need not invest in gold to negate the effects of an inflation. All we have to do is buy real things that increase in currency value faster than the loss of buying power. True, in that light gold is but one of many things that should keep us at least even. However, we are in the process of experiencing a "breakdown" or at the very least a major change in the entire financial system. Not just an ongoing inflation during a phase of a longline expansion. Our goal for certain individuals, is to show this dynamic at work as the real life events unfold and document its progress. For private individuals that read these pages
[that's you and me!], historical purpose and present day logic will build further support for the holding of physical gold as these events reveal the true season. In this light I offer Another's direction given some many years ago, "in this special season, let others buy things to hedge their present worth, let us buy gold in support of our future generations".

Onward:
After reading ORO (9/8/99; 8:24:51MDT - Msg ID:13029), I wanted to at least be more direct in offering this ongoing discussion of events. You do a wonderful job of writing and I often find my information is just a reword what is said:

----
"In order to gain action from people, one needs to provide a timetable for the events (within my nephew's lifetime, mine, my parents' or my grandparents', or before the year turns, any time now...). This is the kind of support that I myself required before I was willing to accept the need for putting resources into "gilded insurance". The same need for support with numbers and charts that I am working on filling is needed to induce the financial pros to give their clients direction. The issue is a patriotic one. Small business America will not survive without small capital hoards. The same problem they had in the depression. The reason for the length of the depression, was the confiscation of gold. The inability of small businesses to find capital pools in an atmosphere of credit unwinding, and the simple death of the money supply in lew of the indestructible gold that was confiscated was the cause for an extra decade of suffering. The only way I see to avoid it is to convince people to build these pools now or end up working for a foreigner for the rest of their lives, since only foreign pools of gold capital will be available (India, perhaps Europe, Arab countries, Asians from countries that managed to pick up the pieces most quickly)."-------- [GIMME THE TIMING, DAMMIT!! :D]

ORO, on these points I completely agree. However, all that is left to drive the last remnants of this world engine is the "American Dream". The leverage to attain that "Dream" is presently stretched so far that any withdrawal back into reality will implode the dollar with amazing speed. The time may be already past for any large scale building of gold stocks based upon reality. But, still the effort is not lost. [OH NOOOOOO, it's now 2015 so he must have been WRONG ABOUT EVERYTHING!!! :D (I don't think so)]

Also:

----
"The key to the numbers is that set of numbers that quantifies the issues. Particularly important is the understanding of how the international dollar system works, how leveraged it is, how that makes it susceptible even to small shocks, how a dollar collapse in international markets would play out in the US. Once the arguments and the numbers are shown and it is possible to convince a professional of the dangers facing the dollar both as reserve currency and the currency of the US, only then is it possible to make the argument for gold as anything other than another paper airplane to ride in the markets. Perhaps you will start a presentation of the qualitative issues regarding the dollar (rather than gold), interspersed with the data you may want to quote. I am currently working on the data to show the details of the situation."------------- [I NEED THE DEEETAILS, DAMMIT, AND THE TIMING!!]

Onward:
The best indicator one could find to advance the warning of a reserve currency breakdown is the fall away of price inflation after decades of local currency and debt expansion. To observe the history of paper money is to view its constant loss of value as expressed in the price of daily things. Whether backed by gold or nothing but "a dream", no world economic power has ever let its currency increase in value for the long term.

The only way any currency can, in the short haul become price inflation neutral is through the demise of its competing moneys. This effect is seen as an increase in the holdings of one major currency and the corresponding sale (increase in trading velocity) of the displaced foreign money. In the case of the modern world reserve currency, the dollar, we look to the net increase of foreign holdings of US treasury debt. The proxy for holding US cash.
[Hmmm… that's a pretty good description of what's happening right now! ;D]

(Note: A table of this recently appeared on the Investech web site. I cannot reproduce it. Perhaps someone else can.)
From 1979 through 1994, the increase was always positive, but never in fully manageable amounts. From 1995 till mid 1998, the accumulation exploded off the chart as money competitors became the spending currency and the dollar the holding currency. It's well documented how this effect has kept price inflation in terms of the local US markets from rising. However, this long trend also had the effects of denominating almost all world debt in dollar terms. This was seen throughout the 90s and is considered the end time event that will break the dollar. Because the local American economic structure has always been finite, it cannot defend its currency with the exchange of real goods nor represent the value of the debts of the entire world. The downside, not discussed result of this will be the complete destruction of the dollar as a reserve currency. This begins as an attempt is made to reverse the dollar holding process. The same chart above also presents a massive decline in net foreign US debt purchases beginning in 1999+/-. The trigger of this action was the successful establishment of a larger competing reserve currency, the Euro.
[Of course we know what happened when China picked up the ball in 2001 that Europe dropped, but what he's describing is happening again RIGHT IN FRONT OF OUR VERY EYES!!! :D]

Because a world reserve fiat currency can only represent the tradable value of its local economic structure, the world markets will now devalue most all debt based upon the dollar. This effort will begin a real "catch up" phase on the US price inflation front, even as dollar debt is burned with a vengeance world-wide. This loss of the dollar vehicle will also bring the destruction of many contemporary derivative markets that priced commodities for their value as trading items, rather than their traditional good use.

More in a later time. Thank You FOA

Right after that post, Cavan Man asked FOA who he was referring to as "important people":


FOA (09/13/1999; 18:52:08 MDT - Msg ID: 13574)
Comments!
Cavan Man (09/13/99; 09:43:46MDT - Msg ID:13521)
FOA
I do not read "important people" wanting to know as being academics of any stripe. Am I correct?

Cavan Man,
To the best of my knowledge, the ones that initiated this were major oil producers. Strange as it may seem, the very first questions came from a US natural gas producer in 1985+/-. Later the initiative came from outside the US. Again, all of this was some time ago.

I find that last bit about "a US natural gas producer" intriguing! Who do you think FOA might have been talking about? My guess (and it's only a guess) is Peter Munk, because I recall that Barrick Resources switched from oil and natural gas to gold mining around 1983 or 1984. From Wikipedia:

"After suffering huge financial losses in oil and gas,[3] principal Peter Munk decided to focus on gold."

Footnote [3] is from the book Golden Phoenix: The biography of Peter Munk by Richard Rohmer. Peter Munk is an interesting person. And whether or not he is who FOA was referring to in that post, we do know from Another and FOA that his company was an integral part of the development of a new kind of paper gold market in the 80s. So I decided to check out the book and see what I could find.


Peter Munk graduated from the University of Toronto in 1952 with a degree in electrical engineering, and in 1958 at the age of 30, he founded a high-end electronics manufacturing company in Canada, but that business went sour by 1970. Then, in the 70s, he founded a large hotel chain in Australia from which he made his first real money when he sold it in 1979. From the hotel chain sale, he was left with about $100M which the book says was "burning a hole in his pocket." So, in 1981, he went into oil and natural gas production. That investment quickly went sour, and within a year or two, he had lost a good portion of his 1979 windfall.

By 1983, according to the book, Klosters, a ski resort town near Davos in Switzerland, had become a central part of his life—a place "for reflection and review." In the chapter titled The Move To Gold, the book quotes Munk himself:

"At Klosters I have made some of the most important business decisions of my life. Because when I'm there I can see the forest, not just the trees." His move from oil to gold was decided there…

"I certainly now believe that Klosters is a very important part of why I'm maybe a bit different from other executives, because there I have a vantage point. I go at Christmas and come back at Easter; I have a little office, but I don't work that hard. I like to ski for four or five hours…"

Here's what Wikipedia says about Klosters:

The Klosters ski resort has long been the winter destination for the British Royal Family for over 3 decades.[9] Prince William and Prince Harry grew up in the village learning to ski and were often spotted at their usual haunt Casa Antica.[10] Among other historic notable usuals include the likes of Paul Newman, Gregory Peck, Yul Brynner, Lauren Bacall, Juliette Gréco, Irwin Shaw, Robert Capa, Greta Garbo and Gene Kelly… In more recent history other regulars include, Lord Mandelson, billionaires Nathaniel Philip Rothschild,[13] and Peter Munk[14]...


Can you imagine Peter Munk, perhaps in the winter of 1982, in Klosters asking one of the Rothschilds about how to preserve intergenerational wealth, since he'd just made and then lost a fortune in the previous three years? Clicking on Nathaniel Philip Rothschild, we learn that there is indeed a connection between him and Peter Munk. Nat is "a member of the International Advisory Board of the Barrick Gold Corporation."

With a quick Google search, I also found that, in 2011, the 83 year old Peter Munk showed up with his 140 foot yacht named the Golden Eagle at Nat Rothschild's 40th birthday party. Incidentally, Munk's yacht was named the Royal Eagle before he changed the name in 2010 to Golden Eagle. Nathaniel Philip Victor James "Nat" Rothschild would have only been 11 years old in the winter of 1982, but his father is Nathaniel Charles Jacob Rothschild who would have been 46, and who made the news just last month.


But Peter Munk was not only hanging around with the Rothschilds and other European elite during this time, he also counted some powerful Saudis among his friends and investors. From the book:

[by 1983] Munk had enlarged the stable of investors in Barrick Resources to include not only Adnan Khashoggi, Prince Nawaf, Joe Rotman and Norman Short, but also Kamal Adham, a former financial advisor to the Saudi Royal family.

From Wikipedia:

Adnan Khashoggi is a Saudi Arabian businessman. At a peak net worth of up to $4 billion USD in the early 1980s, he was considered one of the richest men in the world. Khashoggi along with Kamal Adham was one of the founders of the gold company Barrick Gold Corporation, established in 1983.

Kamal Adham (1929 – 29 October 1999) was a businessman and former director general of Saudi Arabia's Al Mukhabarat Al A'amah or the general intelligence directorate. He served as a royal counsellor to both King Faisal and King Khalid.

Nawwaf bin Abdulaziz is a senior member of the House of Saud and was a close ally of the deceased King Abdullah.


During some time he spent in Australia in 1982, Peter Munk claims that he "learned how to do a profit-and-loss of a gold mine on the back of an envelope." And in 1983 and '84, through Barrick Resources, Munk started buying up gold mines and dumping his oil and gas investments, and he was only interested in producing mines, not exploration companies.

By 1985, he was actively improving the efficiency and productivity of the mines he was buying:

With the funds already in hand, Barrick closed on the Mercur deal in June 1985.

Smith and his team immediately went to work installing new high-tech equipment with the financial assistance of the Bank of America. A $10-million state-of-the-art autoclave unit was the major piece. When it was installed, processing went from 3,000 tons per day to 5,000 tons; morale among the workers took off, the cost of recovering the gold out of the ground was down from US$285 to US$199 per ounce.

This reminded me of something Another said about what the CBs expected to happen in the mining industry in the mid-80s:

The BIS and other various governments that developed this trade ( notice I didn't use conspiracy as it was good business, as the world gained a lot ) , thought that the paper gold forward market would have allowed the gold industry to expand production some five times over!

More from the book:

Production and productivity went through the roof.

In February 1985 Peter Munk had announced his strategic goal for Barrick Resources: in three years its mines would be producing 300,000 ounces of gold a year. In 1984 the production was 34,000 ounces.

As 1985 closed out, Peter Munk was beginning to maximize the leverage that only ownership of the gold reserves of producing mines could bring. He borrowed (at 2-percent interest) 77,000 ounces of gold against Mercur's reserves. He then sold that bullion on the open market for US$25 million. Those funds were used to pay off the total short-term debt to the Bank of America, leaving only $8 million in long-term debt for the Mercur acquisition.

Munk's involvement in pioneering gold-backed financings was emerging.

You might be thinking, like I was, that if Peter Munk was the one who asked the "first questions" that FOA was referring to, then why was he buying mines and not physical? Does this make sense? Does it fit with the storyline we learned from Another and FOA? I think it does.

First, understand the difference between a company and an individual. Companies don't ask questions, individuals do. And companies don't have intergenerational wealth, individuals do. Companies are groups of people doing things together in order to make money, not simply to avoid losing wealth that was previously attained. So even if Peter Munk learned something about preserving intergenerational wealth in the early 80s, I think it also fits that he took his company in the direction he did.

Consider that, in 1983, Munk was maybe personally worth around $10-$20M (just a guess based on what he'd just made and then lost). Then he got into gold mining and became a billionaire over the next 10-20 years, even while the price of gold was declining from $500 to $250. How on earth did he pull that one off?

Well, for one thing, he left the actual gold mining to his employees while he engaged in money mining! More from the book:

During the remainder of 1987, Munk focused on raising capital for American Barrick Resources. He left the mining development to Bob Smith and his professionals. Munk and Gilmour, with their expert number-cruncher partner, Bill Birchall, would orchestrate the money mining.

How he did that was groundbreaking. One almost wonders if the BIS was involved behind the scenes as Another said. In fact, in the book, there's a curious story about a big Canadian bank (also a bullion bank) who, in 1986, suddenly did an about-face and started courting Munk.

In 1985, Royal Bank of Canada (RBC) was in a fight with Barrick over $74M, and the bank accused Barrick of dishonesty. Then, a year later, the bank suddenly apologized to Peter Munk in grand fashion and made nice, and then a year after that, the same bank made the largest gold loan ever to Barrick. Here's how Peter Munk described it:

A year later, in 1986, Brian Gregson, one of the top people of the Royal, came from Montreal and gave a beautiful lunch at the Royal Bank dining room. There were all the big shots from the Royal Bank. Gregson said, "We're giving you this lunch in the most prestigious of the boardrooms in the Royal Bank to tell you how wrong we were and how right you were. And we're here to tell you that we at the bank don't very often apologize, but we apologize." Because of that, the Royal Bank remains our favourite Canadian banking institution. Two years later, we went to them for the largest gold loan ever done in the world, 1,050,000 ounces. We sold the gold for US$450 million. It was because of that single action, the lunch and apology. It was a very gentlemanly thing for them to do.

How often do banks come cap-in-hand and throw a fancy lunch in their finest boardroom to apologize to a client? It makes me wonder if someone wasn't pushing them to make nice with Barrick. Here is Another discussing these deals where he makes it clear that the CBs were behind the deals:


Date: Sat Feb 21 1998 23:47
ANOTHER (THOUGHTS!) ID#60253:

A CB lends gold at 2% to a producer for a better purpose than make money on idle asset. This gold loan is now the gold asset with a mine behind it! Such assets are traded and create solid paper for oil. If reason for good return was real, it would look like below. Read ABX page and consider, please.

There is much with this question!

Why doesn't a CB enter into a "reverse spot deferred gold contract" from the same Bullion Banks it lends gold to? Conditions:

1. CB lends gold at 2% to the Bullion Bank.

2. The Bullion Bank sells the gold at $300US.

3. The BB earns interest on the proceeds.

4. One year later, if gold is below $300, the BB buys in the gold and the CB gets its gold back plus the contango.

5. OR, if gold is above $300, the CB invokes the "spot deferred" clause and lends more gold at $300+ to the BB. The first deal is deferred until another time as intrest builds.

6. In this process the CB will bypass the gold companies and gain more return.

Read the ABX hedging page, we discuss at another time!

www.barrick.com/f-hedge.htm


You see, Barrick was essentially selling gold that it hadn't yet dug up for $428.50 an ounce. And as we now know, the price fell to $250 over the next 13 years. The more mines Barrick could acquire and the more in-ground reserves it could claim, the more paper gold it could sell! Here's more from the book:

Munk had successfully completed, in September (of 1986), a deal with Merrill Lynch Canada Inc. for the sale of C$43 million worth of units of American Barrick's common shares and gold purchase warrants. Each unit offered consisted of one common share and two warrants to purchase gold at US$460 an ounce. For those who had faith (or were prepared to bet) that the price of gold would rise beyond US$460 by September four years later, the enticement was complete. Merrill Lynch had no trouble selling them.

[…]

On March 13, 1987, an ad in the Wall Street Journal announced the sale, worth US$50 million, by Barrick Resources (U.S.A.) Inc. of "2% Guaranteed Gold Indexed Notes due 1992"; redeemable for (a) a cash amount indexed to the price of gold or (b) at the option of the holder, gold bullion, and unconditionally and irrevocably guaranteed by American Barrick Resources Corporation.

[…]

On Thursday, October 29, 1987, Barrick arranged a gold loan of 263,713 ounces from the Toronto-Dominion Bank. This was a major deal that TD chairman Dick Thompson was pleased to approve, and it allowed his friend Peter Munk to authorize the immediate sale of that gold by Barrick into the market for about C$160 million. The initial interest rate for the TD loan was a phenomenally low 1.65 percent annually.

By this time, the cash in hand and short-term investments of American Barrick were over C$300 million. Peter Munk had funds substantially in excess of the planned capital spending programs for both Goldstrike and Barrick's Holt-McDermott mine in Northern Ontario.

For Peter Munk, at Klosters with Melanie on the eve of the New Year of 1988, there was ever reason to celebrate…

All kinds of paper gold! It's amazing, Barrick was essentially in the business of selling paper gold and delivering the real stuff later. The declining price was not only good for Barrick, but as we now know, this process of expanding the paper gold supply had a hand in making the declining price happen by diverting real demand from physical. Barrick shares did very well, "oil" got "solid paper" and some physical gold, and Peter Munk, the "golden phoenix", became a billionaire in the process, all while the price of gold was declining. Can you see how it makes sense?

Date: Sun Apr 19 1998 15:49
ANOTHER (THOUGHTS!) ID#60253:

It truly started with Barrick, in Canada in the 80s. It was a "thin market", but grew big in oil.

FOA (5/15/99; 21:38:42MDT - Msg ID:6212)

One of the first signs that a new gold market was being created was when bullion banks were allowed to sell Central Bank gold "ownership invoices", for cash to the benefit of Barrick. The CBs got only a very small rate of return for this risk. The money set in a bank account and interest was made. The new owners of the gold paid cash but let the gold set in the CB vault. All that happened was that Barrick could earn interest on its unmined reserves and call it "the higher price they were getting for gold"! In addition, the CBs said they could roll it forward for ten years +/-, if the price of gold rose! Really clear eyes could see that the CBs were paying mines interest on unmined reserves if they would replace the CB real gold with mine collateral. Because the gold didn't really leave the vault, the new securities were used to match the mine future assets against the new owners of the gold!

Neat trick. After the public bought it as "the CBs earning interest on a nonpaying asset", the gates were opened. It wasn't long before gold was lent without any gold at all! No different than "fractional reserve" banking. The mines were (are) being used to expand the gold trading arena and they don't even know what is happening. Now, as the price has fallen, all mines must earn interest on reserves, just to survive. The dollar bears are, in effect, nationalizing the mines gold reserves at ever lower prices. Tell me the CBs are dumb???

FOA (5/16/99; 13:50:14MDT - Msg ID:6244)

Why would anyone conclude that Barrick was a "passive foil" of the BIS? At the time, they made a smart, innovative move that allowed them to earn interest in unmined reserves…

It was never done before on this scale, but that is only because the CBs never had a reason to lend gold for almost zero return. I am taken by the naivety of the public and the boards of these companies. It shows the extent that greed holds when no one asked why the CBs were suddenly giving away gold to lend. Remember that interest rates were much higher when all of this lending started.

Trail Guide (11/02/00; 08:07:42MT - usagold.com msg#: 40451)

The original "gold deal" as it first came into play involved lending the gold, the borrowers (BBs) selling it for cash and then they (the BBs not the mines) pooled that cash in a holding account. There it was held in interest bearing instruments, not delivered as financing to the gold mines. That pot of cash grew with its added interest and became the ever increasing per ounce price the mines sold their production to in later years. Fulfilling their contract.

Having entered into these contracts that guaranteed a pot of cash to buy their gold production, the mines could use these contracts as fixing their profit margins to borrow money against and expand their operations. OK;, so this is how it started. I think American Barrick was the pioneer of this back in 1986??

But, as I opened with above, this was just a lead-on sanctioned by the governments to create a market for paper gold dealings. All the rest that followed we have discussed endlessly. However, my main thrust in this is that the CB did have a political return to gain by starting this, it wasn't done for free.

Now, if this was a real lending operation with the intent to get some return on their idle bullion, they could have easily structured it far differently. As it is they lent the gold into a contract scheme that gained them far less then the actual rate returned. The mines would have been happy to create the deal even if it fetched a static guaranteed gold purchase for them. Thus giving the CBs a much higher return. You see, the mines motive was not to receive a higher than market price for gold, rather receive a stable price for gold so financing could be arranged. The fact that gold prices fell made Barrick (and many others) look real good and their staff stood for all the praise. When in fact they didn't know it would work this way (back then).

Today, and over the last few years, with gold ever falling, all sorts of gold deals have bee worked out that have no connection to the CBs. A lot of it is completely outside the mine industry too. It's been carried so far that much of the stuff is just naked financing based on gold's price. The real return was in playing the official stance that gold must fall a little every chance it had to encourage dollar settlements for trade. It's that simple.

Trail Guide (06/27/01; 17:51:32MT - usagold.com msg#: 57005)

ABX has evolved into little more than a banker's extension. One that trades gold for their gain. On ABXs side,,,,, I see their massive paper short position as a financial tool that allows them to make a return on in place reserves without mining them in total,,, at once. That is all their program is really doing. It's a product of banker's games.

The greatest risk for them could be that a good portion of their dealings may not have involved CB gold sold short,,,, and they didn't know this for a long time. The other side of those trades were real cash buyers that simply wanted to work their money in government debt while waiting for the mine to produce gold. The buyers were willing to do this because an outright buy would have gunned the market…

Ha! Ha! It's kind of a joke when one thinks about it. The mine was leveraging their unmined assets to produce a simple return and telling their investors it got a higher realized price for gold production (and it was) ,,,,,,,,, while locking out any chance for profit if gold ran.

FOA (10/15/01; 07:49:09MT - usagold.com msg#120)

It's no accident of nature that our world monetary structure embraced derivative expansion as it has over the last ten or twelve years. I think we can say that this modern creation of risk management began around 1988 or so. ( It's funny, but I remember living in San Diego and reading a paper about a gold company called Barrick that just started only a few years earlier?)

Golden Phoenix standing atop the Golden Eagle

Sincerely,
FOFOA

101 comments:

vas squat said...

Very interesting. A wonderful work of investigation and cross-referencing.

For some additional color from a different perspective, Fekete discusses Barrick and Munk and how he lost out in paper trading on Barricks due to their hedging.

http://www.321gold.com/editorials/fekete/fekete081106.html

sicp reader said...

second !

Jeff said...

Vas squat,

A lot of people jumped on the paper selling bandwagon and profit turned to pain for people like LTCM, Barrick and even the european CBs lost some gold in the end; A/FOA discussed it extensively at the time.

It just goes to show there is no omnipotent omniscient hand controlling events; the future is a joint project.

Indenture said...

If you enjoyed this post please consider donating to FOFOA.
His time and effort are only compensated by our contributions.

Lisa said...

Vas Squat

Interesting link - I found this paragraph from the article you linked:

"Is Barrick a front to cover up gold-laundering?

That is, unless Barrick was a front to cover up gold laundering by governments, in which case unilateral forward selling was not a mistake but a deliberate policy. I couldn't help but believe that the company had a vested interest in suppressing the price of gold. Its ambition to become No. 1 also points that way. It is not about vanity. It is about pricing power. The suspicion that Barrick is a front to cover up a gigantic gold-laundering operation, presumably on behalf of a government (or governments) that need more time to complete a gold-acquisition program in the order of thousands of tons of gold, is hard to escape. Incidentally, if you interpret 'gold laundering' as a polite expression for 'stealing shareholder gold', no harm done." To Barrick or to be Barricked, That is the Question,
Antal E. Fekete,former shareholder of Barrick Gold, Aug 11, 2006

quite prophetic, in light of this section from FOFOA's article above:


"How he did that was groundbreaking. One almost wonders if the BIS was involved behind the scenes as Another said. In fact, in the book, there's a curious story about a big Canadian bank (also a bullion bank) who, in 1986, suddenly did an about-face and started courting Munk.

In 1985, Royal Bank of Canada (RBC) was in a fight with Barrick over $74M, and the bank accused Barrick of dishonesty. Then, a year later, the bank suddenly apologized to Peter Munk in grand fashion and made nice, and then a year after that, the same bank made the largest gold loan ever to Barrick.
...

How often do banks come cap-in-hand and throw a fancy lunch in their finest boardroom to apologize to a client? It makes me wonder if someone wasn't pushing them to make nice with Barrick. Here is Another discussing these deals where he makes it clear that the CBs were behind the deals:"
Saturday, April 4, 2015, The Golden Phoenix

ricks brain said...

So good, FOFOA. Thanks.

Random Man said...

And the point of this long discussion on one head of one mining company is to prove what?

That freegold is around the corner, peace is going to break out around the world, and we are all going to live forever in a utopia of endless prosperity?

Indenture said...

It is my understanding that we were just given a glimpse into the beginning of the paper gold market.

I don't remember reading anything about timing, peace or utopia.

Motley Fool said...

Random man

No, it doesn't prove anything.

It is an attempt to colour in a little bit more of the puzzle as regards the people.

My friend, if you are hoping someone will prove the future to you, you will be waiting an eternity.

TF

Aurora said...

Happy Easter to all of you. I'm not much of a contributor to the debate here because I prefer to read, think, and learn through the excellent posts and mixed comments on this blog.

However, I would very much like to take this opportunity to extend my sincere gratitude to our gracious host and acknowledge all the pleasure I personally get from working my way through his excellent research and finely crafted posts. Thank you FOFOA for your friendship and direction as we wind along the golden trail together. I for one am extremely grateful for all you do for us here, as I continue to watch and learn from the wings.

Your friend,

Aurora

Canadarob said...

Indenture,

You are correct. No one spoke of peace or utopia. From what I gather from fofoa his message has been "prepare for the worst hope for the best"

As in, Get a little food and gold.

That is all.

As for the "Random" trolls. Again let's try not to feed them.

Confidence is quiet, insecurities are loud.

Thanks fofoa!

Georgiew89 said...

Goldbugs read and weep:
http://philosophyofmetrics.com/2015/04/05/humes-multilateral-adjustment-mechanism/

queckshep said...

Georgiew89,

If you're trying to prove how utterly clueless, you and the author of that article are, then bravo.
It's almost as comical as convincing us that water really isn't wet. Don't expect much replies to nonsense littered with fallacies from the audience of this blog.

May the farce be with you!

ein anderer said...

Great findings, great pics, great video! Thx, FOFOA, Freegoldtube!

Xavier said...

Georgiew89
More like read and laugh,

this is my favourite quote which the author of the article writes in the comments section: "A price for gold will be determined, like under Bretton Woods at $35.00/oz, and will be nowhere near $3000 or any amount higher. After a potential spike of hundreds during the initial stages of the transition, the value of gold will be set somewhere in the $700 -$800 range."

Good luck finding physical at that price! Just demonstrates how clueless the author is

burningfiat said...

Really great post! Very interesting research into one corner of FG history.

Will we ever find out if it was really Munk that "asked the first questions"? I don't care much, my knowledge of the start of paper market and Peter Munk/Barrick increased a great deal by reading this!

Like all good FO/FO/A epistles, it doesn't leave you with definitive answers to all the mysteries, but you end up a great deal wiser anyway.

Thanks FOFOA!

Aaron said...

Excellent post FOFOA and ditto on Burning's comment

"Like all good FO/FO/A epistles, it doesn't leave you with definitive answers to all the mysteries, but you end up a great deal wiser anyway."

vas squat said...

Since no one has asked, I’ll ask the questions.

FOFOA has shown that Munk established a friendship with those in the Rothchild family and with important Saudi’s in Davos. Presumably he also established relationships with those at the BIS. He came away from this experience, moved into gold, and was instrumental in pioneering the gold derivative paper trade which involved the Rothchilds, Saudi’s and the BIS. Another first wrote about this arrangement.

FOA is intimate with the Barricks arrangement and seems to want to set the record straight:

“Why would anyone conclude that Barrick was a "passive foil" of the BIS? At the time, they made a smart, innovative move that allowed them to earn interest in unmined reserves…”

Another has been speculated to be a Rothchild and FOA a non-European westerner.

Munk has renamed is boat Golden Eagle and calls himself the Golden Phoenix, is this title related to his initial move into gold or is it talking about when gold rises again in Freegold.

Another says :
“It is about allowing meritocracy to rise like a Phoenix from the ashes of the dollar's inevitable collapse."

FOA identifies himself as a trail guide leading us through the forest and Munk writes

"At Klosters I have made some of the most important business decisions of my life. Because when I'm there I can see the forest, not just the trees."

Unless I infer incorrectly FOFOA has laid out all the breadcrumbs without saying it. So I’ll play the straight man.

Is Munk FOA?

If Munk is FOA then does that give additional insight into who is Another?

I seem to recall some time ago that a commenter in the forum said that she (I think it was a she) knew FOA, but I can’t seem to find it.

I’m not sure it matters except that if one could establish Munk is FOA one could politely invite him to make a guest posting on how they see things given recent events. Granted he may have sworn off engagement with ears that bite.

Woland said...

Munk: a Jewish Hungarian refugee who moved to Canada. Married twice.
FOA: American, born (probably) near Houston, married once.

fftastic said...

1/2

“But, as Dr. O. has pointed out, the SDR is not even an IOU. It has no obligor. It is a ‘who-owes-you?’
Moreover, nothing is owed, certainly not gold, so it is a ‘who-owes-you-nothing?’ And it has no maturity date, so is a ‘who-owes-you-nothing-when?’ Surely it is the most
preposterous credit instrument ever invented by the mind of man, if indeed we can call it a credit instrument. No wonder it is hard to fix its rate of interest and determine who will pay that interest.
Dr. O. asked for a new name for it. I suggest
calling it a ‘who-owes-you-nothing?’ A few central bankers may accept and hold who-owes-you-nothings instead of
gold, but people in the marketplace won’t. Yet Dr. O. spoke hopefully of banks accepting demand deposits in them as they do in Eurocurrencies.
The next step would be to make them legal tender.
You can imagine the inflationary possibilities of a
system of national currencies backed by who-owes-you-nothings.
You heard yesterday of the mindless manner in
which it was decided to create the first 9,5 billion of
them. At the appointed time they were created in an
instant on an IMF Computer.
“There must be a gold miner or two in the roorn.
How long would it take you to dig 9,5 billion dollars
worth of gold from holes in the ground? I thought Milton
G. saw through this SDR nonsense a few years ago
when he said he would believe in them when his wife
asked for a bracelet of them. But now that he has
accepted SDRs as a Supplement to gold I begin to think he may have bought her one.
“I want to add to what Milton said about
convertibility. I shall try to define it. Convertibility must
mean the obligation and readiness of a monetary
authority to convert on demand at a fixed price its own
IOU, whether written on a worthless piece of paper or
only a bookkeeping entry, into a commodity that has
inherent worth because it is both desirable and scarce, a
commodity that in and of itself is good store-of-value
money. Scarcity and desirability are the keystones of
store-of-value money.
“So SDRs and national currencies cannot be put on
all fours with gold as reserve assets. Every central banker I know would prefer to pay out his dollars and SDRs before he paid out his gold, certainly at the $42.22 price. Even Dr. Ossola’s Bank of Italy dropped out of the
‘snake’ on that issue.

fftastic said...

2/2
“To exchange an I-owe-you-nothing into a who-
owes-you-nothing is just exchanging one piece of paper
for another, and most likely a less desirable one at that.
To call that convertibility is to make a mockery of the
word. Convertibility into gold imposes discipline because
gold is scarce. Exchange of paper for paper is no
discipline at all. I do not have confidence that any
international monetary authority would keep SDRs
scarce. Much as I like them personally, if Rinaldo Ossola and Robert Triffin were made monetary dictators, I would not trust them to keep SDRs scarce.
The SDR has been called paper gold because of its
gold maintenance-of-value clause. It is that clause, as Dr. O. explained yesterday, that has caused it, like gold,
to be driven out of circulation by Gresham’s Law. If its
value is to be completely divorced from gold and based
on some arbitrarily selected basket of paper currencies, it will no longer be even paper gold but will become paper paper, and even less desirable than paper gold.
The questions yesterday indicated that many of you were troubled by the SDR. You can forget your troubles.
The SDR in my view is a horse that will not run. It may have left the starting gate, but it will soon drop out."


Guess who said that in Nov. 1973?

Roacheforque said...

The dollar has its own special problems, debt has another - "derivatives" (which the dollar suffers from as well).

The SDR is a derivative, heaped upon the grid of derivatives of derivatives of the dollar, the first true derivative of ... GOLD!!

Keynesians will ALWAYS invent new ways to paper over aging debt, just as we've done for Greece ad nauseaum.

Let's slip the drachma into the SDR with the help of Goldman, just like they got Greece into the Eurosystem.

Fucking SDR nonsense ... That spook Rickards should be collared.

Eventually one either comes to understanding (OR NOT) that all paper is merely a position on future performance, whereas gold is "payment in full" for said performance.

A simple concept, made inextricably complex by our Princeton academics and their respective ilk.

Roacheforque said...

FFT,
Thank you for that. I would go a step further. The SDR is a representation of who-owes-you-nothing-EVER.
The maturity date is MUCH more important when the paper in question is a position of future performance THAT WILL NEVER COME DUE.

The Keynesian fantasy perfected. A great tool for the lender class to continue preying upon the debtor class, if only that dog would hunt ...
http://roacheforque.blogspot.com/2015/04/cla-discrimination.html

Canadarob said...

Roacheforque.

I totally agree. I hate hearing about it. I hate talking about it. It is nothing. It doesn't solve anything. It's a basket of baskets of different fiats of worthlessness.

It was only in place as a bridge to a new system. How do I know this? Because it doesn't solve anything.

Even the name is stupid. Special drawing rights?

Mr Mustard said...

Hello, I seem to recall that in one of FOFOAs posts on GLD it was said that below 700 tons was the 'danger zone'. GLD now has 733 tons. Can someone please explain why the 700 level is so important? Thank you in advance.

byiamBYoung said...

Mr Mustard,

I don't recall a statement about under 700 tonnes being thedanger zone, but I think the general concept is that the lower the tonnes in GLD goes, the greater the chance that GLD simply cash settles it's investors and closes.

I don't think anyone knows exactly where the implosion point is, but I bet it isn't way down at the bottom. It just seems logical that if GLD inventory continues to drop, we will reach a point where the remaining gold moves abruptly to the more connected clients.

Of course, someone who actually knows what they are talking about might clarify or refute my theory.

BTW, you wouldn't happen to be in the billiard room with a lead pipe, would you? :D

Cheers

Blake said...

QE is Debt Cancellation:

https://vimeo.com/user20236372/review/119677193/def5c32822

I found this video vaguely interesting as a freegolder.

Michael dV said...

Jim Willie is the one with the 700 ton statement. He claims 650 to 700 is really the zero level. Anything above that is actually held by GLD the rest is 'in transit' or still in 'deep storage' (i.e. still in the mine.) …but JW says a lot of things. 700 is an interesting number none the less. As the inventory dropped it could not stay below 700…deeper meaning?…who knows….As far as my reading of Fofoa goes I don't think he pays attention to this data point as it is just speculation as to its meaning.

vizeet srivastava said...

I calculated 550-650 as danger region based on some news article. I don't remember exactly how I came to that number. Seems my calculations were not incorrect.

judie toy said...

@Roacheforque,
"The SDR is a derivative, heaped upon the grid of derivatives of derivatives of the dollar, the first true derivative of ... GOLD!!"
What if SDR were a derivative of a grid of paper currencies which are partially back by gold. If participating regional currencies were required to hold a minimum of amount of gold as reserve asset which would be predetermined by the IMF in accordance to the GDP of participating nations.

"The maturity date is MUCH more important when the paper in question is a position of future performance THAT WILL NEVER COME DUE."
Perhaps that matter could be resolved if conversion to SDR has to be settled in respective currencies plus whatever predetermine percentage of its gold reserve.

SDR would not work by itself for long since it's indeed a derivative of a bunch of derivatives of nothing/abstract future productivity which is truly a representation of who-owes-you-nothing-EVER. However, I think gold as a reserve currency will be too rigid even if the price is free floating and not fixed at whatever price. Do you think SDR may work if it were complemented with gold?

Franco said...

I've seen it mentioned more than once: "what if the SDR were partially backed by gold?" I don't know how to put this in words, but there is no such thing as partially backing something with gold. You can either tether one to the other, or not, but there's no in-between.

Michael dV said...

Partial back with gold is the idea of the gold standard. Initially the idea was that paper was a receipt for metal. Throughout history the issuer of the paper realized that they did not need to deliver all the metal at once. This allowed them to print paper in excess of metal holdings. By the 1920's there were official reports (I think I'm correct here) that indicated a certain 'percentage' of gold for the paper issued.
Once you go down this path there is no limit to how low that percentage can go and soon you are back to another system of fractional reserve gold banking. Gold backed SDRs can never resolve the problems of trying to store wealth in paper. Sure the international community could agree to anything in a crisis but the savers of the future will look back on the coming unraveling and will opt for the real thing. Why use a system that has ailed so many times and is about to fail again when one can simply hold the gold themselves. Obviously there are answers to that question (leverage, convenience etc.) but in the near future we shall see a wiser world that pays much closer attention to what those wacky printers are up to.
I don't think SDRs will fool very many people for very long. We do not just need another stable medium of exchange. As Fofoa has stated we need a MoE that is flexible, to tie it to a commodity is not helpful in that regard. Separation from the SoV role is the key. That is one of the primary messages of FG.

Roacheforque said...

Judie,
The problem I see is in defining "partially backed by" and "complemented by" gold. This always becomes politicized, therefore subject to deception, whereas a "free market in gold" (as outrageously unlikely as that seems today) is a simple, proven solution. The "planners" seem to think that more layers of complexity is the key to keeping debt alive, when in fact we just need to let debt die. Simple, time-proven ... inevitable ...

Of course, China is going astray I see, with gold leasing and paper gold, and inclusion to the SDR. They don't need the IMF, but they seem reluctant to part ways with the past too abruptly, more smooooothly is their style. No rock big US boat, OK??

Otherwise, the answers that beat me to your question above, I also agree with.

Cheers-
-R

One Bad Adder said...

Good post FoFoA.
@Blake: - That Richard Duncan vid was VERY interesting - Thanks.

Blake said...

@OBA -

I did too. Perhaps FOFOA and/or others would care to weigh in on it?

One Bad Adder said...

@Blake: - My takeaway was that the process is FreeGold positive - ie: in aiding the erosion of faith in Fiat ...
...and when alls said and done, the key to the DE - Hyper-Inflation transition hinges on this very loss-of-faith. IMHO.

PeaknikMicki said...

Surely a partially backed SDR could work to some extent.
Now I'm not advocating it and I think SDR is a poor idea myslef. But if gold, especially free floating gold, was included in the SDR basket, then devaluation of national currencies would be offset by increasing value of gold, no?
And in that case gold would help stabilise the SDR.
Freegold theory advocates full fiat currency and gold as a store of value. This would not be so different; a basket of fiats and a component of value storage.
In currency terms the value of gold should be set to 50% of the total SDR basket (my suggestion.)

Sam said...

@peak

Ask yourself this. Can gold function as the ultimate store of value if it is still tied to the monetary system (partially backing SDR). If currency tries to be "good as gold" it necessarily suppresses golds value in order to maintain its own. If gold is set free it can stand behind a currency without hurting the currency's value.

Another question is why do we need gold backing if we have free floating currencies. Why would a currency block store SDR's in trade leaving trade perpetually and dangerously unbalanced when it could instead allow its exchange rate to automatically balance things out

Roacheforque said...

Sam (and Peak),
Exactly, but to add ... These techniques of spreading the debt among sovereigns or homogenizing the debt with a portion of gold all remain efforts to extend the lifeline of aging debt. As Sam says, to imbue the "goodness" of gold into fiat, or the "goodness" of producer nations into a new value structure (LaGarde is playing this hand well).

Which is not to say it cannot or will not happen ... the can will be kicked as long as it can be. But it will ultimately fail, as time will no doubt prove.

PeaknikMicki said...

The scenario was not gold "backing" SDR in that SDR is this case wouldn't have a fixed value, nor would gold but by the law of nature as fiat is debased gold would be pushed up and thus offsetting the deterioration of fiat. As I see it this would be very close to the core free gold model.

anand srivastava said...

MdV

Just a small quibble. It is not the MoE that needs to be flexible. It is the UoA. If the currency needs to act as a UoA then it needs to be flexible. MoE can be anything even down to toilet paper during hyperinflations.

judie toy said...

@ Roach & Peak,

I'm trying to put it all together and am going to ramble a bit. Is it possible that gold and fiat can be MoE and SoV?

For example: IMF would require productive nations like Germany and Saudi Arabia to have 99% of their reserve in SDR and 1% in gold. I imagine the Deutsche Mark should be as strong/good as gold or maybe even occasionally surpass the price of gold. Germany would have no problem getting $100 SDR with $99 Deutsche Mark and $1 SDR worth of gold.
For dirt poor nation like Greece, the reserve requirement would be 1% SDR and 99% gold. Greece would have no choice but to make themselves extremely accommodating to outside investments or find a lot of good stuffs to export. If they needed SDR, they would either earn the SDR or convert $99 SDR worth of gold (domestically mined gold) and $1 SDR of drachma until the drachma is strengtened with improved productivity.
Does it make any sense or perhaps I'm just talking gibberish.

Sam said...

Let's just ignore a century of gold price suppression when gold has any tie to the monetary system for the sake of argument. That and all other SDR variants are still (as FOFOA put it) superfluous.

1). You don't need a store of value currency when you balance trade with free floating exchange rates.

2). You do need a true store of value asset for individual savers (read: not nations or currency blocs) so that those that CHOOSE to save can do so.

One cannot be connected in any way to the other to function properly.

We don't need any new currencies or ideas to fix our modern global imbalance issues that have led to global stagnation. We simply need to wait until the incredibly inaccurate and increasingly less useful monetary plane crumbles under its own weight and reveals a physical plane with real stuff that has a way different value than "the markets" tell us. From there you will see the revelation of a new monetary system, all set up and ready to go, that has been under construction for at least 30 years.

judie toy said...

A little more gibberish. SDR, Deutsche mark, drachma are all UoA and MoE. SDR and Deutsche mark can be medium term SoV but gold will always be the ultimate long term SoV.
Drachma will not be wanted outside of Greece and very little will make its way into the SDR without gold.

judie toy said...

@ Sam,
I'm trying to imagine how that is going to work but I just can't. If fiat currencies were not even medium term SoV, nobody would want to hold it for more than a few weeks/months.
I can't see folks converting fiat to gold every few weeks. Where are they going to keep them if they lived in small apartments? If they don't keep it in their homes, would they deposit the gold in the bank? If it were deposited in the banks, the physical would once again become paper.

Eric C said...

If you partially back your fiat with physical gold available at the bank, what stops me from exchanging my fiat over and over, until I convert it all to gold?

Thanks for your work FOFOA

anand srivastava said...

judie toy:

SDR cannot be UoA, because it cannot be managed to keep Consumer Price Index constant (or inflating at a low 2% margin). I hope you know the definition of Unit of Account.

SDR cannot be MoE, because it will not be available to people anywhere. I hope you know the meaning of Medium of Exchange.

SDR is being designed to be an SoV for the Currency producers. Store of Value cannot be anything that can be printed at will, at least for a decent term. I am not sure why Currency producers should want to have it. Maybe for a stop gap arrangement, under the stupid monetary situation.

The duration for which people will hold currency directly depends on the stability of the currency. The perception that it is stable will add to its stability due to the hoarding. Allowing the politicians to take advantage of it, by spending more than budgeted. Creating a currency bubble that in the future will burst, just like USD is going to burst in the future. This is where monetary unions like Eurozone come into the picture. These unions prevent politicians to have too much power to inflate the currency.

This is why a 2% inflation is required to help convince people to move their money into gold at some point in time. Unfortunately Banks have been saved till now, and people have seen their money in bank as very safe, and gold had been manipulated down. So they don't think about gold at all. The situation is changing as some banks are being bailed-in. This will continue and during the crisis a lot of people will lose their money due to bail-ins. So people will become loath to storing their money in banks for long duration.

I would expect that people will use locker facilities in the banks to keep the gold. These are mostly safe, although in rare cases there can be break ins. Dividing your wealth into multiple safes should give you safety.

I would think that the best solution would be gold accounts, that are backed by the Central Bank. The bank would only keep small amounts of gold to pay off if asked by the client. The rest would be kept at the Central Bank. Most clients would pay in currency and take out currency. The Bank would probably not accept gold unless it is 9999 bullion, and would pay out in gold again 9999 bullion. The bank would charge a small percentage as fee for storing the gold, which it would pay to the Central Bank. I would think this facility should be provided by the Central Bank as it would help prevent people from holding currency for long time.

This does require the Central Banks understanding that this is a necessary feature. I would think only Central Banks of Monetary Unions having a single mandate and having control of all banks in the region would be able to make such a gold deposit policy. It is really not in the interests of the Governments as it robs them of free money. They can still get free money in the form of Social Security payments. The Central Banks of such places with Gold reserve would be able to remove lots of Currency from the markets with a corresponding increase in the velocity, without increasing the inflation rate. Euro already has all these features.

Some countries like Turkey are also dabbling into such facilities. But it is dangerous for the user before the crisis, and in countries with currencies which are not part of a union.

vizeet srivastava said...

I think in freeGold world will still need global UoA. And a right mix of currency and gold can act as a UoA. But that does not mean SDR someway avoids Freegold.

anand srivastava said...

vizeet:

I think you mean Global SoV. UoA is only needed for price stability. Since SDR is not going to be used by the common man it does not need to be UoA. SDR is superfluous as a Global SoV, when gold is available and already part of almost all Central Banks.

vizeet srivastava said...

And there can't be right mix of currencies with right weight-age before revaluation.

Georgiew89 said...

What if Keynes was right? What if Another is wrong? What if you can kick the can for so long, that something comes from somewhere that allows humanity to reach a new event horizon in productivity gains. Artificial intelligence, automation, free energy. Maybe one day we truly can pay back the debt. If the SDR gives humanity another 10 - 15 years or more. It is possible, albeit unlikely, but possible that something big could happen in that time.

Roacheforque said...

Judie,
Currencies will retain value based on their prudent management, which gold - disconnected as a means of exchange and unit of account - governs, through its flow.

This simple system has centuries of economic growth and prosperity between the various classes behind it for validation and proof.

Our present entaglements of debt and equity are the foundation of most systemic problems today. ALL are attempts to impart the power of wealth creation, through paper to men, instead of nature, or God, or whatever else you'd want to call the natural order of things, where meritocracy is rewarded instead of failure.

When men have the power to create wealth through paper, they will abuse it, and buy favors and reward failure, and protect their ability to continue this unearned power.

This discussion is very apt to my last post at the annals, and the link at the end of that post well worth reviewing. Then, at the end of THAT post is FOFOA replying to Andy's first comment - very relevant to all this.

Cheers!

Roacheforque said...

G89,
Yes, it is possible. But I'm insuring against that outcome.

judie toy said...

@ Eric,
"what stops me from exchanging my fiat over and over, until I convert it all to gold?"
Folks living in a producer or natural resource rich country may not desire gold. The regional currency is likely very strong and stable until war or natural disaster.
For example, dollar has been up&up for almost half a year - for all the wrong reasons. Most folks who don't know any better would lament the points/investment/wisdom of holding gold.

Aurora said...

Just hit the donate button to help support this fine blog. Hope others will consider offering a tangible "Thank You" for our host as well. Best to you all..........Aurora

judie toy said...

@ anand,
I don't know the exact economic meaning of UoA, I was using its literal meaning in my fantasy land of "a global reserve currency partially back by free-gold order world".
However, why can't SDR be used as UoA to value regional currencies and gold?
In the case of Greece in my fantasy world, Greeks wouldn't be able to get/convert much SDR no matter how much drachma they print. They can't import/buy anything until they earn SDR via export, attract foreign investmnets in SDR or dig up sufficient amount of gold domestically.

anand srivastava said...

judie:

In the simple world of Freegold also the Greeks will not be able to get much free money. Why do you want to create a complex mechanism to do the same thing. The system will adopt whatever is simplest to achieve. If the SDR requires a whole lot of complex mechanism to work, with the support of a whole lot of other countries and politicians, when the crisis happens the flow will automatically move the one with the least resistance.

The system is already ready for Freegold. Nothing needs to be done. The only thing that need to happen is for US Dollar to no longer be the reserve currency. That simple happening will cause US Dollar to hyperinflate, as no Central bank will hold new Dollars anymore, to support the system. It will cause the demand of Gold to outstrip its availability, causing the paper gold system to crash. This will cause Gold to revalue. The Japanese Yen must also hyperinflate during that crisis as too many have been printed. We expect that pound will also face problems causing them to embrace Euro. This means that the SDR which contains Yen/USD/Pound/Euro will become purely Euro. I don't expect they would have included Yuan by that time.

vizeet srivastava said...
This comment has been removed by the author.
Michael dV said...

anand
I'm thinking on that MoE vs UoA thing. I prepared a response but I'm not sure it is ready for prime time.

vizeet srivastava said...

I agree that global UoA doesn't make sense but I am not sure how will IMF or AIIB give loan to countries that need it. Or how will they play role of development bank, if there is no single reserve currency. I think each regional bank will have single regional currency like Euro or it will have multiple currencies and gold in a ratio. Not sure if a development bank with multiple currencies will require to have to follow full reserve banking. If some of you can clarify me on this.

judie toy said...

@ anand,
I suspect things in the world of freegold may not be simple at all. Like you, I believed the dollar will eventually hyperinflate. It's fundamentally logical and mathematically inevitable. However, I also believed the U.S. of America is a benign nation with perpetual benevolent.
I now believe that we are the real sponsor of terrorism. We started conflicts in Ukraine, Syria, Yemen, Libya....... to prolong the reserve status. I'm not saying that we are the big bad wolf feasting on the innocent lambs. The lambs are wolves too but we are the one with the sharpest fangs.
As long as we have the biggest and baddest military, the world will create a complex mechanism to prevent dollar hyperinflation. They are not going to do that because they like us or for the good of humanity, blah blah, blah. They will do it because that will be the easiest way out.
I hope Obama would have the intellect to compromise and embrace the new multilateral system instead of fighting it. I think the world will eventually rebel against the existing dollar reserve system much more forcefully even if it means war.

Jeff said...

If you believe the US is 'the real sponsor of terrorism' and holding the world hostage at gunpoint, you have bigger problems to worry about than gold. Also, why would you openly post such views? Any government willing and capable of doing such things would have no problem hunting down and 'suiciding' insignificant dissenters on message boards.

MatrixSentry said...

As a retired US NAVY officer, it's my belief that the US is the most aggressive and warlike nation on the earth. Ike told us why this is a long time ago. War is good business. Half of our government openly professes that war is the answer for all problems (everything looks like a nail when your only tool is the hammer.) The other half is more subdued, but when it's time to get behind the bombing, they are in with gusto.

In a sense the U.S. instigates terrorism. I wouldn't use the word sponsor. Terrorists do what they do, hoping the U.S will react. They understand that U.S. involvement is the greatest recruiting tool they will ever have that gives them legitimacy for the minds they wish to capture. They also understand the fighting the war on terror is more important to the U.S. than winning the war on terror. It's just business.

I suppose my government really does not like me much. The feeling is mutual. I suppose the majority of Americans who continue to support these clowns don't like me very much either. The feeling is mutual. Out of ignorance and self interest, I did my part for these ignoramuses. For this I'm constantly accosted in public places with "thank you for your service" and similar tripe. Talk about making me feel like shit :-(

Surely this post will make its way to a NSA hard drive, so in a sense they are reading this. My message to them is:

KISS MY ASS!

fftastic said...

"everything looks like a nail when your only tool is the hammer"

... or the 2015 version of a hammer: a nailgun^^

judie toy said...

@ Jeff,
"Any government willing and capable of doing such things would have no problem hunting down and 'suiciding' insignificant dissenters on message boards."
I have learnt that our deadliest offense is not the sharp fangs but the sheep's clothing. We are a too sophisticated to jail old ladies talking gibberish behind the screen. Instead of the iron curtain, we have smoke and mirrors. We silence dissenters with ridicule instead of bullet - Benghazi is really about a YouTube video. That is the different between soft tyranny and hard core in your face despotism.

http://philosophyofmetrics.com/2014/03/22/the-world-holds-suicidal-america-hostage/

Roacheforque said...

Today, the USA may hate me for being a gold advocate. Tomorrow, they will accept my gold with open arms.

This is a good discussion. It proves that humans can still think ... and of course, currencies still work as well.
;0)

Reality Show said...

Yes, best keep your golden eggs in many baskets.
This happened in London over the Easter weekend.

anand srivastava said...

judie:

As long as we have the biggest and baddest military, the world will create a complex mechanism to prevent dollar hyperinflation.

The money required to run that military comes from the rest of the world, and their own industry. If the world stops paying the military will have to shrink. The ROW does not have to visibly do anything. Just show that they are suffering and stop providing things to the US, because they are suffering. Nothing else needs to be done. And that is what is happening at the moment.

We are moving into an age of low growth. The only country that will be better than the rest will be the US, because the private world is still buying their debt. This situation will continue to get worse and worse. Eventually every currency region will only be selling products internally or to their trading partners for stuff in exchange. No more Chinas who produce so much that they cannot consume.

Actually nobody consciously wants the USD to crash and burn, but that will happen, because nothing else can happen. I realized this in 2012, because of this blog, that the crisis will happen even though nobody wants it. I don't think even many freegolders would want it. It would mean that the world of easy money is gone, and we are making easy money at the moment. There are many among us that are still collecting those shiny rocks, and don't have nearly enough.

Thinking that US can fight the whole world is not realistic. It cannot suddenly attack the whole world or capture men and women and force the world to pay them. You cannot squeeze money out of people without openly threatening them.

What is happening is that they are trying to create disturbances in places where they can get some mileage like Yemen, Ukraine etc. They are trying to stop the Oil from tumbling, as it causes the world to go into deflation, and they get into trouble. They can't do much, and the ROW can't do much. There are no degrees of freedom left in the situation.

FOFOA said...

Benghazi, Judie Toy? What about the Sandy Hook elementary school shooting, the Boston bombings, and last year's Canadian parliament shooting which were staged events according to your SDR guru, 9/11 of course… ldo, and – OMG – the Ebola outbreak last fall which was manufactured and dispersed intentionally as "a pretext for shutting down global equity markets… that would obviously facilitate the transition to the multilateral financial system"?

Man, that's some world view your SDR guy has!

His name is JC Collins, and his blog is philosophyofmetrics.com. For any who share his world view, please sell all of your gold, because if he's right about that utter nonsense, then he's right about gold too! Oh, and feel free not to grace us with your presence, because I don't share that crazy world view. Also, the next "philosophyofmetrics troll" (and I'm looking at you three, judie toy, Georgiew89 and PeaknikMicki) who posts another link to that repulsive blog will be banned.

But I'm certainly not one to censor beautiful writing, so here are a few excerpts from the SDR guru guy to send you all on your way:

Cont…

FOFOA said...

2/3

On Ebola:

"Around 20 years ago the seed was planted for this operation by way of mass market publications and cinema entertainment.

In March of 1995 the movie Outbreak was released and instilled the initial fear of a hemorrhagic fever epidemic in small town America. Five months later in August 1995 the book titled The Hot Zone written by Richard Preston was released and quickly became a New York Times Bestseller. At the beginning of the book the author thanks the Alfred P. Sloan Foundation for a research grant.

Alfred P. Sloan was a Nazi collaborator. The obvious connections between the eugenics movement which was started in America and exported to Nazi Germany, and than exported back to America and eventually became the Human Genome Project, and the depopulation agenda of the worlds institutions, including top scientists calling for a 90% reduction in the population by using an airborne Ebola virus, and the research grant issued for the publication of such a book, will be left to the astute reader for further research.

Further social engineering continued over the years through numerous virus pandemic movies ending with the latest Dawn of the Planet of the Apes. Like the western population was carefully prepared for terrorists attacks by such movies as The Siege, when an attack finally came in New York, the population had already assimilated the proper social meme to respond as required.

The same is now happening with this Ebola outbreak.

Once a pattern of psychological operational methodology is established and recognized the aware human can more easily discern the origins and probably outcomes of operational mandates.

So should we expect that this will become a global pandemic and reduce the worlds population by 90%?

No.

I see that as highly unlikely given that not all persons which make up the small organized elite would support such a cause. There are those with psychopathic tendencies in all socioeconomic groups, probably more so in the large disorganized masses than others.

Yet the obvious advantages to promoting such a pandemic and solution based quarantine fits much too well with the economic and geo-political transition which is taking place.

[…]

But like all great plans and strategies there are multiple moves at work here. There is a very high probability supported with strong evidence, that the Ebola virus was manufactured and dispersed intentionally. As covered in the previous post Global Pandemic and Quarantine, the Ebola outbreak is offering a very convenient pretext for shutting down global equity markets and invoking a subtle form of martial law across the spectrum of western and eastern countries. This would obviously facilitate the transition to the multilateral financial system while offering a reason to the disorganized masses for the failure of the old and the need for the new."


Cont…

FOFOA said...

3/3

On Sandy Hook, the Boston bombings, the Canadian parliament attack and even ISIS:

"This [Canadian parliament attack] also follows the same methodology of other shootings, such as Sandy Hook, and the Boston bombings, and including another shooting earlier in the year on Canada’s east coast…

It has been well written and described in the past how masses of people, or the disorganized masses, require an external enemy in which they can direct fear and shift blame for the inefficiencies of the government. It is likely that with the emerging multilateral structure of the world, including the financial aspects of the SDR supra-sovereign asset, we are seeing, with ISIS and radical Islam, including the home grown terrorist template, the creation of an enemy that does not exist across the border or the ocean, but one that hides in out midst."


And, of course, a beautiful tribute on the 13th anniversary of 9/11:

"One of the most controversial “conspiracy theories” to come from 9/11 is the one that intends to show us that no planes in fact crashed into the buildings that day. It is proposed that they were image layers inserted into the original live shots that morning. I for one find this theory to be completely plausible and likely given the amount of evidence in the documentary included at the end of this post. I would encourage all readers to take the time to watch it.

Going on the assumption that there were no planes which crashed into the World Trade Center that day we are left with the conclusion that the buildings were brought down by controlled demolition. Extrapolating this further we can quickly conclude that no plane crashed into the Pentagon either. Especially given that there was no plane wreckage at the Pentagon.

And extrapolating even further we are to conclude that there was no plane which crashed into the field in Pennsylvania. If so, we are left with the question of what really happened in that field? What hit that field and why?"


Now be gone, and stay gone. Please. ;D

Sincerely,
FOFOA

Jeff said...

Conspiracy theory is like cancer, and those who spread it are not rational. If the things Judie toy and her ilk say were true, they would have a shorter lifespan than a Russian investigative journalist in Moscow. The fact that Alex Jones is still breathing is the strongest evidence that he is wrong.

DP said...

Extrapolating this further, astute readers might quickly conclude that JC Collins is an artful storyteller who knows how to make his reader seem almost as special as himelf.

M said...
This comment has been removed by the author.
M said...

@ Judie

"As long as we have the biggest and baddest military, the world will create a complex mechanism to prevent dollar hyperinflation."

How did that work for the Soviet Union ? Which was the 2nd biggest economy in the world before it collapsed.

But I agree that the US started the war in Ukraine. They don't want Russia to have any sort of strength. As soon as Rosneft and Gazprom became the biggest energy companies in the world in their respective sectors, something was inevitable.

Fofoa should write a letter to Putin.

Putin will be blamed when the IMFS comes apart (if ever) regardless who it is.

Canadarob said...

No planes into the towers? There were thousands of people who witnessed it.
But I don't believe for a minute the story we are told and the real story are the same.
I use the same gut that told me to look for other answers about the worlds financial problems outside of the mainstream

Canadarob said...

Fofoa,
The link to the 9/11 13th anniversary is ridiculous, which I'm sure is your point.
Anyone can make any numbers "do" whatever they want. And pretty much everything can be lead in some way to Illuminati or the ocult or whatever.

I'm a little surprised that conspiracy theory is so hated among this crowd though. Isn't that "theory" what brought you here, and then found to be fact?

Gold manipulation was a theory for a while.
Watergate was a conspiracy theory before it was decided it was better PR if it was put out in the open.

As history has proven the people in power will do whatever it takes to maintain money and power as the two are connected.

False flags are nothing new.

http://www.zerohedge.com/news/2015-02-08/42-admitted-false-flag-attacks

Obviously we have to make sure sift through what is plausible, possible, likely..etc

I've never heard of this Collins character before and a quick search leads me to see some rather large holes in his theories.

Hope I don't make fofoas list for my ramblings. ;)

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burningfiat said...

Logical consistency bitches!
Truth about conspiracy theories:

https://www.youtube.com/watch?v=95Hpix8O9Qs

Michael dV said...

Sonia
We are all adults here. Why would we need to be escorted?

Michael Martin said...

Orlov wrote a beautiful piece marrying quantum mechanics with the idea of conspiracy theories.
http://cluborlov.blogspot.com/2015/02/masters-of-parallel-universes.html

In a nutshell, the two realities exist (MSM story and conspiracy theory) until time proves one true and the other false; you find out that the cat is dead or alive only after opening the box.

I was also going to post the zerohedge link to the false flags article but Canadarob beat me to it.

One Bad Adder said...

@Canada: - ".As history has proven the people in power will do whatever it takes to maintain money and power as the two are connected."
...but are they (Money and Power) REALLY connected?

I've come to the understanding that "money" as we (the little people) know it, is of little consequence to the Power-elite. It's crucial to them however that the current perception of Money ...in the hearts and minds of the masses, is maintained and nurtured.
Ultimately ...this will change methinks.

Canadarob said...

Michael Martin,

"Until time proves"

An interesting thought. At what point does the theory become proof? When a certain mass has the same understanding? When it is announced on CNN?

Are those here correct only after gold gets revalued? Then do you look back and say "yup. You WERE correct because the future proved it". Or are we correct now because the lens explains everything?

I believe the latter. Because to me, anyway, the future doesn't change the present facts.

OBA,
Isn't money how you get and maintain your power?

Edwardo said...

Those planes in the air were not there
'twas all an elaborate scare
A big hologram
An audacious scam
That's not my meds talking I swear

tEON said...

Most recent Kunstler...

The truth is, when you rig a money system with price interventions, distortions, and perversions, they will eventually express themselves in ways destructive to the system. In the present case of world-wide QE and central bank monkey business, these rackets are expressing themselves, finally, in wobbling currencies. In many nations, people are deeply unsure of what their money is worth, and how much it might be worth a month from now. This includes the USA, except for the moment our money is said to be magically appreciating in value compared to everyone else’s. Aren’t we special?

Get this: nothing is more hazardous than undermining people’s trust in their money.
All of this financial perfidy conceals the basic fact that the human race has reached the limits of techno-industrialism. There are too many people and not enough basic resources to grow more of them — oil, fishes, soil, ores, fertilizers — and there is no steady-state “solution” to keep that economy going. In other words, it must either grow or contract, and it can’t really grow anymore (despite the exertions of government statisticians), so the authorities are trying to provide a monetary illusion of growth, when instead we’re in contraction.

Yes, contraction. The way out is to get with the program, shed the dead-weight and go where reality wants to take you. In the USA that means do everything possible to quit supporting giant failing systems — Big Box shopping, mass motoring, GMO agribiz, TBTF banks — and get behind local Main Street integrated economies, walkable towns, regular railroads, smaller and more numerous farms, local medical clinic health care, artistry in public works, and community caretaking of the unfit. All this surely implies a reduced role for the national government, and maybe the states, too. You could call it a lower standard of living, or just a different way to live.

PeaknikMicki said...

I am most disappointed with FOFOA for painting me as a JC Collins troll when all I've done is discuss the possibility of introduction of a new generation of SDR and how that would be compatible/incompatible with a free gold market and how possibly such global currency could be made to work at least in the medium term. As I stated I don't even support this move to SDR but that doesn't prevent me from speculating what it could look like if still was introduced contrary to my own wishes. Neither have I ever promoted JC Collins as some sort of guru. He does however follow news evens related to SDR and is therefore an interesting source for such news. If you bother sifting through reader comments on PoM site you will also see that I have a several occasions questioned JC Collins conclusions for instance with his bearish statements on gold. And whenever I have posted comments they have always been to the point and without adhoms or other trollish behaviour.
Anyway I as FOFOA feels such discussion doesn't belong here and he goes out of his way to name call me and threaten with banning I will step down and leave the discussions to those who share FOFOA's approved views.
Thanks all.

Cousin Avi said...

I agree PeaknikMicki. i have been lurking here for a while trying to understand as much as I can between work and family life. I see myself as well grounded in reality. i do not know exactly what happened on 9/11. What I can say is that anyone who believes the official narrative of what happened and who did it is either a fool or a liar.

Pick one

Michael Martin said...

@canadarob

"Are those here correct only after gold gets revalued? Then do you look back and say "yup. You WERE correct because the future proved it". Or are we correct now because the lens explains everything?"

I think our host's weaving together of logic and historical references (raw money data, newspaper clippings, book excerpts, etc) to tie together and support the words of FOA and Another are the act of "opening the box"; the lens that our host has developed is the act of opening the box. The words of FOA and Another were the "conspiracy theory" at the time they were first written.

Gold revaluing would just be another "historical event"; a marker on the trail; one of the nano seconds of the act of the opening of the box. Or so I think at the moment.

answer2me said...

For the love of GOD! Who is ANOTHER and FOA?

FOFOA-love the post.

answer2me said...

I got it FOA is Martin Armstrong. JK

Nickelsaver said...

Another is he
His friends are we
To hope for more
Is a closed door

Random Man said...

9/11 by evil men was done
USA to the rescue, with wars
Don't question this, my son
Or boot in the face will be yours

Georgiew89 said...

I think the SDR debate is a good one. After all, Another is from the realm of the very same Giants trying to enact these sorts of policies. These things can or would effect the viewship of this blog were they to play out in reality. You can call out on JC Collins all you like, but you're also calling out on the IMF, Russia and China too.

Georgiew89 said...

I think the SDR debate is a good one. After all, Another is from the realm of the very same Giants trying to enact these sorts of policies. These things can or would effect the viewship of this blog were they to play out in reality. You can call out on JC Collins all you like, but you're also calling out on the IMF, Russia and China too.

fftastic said...

@Georgiew89

You are right. And it is all here in these blogposts.
The synthesis is like this:

"So, the point about currency is, and mainly for those of you that fret over a NWO currency, or "whatever currency," an Amero or SDR or euro-whatzit... chill TF out!
Currency is no big deal. Currency is not the issue that matters here. "What matters is what we, as a planet, choose to save."

So often in commentaries of this sort that propose a “solution”, the author is strangely obsessed with the notion of replacing the dollar (as a reserve currency unit) with simply another institutional emission of similar ilk (such as currencies of other nations, SDRs, bancors and whatnot). Their avoidance of any meaningful discussion of the most obvious remedy is almost pathological in the extreme. To be sure, we don’t need to invent any manner of universal reserve currency to fill the role of a unit of account because that role is already served in a fully functional capacity for any given country by its own monetary unit.

What IS desperately needed, however, is a universally respected reserve asset capable of filling our current void with a reliable presence that serves as a store of value. And far from needing to be conjured or created by complex international committees, that asset is already in existence and held in goodly store by central bankers and prudent individuals around the world — it’s known as gold.

Read it ALL. And then, ... please, after your reading, be welcome to debate it.

judie toy said...

@ anand,
"The money required to run that military comes from the rest of the world, and their own industry. If the world stops paying the military will have to shrink."
I'm not going to dispute that fact. However, it takes time and our military will not crumble overnight likes the former Soviet Unions since most Americans/private industries still believe in the system. We could meanwhile do many crazy and reckless things like starting/funding a civil war in Ukraine and sanctioning Russia.

"We are moving into an age of low growth. The only country that will be better than the rest will be the US"
Again, we are in total agreement with that statement.

"Actually nobody consciously wants the USD to crash and burn, but that will happen, because nothing else can happen."
Once again, I concur. The world gave us a way out via the IMF Veto & Governance Reform 2010. They are not doing that because they like us. They did it to prevent us from doing desperate/crazy/irresponsible things like what we are doing now in an attempt to keep the status quo- I believe whatever we did/are doing in Ukraine is criminal.

"Thinking that US can fight the whole world is not realistic."
I never said that US can fight the whole world and WIN. However, we are more then capable to inadvertently start WW III by doing stupid thing like sanctioning the Russian and stirring up the hornet's n e s t in the Mid-East .

"You cannot squeeze money out of people without openly threatening them."
We are too sophisticated to do that openly. We have been doing that covertly by creating disturbances in places where we can get some mileage.

I wasn't trying to brag when I said that we have the "biggest and baddest military", I'm not at all proud of what this administration has done with our servicemen and women - Among so many other things, Obama should be impeached for not granting past due benefits to those who were hurt in Ft. Hood.

judie toy said...

@ FOFOA,
I'm surprised and a little proud of the fact that I have somehow managed to garner some much attentions from you.
I don't agree with most of J.C. Collin's world view, especially the PoG after the reset under the SDR - he thinks gold in dollar would reach no higher than $3000 and then back down to whatever... I think it would be back down to at least $5,000 to $15,000 after ???
I apologize if I have offended anyone.

judie toy said...

'What IS desperately needed, however, is a universally respected reserve asset capable of filling our current void with a reliable presence that serves as a store of value.... — it’s known as gold."
It's true but which country is going to be the advocate for that cause.
I think the world much prefers a gradual decline rather than a sudden chaotic collapse.

Indenture said...

judie: The world currently has a gentle, gradual decline, inevitably followed by a sudden chaotic collapse. But without the Euro the world would fall into a deeper hole if oil was forced to bid directly for gold.

judie toy said...

@ indenture,
The last time "oil was forced to bid directly for gold." almost happened.

https://www.youtube.com/watch?v=GuqZfaj34nc

"The world currently has a gentle, gradual decline,"

The rate of decline and flow is controlled solely by the U.S. After 2009, the world no longer trust the U.S. However, they continued to support the dollar since they believed we agreed to the new multilateral system instead of the unilateral US centric system back in 2010 - IMF Veto & Governance Reform.
Obama forgot his phone and pen when the US Congress failed to pass the reform package's April deadline in 2014.


judie toy said...

@ indenture,
This article explains it all.
http://www.counterpunch.org/2015/03/06/dollar-imperialism-2015-edition/