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("Thoughts!" by ANOTHER)
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WELCOME TO THE ARCHIVES!
ARCHIVED DISCUSSION FROM 9/27/1998
All times are U.S. Mountain Time
jinx44 (9/27/98; 22:15:08MDT - Msg ID:220)
El Santa Uno: reference FX DD acct.--Mark Twain Bank-St Louis
Sorry, must have been a little too heavy on the trigger.......... Anyway, S1, MTB has domestic "FX" accts. They are a misnomer/LIE about what they accomplish. You open up a $US acct. and then pay them a hefty premium to buy, say, SFr. As I understand their Dept. Mgr., all you have is a credit balance in an offshore REAL FX acct. The USGovt doesn't believe that we should be able to hold FX accts. domestically. I don't blame them, you know how we just waste our own money, right??? So, buy FX options or open an acct. offshore, just keep it <$10,000. I recently received a 15 year chart of the SFr. versus gold. Gold is cheap in SFr and US$ prices right now. Maybe a mix of US bullion coin locally and bullion coin and SFr. cash in a SD box. One could make the argument that over the previous 15 yrs., the SFr. has become more valuable to gold - strong in gold - and also the dollar by about 70% since 1972. Govt minted bullion coins are still free of import duties in Europe, so one could take a quick trip to Benelux perhaps Adios
Goldfly (9/27/98; 19:47:36MDT - Msg ID:219)
To FOA
Hi, I hope you don't think I'm trying to nail you down or trap you on this gold price thing, I realize that may have been a problem elsewhere.....But I am really keen to get an understanding of your thinking on this. I've read and tried to understand the Another Archives ..... is it the debt unraveling......do you see oil taking a new path (Now?).....or do you have your finger on a different pulse? GF
TYoung (9/27/98; 19:36:22MDT - Msg ID:218)
Debt....supply....Japan
The answer is...you can not "push on a string". Banks that lose capital...debt default...will not want to lend. People will not want to borrow when bad times arrive. Debt creation is a creature of "good times". Tom
Goldfly (9/27/98; 19:30:04MDT - Msg ID:217)
To TYoung
Oh, ok, I read it again. I see, just an example.... sorry
Ph in LA (9/27/98; 19:21:10MDT - Msg ID:216)
Failure of debt?
Thanks, TYoung for pointing out that "if" all debt fails...Yes, but... It sounds a little like postulating "if the sky falls..." I ask in all seriousness if the sky ever could fall. True, the LTCM default cascading throughout the system...etc. But isn't that a unique aspect of debt? There really is no end to the supply. If some of it defaults, someone, somewhere can merely create some more. After all, the basis for all dollar derived currencies today is promises (with a generous injection of thin air and a tenuous connection to gold via the free market). Maybe those who ultimately make the promises (ie. governments) will become discredited to one degree or another, but someone else can still take on the task. As they say, it may be a hard and dirty job...but somebody has to do it. (And there are advantages!)
Goldfly (9/27/98; 19:13:17MDT - Msg ID:215)
To TYoung
I was with you on your post about collapsing debt to Ph in LA.....until gold disapeared......Where did it go? GF
Friend of Another (9/27/98; 18:15:20MDT - Msg ID:214)
TYoung (9/27/98; 15:29:10MDT - Msg ID:212)
TYoung, That post was excellent!
Friend of Another (9/27/98; 18:11:12MDT - Msg ID:213)
Ph in LA (9/27/98; 11:39:16MDT - Msg ID:211)
PH, I may have sent you (and others) the wrong signal in my reply to el St. One . In your post you noted:
"Yet you also said yesterday to el St. One "...the new exchange rate would destroy your purpose for holding the (foreign currency) account in the first place."
-------------
You must read that statement in context of St One's question. At least as I understood it. My thoughts to him were from a standpoint of having an account in "a bank in the states"?? See his post (Msg ID:206). My explanation was directed towards a person that wanted to hold foreign currency in an account "in the states"! Does this make more sense? Ph, I thank you for giving me your interpretation of this. It has been one of my greatest problems, trying to refine some of Another's message. Many people have picked it up out of context without receiving a better "English" explanation! Sometimes I don't get all of it in the first read. As time goes by, events have made it more understandable. On this Forum, I am able to explain in the company of very polite interesting people.
Also: It is clear to me that this Forum is not for the use of only a few. It is for ALL thoughts and the understanding they impart. I consider myself but a guest in this grand hotel! Thanks
TYoung (9/27/98; 15:29:10MDT - Msg ID:212)
Ph in LA
All currencies today are dollar derivatives. If, and I repeat if, debt defaults occur the world monetary system ...created since 1971...will fail. No currency will be safe. All are based on debt. LTCM may be a situation of debt default were couterparties defaulted rather than just a few bad bets. Try to understand what happens when the underlying basis for the world's currencies...debt...fails. What do you have left...Nada. The Euro may well meet the same fate. If currencies were back by gold and gold suddenly disappeared...what would you have? Same concept. Yes? Tom
Ph in LA (9/27/98; 11:39:16MDT - Msg ID:211)
To: FOA Re: Devaluation as Foreign Currency Control
This question of foreign currency controls is one that I have in fear thought long and hard about for purely selfish reasons. If I read your view correctly, the mechanism of controls will be a dollar, whose fall versus the European currencies has already begun (153 Spanish pesetas per dollar in August to 142/dollar today) falling much, much more as the gold¥carry trades unwind, the American stock market fails and the Euro offers an alternative world reserve currency. ANOTHER has said that "trying to maintain wealth in dollars will be like trying to hold the hand one meter below a falling stone". Yet you also said yesterday to el St. One "...the new exchange rate would destroy your purpose for holding the (foreign currency) account in the first place." But wouldn't holding foreign assets actually be the reason in itself? If the dollar is falling, that would mean an appreciating investment in dollars for holders of foreign currencies. If dollars are trading, one or the other, either the dollar or the other currency, must be going up. I cannot imagine a system in which both the dollar and the foreign currencies go down at the same time. Such a system would not be a trading system, it would be chaos. We would have to be facing a complete destruction of the international monetary system as we have known it these hundreds of years. In any case, even if there comes a period of adjustment during which the gold trade ceases and currencies do not trade, real assets in other parts of the world will continue to exist. During such a time, there might be little or no international trade and no convertibility whatsoever from one currency to another. But the underlying assets would not cease to exist. Someday they would have to be tradeable again. Please correct me if I am way off base here; I am but a simple man trying to peer into a fog-shrouded future enough to protect a family in a time of great change. Many hold physical gold and do understand TYoung's concept of insurance but do not yet see desperation and catastrophe overwhelming our civilization. The thoughts of others so obviously more well-versed in these matters are enormously appreciated. Thank you!
bmacd (9/27/98; 10:11:52MDT - Msg ID:210)
ET from yesterday
I went back to yesterdays postings after I signed off, and read your reply. You're right, I dove on one point, and then went off on a tangent without really replying to what you had said! (Sorry). I agree, if the NY Times piece doesn't hit investors smack in the face and scare them to death, I don't know what ever will. With all the bad news that has hit as this world economic mess unfolds, I would have thought a stampede into gold would have started long ago. It's not like any of this is a huge surprise. It's been a ticking bomb for ages. I hope you're right that this piece of news will be the straw that broke the camel's back. Know what I find scary about it? That the Fed was involved in a bailout at all. That's not their job. There will be other financial institutions to fall for the same reason, and is the Fed going to order them bailed out as well? The numbers for the LTCM are staggering.
Friend of Another (9/27/98; 08:35:40MDT - Msg ID:209)
el St.One (09/27/98; 03:25:04MDT - Msg ID:206)
St. One, ________ It's the same story for any financial operation, if the economic cycle repeats itself. Everything will work out fine. I have been forced to rethink any investment direction because of the input from A (Another). History shows that we get caught the worst when the times change. The banks are no different. They are run to make profits by people using the established architecture. Foreign currency accounts are not provided for customers with the intent of creating a vehicle to protect against changes in the national law (read that established architecture). If FXCs are implemented, your account is voided to some extent? Foreign currencies are just like your dollars, the bank doesn't hold them in the account. It's loaned out and the bank Credits you for the money. With FXCs they cannot import the real thing, even if asked to by a customer. Even if they could the new exchange rate would destroy your purpose for holding the account in the first place. That's my view on it? If anyone can show this to be incorrect, please do? FOA
BC (9/27/98; 06:29:31MDT - Msg ID:208)
Swiss Franc & Gold
FOA and ANOTHER: Thank you for your participation here. My awareness and knowledge of the current financial markets has expanded greatly from your observations and comments. ... I have always considered the Swiss Franc to be a very stable currency, and saw it as an alternative to the Euro for stability and safety. However, recent events -- e.g.: accusations/lawsuits re: Swiss banks withholding gold from Jews deposited during WWII, and recent Swiss Air crash as serious assaults on what some consider the Swiss' impeccable reputation. I would assume now that the backers of the Euro see the Swiss Franc as serious competition to the Euro, and Euro-backers would benefit greatly from weakness or lack of confidence in the SF. Is the Swiss Franc likely to maintain its strength in the years to come, or will it also weaken (by design or by circumstances) as other currencies of the world weaken one by one? Do you consider that the SF will remain or ever be again a safe haven or is gold the only safe haven during this upcoming transition phase you speak of? Thank you. BC.
BC (9/27/98; 06:27:24MDT - Msg ID:207)
Thanks
Michael and USAGold staff: A hearty thank you for sponsoring this forum. It instantly has become a daily stop on my Internet rounds, and I always find some valuable information. I knew nothing about your company a couple of months ago, but have developed a great appreciation for your operation from my daily visits to your Website and your excellent newsletter. Please keep up the great work. Thanks again. BC
el St.One (09/27/98; 03:25:04MDT - Msg ID:206)
Foreign Accounts
Question for ANOTHER or FOA. I have heard of a bank in the states that has accounts denomenated in any of several foreign currencies. Do you see any advantage to using one, for day to day settlements. If so which currency or combination of currencies, currently available, are to your liking? Would these foreign accounts be the first to go under controls? Till When
All times are U.S. Mountain Time
jinx44 (9/27/98; 22:15:08MDT - Msg ID:220)
El Santa Uno: reference FX DD acct.--Mark Twain Bank-St Louis
Sorry, must have been a little too heavy on the trigger.......... Anyway, S1, MTB has domestic "FX" accts. They are a misnomer/LIE about what they accomplish. You open up a $US acct. and then pay them a hefty premium to buy, say, SFr. As I understand their Dept. Mgr., all you have is a credit balance in an offshore REAL FX acct. The USGovt doesn't believe that we should be able to hold FX accts. domestically. I don't blame them, you know how we just waste our own money, right??? So, buy FX options or open an acct. offshore, just keep it <$10,000. I recently received a 15 year chart of the SFr. versus gold. Gold is cheap in SFr and US$ prices right now. Maybe a mix of US bullion coin locally and bullion coin and SFr. cash in a SD box. One could make the argument that over the previous 15 yrs., the SFr. has become more valuable to gold - strong in gold - and also the dollar by about 70% since 1972. Govt minted bullion coins are still free of import duties in Europe, so one could take a quick trip to Benelux perhaps Adios
Goldfly (9/27/98; 19:47:36MDT - Msg ID:219)
To FOA
Hi, I hope you don't think I'm trying to nail you down or trap you on this gold price thing, I realize that may have been a problem elsewhere.....But I am really keen to get an understanding of your thinking on this. I've read and tried to understand the Another Archives ..... is it the debt unraveling......do you see oil taking a new path (Now?).....or do you have your finger on a different pulse? GF
TYoung (9/27/98; 19:36:22MDT - Msg ID:218)
Debt....supply....Japan
The answer is...you can not "push on a string". Banks that lose capital...debt default...will not want to lend. People will not want to borrow when bad times arrive. Debt creation is a creature of "good times". Tom
Goldfly (9/27/98; 19:30:04MDT - Msg ID:217)
To TYoung
Oh, ok, I read it again. I see, just an example.... sorry
Ph in LA (9/27/98; 19:21:10MDT - Msg ID:216)
Failure of debt?
Thanks, TYoung for pointing out that "if" all debt fails...Yes, but... It sounds a little like postulating "if the sky falls..." I ask in all seriousness if the sky ever could fall. True, the LTCM default cascading throughout the system...etc. But isn't that a unique aspect of debt? There really is no end to the supply. If some of it defaults, someone, somewhere can merely create some more. After all, the basis for all dollar derived currencies today is promises (with a generous injection of thin air and a tenuous connection to gold via the free market). Maybe those who ultimately make the promises (ie. governments) will become discredited to one degree or another, but someone else can still take on the task. As they say, it may be a hard and dirty job...but somebody has to do it. (And there are advantages!)
Goldfly (9/27/98; 19:13:17MDT - Msg ID:215)
To TYoung
I was with you on your post about collapsing debt to Ph in LA.....until gold disapeared......Where did it go? GF
Friend of Another (9/27/98; 18:15:20MDT - Msg ID:214)
TYoung (9/27/98; 15:29:10MDT - Msg ID:212)
TYoung, That post was excellent!
Friend of Another (9/27/98; 18:11:12MDT - Msg ID:213)
Ph in LA (9/27/98; 11:39:16MDT - Msg ID:211)
PH, I may have sent you (and others) the wrong signal in my reply to el St. One . In your post you noted:
"Yet you also said yesterday to el St. One "...the new exchange rate would destroy your purpose for holding the (foreign currency) account in the first place."
-------------
You must read that statement in context of St One's question. At least as I understood it. My thoughts to him were from a standpoint of having an account in "a bank in the states"?? See his post (Msg ID:206). My explanation was directed towards a person that wanted to hold foreign currency in an account "in the states"! Does this make more sense? Ph, I thank you for giving me your interpretation of this. It has been one of my greatest problems, trying to refine some of Another's message. Many people have picked it up out of context without receiving a better "English" explanation! Sometimes I don't get all of it in the first read. As time goes by, events have made it more understandable. On this Forum, I am able to explain in the company of very polite interesting people.
Also: It is clear to me that this Forum is not for the use of only a few. It is for ALL thoughts and the understanding they impart. I consider myself but a guest in this grand hotel! Thanks
TYoung (9/27/98; 15:29:10MDT - Msg ID:212)
Ph in LA
All currencies today are dollar derivatives. If, and I repeat if, debt defaults occur the world monetary system ...created since 1971...will fail. No currency will be safe. All are based on debt. LTCM may be a situation of debt default were couterparties defaulted rather than just a few bad bets. Try to understand what happens when the underlying basis for the world's currencies...debt...fails. What do you have left...Nada. The Euro may well meet the same fate. If currencies were back by gold and gold suddenly disappeared...what would you have? Same concept. Yes? Tom
Ph in LA (9/27/98; 11:39:16MDT - Msg ID:211)
To: FOA Re: Devaluation as Foreign Currency Control
This question of foreign currency controls is one that I have in fear thought long and hard about for purely selfish reasons. If I read your view correctly, the mechanism of controls will be a dollar, whose fall versus the European currencies has already begun (153 Spanish pesetas per dollar in August to 142/dollar today) falling much, much more as the gold¥carry trades unwind, the American stock market fails and the Euro offers an alternative world reserve currency. ANOTHER has said that "trying to maintain wealth in dollars will be like trying to hold the hand one meter below a falling stone". Yet you also said yesterday to el St. One "...the new exchange rate would destroy your purpose for holding the (foreign currency) account in the first place." But wouldn't holding foreign assets actually be the reason in itself? If the dollar is falling, that would mean an appreciating investment in dollars for holders of foreign currencies. If dollars are trading, one or the other, either the dollar or the other currency, must be going up. I cannot imagine a system in which both the dollar and the foreign currencies go down at the same time. Such a system would not be a trading system, it would be chaos. We would have to be facing a complete destruction of the international monetary system as we have known it these hundreds of years. In any case, even if there comes a period of adjustment during which the gold trade ceases and currencies do not trade, real assets in other parts of the world will continue to exist. During such a time, there might be little or no international trade and no convertibility whatsoever from one currency to another. But the underlying assets would not cease to exist. Someday they would have to be tradeable again. Please correct me if I am way off base here; I am but a simple man trying to peer into a fog-shrouded future enough to protect a family in a time of great change. Many hold physical gold and do understand TYoung's concept of insurance but do not yet see desperation and catastrophe overwhelming our civilization. The thoughts of others so obviously more well-versed in these matters are enormously appreciated. Thank you!
bmacd (9/27/98; 10:11:52MDT - Msg ID:210)
ET from yesterday
I went back to yesterdays postings after I signed off, and read your reply. You're right, I dove on one point, and then went off on a tangent without really replying to what you had said! (Sorry). I agree, if the NY Times piece doesn't hit investors smack in the face and scare them to death, I don't know what ever will. With all the bad news that has hit as this world economic mess unfolds, I would have thought a stampede into gold would have started long ago. It's not like any of this is a huge surprise. It's been a ticking bomb for ages. I hope you're right that this piece of news will be the straw that broke the camel's back. Know what I find scary about it? That the Fed was involved in a bailout at all. That's not their job. There will be other financial institutions to fall for the same reason, and is the Fed going to order them bailed out as well? The numbers for the LTCM are staggering.
Friend of Another (9/27/98; 08:35:40MDT - Msg ID:209)
el St.One (09/27/98; 03:25:04MDT - Msg ID:206)
St. One, ________ It's the same story for any financial operation, if the economic cycle repeats itself. Everything will work out fine. I have been forced to rethink any investment direction because of the input from A (Another). History shows that we get caught the worst when the times change. The banks are no different. They are run to make profits by people using the established architecture. Foreign currency accounts are not provided for customers with the intent of creating a vehicle to protect against changes in the national law (read that established architecture). If FXCs are implemented, your account is voided to some extent? Foreign currencies are just like your dollars, the bank doesn't hold them in the account. It's loaned out and the bank Credits you for the money. With FXCs they cannot import the real thing, even if asked to by a customer. Even if they could the new exchange rate would destroy your purpose for holding the account in the first place. That's my view on it? If anyone can show this to be incorrect, please do? FOA
BC (9/27/98; 06:29:31MDT - Msg ID:208)
Swiss Franc & Gold
FOA and ANOTHER: Thank you for your participation here. My awareness and knowledge of the current financial markets has expanded greatly from your observations and comments. ... I have always considered the Swiss Franc to be a very stable currency, and saw it as an alternative to the Euro for stability and safety. However, recent events -- e.g.: accusations/lawsuits re: Swiss banks withholding gold from Jews deposited during WWII, and recent Swiss Air crash as serious assaults on what some consider the Swiss' impeccable reputation. I would assume now that the backers of the Euro see the Swiss Franc as serious competition to the Euro, and Euro-backers would benefit greatly from weakness or lack of confidence in the SF. Is the Swiss Franc likely to maintain its strength in the years to come, or will it also weaken (by design or by circumstances) as other currencies of the world weaken one by one? Do you consider that the SF will remain or ever be again a safe haven or is gold the only safe haven during this upcoming transition phase you speak of? Thank you. BC.
BC (9/27/98; 06:27:24MDT - Msg ID:207)
Thanks
Michael and USAGold staff: A hearty thank you for sponsoring this forum. It instantly has become a daily stop on my Internet rounds, and I always find some valuable information. I knew nothing about your company a couple of months ago, but have developed a great appreciation for your operation from my daily visits to your Website and your excellent newsletter. Please keep up the great work. Thanks again. BC
el St.One (09/27/98; 03:25:04MDT - Msg ID:206)
Foreign Accounts
Question for ANOTHER or FOA. I have heard of a bank in the states that has accounts denomenated in any of several foreign currencies. Do you see any advantage to using one, for day to day settlements. If so which currency or combination of currencies, currently available, are to your liking? Would these foreign accounts be the first to go under controls? Till When
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