Posted on 11/18/2005 6:43:11 PM PST by hubbubhubbub
Thanks Travis.
That is a beautiful piece -- as gold nears $500 / Oz.
I'd love to get Greenspan alone and ply him with drink, and discuss when and how he was seduced away from his 1966 clarity.
What he said about the credit induced boom of the 20s leading to the crash and the depression is about to be repeated.
PS: Don't look at it as gold nearing $500/oz.
Gold is just gold, it hasn't changed since before the Pharoahs!
In truth, to Dollar is DOWN to $500 per oz of gold!
"The Fed purchases US government securities from the public (banks and others). In the process, money is injected into the economy."
Thanks for the explanation.
When he said "assets" I almost thought he meant something solid.
"Normally, money is injected into the economy through asset purchases by the Federal Reserve"Can anyone explain what that statement means?
Money is borrowed into existence on a promise to pay back more money than was created by the act of borrowing.
Read later placemark
LOL
The mention of "injected" got me thinking that drugs may have replaced gold as the underpinning of our currency.
I thought Rocky and Bullwinkle proved in 1959 that box tops were the true basis of the economy?
(We *love* Moose and Squirrel. We give Season 1 four stars... and it's only $30! (Or 6/100ths of an ounce of gold at current prices.))
"A supply that increases, oh, 1/10 of 1% a year. "
WRONG! It increases 2% per year. But it is an asset not debt.
Now we have to increase our debt 8% per year to get 4% GDP growth.
But fiat money is a "confidence game" that enables rapid creation of wealth
Printing FIAT does not create wealth. It creates DEBT!
"The Fed purchases US government securities from the public (banks and others). In the process, money is injected into the economy."
Thanks for the explanation.
When he said "assets" I almost thought he meant something solid.
That's why FIAT is liability money.
Hi Trav,
I see where the price of gold is going up because the Russian Central Bank has decided to raise its reserves from 5% of its assets to 10 %, and that change means they will require about 300 Tons more gold. That represents about 3 years of the gold output for the Soviet Union. World wide gold consumption is between 4000 - 7000 tons annually for jewelry, with SA producing the cheapest gold, selling Krugerands for the spot price, all other coins have a coinage markup. The next hi-point for pricing gold will be about 510 in early December, then about three weeks later you will see a correction to about 475. I've studied the trends for a few years now, and somebody is running the market in a way where the movement is complex but predictable. Funny.
Welp, them's the breaks. So does increasing the cost of capital.
The fact is, no matter WHAT standard we choose, somebody's going to get hurt. The only thing to do is chose the standard that does the most good for the most people most of the time.
The U.S. economy is, oh, about 8x what it was since we dumped the gold standard. I daresay the printing presses have helped made us the richest nation on Earth. In short: fiat sit!
“Printing” fiat money helps creates wealth when the price of capital is too restrictive on investment, development and production.
You’re confusing borrowing dollars with owning gold. $500 in your pocket is as much an asset as an ounce of gold in your pocket. Borrowing an ounce of gold is as much a liability as borrowing $500 dollars.
Yes, gold has been "run" for at least 5 years, no big secret there to traders. Here's one pretty good current
explanation of the way it's worked:
http://www.theglobeandmail.com/servlet/story/RTGAM.20051118.wbarrick1118/BNStory/Business/
But I think the central banks and their cooperating agents (Goldman Sachs etc) have finally capitulated in the last several weeks. It's over, nothing but clear running now to 500 and far above. I don't think they have the means left to beat it back to 475 once it breaks above 500. External forces are much too great now, with the Russians doubling reserves, China playing in a big way, etc.
Keep chugging that green Koolaid, and don't forget to pick up a wheelbarrow or two, for when Helicopter Ben starts tossing out his bales of money, as promised.
Nonsense.
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