Bailing Hedge Funds Incognito?

[Issachar]

Well, first of all, the US won't be going back to a standard based economy. It's not in the agenda of the NWO folk.

Sure the supply is finite. That's the whole point of a standard such as gold. It forces governments to act responsibly. They don't have to do that now. They can just inflate and inflate and inflate to their heart's content .... until they crash everything. I'm wondering if you realize that 100% of fiat systems have failed throughout history? It's not the fiat part per se, it's the sin nature of man's heart that uses the fiat system to further a selfish agenda.

There is no rule against setting a new value for say, an ounce of gold, in order to grow economies when there is a limited supply of the standard. There are economic laws that God created that will make that work. The good news in that is that "it takes an act of Congress" to do that. Fickleness is removed from the picture where as under the current system, the FED, which is an unconstitutional entity, can change the value of money at a whim.

Today, in case you haven't seen it yet, the FED cut the prime interest rate by half a percent! That is very significant and will only lead to more price inflation as the money supply is inflated. The more of something that there is, the less value it has. What is more valuable? A pound of gold or a pound of sand? The gold of course. Because it is far less plentiful. The more dollars that the FED makes out of thin air only devalues the dollar and so then we need a lot more of them to buy the same stuff. Also, don't fall for the myth that wages keep up with inflation. Never has, never will. That is an intrinsic part of a fiat system.

Issachar

[Big Daddy]

Gold melts quite easily when exposed to heat, it will run through your fingers...
The inherent prolem, what people don´t want to see with fixing your currency against a commodity is quite dramatic. You can´t grow if the supply of the commodity doesn´t grow. With our current technology we are llimited to Earth. Any precious metal is quite limited in supply, used by industry. What if new industrsy advances need more precious metals than now? The same precious metals you ind the currency to are used up in nidustry, thus the money supply will be shrinking.
All companies, thate xport use options/futures to secure exchange values to calculate. This will no longer be possible. Expect a draqmatic increase in prices (Higher risk-higher expected return).I think this is backwards.
The less supply of a commodity, and the more the demand, the higher the value or price.

I will have to go dig up the exact reference to quote, but I just read a book about this, and it pointed to the fact that in the Rome during Christs time on earth an ounce of gold would buy a suit of cloths and a meal.
This is true even today. The dollar value of an ounce of gold will buy a good suit and feed you for a day.

Yet the value of a dollar goes down everyday.

I'll try to dig up the exact quote.

[Issachar]

Boy, I just finished this book "Creature from Jekyll Island", and if history is any teacher, the US is in for a rude awakening. I just ordered that book! I should have it by Saturday or Monday. I am so looking forward to it. Forget Monday. Forget Saturday. I got it today! :)

Issachar

[tk939]

Of course less availability means higher prices, you really want in a stagnating economy rising currency values? Thats what you can get when fixing to commodities.
I talked not aout that relation.
Fixing currency against a commodity means fixing it to the supply of the commodity. If you need more money you need also more of the commodity.

New York Spot Gold is almost 650 US$/ounce, courtesy of kitco.com. The dollar was fixed to 5% of an ounce, hence the dollar value of an ounce would be today 32,5US$. If you want to return to gold standard then you have an inflation of 3500%. In addition I doubt, that you get a meal in a non fast food restaurant and a full set of clothes (pants, shirt, jacket) for 32,5US$ even today.

[ddg1263]

Of course less availability means higher prices, you really want in a stagnating economy rising currency values? Thats what you can get when fixing to commodities.
I talked not aout that relation.
Fixing currency against a commodity means fixing it to the supply of the commodity. If you need more money you need also more of the commodity.

New York Spot Gold is almost 650 US$/ounce, courtesy of kitco.com. The dollar was fixed to 5% of an ounce, hence the dollar value of an ounce would be today 32,5US$. If you want to return to gold standard then you have an inflation of 3500%. In addition I doubt, that you get a meal in a non fast food restaurant and a full set of clothes (pants, shirt, jacket) for 32,5US$ even today.

You are correct. But I do want to mention that this credit crunch was not a major problem for our banking system. The fed did cut the rates to bail out hedge funds.

[Big Daddy]

Of course less availability means higher prices, you really want in a stagnating economy rising currency values? Thats what you can get when fixing to commodities.
I talked not aout that relation.
Fixing currency against a commodity means fixing it to the supply of the commodity. If you need more money you need also more of the commodity.Don't you mean if you need more "credit"?
That is what it means today. As credit is extended, it means more money is being printed. That is inflation.

New York Spot Gold is almost 650 US$/ounce, courtesy of kitco.com. The dollar was fixed to 5% of an ounce, hence the dollar value of an ounce would be today 32,5US$. If you want to return to gold standard then you have an inflation of 3500%. In addition I doubt, that you get a meal in a non fast food restaurant and a full set of clothes (pants, shirt, jacket) for 32,5US$ even today.I guess when the gov regulates the money supply, then what you say will happen.
Even when the money was fixed to gold, there was still fractional reserves for the supply in circulation. Every dollar worth of gold in the vault could have 10 dollars in circulation. Every dollar of that ten that was loaned out counted as an asset and could be put on the books as such, and added to the reserve. It then could be lent out again.

[Big Daddy]

Forget Monday. Forget Saturday. I got it today! :)

Issachar
Oh boy, your in for a real eye opener.

It's like peaking behind the curtain in the Wizard of Oz. :lol2

[tk939]

When fixing agaisnt a commodity the currency value depends on the commodity. Rising commodity prices aren´t exactly healthy for the economy when the economy stagnates. That wouldn´t cause inflation? Gold price doubled in the last ten years, was the economic groewth of the US 100% in the last ten years?
If you want to fix against the commodity you need to bunker the commodity in order to increase the general money supply, putting more upward pressure on prices, which in turn would or would not cause inflation?

In order to return to the gold standard you will have to turn in 32,5 old dollars to get one new dollar. Anyone can live of 1/32 of what she/he makes today?

Not to talk about government bonds, far less people will be interested in buying them. Government bonds are per definitionem risk free, because governments don´t default on debt. Fixing it to a commodity will suddenly introduce the element of risk in government bonds, a very bad idea for the financial markets.

[Issachar]

Government bonds are per definitionem risk free, because governments don´t default on debt.

... investors have a funny way of remembering when a government defaults on debt, as the Philippines did two decades ago." http://services.inquirer.net/print/print.php?article_id=73163

Also interesting, given what is going on these days, is the opening of this article:

ON May 10 ("Paying the Piper (http://opinion.inquirer.net/inquireropinion/columns/view_article.php?article_id=65060)") I wrote about the resignation of national treasurer Omar Cruz. He'd warned that government wasn't collecting enough taxes, and that it would have to consider either raising taxes anew, or keep selling off government assets. I said at the time the President was facing a serious problem: she has to spend money to pacify the public and her supporters; but the money's going to be hard to find.
Shortly after the elections, Standard & Poor's didn't upgrade the country's credit rating--although it had widely been expected to do so--because it believed inefficient tax collection meant the government was unable to meet its income goals. Strike one.

On June 14, Moody's Investors Services also declined to upgrade its rating of the Philippines, saying there was a "moderate risk of a payment moratorium" owing to the high debt volume of the country. The large national debt, Moody's said, makes the country "vulnerable to shocks." Thomas Byrne, Moody's vice president, explained it this way: "The government's revenue base cannot yet support higher spending to meet major needs in public infrastructure, in part because of large interest payments on debt." Strike two.

James McCormack, head of Asia sovereigns at Fitch Ratings, told Reuters last week that weak tax revenues would push the deficit, excluding privatization, to more than P100 billion, or around 1.5 percent of gross domestic product. Strike three.

1998: Russia's reviving economy hit by global financial crisis; government defaults on debt and ruble crashes. http://www.frommers.com/destinations/russia/0404020051.html

Issachar

[tk939]

I formulated it wrong, government bonds are per definitionem risk free because governments dont default on bonds. The only reason for a bond to not be paid back on time is when the nation ceases to exist.
Please note that this does not include any other instruments of borrowing.