Sun May 11, 2003
Fundamental New Development in Gold
Author: Jim Sinclair
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The leadership of the US Federal Reserve and the European Central Bank recently made a watershed announcement that signals a major shift in monetary policy.
No longer is control of inflation the marching order for their monetary policy. Monetary policy is now tasked to increase inflation by expansive, inflationary monetary policy. That means that in the US, the activities of the Federal Reserve Open Market Committee will include instructing the New York Federal Reserve Bank's trading department to purchase government securities on their behalf from the commercial banking community.
When the commercial banks receive bank wires for those securities from the Federal Reserve, new money is created in the system equal to that transaction.This is governor Bernanke's "Electronic Money Printing Press" at work. The Federal Reserve is also saying that there is little possibility that the "Discount Rate" will rise in the future nor will "Bank Reserve Ratio Requirements" be increased as both of these negatively affect the creation of new money.http://www.jsmineset.com/s/NewsArchives.asp?ReportID=61418&_Title=Fundamental-New-Development-in-Gold
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May 11, 2003. Long Con: Mother of Bank Runs
Confidence games take many forms. Generically, they are swindling operations in which the perpetrator profits himself by taking advantage of the confidence reposed in him by the target to create some sort of false illusion that causes the victim to act against his own interest. In the most elaborate and successful confidence games, or "long cons" as they are sometimes called, the "con artist" often presents his illusion so convincingly that the mark refuses to believe that he has been fooled despite the later revelation of overwhelming evidence to the contrary.
By its very nature, fractional reserve banking -- particularly as developed under the gold standard -- amounted to little more than a con game. At the same time that they loaned out a substantial percentage of total customer gold at maturities considerably longer than sight, bankers had to assure individual depositors that their own gold remained available on demand. Loss of confidence led to bank runs that caused bank failures when sufficient gold could not be mustered on short notice.
More recently, gold banking has produced a new con game: the dishoarding of physical gold by central banks through leasing and swaps while at the same time keeping it on their books as if still in their vaults. Their principal marks were gold mining companies, many of which were tricked into large forward sales of future production by declining gold prices primarily caused by these unseen and unreported physical supplies hitting the spot market.
goldensextant.com
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