HQLA... is a term used by bankers to qualify collateral... as directed in the Basel III agreement. It is "high quality liquid assets". While the bankers deride the utility of gold ownership by the plebes... when gold is the subject at issue among themselves ? That's different. Then, it is both valid as money... and it is both a Tier 1 Asset... among the very few with 100% of the value credited on balance sheets, without risking... and the definition of HQLA... (I'll come back to the issue of "without risking" in future posts... as that gets to the heart of what's at issue in the liquidity crisis unfolding now.)
As a general rule, when engaged in a game with others... it is important to understand that competition is a form of cooperation... When basketball resumes... the competition occurs within a framework established to enable it. There's a tremendous amount of cooperation involved just in enabling one game to take place... and then, multiply that by the thousands. In the game itself... there are rules... the two teams each agree to abide by the rules as part of the cooperation in agreements made just to enable the competition to occur.
And then, within the rules... there are enforcers... who make good calls... or keep calling fouls on your team when there wasn't even anyone there to commit a foul. That's called "home team advantage" or "corrupt bastards" depending on which team you root for.
Same thing, of course, with markets... not meaning that cooperation is defined by the rules limiting investors opportunities, as imposed on investors by the SEC... to make sure there's not a level playing field... but that, if you are in the market at all, the counter-party in every trade... is one of the bankers who are governed, essentially, by the Bank of International Settlements, who dictate the rules of play in banking to bankers... ("rules"... wink,, wink).
But, if you play the game... you ought to know the rules that the other team is playing by... more since they're NOT the same rules as those they impose on you and expect you to adhere to ?
The house always wins... because them's the rules ?
<Insert popular Santayana quote here>
The point ? Gold is not what you think it is... and its role is not what you think it is.
Changes in the rules... are made for a reason. Ignore what the change "is"... and focus on what it means... the reason they made the change... which isn't about "helping you win the game" ?
The guys with the gold make the rules... that's one of the rules... and another one of those rules is... you don't get to make the rules, because... |
