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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: TheBusDriver who wrote (53219)	5/24/2000 10:51:00 AM
From: LLCF	Respond to of 116759

Anyone listen to 'The Fleck' yesterday??? Anything new, or just more Fleck? DAK

To: TheBusDriver who wrote (53219)	5/24/2000 2:04:00 PM
From: Hawkmoon	Read Replies (3) \| Respond to of 116759

I don't really understand all the ins and outs of these matters but the above is where the problem lies IMHO. Don't feel bad Wayne.. It is quite complex to understand fully. I don't even pretend to comprehend the interface between bank branches, their parent branches, and how those large banks interface with the Fed, with regard to reserve requirements vs how much can't be loaned off of their liquid assets (deposits). Suffice it to say that the banks use a formula that stastisically predicts how many loans will remain performing vs non-performing, and rates and loan terms are assigned commensurately. And this how the system has worked for centuries, even under the gold standard. In fact, many problems were caused in the past because individual banks were able to issue their own currency (specie) based upon the gold they held as a reserve asset. Yet because of loose or non-existent regulatory oversight and competition between lenders, many loans were extended to borrowers beyond the banks held gold reserves, and when this fact made it into the public, the banks issued notes became almost worthless and the banks folded. All of this occurred before the appearance of the greenback during the Civil War, with its only backing being the full faith and credit of the US government. It occurred before the creation of the Fed, which was tasked with managing and resolving liquidity problems in major banks in order to maintain confidence in the financials system. It occurred before the creation of the FDIC which guaranteed depositor's money, thus lessening their willingness to initiate bank runs. At its heart, ANY FINANCIAL SYSTEM IS NOTHING MORE THAN A CONFIDENCE GAME. So long as people believe their money is worth something, they will continue to use it. It really doesn't matter whether that money is backed by gold or merely the full faith and credit (FF&C) of an entire nation. What matters it the perception that people hold in a currency and the willingness to accept its use in day to day business transactions. That's why I think Goldbugs are so self-defeating. If they ever are able to achieve a reversal in the public perception of gold vs FF&C based currency, it would create the Mother of all Depressions, making them a fortune at the expense of the rest of the nation. And then they would have the problem of figuring out where to stash all that gold so the rest of us couldn't steal it from them. Regards, Ron