To: Mike M2 who wrote (96058 ) 5/26/2002 8:23:20 PM From: Nadine Carroll Read Replies (1) | Respond to mike, what do you make of the gata-type argument that the central banks have already swapped out large amounts of their gold to the major banks, who are sitting on huge short positions? As in this argument:From his academic studies, Summers understood that if massive amounts of money were printed and the gold price was not capped, the dollar would decline and interest rates would rise sharply. Monetary bailouts by a rapidly declining currency could not long be effective. Under such an environment, economic growth a bubble economy, like that of the late 1990's could not have developed. Also, Clinton and his Treasury boys understood from the lessons of the 1970's that a transparent policy of intervening in the gold market would backfire. So the Rubin Treasury and the Fed set out to clandestinely manipulate the gold market by silently dumping gold out onto the market in the form of gold loans via sweetheart gold loans available to crony capitalist friends at major banking institutions like Goldman Sachs, J.P. Morgan Chase, Deutsche Bank, and Citibank. These loans typically were granted to these privileged political insiders at a rate of around 1% p.a., sold for dollars which were then invested in U.S. Treasuries at between 5% and 7%. Not only did this provide a terrific return on investment for Rubin's friends at Goldman Sachs, but it also helped drive interest rates lower. Moreover, these special friends of our political leaders could also count on not needing to worry about covering their short position (repaying with higher priced gold) because Chairman Greenspan assured them that "central banks stood ready to lease gold in increasing quantities, should the price begin to rise." gold-eagle.com
