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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: Ahda who wrote (18207)	5/5/2003 5:25:10 PM
From: sea_urchin	Read Replies (1) \| Respond to of 81453

Darleen > I have a hunch with all the legal rearrangements that are taking place there have to be some Centrial Bankers questioning themselves as to unlimited fiat as well as debt being the most lucrative market. As we learnt from a piece which I posted previously there isn't such a thing as actual money. Message 18908425 There is only debt. What we call money is simply a book entry to balance that debt and they divide that book entry into little pieces of paper called bank notes. In the circumstances, the idea that gold is necessary to "back" the money is absurd because the money is already "backed" by the debt. It also follows that one can't have a dual system with some money backed by debt and some backed by gold. Thus, it is important to understand that gold has actually become redundant to the central bankers and its presence in their vaults is an anachronism --- a relic (although I didn't say barbarous as Keynes did) of previous times when bankers lacked the confidence to say what money really was --- a book entry. For many years they tried to pretend that paper money was an IOU for a bit of gold --- of course, knowing all the time that it wasn't because they had no intention of giving anyone any gold for their piece of paper. In fact, it wasn't the paper money that was the scam, it was the gold "backing". Stemming from historical notions, many people seem to think that money is a store of value. It isn't nor, in the present system, can it be. If there is a value to money, this "value" can only be the debt that "supports" it. However, if people seriously want a store of value --- and it's clear that none really exists anywhere because the value of all known assets is ultimately tied to the value of paper money --- then these people will have a virtually impossible job on their hands. They are actually looking for something that doesn't exist. The situation is analogous to a person drowning where there is no lifebelt. The metaphor is that there is nothing that will permanently keep an investor up for all time. The only way an investor, like the drowning person, can save himself is by swimming or treading water --- in other words through his own knowledge and efforts. The money is the water --- we are swimming in it. If, however, we do not know how to swim properly we will drown. Many people think the money is the lifebelt --- they are wrong. In fact, they couldn't be more wrong. At the moment, gold is two things --- 1. It is a commodity which is used particularly for jewelry and also dentistry and electronics. 2. It is a medium of investment particularly to those who have few alternatives eg Indians (in India). Also for gold coins and medallions for whatever reason. It is also an essential investment for those who anticipate Doomsday. But when that day comes the gold will be about as useful as all the arms, ammunition and canned-beef they have stashed away in their fall-out shelter. There is also such a thing as the "idea" of gold. It is this, in fact, which sets the price of gold on COMEX etc --- not the price of the actual gold bullion --- but the price of gold futures, options etc. In other words the price of gold "paper". This "idea" gold is thus like fiat currency because it responds to the same dynamics as the USD, Euro etc. The value of this "idea" or "fantasy" gold also sets the price for gold bullion but gives one no indication of the supply of and demand for bullion because the market for "fantasy" gold is many times greater than the market for gold bullion. I presume the reason for the big market in "paper" gold is simply that people like gambling and many like to gamble with the "idea" or "fantasy" of gold, much like people in the 17th Century gambled with the idea of tulips in Holland or property in Mississippi. However, and this is what is important to shareholders in gold mines, the price of "idea" gold does not represent the profits (or losses) which gold mining companies achieve, clearly, because there is no direct relationship between the two. Thus we see, in South Africa for example, although the price of gold measured in USD is quite high, because of the adverse rand-dollar exchange rate and the excessive costs on the mines, the mines are doing very badly. And there you have it --- all in one lesson.