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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: J.B.C. who wrote (18861)	5/7/2003 9:59:04 AM
From: Jim Willie CB	Respond to of 89467

gold cover clause is a partial gold backing of US$ or whatever other currency is involved the euro has a greater implied gold backing they have 15x as much gold in EU treasuries as USA they also have a much smaller federal debt so they have greater collateral in gold, smaller obligation when the crisis hits in the next 2-3 yrs, all hell breaks loose at that time, foreigners will openly question the viability of the USGovt to EVER repay their $8 trillion in debts (now $6.5T) the vicious cycle of the USDollar decline will be clear each step down in the US$ urges and demands the next step down the cycle does not end until crisis the USDollar will be at the center of the world monetary crisis the only available response when it hits will be for the USGovt to announce that the dollar will be partially backed by gold (or a combination of gold & silver) detractors laugh at this but many laughed at a stock bust in 1999 but many laughed at telecom bust in 1998 but many laughed at Asian bust in 1995 the USGovt might impose a 5% gold cover clause initially that means a person with $1M could demand $50k in gold it also means the US Treasury would have to hold 5% of its money supply in Fort Knox again take $6 trillion in circulation that means $300 billion must sit as collateral to back the MZM and in the following year, if the USGovt has a $100B deficit, they must come up with $5 billion in gold purchases this provides the bankrupt USGovt flexibility if foreigners still balk at financing our banana republic debts, then we are free to up the cover to 6% eventually we will find stability because foreigners will realize that gold backs our debt and money Kondratiev Winter is brutal on debts both the USEconomy and the USDollar are debt driven abusively so the structure and its paper medium will be shattered right now the USDollar is backed by $6.5 trillion in debt and a shrinking horde of gold far less gold exists in Fort Knox than it told the crisis will precipitate an explosive move in gold just like in the middle 1970's but to get there, I expect about a 10-fold jump first then it will stabilize at 5-fold, possibly higher remember 1980, when gold hit $880 ? then it settled back to 400 now it is coming off an absurdly low 265 low and trying to climb back to 400 we will see the same thing happen again in 1969, gold broke loose of $32/oz standard and headed for $880, a 25-fold jump I dont expect quite that large a jump this time but we do have once per generation a 10-fold stairstep 1970: $32 1990: $400 2006-08: $3000 / jim