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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Robin Plunder who wrote (99492)	11/8/2008 10:02:38 PM
From: Hawkmoon	Respond to of 110194

actually, i do have most of my physical certificates...:) I wish more people were like you (or at least that the system was more geared towards facilitating receipt and delivery of actual certificates). Because, were that the case, all of the tremendous naked short selling and derivatives related manipulation (synthetic shorting) would quickly result in scenarios like what occurred with Volkswagen, a massive market-wide short squeeze that would pulverize the hedge funds. take a look at Fekete's recent article on financial sense, he discusses the use of scrip, and how this scrip is linked to a physical asset I did browse through the article and it provided some interesting history. But still all of that "scrip" is rendered worthless without the legal foundation of contract obligations that force counterparties to deliver that physical gold, even if between "cages" on the NY Fed gold storage. Again.. scrip become the medium of exchange based upon a real asset, gold, which fluctuates according to both monetary and industrial demand. So why not issue money based upon real estate, which only mother nature controls the manufacture. Why not issue money based upon homes? Why not issue money based upon some other non-perishable commodity like Diamonds? We relied upon gold in the past because it was non-perishable, malleable, beautiful, as well as rare. But despite all of these factors, it's industrial use can decentralize it's physical location in ways that make it difficult to retreive without great expense via a recycling process that is environmental unfriendly. And gold doesn't necessary equate to a diversified and well-structured economy. It's no different than oil in this regard. Look at all of those poor countries in the Mid-East who suddenly find themselves wealthy beyond their dreams because of a natural resouce. Look at the California and Alaskan gold rushes. Look at the environmental devastation of the rain forest due to gold mining there? The quest for "quick profits" via a gold-rush mentality has helped to create the "quick money" mentality that is the anti-thesis of a well structed and diverse economy. At least with Fiat money, in the hands of well regulated and disciplined central banks, there is a measure of human control over the money suppy. But what has been the primary problem with Fiat money is that in the name of "innovation" we've seen the creation of a "shadow banking system" that is unregulated and outside of the control of the central banks.. This is what has primarily caused the recent turmoil. The evolution of the unregulated Credit Default Swap markets and private market financial surety products has utterly collapsed. In the interest of innovation and increasing the velocity of financial transactions, as well as securitizing real property (mortgages, equipment.. etc) we've permitted the financial system to run amuck and prevented disciplineds management of money supply, with the resulting lack of confidence. No one really cares if they can exchange their Fiat money for gold. They just want to know that their dollar will have a measure of value that resists inflation, or pays an interest rate that exceeds that inflation so they can purchase the goods and services they require. In fact, moderate inflation can play an important role in insuring that money isn't just parked in a matress (physical or electronic.. eg: Japan) and that it is invested to finance economic growth. If there is a moderate inflation rate of 1-2%, it will motivate people to deploy their capital into instruments that pay more than that inflation rate. Whether it's gold, silver, Fiat money, stone disks, wampum, or even sheep, all of it is nothing more than a medium of mutually recognized between counterparties in a transaction that negates the requirement for a direct and inefficient barter system. Btw.. no need to paste my entire posts for your response. I can easily review the previous conversation. Hawk

To: Robin Plunder who wrote (99492)	11/9/2008 12:32:06 AM
From: RJA_	3 Recommendations Respond to of 110194

>>the real issue is that paper money is nothing real...thats all there is to it. The problem is essentially the fractional reserve banking system. Creation of money out of thin air as the result of debt creation. Leverage beginning at 10:1 and then expanding as the proceeds of the loan are redeposited and lent out again... What we are seeing now, is the system operating in reverse... as all the created dream money evaporates. Now, the interesting and perverse thing, is at the heart of the system the "reserves" that used to be gold, are now in fact nothing at all, and one wonders how long this complete scam of a system can in fact continue to exist. A gold backed currency would at least bring stability of sorts and limit monetary expansion -- if tied to elimination or reduction of the leverage of fractional reserve banking.