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

To: clochard who wrote (99532)	11/9/2008 4:01:27 PM
From: Hawkmoon	1 Recommendation Respond to of 110194

Think about it. I don't think I've stated anything differently. In fact, in my discussion of what gold represents, I asked why we don't just back our currency with real property or other hard physical assets? And as you aptly state, consumables are probably a better storehouse of value since presumably there will remain a constant demand for staples and other everyday necessities. This already occurs since commodities like oil and mineral reserves are used as collateral for credit. Mortgage loans, backed by the implicit market valuations of the homes and the property they were built upon, were established as collateral for mortgage backed securities. MBS's, and their revenue streams, were used as collateral for other forms of credit. The monster than has been created are these unregulated financial instruments and debt obligations that have become so complex that it's hard to trace who owns what collateral. No one knows who actually owns mortgages that were sold off by that mortgage originators, so it's nearly impossible to arrange "work arounds" that might salvage those mortgage loans and keep people in their homes. Thus, IMO, it's not the medium of exchange that matters so much, but the fact that we've permitted the unregulated "shadow bankers", represented by free market hedge funds, over-leveraged investment banks and other private entities to artificially inflate money supply (debt) beyond the ability of the Central Banks to control it (discipline). All in the name of "free markets" and financial innovation so representative of the "market forces" that so many people suggest we adher to. The problem is that free markets require enforceable contract laws, and these vary between individual countries. I guess that's what "Bretton Woods, part deux" (or "trois) will be about later this month. en.wikipedia.org Hawk