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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (89603)	4/28/2012 3:35:57 PM
From: Maurice Winn	2 Recommendations Read Replies (1) \| Respond to of 218708

C2, you missed the point. The Federal Reserve isn't holding all the US$. They have conned [confidence tricked] hordes of people into holding many $trillions of them. Whether the interest rate for those US$ is 0% or 10% is nether here nor there to the Federal Reserve. The fee they charge is the dilution they create. If they dilute the existing US$ by 10% and there are $10 trillion US$ "out there", then the Federal Reserve pockets $1 trillion. That's a very nice business to have. They can pay themselves nice high salaries and dividends with those freshly produced $$$s and spend them just like all the people who actually earned $$$s by doing something for other people. If the Fed owned gold, they could not pay themselves anything, and couldn't help themselves to a dividend either. If the US$ was gold, and the Federal Reserve owned all the gold and issued a matching number of gold certificates, aka money, then the Federal Reserve would have to charge for managing the gold and the money. It is a much more profitable game to produce US$ out of thin air, lend them to others, pocket some as salaries and dividends, and keep the game going, as long as possible. Every year, the Federal Reserve can produce more of them, especially if the economy is growing and the technological revolution makes things cheaper [or would do but for the constant dilution]. $10 trillion which exists now, has the purchasing power of $1 trillion from not all that long ago and $100 billion from back in the day. The Fed has transferred a great deal of the purchasing power to themselves over the decades. That's the way the game works. It is perfectly sensible of them to do that. Governments around the world are doing the same. None of them like using gold because this way, they confiscate a small proportion every year which is taxation by another name. Taxation by dilution is great because they don't need to hassle individual taxpayers. People who are sick of being diluted are holding gold because they don't want to spend money now, but want to hold purchasing power for later. Some are actually simply speculating on gaining purchasing power and in fact I think that's now the dominant reason people are holding gold. I am going to issue a sooth one day which is going to scare the wits out of the Goldster speculators. The real value of gold is the cost of production plus 10% [more or less]. Gold does not cost $1727 to produce. $1727 you will recall is the official sooth for 31 December 2012. Understanding why the Federal Reserve does what it does is important if dabbling in their US$, which I do. I'm currently holding a few of them. That's just while I wait to decide what to do with them. It's not a vote of confidence in US$ value. I do think US$ has better prospects than NZ$ which is why they are US$ rather than NZ$ while I wait. Though I have a stash of NZ$ as well. One needs some readies to take up opportunities as they come along, such as buying GLD, JPM, WFC after having sold them, which were all good fun and highly profitable. I would like to buy gold again. But I haven't sold any so have no need to buy. Mqurice