Tuesday, February 1, 2011

Always belive in!

Gold always believe in your soul

Apologies but having spent an aeon typing a message to the good General regarding his gold thesis I realised the post to which I wanted to add it has disappeared - now attached as first message to this gratuitous post. Apologies to everyone else, although as a sort of defence I do see gold as being a sort of prism through which a great deal of what has happened and is happening can be thought about and discussed.

Posted by bellwether @ 12:13 AM (1134 views)
Please complete the required fields.



12 thoughts on “Always belive in!

  • GC, gold as held by central banks is obviously a vestige of an old system, a system which was gradually dismantled during the 20th century as you point out. Perhaps the US Government claim there is 8000 tonnes of gold at Fort Knox because there is, but really the amount of gold held there is irrelevant, and with or without it the US is by far the most powerful and wealthy country on earth. Wealth has nothing to do with paper or gold, or indeed any other physical substance for that matter, wealth lies in the productive capacity of a country via its people and i suppose in the final analysis in its ability to fight if it comes to it.

    The gold standard has gone (and incidentally I’ve yet to hear a good argument for reinstating it) but it has of course been replaced by something else, being the free floating of currencies on an open exchange – something that I would argue is far more appropriate for a complex and now global economy. It is this that in an ingenious and flexible way control the relative value of currencies. If the US government print way beyond productive capacity then the dollar will tank relative to other currencies and inflation will surge, but of course neither of these has really happened.

    You are quite right that money is created out of thin air by governments (I stress by governments and not by central banks) but nevertheless out of thin air, but this is the way of fiat currency and I’m not sure why so many are troubled by this providing the amount of money produced reflects the productive capacity of a country and its relative needs to export. Note eg China who are operating on a sort of gold standard ie fixed to another currency have looked to suppress the value of their currency and it is there rather than in the US that inflation is surging.

    You say and have repeatedly said that the “indebtedness” of the US is a problem ignoring that the US have been in debt for the past hundred years and during this time have grown into a hugely successful and rich country. The debt has not been a problem and was not a problem in 1945 when it was 3x GDP. There is always the capacity to grown and to a modest extent inflate debt away as has always happened. It’s never been a problem before so why now? Also you simply cannot analyse sovereign debt as you would household debt. For example the US really owes China nothing, it is simply that China has to take something in exchange from the goods it produces in its attempts to trade with the west and thereby industrialise its economy. The real value to China is that it has become a sort of work shop that can offer something where before it could offer very little.

    Again future liabilities are frequently referred to as debts but of course they are not really debts but an obligation to direct its resources in a certain direction eg we undertake to see everyone has free medical care. These are not debts as such, or actually even obligations as a country can always withdraw certain sorts of expenditure or make it more efficient etc.

    I’m not saying that deficits cannot become a problem if they get too high and too persistent but you have never really shown in a convincing way that we are at that point. Certainly in the US the bond and fx market would seem to disagree with you but I would be interested if you could explain how see the US as insolvent.

    An even greater problem for me is that somehow all countries are insolvent, which is just ludicrous because solvency is always a relative concept and if everything is insolvent then everything is therefore by definition solvent.

    Reply
    Please complete the required fields.



  • @bellwether

    I hope you don’t mind if I join in. I suspect that this post will also be kicked off the blog soon so now or never.

    “The debt has not been a problem and was not a problem in 1945 when it was 3x GDP”

    At that time, America was virtually alone as a country with its massive industrial base untouched by WWII. While the rest of the world had to rebuild their industries from the ground up, America only had to retool its industries back to civilian production. That was an enormous advantage for America at the time.

    “the US really owes China nothing”

    So do US taxpayers work and pay tax to service their national debt for nothing?

    Regarding the gold standard, I invite you to read #3 at Now we have all the proles gold…

    I don’t think anybody knows how the current reserve currency system will progress but the current arrangements appear to be vulnerable to what Macillan referred to as “events.”

    Reply
    Please complete the required fields.



  • Another of bellweathers gold bashing threads.

    Bellweather, you need to stop obsessing about the investment habits of others and just focus on your own habits – unless of course, you are shorting gold, in which case it is in your interest to post negative after negative article.

    In any event, you are making yourself look like a bitter fool who missed the ‘gold’ boat.

    Reply
    Please complete the required fields.



  • the number cruncher says:

    hpwatcher – what was that you said was it:

    “you need to stop obsessing about the investment habits of others and just focus on your own habits – unless of course, you are ramping gold, in which case it is in your interest to post positive after positive article.”

    “In any event, you are making yourself look like a bitter fool who bought into the ‘gold’ bubble.”

    Reply
    Please complete the required fields.



  • the number cruncher says:

    A history lesson from the great James Burke. Fascinating stuff.

    Reply
    Please complete the required fields.



  • hpwatcher – what was that you said was it

    Yeah, what about it?

    The point I am making is that Bellweather doesn’t even own the stuff – it’s understandable to be obsessive if someone does own it, what Bellweather does is simply daft.

    @ the number cruncher –

    Exactly how many different login details do you have – you ignorant oaf?

    Reply
    Please complete the required fields.



  • the number cruncher says:

    temper temper –

    drop the paranoia, straw man augments and personal abuse please it has no place in grown up debate

    Reply
    Please complete the required fields.



  • QG the moderators should perhaps recognise that the post is ultimately more about the monetary system and money supply than about gold.

    The US taxpayer pays taxes in order to support the public sector which should in turn support the private sector. You might argue that the balance between public and private sector isn’t right meaning the economy isn’t running at optimum but that’s a different converstation, although perhaps a more relevant one. Incidentally it is that taxes can only be paid in USD that gives the currency its force.

    There is a great deal in my post that you didn’t address eg the differences between personal and sovereign debt, what really gives a currency its value and the role of a free floating exchange system as to the value of currencies of trading countries as an alternative to a gold standard.

    It is I suppose a lot of ground to cover but I’d at least be interested in your own thoughts as to the advantages of returning to a gold standard, it seems that this is often spoken about but that the advanatges are rarely explained in clear terms.

    Reply
    Please complete the required fields.



  • drop the paranoia, straw man augments and personal abuse please it has no place in grown up debate

    I don’t recall you ever being involved in ”grown up debate”. You are just one of the mindless many who never volunteer anything interesting but just criticise everybody else.

    There is a great deal in my post that you didn’t address eg the differences between personal and sovereign debt, what really gives a currency its value and the role of a free floating exchange system as to the value of currencies of trading countries as an alternative to a gold standard.

    I’m not interested in anything you write, related to gold, because you have clear bias. You need to wake up to the fact that your paper money is losing value every single day.

    Reply
    Please complete the required fields.



  • Bellwether,

    I agree that there is a lot in you post I didn’t (intend to) address. I’ll make a few more comments but am coming to the view that we’re not really interested in the same things.

    “The US taxpayer pays taxes in order to support the public sector which should in turn support the private sector.”
    But it’s not a closed loop. Some of that money has to go to foreign creditors in the form of debt servicing. That’s not necessarily a problem if America can avoid a compound debt spiral; I’m sure you are aware that some economic commentators fear that’s where America is headed.

    “There is a great deal in my post that you didn’t address eg the differences between personal and sovereign debt”
    I recall a while ago you commented on some material by the ‘Pragmatic Capitalist’ which proposed a somewhat counterintuitive way of thinking about sovereign debt. All very clever, I’m sure, but I never really believed in TPC’s idea. Perhaps that’s just because of my lack the mental bandwdith. You decide.

    As for the gold standard, I’d ask you to read comment #3 at Now we have all the proles gold… if you haven’t already. Theoretically, the gold standard might force central banks to stop devaluing their currencies instead of tight monetary policy but as I’ve already mentioned in my link, the discipline that made the pound so attractive in the past is politically impossible today. It’s not going to happen so I don’t spend a lot of time dwelling upon it.

    I suspect you will not be impressed by this response but hopefully there’ll be no call for talk about dildi this time 🙂

    Reply
    Please complete the required fields.



  • @Hpwatcher

    “You are just one of the mindless”

    Rather strong language there. Bit uncalled for really.

    Reply
    Please complete the required fields.



  • Rather strong language there. Bit uncalled for really.

    I feel it to be true. Number cruncher is one of those posters, who never really says anything but just snipes at everybody else. HPC seems to have more than it’s fair share of ”people” like that.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>