From
NYPOST.COM



HOW INFLATION WILL WRECK THE ELECTION FOR AL GORE

By JOHN CRUDELE


--------------------------------------------------------------------------------



GET ready for a major collision between the Fed and the White House this fall.
As everyone knows by now, the Fed decided to leave interest rates unchanged at its latest Open Market Committee meeting this week. In doing so it said some things to make those who want rates to stay put feel good, and some things that left open the door for higher borrowing costs as the year progresses.

If the economy does slow and inflation shows no signs of picking up, then the U.S. will be able to move into the election season without the Fed and the White House bumping heads. And that will be the end of the story.

But if the signals of inflation get stronger - and I'll explain why that's a very good possibility - then this election year could see the meanest, ugliest confrontation ever between the executive branch of our government and monetary authorities.

And the repercussions from such a battle will not be controllable by our officials. That's because foreign investors will get to cast their vote for the way the American economy is being handled by their treatment of U.S. dollar and financial markets.

The Federal Reserve has increased interest rates a half dozen times in the past year, starting with one last June that caught every single Wall Street expert by surprise.

The second hike also shocked the markets, which were hoping that the Fed was just tapping on the breaks to slow the economy. Even when the third rate increase came in the fall, Wall Street was still in denial.

Because the Fed didn't raise rates this week, Wall Street again has its hopes up that the Fed is finished. But don't get too blas� about the future.

First, the only moderately troublesome inflation reports that have been coming out of the government recently are an aberration at best and fraud at worst.

The Fed has already publicly questioned the government's inflation data, which showed consumer prices up 0.1 percent in May and producer prices flat.

What bothered economists is that Washington seems to have missed the incredible run-up in energy prices. And without those price increases, it is impossible for the Fed or anyone else to figure out how much the higher cost of energy is filtering through to other products.

But here's the problem.

The statisticians who put together the inflation numbers - especially those on consumer-price rises - say that the jump in energy prices was missed simply because of a fluke in their surveying system.

And they expect that the higher inflation numbers will start re-appearing with June's numbers. I spoke with them about this, and so have others.

The Fed's Larry Meyers has already called the government's May employment statistics "not credible" when it showed a decline in private industry jobs, a rise in unemployment and an increase in overall jobs because the Census Department hired an extraordinary number of temporary workers.

And Fed officials are constantly telling a few key private economics firms that they need help because the government's numbers are so unreliable.

Even if inflation stayed at current levels, prices are still up about twice as much over the past 12 months as the previous year. That alone should worry the Fed but it's only half the problem.

As this column has been saying for years, the Fed is mainly concerned with the stock market bubble. The "asset inflation" being created on Wall Street has long been bleeding into the economy and the fear is that the U.S. will reach production limits and prices will rise uncontrollably.

Stocks had only a modest reaction on Wednesday to the Fed's decision to keep rates steady and fell yesterday.

But the next interest rate meeting isn't until late August.

Here's the worst case scenario, which also happens to be the most likely.

Over the summer the stock market rises, creating more bubble money that investors will use to put a further strain on the nation's production capacity. At the same time, the inflation already imbedded in the economy will start showing up in the government's numbers on top of whatever new inflation is created by a further inflating of the bubble.

The end result will be a strong need for the Fed to increase interest rates right through the presidential election. This will give the Democrats fits.* Please send e-mail to:

jcrudele@nypost.com
View Yesterday's Discussion.

RAP,

Compliments on an informative and craftily worded post.

Are you arguing that a violent response to the current constitutional/governmental arrangements in the US could be justified? If yes, (a) would the existing debt of the US government or state governments be honoured? (b) would you retain the current US as a form of legal tender? (c) if not the US dollar, would gold/silver play a role in the monetary system?

It is interesting to note how much of history turns on arguing over debt: which one's will be honoured, which one's won't, and how they will be paid.

Most modern thought, IMHO, is focused on the pursuit of this-worldly pleasure - wealth, status, etc. Would most modern thinkers view the US revolutionaries who lost everything in support of their cause as "losers" or "suckers"?

It would be interesting to study whether some of the revolutionaries managed to use the new arrangements to directly or indirectly "make good" their losses, or to enrich themselves outright.

In my own personal experience, when I was younger, I would allocate significant efforts to advance a cause, without pay. Later, I learned that some of my associates insured they received payment for their allegedly voluntary efforts. The quandry: No cynical society can survive because no one will undertake the collective efforts (with risk of individual death, suffering, or impoverishment) needed to keep the society going. But in being an idealist, one must ensure that one is not paying a disproportionate price to benefit others. However, the need to protect oneself from being used can inhibit necessary but non-remunerative action, which means the necessary collective tasks don't get done. What to do?

An aside: The United Empire Loyalists would look at how their property was stolen by the US revolutionaries. Why were not these signers of the Declaration of Independence compensated from the looted or abandoned property of the Loyalists? If they weren't, who was compensated, and why?

Just received my (first)10 tola bar. Long wait but what a beauty. Love the Pachiderm. Still waiting for my Uro's.

Michael have you had any luck in connecting with a supply of the Harmony issue's? I wish to add some more but am waiting to find out if our esteemed host can deliver. At these prices I don't want to wait too long.

http://www.bog.frb.fed.us/releases/H15/update/
Official: Federal Reserve Statistical Release

Release Date: June 30, 2000

Rates for Thursday, June 29, 2000

Federal funds 6.76

Treasury constant maturities:
3-month 5.85
10-year 6.04
20-year 6.24
30-year 5.88

upside-down spread FF vs long bond = (.88%)

http://dailynews.yahoo.com/h/p/ap/20000630/en/earthling_traffic_oeo.htmlThere are a lot of crazy drivers out there.

Congratulations on your latest acquisition. I seem to recall some posts a while ago about tolas but, alas, I have a good memory...its just too short. Can you talk more about your tola? Specs, turnaround time, etc.?

Thanks.

Thank goodness they're protecting us from these-type vehicles!

Regards, j.

http://www.phillynews.com/content/inquirer/2000/06/23/front_page/sails23.htm.

http://www.prudentbear.com/guest.htm
"So what is [the] real rate of inflation in the US? It probably approximates growth in
total money supply, or M3. Since 1959, M3 has grown at a frightening
compound annual rate of 7.9%, while the CPI has "only" indicated 4.4%
compound annual inflation. The real per capita GDP, in the same period,
grew at a compound annual rate of only 1.4%, indicating the annual growth in
the broad money supply exceeded per capita GDP growth by an incredible
6.5% annually. More money chasing fewer goods equals inflation. With money
supply growth far exceeding per capita GDP growth for over 40 years,
inflation will get much, much worse before it gets better in the United States.

As this month's BLS results made crystal clear, the CPI is not a valid measure
of inflation, but has devolved into a mathematical Frankenstein's monster.
Real inflation, by any measure, is much higher than official Labor Department
statistics indicate. Sooner or later, general price levels will rise high enough
so everyone will be able to see through the statistical smoke and mirrors the
BLS has deployed. When that day comes, international faith in the US dollar
will plummet like a meteor, and hundreds of billions of dollars will be
dumped in the international currency markets in nanoseconds. The only
investment that has always thrived in highly inflationary environments in the
past is gold. Gold always retains its inherent, intrinsic value through all
financial turbulence, and shines its brightest when the demons released from
the Pandora's Box of inflation are wreaking the most havoc."

Stranger's Note: Be sure to click on the link and get the whole story.

COLUMBIA, S.C. (July 1, 2000 8:29 a.m. EDT http://www.nandotimes.com) - A prominent South
Carolina video gambling operator kept an ace up his sleeve but despite the last-minute legal
maneuvers, the high-stakes battle ended with the industry folding.

The plug was pulled on the $3 billion industry at midnight Friday as a statewide ban went into
effect 14 years after video gambling was legalized in South Carolina.

"Bored. That's what I'm going to be - bored," said Wanda Rose, playing at the Double
Diamond in Columbia. "I mean, it's my money. I think that I should be able to spend it however
I want."

The end came only after a late-night legal drama that reached the state Supreme Court less
than two hours before the midnight deadline.

Businessman Henry Ingram, who owns five casinos, won a temporary injunction from a
Circuit Court judge allowing him to keep his video poker machines running. However, the
state Supreme Court shot that down late Friday night and denied other requests for
emergency injunctions.

Operators were supposed to have their machines turned off by midnight Friday. Authorities
had no immediate reports of violations.

"The last player had $100 that I was able to pay him," said Linda Browder, manager of Airport
Bingo in Cayce, which closed about 30 minutes before the midnight deadline. "I gave him his
$100 and his ticket as a souvenir. He said he would keep it."

Video poker became legal in South Carolina after a lawmaker slipped a provision into a bill in
1986. Anti-gambling forces fought hard to outlaw the machines, a battle that came to a head
in 1998 when then-Gov. David Beasley, a Republican, called video gambling "a cancer on
South Carolina" and vowed to get rid of the industry.

Gambling operators helped defeat Beasley's re-election bid, pouring money into the campaign
of Democrat Jim Hodges, who won the governor's race with a promise to let voters decide
whether the games should remain legal.

Last year, the Legislature approved a bill that banned video gambling unless voters decided in
a referendum to keep the machines. A few months later, the state Supreme Court threw out
the referendum, but upheld the ban.

"I'm glad it's out," Margaret Perry said as she played at D J's Video Games in Columbia. "It's
caused a lot of problems in my life. It's been a detriment to my spiritual life."

(Fair Use Protections Apply.)

http://www.lemetropolecafe.comI haven't been able to access this site for two days now. Is it being subjected to a span attack?? anyone else able to get through? Also I have the same problem trying to email Murphy's webmaster gbarnes@unicomp.org, can't get through.

grateful for a reply.
Goldfan

re my previous 330373, sorry, make that gbarnes@unicomp.net
goldfan

The future of American
liberty rests in the hands of young people more familiar with the "Three Stooges" than the
three branches of government. According to a 1998 Luntz Research survey, 59 percent of
13- to 17-year-olds identified Moe, Larry and Curly while only 41 percent correctly cited the
legislative, executive and judicial branches.

As America celebrates 224 years of independence, one wonders if this nation's citizens are
equipped to defend their freedoms against the state's natural penchant for mischief. The
evidence should make you drop your hamburger.

The National Constitution Center interviewed 1,000 adults and found that 24 percent cannot
name a single right guaranteed by the First Amendment.

Only 6 percent can cite freedoms of speech, press, assembly and religion. Fifty-two percent
do not know the Senate has 100 members. One in six believes the Constitution created a
Christian nation.

Even well-educated adults seem confused about America's experiment in limited
self-government. The Rev. Joan Brown Campbell of the National Council of Churches
explained during the Elian Gonzalez saga that Juan Miguel Gonzalez planned "to simply ask
now that the attorney general issue a court order and that the boy be returned immediately to
him." Neither Campbell nor Brian Knowlton's April 13 International Herald Tribune story
observed that attorneys general may not issue court orders any more than judges may
prosecute suspects.

Indeed, no matter what people wished for Elian, one likely reason that two-thirds of Americans
applauded his abduction by a federal SWAT team is that they did not grasp the case's basic
legalities. The Justice Department should have secured a court order to transfer Elian from
his great-uncle to his father. Instead, Justice relied on a fraudulent search warrant that falsely
called Elian "an illegal alien" and "a concealed person," presumably hidden atop Lazaro
Gonzalez's backyard jungle gym.

Unaware of what the Constitution entails, affluent and disengaged Americans seem rather
comfortable with a kind of elective monarchy.

Every four years, they pick a king who governs largely as he wishes.

Members of Congress - like an American House of Lords - breezily conduct their own affairs.
The two divisions of the royal family occasionally cooperate, usually - but not always - within
the law.

Every other November, Americans decide which among them may keep their orbs and
scepters and continue ruling at their whim.

In August 1993, for instance, a Democratic Congress approved Bill Clinton's proposed hikes
in top income and estate tax rates retroactive to Jan. 1, 1993, despite the Constitution's
explicit instruction that "No Bill of Attainder or ex post facto Law shall be passed." Indeed,
Clinton's measure actually raised taxes on moneys earned during the final days of the Bush
Administration, before Clinton's inauguration!

Although the Constitution unambiguously states: "The Congress shall have the Power to lay
and collect Taxes," the Federal Communications Commission in 1998 imposed the $2.25
billion-per-year "Gore Tax" on telephones. Worse yet, the FCC forbids phone bills from
separately identifying this roughly 5 percent telephone tax as a tax, never mind the phone
companies' First Amendment freedom to communicate with their customers as they like.

Congress voted last July 15 to accept a 3.4 percent salary increase, effective Jan. 1,
regardless of the 27th Amendment's requirement that compensation changes commence
after "an election of Representatives shall have intervened." Lawmakers feathered their beds
by dubbing this unconstitutional pay hike a "cost-of-living adjustment." The media and
masses snored right through this shakedown.

America's public cluelessness begins in schools that teach little about English and the
sciences and less about government. Sen. Joseph Lieberman, D-Conn., joined members of
the American Council of Trustees and Alumni on June 27 to call on "educators at all levels to
redouble their efforts to bolster our children's knowledge of U.S. history and help us restore
the vitality of our civic memory." A major overhaul of America's classrooms - through charter
schools, vouchers or total privatization - would boost the odds that citizens will learn why this
country is so special and how to keep it that way.

Meanwhile, Americans would be wise to heed the man who penned the Declaration of
Independence on July 4, 1776. "If a nation expects to be ignorant and free," Thomas Jefferson
said, "it expects what never was and never will be."

New York commentator Deroy Murdock is a Senior Fellow with the Atlas Economic
Research Foundation in Fairfax, Va.

(Fair Use For Educational/Research Purposes Only!)

I just checked the Cafe and its working. I cant stay online due to my wife's mom having a by-pass this morning. Waiting for news. There is a new post by James Turk . I have not read it yet. Need to get off computer to keep phone line open.

$hifty :)

Actor Walter Matthau Dies at 79

By Bob Thomas
Associated Press Writer
Saturday, July 1, 2000; 9:43 a.m. EDT

SANTA MONICA, Calif. �� Walter Matthau, the foghorn-voiced movie
villain who became a master of crotchety comedy with his Oscar-winning
"The Fortune Cookie" and followed with "The Odd Couple," "Grumpy
Old Men" and many other hits, died Saturday morning of a heart attack.
He was 79.

Matthau was pronounced dead at 1:42 a.m., shortly after being brought
into St. John's Health Center in Santa Monica, said hospital
spokeswoman Lindi Funston.

Often cast as a would-be con man foiled by life's travails, Matthau
bellowed complaints against his tormentors and moved his lean, 6-foot-3
frame in surprising ways.

Said his frequent costar, Jack Lemmon: "Walter walks like a child's
windup toy.

Matthau's performance as the shyster brother-in-law of Lemmon in "The
Fortune Cookie" won him the Academy Award as best supporting actor
of 1966. He was twice nominated for best actor: as the cantankerous
oldster in "Kotch," 1971 (directed by Lemmon); and as the feuding
vaudeville partner of George Burns in "The Sunshine Boys," 1975.

"The Odd Couple" provided the role that established Matthau's stardom.
In 1965 he appeared in New York as the slobby sportswriter Oscar
Madison in Neil Simon's play. Art Carney was the fastidious
photographer, Felix Unger, who shared an apartment with Madison after
both had been divorced.

Matthau repeated the role in the 1968 film, with Lemmon as Felix. They
reprised their roles 30 years later in the 1998 film "Odd Couple II."

"Every actor looks all his life for a part that will combine his talents with his
personality," Matthau told Time magazine in 1971. "'The Odd Couple'
was mine. That was the plutonium I needed. It all started happening after
that."

The actor could be as whimsically eccentric in interviews as he was on the
screen. Reporters had to exercise caution in separating fact from his flights
of fancy.

In responding to a form for Current Biography, he reported that his father
had been an Eastern Orthodox priest in czarist Russia who ran afoul with
church authorities by preaching the infallibility of the pope. His father was
actually a Kiev pedlar.

Matthau declared that he had married the former Carol
Wellington-Smythe Marcus. His wife was really Carol Marcus, who had
been twice married to playwright William Saroyan.

"That's my defense mechanism against pompous and ludicrous questions,"
Matthau explained. When he filled out his Social Security form in 1937, he
listed his middle name as Foghorn. He never corrected it.

Some of the facts about the actor's early life seem accurate. He was born
Walter Matuchanskayasky on Oct. 1, 1920, in New York City to
impoverished Russian-Jewish immigrants.

The father left home when Walter was 3. Walter and his older brother,
Henry, lived with their mother, a garment worker, in a series of cold water
flats on the lower East Side.

Young Walter showed a dramatic bent early, reading Shakespeare at 7
and reciting poems in school assemblies at 8. He was introduced to
Yiddish plays at 11, when he sold soft drinks at 2nd Avenue theaters. He
made occasional appearances onstage at 50 cents a performance.

He was already 6 feet tall at 10 and weighed 90 pounds. "When I drank
cherry soda, I looked like a thermometer," he once cracked.

Graduating from Seward Park High School during the Depression, he
took government jobs � as a forester in Montana, gym instructor for the
WPA, boxing coach for policemen. In World War II, he enlisted in the
Army Air Corps and served as radio cryptographer in a heavy bomber
unit in Europe.

Matthau ended the war a sergeant with six battle stars and a fistful of
money from poker winnings. Legends of his gambling followed him
throughout his life. While making a TV series in Florida before his movie
stardom, he lost $183,000 betting on spring-training baseball games.

The actor himself made no effort to quash the legends and even
contributed to them. In middle age he estimated his lifetime gambling
losses at $5 million.

After release from the Air Corps in October 1945, Matthau enrolled in
the dramatic workshop at New York's New School. Among his fellow
students: Gene Saks, Rod Steiger, Harry Guardino, Tony Curtis. He
stayed three years, living on the GI Bill and playing in regional stock during
the summer.

Matthau's first Broadway role came at the age of 28 when he was hired as
understudy for the role of an 83-year-old English bishop in "Anne of the
Thousand Days," starring Rex Harrison.

When the aged English actor playing the role became ill, Matthau went
onstage without a rehearsal. He liked to tell the story of how the surprised
Harrison looked at him and uttered an expletive. Matthau related: "People
in the audience began muttering to each other: 'Did he say "Oh, spit!"?'"

A series of flop plays followed, then Matthau hit a lucky streak with "Will
Success Spoil Rock Hunter?," "Once More with Feeling" and "A Shot in
the Dark." Hollywood took notice.

His first film, "The Kentuckian" starring and directed by Burt Lancaster in
1955, cast him as a villain, and more heavy roles followed. Among the
early films: "King Creole" (Elvis Presley), "A Face in the Crowd" (Andy
Griffith), "Lonely Are the Brave" (Kirk Douglas), "Charade" (Cary Grant,
Audrey Hepburn).

He also appeared on dramatic TV shows such as "Playhouse 90" and
"DuPont Show of the Week," and starred on the short-lived series
"Tallahassee 7000."

"The Odd Couple" and "The Fortune Cookie" elevated Matthau to
stardom, and he enjoyed a wide variety of roles for more than 30 years.
He appeared in action thrillers such as "The Taking of Pelham One Two
Three" and "The Laughing Policeman," and portrayed a U.S. Supreme
Court justice in "First Monday in October." He even did a musical, "Hello
Dolly!" costarring with Barbra Streisand, with whom he publicly feuded.

He was always identified with comedy, something that rankled him.

"When people come up to me and say, 'Aren't you that comedian who's in
the movies?' I want to throw up," he once complained. "I throw up a lot."

Matthau was often teamed with Lemmon, always as adversaries though
they were best friends offscreen. Their films included: "The Front Page,"
"Buddy Buddy," "Grumpier Old Men," "Out to Sea."

Among Matthau's other films: "Cactus Flower," "Plaza Suite," "Pete 'n'
Tilly," "Casey's Shadow," "California Suite," "Little Miss Marker," "I
Ought to Be in Pictures," "Pirates," "Dennis the Menace."

He was most recently on screen with Meg Ryan, Diane Keaton and Lisa
Kudrow in movie "Hanging Up," released in February.

Matthau was married to Grace Geraldine Johnson from 1948 until their
divorce in 1958. They had two children, David and Jenny. He married
Carol Marcus in 1959, and they had one son, Charles, who became a
filmmaker and directed his father in "The Grass Harp" in 1996.

The actor survived several serious health setbacks during his career. While
making "The Fortune Cookie" in 1966, he suffered a serious heart attack.
His doctor attributed it to smoking three packs a day and constant worry
about gambling and told him to give up both. Matthau stopped smoking.

In 1976, he underwent heart bypass surgery. After working in freezing
Minnesota weather for "Grumpy Old Men" in 1993, he was hospitalized
for double pneumonia. In December 1995 he had a colon tumor removed;
it tested benign.

He was also hospitalized in May 1999 for more than two months after
another bout with pneumonia.

Matthau attributed his various illnesses to his eating habits: "If you eat only
celery and lettuce, you won't get sick.... I like celery and lettuce, but I like
it with pickles, relish, corned beef, potatoes, peas. And I like Eskimo
Pies, vanilla ice cream with chocolate covering."

(A Great Loss! And Fair Use Protections Apply.)

I would love to tell more but alas, the "rules". If you were to find the link to Harmony Mines webpage there is another link there. Clues only lest I find myself deprived of the fellowship of my peers. I fear I may already be in transgression. If so, forgive my impertinance Michael.

1. Why has the word "inflation" become confusing? What are the
results of this confusion?

2. What did Charles DeGaulle mean by "extravagant privilege?
What's another little-used word for it? What would happen if
"the privilege" were exercized world-wide?

3. Did markets and the people choose paper money over gold? If
not, who did?

4. Does government/Federal Reserve monetary control serve the
common good?

5. Is there enough gold for the world to go back on the gold
standard?

6. Is gold too expensive to be efficient for use as money?

See how your answers to these questions stack-up against Ludwig
von Mises, the esteemed founder of the Austrian School of
Economics. WARNING: Many of the "answers" von Mises gives are
NOT multiple choice. You may have to engage your mental gears.

I'm going to post Mises' quotes (with a bit of commentary on a
couple of them) one at a time at irregular intervals over the
next few days, so tune in often!

Regards,
Journeyman

No problemo...I thought MK was offering them. If not, maybe he should.

As an aside, there was a little known band, Osa Bisa, I think, in the early '70s that used the Pachiderm on their album covers. The ears where so big as to allow them to fly. Incredible art work.

A good von Mises website..

Ludwig von Mises Papers Discovered in Moscow

In March 1938, the Nazis occupied Austria. They broke into the apartment of Ludwig von Mises,
who was away teaching in Geneva. The Nazis took all the papers and correspondence of this
Austrian economist they considered their most important intellectual enemy. At the end of the war,
the communists confiscated the papers (38 boxes, 20,000 items) and transported them to Moscow.
Now, more than 50 years later, the papers were discovered by 2 researchers in a secret Moscow
archive.

At a time when Socialism was the rage in Europe (1920s), Mises was its most vehement critic. In his
much talked about book, Socialism, Mises exposed socialism as a utopian scheme that is illogical,
uneconomic, and unworkable at its core. Because of his views, he was feared by European leaders
and was consequently denied an academic post at a major university. In 1940, he sought refuge in
the U.S. where he continued to write and teach until his death at age 88 in 1973.

Mises, the most famous economist of the Austrian School, was passionately committed
to freedom and to capitalism. He never stopped his fight against socialism, or any sort
of government intervention, which he concluded was unproductive, unstable and would
only lead to more government intervention.



"Ludwig von Mises did more to spread the fundamental ideas of free markets
than any other individual." -- Milton Friedman, Nobel Laureate


A champion of freedom, private property and free markets, Ludwig von Mises is
author to 25 books and over 250 articles, including his masterpieces: Human Action,
Socialism, Planned Chaos and The Theory of Money and Credit.

To find out more about Ludwig von Mises, contact The Ludwig von Mises Insitute
in Auburn, AL or visit their web site at www.mises.org, or email them at:
lvmises@mises.org.

I still like to peruse Kitco, mostly for humor content, and today's posts on gold leasing are hysterical.

Now it seems Disney and Strat have come up with a methodology for Central Banks and Bullion Banks to make money in the gold market WITHOUT any gold leaving the CB vaults. Moreover, they assure us that this methodology is correct because bullion banker "expert", Lenny Kaplan attests to its validity. Yes, that's Lenny Kaplan, the very same man who periodically posts @Kitco to tell everyone that gold is no more than a mere industrial metal commodity today (yet assures us that he is just a trader with no negative bias toward gold???).

According to Diz and Strat, it seems that, in order to earn a whopping 1% on their gold reserves, CB's are happy to BUY gold (on paper) at spot price around $290 (a helluva lot of money to put up in order to earn a mere 1% ROI), thus allowing the BB's to earn 6%, while the CB's never part with a single ounce of gold through the entire process.

DUUUUH? So how does the 1500 ton annual global gold deficit get filled if the CB's are engaging in mere paper transactions without gold leaving their vaults????

Never a day goes by where gold investors don't receive healthy doses of negative gold propaganda from both gold shorts and plain simple idiots.

Still I enjoyed the laugh.

Thanks

F*

http://www.SelectSectors.com/wavelet.gif All componets are pointing Up!
Have a GREAT 4'th

When the topic of Harmony's own branded 10 tola (3-3/4 oz.) gold bars was brought up at the forum a couple months ago, Michael said at that time that if you good people expressed an interest or desire in acquiring some Harmony gold for your portfolios then Centennial would look into tapping into the supply line. It might be helpful if anyone with a serious potential interest would let us know (e-mail reaches me here at The Tower if you send it to the sitemaster's address listed at the top of the forum).

This situation is very much like the one in which the Bundesbank recently announced plans to mint one million 11.8 gram one-mark gold coins next year as part of a program to foster "monetary and currency stability consciousness" among the general public, according to the Bundesbank's press release. Based upon clientele demand, Centennial will look into offering these coins if they can in fact be had in the U.S.

I, for one, have an interest in both.

Nasdaq 3966.11 + Dow 10,447.89 = 14,414.00 divide by 2 = 7,207.00 Ponzi

Up 81.96 ponzi points from last weeks close.

$hifty

http://www.usagold.com/hall/hallfame2.htmlORO, sorry for the poor continuity in my attempt to engage you in discussion regarding some of your comments. Over two weeks ago I had asked you to more clearly define the meaning of the lie that governments and banks sell to the public as stated in your latest Hall of Fame entry, and only now am I getting around to this intended follow up. I hate to come across as being nit-picky, but we have so thoroughly covered the fundamentals, discussion of nuances and details are seemingly all that's left to us.

As it is, I have misgivings about the applicability of this "selling a lie" notion of yours -- while at the same time I do certainly acknowledge that it makes for good copy ("sex appeal") here at a forum of gold advocates such as myself. As a reminder, you said, "The public has been sold both the fiduciary gold and the fiat debt money as supposedly workable monetary systems. Governments and banks know this is not the case." Unfortunately, in my specific case, this now falls on deaf ears. I have for a long enough time in years past beaten my head against the wall trying (in vain) to "expose the fraud" of paper money, and yet the unavoidable and "inconvenient" truth of the matter was that the relatively smooth functioning of the marketplace in modern days has proven this position to be wrong. Let's face it--every real Gold advocate would call for the immediate collapse of each and every paper currency, and must admit consternation or else claim some form of sorcery from the "powers that be" with each passing day that paper currencies continue to function. I used to be among this crowd. (I will offer some more posts on this topic later.)

This is not to say that paper currencies are as good as Gold. Far from it. But as I look around with untainted eye, I fail to see the masses that are accepting paper dollars against their will. To the contrary, most people would love to have many more of them. And as long as that is the case, the "lie" you propose to exist seems to have given way to something else. It would seem that each passing day for several decades would serve as testimony that "fiduciary gold and fiat debt money as supposedly workable monetary systems" have not only been "workable systems," but must in fact be declared as incredible successes in the minds of us sceptical Gold advocates in particular. [We see this as just cause for your own reevlauation, ORO, as you suggested in your HoF post--"Quite frankly, the detachment of gold from the currencies would eliminate the benefit of having them. Any attempt to inflate would destroy the currency values."] As it is, and as the world seems to function in modern times, I had to change the lenses through which I viewed the world in order to make sense of it all and to proceed forward with anything approaching a sane and rational existence. To insist daily that the Sun cannot workably rise in the East, contrary to daily observations, is to surely get oneself committed to an institution. Perhaps your own error is in thinking that a "workable" system has to be the BEST system, which it decidedly does not have to be, and currently is not.

To be sure, some "modern" currency systems have had better track records than others, but even the worst among them have worked, and the people using such systems quickly adapt to either use it to their advantage or else make the best of what it has to offer. But of course, you would have me believe instead that the following dictum is at work: "You can fool all of the people some of the time, and you can fool some of the people all of the time--and that is usually good enough." My personal view of the situation is that there is no "selling" and no outright "lying." Instead, we have various systems in use throughout the world, and as with any diverse population of people, we have diverse levels of understanding with regard to the nature of their currency system and its relationship to real wealth. Those with regular exposure to the most unstable of workable currency systems have had little trouble seeing things for what they are. Ask them if they are being "lied" to, and the answer will surely be, "No." Similarly, we are not being lied to in America. It's just that the general level of optimism or contentment regarding the "infallible dollar" is perilously high and firmly entrenched in the minds of many who would do well to recognize the potential for a downside. With such awareness comes the natural desire for individuals to diversify into Gold as their form of wealth savings. Herein rests Gold's untapped potential for an astounding rise in both price and relative value.

There were two other items I wanted to raise about your post. You wrote--"1. Gold IS THE MONEY: The core of the financial system is gold." Here I beg to differ. I would suggest that the core of the financial system is The Effort to Service Debts. As for what Gold is the "core" of, Gold is the core of the Wealth Universe--of all items it is most reliably accepted in trade at all places at all times for all things; it can even be swapped for any currency as needed. Hence, its value as savings.

You continued your point with the comments--"The profits of trade are placed in rarities and gold. Like all profit motive operations (the only motive) the 100% of the enterprise exists because of the expected 15%-20% gross margin, the gross margin is only important because it provides the profit which can be invested or stored. Investments earn a return, gold is what is returned and not reinvested. Traditionally, a 3% net profit is all that is necessary, thus 97% of trade can be done without gold, but the only justification for the 97% is the 3% that will be put into gold."

Again, I must beg to differ. To see otherwise, we need only to look at the wide world filled with practical experience to the contrary. How many millions of people are out there engaged in various enterprises with one motive or another who have absolutely never given any thought to Gold in their entire lives? Not only do I question the Gold motivation, I also question the reliability of the 3% net profit business. Whereas you say these "profits of trade are placed in rarities and gold," I would suggest that the motivation and profits of trade are represented by getting something ELSE that you need as a byproduct of your specialization to produce very efficiently more items of a single kind than you personally have any need for. That's what division of labor is all about. Seen this way, the notion of "profit" flys. We could conceivably all be content with "Break Even," getting precisely an equal value in return for our effort. We toil for shelter, food, and clothing as the "profit" (motive, actually) for our single-purpose efforts that modern division of labor and commerce allows. The Profit comes in where we toil and exchange in excess of our immediate personal needs. This becomes the Wealth that we accumulate. And where food spoils and storage of goods are problemmatic, we turn to Gold...or else many of our peers take their currency and turn to speculation or various investment schemes to, as they say in Vegas, "Let it ride!" Good luck. There's nothing wrong with that as long as they are fully aware that they are gambling with the product of their past efforts.

The second item I wanted to question you about was your comments regarding hyperinflation. You said rising prices causes less currency to be held in banks, leading to currency shortages, and with rising prices ultimately leading to loan defaults, whereby, "Defaults destroy bank assets and the banks must sell assets to obtain cash with which to settle. The defaulted loans are no longer a source of demand for currency, and so the value of the currency erodes further."

How do you rectify the logic and the outcome you've established in that example of defaults with what can be reasonably expected to occur with the value of Gold upon a similar default on Gold loans in the bullion banking sector? I'm sure we are all in agreement that the value of Gold would increase, yet you say the parallel with currency has an opposite effect. Are you neglecting the bank's own obligation to cover the defaulted loan in the first (currency) example?

And on the topic of maintaining similar logic between one banking system and another, Bill Murphy said upon his return from Paris --"There is much at stake. If the buildup in [Gold] derivatives is as significant as we think it is and the gold loans are as large as we think they are, the gold price will soar." While I don't question that outcome for Gold, why can't it also be argued under the same driving principles that "if the buildup in DOLLAR derivatives is as significant as we all know they are, and the DOLLAR loans are as massive as we know they are, then the DOLLAR will head for the stars."?

Just an effort to stimulate some additional quality thinking.

Gold. Get you some. ---Aristotle

Before he started travelling, TG told us that, upon his return, the gold trail would be red hot.
I would like to know when TG will return.

DEMOCRACY--I WANT--THEREFORE I'M ENTITLED


Common sense, as well as experience tells us that:
# 1, everything, including government, must have a source, or creator. # 2, the created is forever subservient to
the creator. # 3, the human race, created in the likeness and after the image of a creator capable of self government and self determination, inherited these capabilities, and thus acquired the attendant responsibilities.

To Thomas Jefferson, the author of the Declaration of Independence, the absence of individual right to life, liberty and property, relegated birth to the status of an exercise in futility, he concluded therefore, that they must have been an endowment of our Creator.

The protection of these endowments became the basis of a radically new form of constitutional government. As an interpretive aid, our nations founders later spelled out
the philosophy behind this document in an addendum which came to be known as the Bill of Rights. However, because circumstances of the time precluded its establishment, the
complete government envisioned in the Declaration of Independence is still in our future.

The caterpillar must die, that the butterfly may emerge, and so it is with government. The human race, as beings created in the image of our creator, at any given time, are limited only by the scope of knowledge available at that particular time. We are on an endless and unlimited journey, and, at this time, neither perfect science, nor, perfect government is possible. As our level of knowledge multiples, so also does our options; in the interim, existing knowledge serves to meet the challenges of a particular time, place, and circumstances, in an ever changing present.

While the concept of self determination was, in my opinion, revealed by inspiration of God, the government required to fulfill this Godly mission was not miraculously created. It was to be a work in progress, constructed bit by bit, involving billions of people, with no time restraints, until it extended world wide. Though in constant, evolutionary flux, at any given time, the government required for the next step down the path will have evolved sufficiently to meet the continuing challenge.

As the government given birth by our nations founders comes of age, and gradually sheds its democratic cloak, mankind will take a giant step down the road of government evolution, toward a more perfect government.

But a democracy is the perfect government, our President glorifies it, our preachers create surmons around it, our teachers proclaim it in grade school, university degrees are bestowed upon it, and even Tom Brokaw confirms it from my television.

O.K, if they are right, then why was it, rather than the republican form of government, not guaranteed in our Constitution? I'll ask one of them: Mr. Madison,
we know that it was considered at the convention, so why didn't you just create a government of majority rule? His reply per the Federalist Papers: Democracies have ever
been spectacles of turbulence and contention and have been found incompatible with personal security or the rights of property, and have in general, been as short in their lives as they have been violent in their deaths."

This statement, based upon a long knowledge of history, was short and to the point; words of wisdom which have been with us for over two hundred years; an admonition which we apparently do not believe worth pondering, and certainly not worth following, as we continue to build "our democracy," and wonder why our nation is in turmoil.

As current conditions continue to validate Mr. Madison critique of democratic government, perhaps an analysis of our brief experience with it will tell us why he has
proven so successful a prophet. This analysis begins with (a.) the Constitutional guarantee of a republican form of government to every state; (b.) a determination of exactly what is comprised by the term" republican," and (c.) a reference to the first ten amendments to the Constitution.

The basis of our government is not the Constitution, it is the Declaration of Independence. According to this document, the protection of individual rights is the purpose of government, the Constitution was written to accomplish this task.

The amendments, known as the Bill of Rights, offers an absolutely infallible platform from which to determine exactly the definition accorded the term "republican
form of government" by the "experts" themselves, the founders of our nation. We find: Every one of these amendments takes power from the mass, and deposits it with the individual. They build upon the standards set forth by The Declaration of Independence which recognizes the existence of a creator and further states the purpose
of government to be the security of the endowment of rights, to life, liberty and the pursuit of happiness.

Because we are created individually, not in mass, these
endowments originate at the individual level, and apply to all mankind at this level. Just remember, they are not gifts, they are required elements for self determining
individuals, the purpose for which were created.

These principles are borne out by the Declaration of Independence, which states, that any government created to secure these endowed rights, is to be established, not by
the creator to rule the created individual, but by the created to govern themselves, deriving its just power from the consent of the governed. Because the endowments of
life, liberty and the pursuit of happiness, pertain to the created individual, the term, "governed", is imbodied, not in the mass, but, in full measure within each individual.
* This was considered blaspheme by the Christian Church of the time. They taught that government was a creation of God; they performed Coronations of Royalty,(and still do) and decreed that the individual was obligated to submit to those in government who had the "rule" over them.*

According to the government our founders selected, this consent, is delegated,not as surrendered rights, but as authority, to citizen representatives, chosen by majority ballot, who then comprise the government; thus, the will of the majority extends only to the selection of those hired to serve as our representatives. They then derive their just authority as well as limitations from their employment contract, the Constitution, (but only after taking an oath of obedience to that document).

Because individual rights existed prior to the Constitution the term Constitutional Rights is a misnomer, the individual citizen enjoys Prior Rights, Constitutionally guaranteed, there is a vast difference.

The only rights created by the Constitution, were those necessary for the function of government, which were then delegated to the representatives as authority. They become enhanced rights when exercised within the parameters set forth by the Constitution, in which case, those enumerated rights, do indeed take precedence over individual rights, voluntarily subjugated to government.

The responsibility of hiring those suited to the task, including education and character, rest with us, the governed. If, through usurped authority, or for other reasons, the government becomes detrimental to the welfare of the individual, the duty, to either alter or abolish it, and the establishment of another, which in our opinion, is suited to the task, also belongs to we, the governed:
Per The Declaration of Independence.

In essence, we are the governors--Governor.

Under this system, government is entitled only to the authority possessed by each individual citizen, that which doesn't exist individually cannot be delegated massively:
translation: If I personally cannot take your home, car, or gun, then neither I nor you possess anything to delegate to our representative. (1,000,000 x 0 equals 0)

This barrier to majority rule, represents the stabilizing factor necessary to fulfill the mission of a just, thus peaceful, governed society. Are these conclusions borne out
by actions of our nations founders? Yes! As previously noted, the first nine amendments to the Constitution were specifically written to deprive the government of rights, while the tenth was intended as unambiguous insurance against "interpretive" license.

Do circumstances arise within a Republic in which the welfare of the mass takes precedence? Yes. And they are provided for within the Constitution.

A COMPARISON TO WHAT WE NOW HAVE

Mr. Madison's statement recognizes the folly, and anticipates the answers to questions that cut to the very heart of direct democracy. As an example: In a democratic
nation, what percentage of the electorate should be required to empower the government to confiscate Private property? Private Industry? Private land? In the final analysis does
the initial figure really matter, it can always be changed by the will of the majority, right?

Our founding fathers were also aware of the fact, that the basic principles of democracy treat all created wealth as common wealth, to be used at the sole discretion of
those currently in power. Representatives of government thus must find the means of harvesting the wealth, as well as determining the amount to which each citizen is entitled.

It takes no genius to associate money spent at the right time and right place, and re-election. Ad the: "I'll vote for your pork if you vote for mine", and the "yes I know it
violates the Constitution but this is an emergency", plus the outright prostitution of the office to special interest, and you have four, of an endless list of causes, for the failure of the democratic form of government

Authority bestowed to selected individuals through the deferral of rights, is itself mitigated by restrictions, natural limitations, and common sense application, to be a given. Because self government of the mass must derive from self governing individuals, behavior, if abhorrent to the
individual citizen must also remain abhorrent to the citizen representative. Society, merely for convenience or desire, cannot exempt the mass, nor those formulating and enforcing the law, from that law, without also exempting the individual.

When was the last time any member of our "democratic" government was subjected to this standard? The last time I checked, it was being run according to "polls" taken to determine what exactly the citizens will allow the representatives, including the president, to get away with. The list included, but was not limited too, perjury, conflict of interest, coercion, witness tampering, bribery, breach of national security, immoral conduct, sexual harassment and influence peddling at every level and department of government.

The necessity of enforcing any law, although approved by the majority, with the effect of taking life, or appropriating the value of private property without just
compensation, precludes its universal acceptance. Regardless of the "democratic " approval percentage, because the law derives from authority which doesn't exist, it becomes a criminal act by society, compounded by enforcement procedures.

Any procedure, purposely designed to ensure the legality of the taking of life or property by individuals or society, is not only unlawful, but rather, by institutionalizing a precedent, serves to compound the act. After all the I's have been dotted, T's crossed, and the guns of " law enforcement " used to finalize the proceedings--theft remains theft--society's credibility and thus its viability is compromised--the individual assumes the same " might
makes right " attitude, and the rush toward oblivion accelerates. The events in Waco by government and the bombing in Oklahoma City by individuals are very vivid examples.

In a democracy the power belongs to those in the position to influence public opinion, the press in effect become the "King Makers". Is there any doubt that in a society which gets most of its news from television, that we are being "educated" as what to think, and what we want.

We are being offered our " choice " of purchased, packaged,
and merchandised politicians. According to our vote, or lack thereof, one of these "chosen " few becomes a part of our "leadership," and they in turn are influenced by the
polls to " give " us what we have been educated to won't, even if it requires taking it from someone else--this is "capitalist democracy" in action, the reality of majority rule.

Even in its limited form, it has crippled our government's ability to govern, as the escalating chaos,
violence, and barbarity attest.

Because trust is the glue which binds a free society. Just as society enjoys the right to expect the individual to honor the trust invested in them, the individual enjoys the
reciprocal right of being granted trust by society, until they, by their actions, prove unworthy of that trust. If the penalty for individual breach of trust is the loss of respect by society, then the opposite is also true. If failure to exercise individual self government constitutes a crime against society, necessarily resulting in the loss of individual sovereignty, then the stripping of individual rights without just cause or due process, constitutes a criminal act by society. Consequently, just as a criminal act by the individual results in status transformation, the same is true as it relates to society. As surely as the
advantages of obeying the rules of society is destroyed, chaos replaces tranquillity

One of the laws of physics states that for every action there is and equal and opposite reaction. This same principle applies to society. Every unlawful act, whether by the individual or government representative is replete with consequences. If the individual perpetrating the crime is not required to suffer the full consequences of his or her actions, then society picks up the tab. Every time some judge puts another criminal back into our midst, he is transferring the consequences of the crime, to the society.
How much more turmoil must we subject ourselves too before we recognize this fact? How much farther must our society deteriorate before we began to understand that
every time we utilize the "democratic shield" to shelter government representatives from the consequences of their actions, we tear another hole in the fabric of our society? How can we condemn our children for their lack of respect for the common laws of the land, while displaying our own contempt for these laws by disregarding them when perpetrated by "government"?

James Madison made the statement at the birth of this nation that: "This Constitution is suitable for governing a moral society, and is wholly inadaquate to govern any other." Again Mr. Madison has proven to be a very accurate prophet. Criminal activity within our society has become so prevasive, and our criminal justice system so complex and expensive, that we must now make "deals" with the most vile of criminals because we can no longer afford to prosecute them, nor to adaquately incarcerate those which we do manage to convict.

And Mr. Madisons Constitution? Well our judges just interpret it to accomodate the current situation and prevailing form of government. Even as our federal government grows progressively more powerful and exponentially more corrupt, a few of us were still
alarmed by an utterance of our "Vice" President "that he is bound by no controlling legal authority," however, most of our fellow citizens appear to have recognized and accepted this statement of truth, as old "news."

Unfortunately this truth is applicable to our entire federal government. No one in authority, is willing to hold another in authority, responsible for their conduct, a condition
which elicits and interesting question: In a nation whose welfare is predicated upon self government, if individuals elected to serve in government are devoid of this attribute,
and, additionally recognizes no external controls over his or her conduct, doesn't it follow that this conduct becomes a conduit, by which the poison of lawlessness is transmitted to the whole of society?
The culprit we are told is an outmoded Constitution which must be constantly re-interpreted. To a degree this is true, the Constitution was far from perfect, The flawed rendering of the term "all men", as contained in the
Declaration of Independence, in the restrictive gender connotation, rather than "mankind" the inclusive species interpretation cost us a war plus 140 years of evolution. This hypocritical failure to implement through government, the previously stated intent of the creator, that every individual, regardless of race, creed, color or gender, was created with the ability, and thus the responsibility, of self determination, guaranteed the war that was to follow 70 years later, as well as its result.

Until we are all entirely free to reach for the endowment of our creator, the brass ring of peace, will remain just out of reach of us all.

THE CATIPILLER IS DYING BEFORE OUR EYES, LETS PRAY FOR A SUCCESSFUL BIRTH OF THE BUTTERFLY!
Still perplexed

Perplexed,
that was certainly one of the finest offerings I've seen at the forum, whether it be on or off the topic of Gold. Your post IS Gold! Seeing your political philosophy laid bare as such, I am even more pleased to have seen you weigh in during the past as a ***supporter*** of the FreeGold scenario.

All my best to you on this Independence Day weekend.

Gold. Get you some. ---Aristotle

http://www.mises.org/humanaction.asp
Question 1: Why has the word "inflation" become confusing? What
are the results of this confusion?

The semantic revolution which is one of the
characteristic features of our day has also changed the
traditional connotation of the terms inflation and
deflation. What many people today call inflation or
deflation is no longer the great increase or decrease
in the supply of money, but its inexorable
consequences, the general tendency toward a rise or a
fall in commodity prices and wage rates. This
innovation is by no means harmless. It plays an
important role in fomenting the popular tendencies
toward inflationism.
+
First of all there is no longer any term available
to signify what inflation used to signify. It is
impossible to fight a policy which you cannot name.
Statesmen and writers no longer have the opportunity of
resorting to a terminology accepted and understood by
the public when they want to question the expediency of
issuing huge amounts of additional money. . . .
+
The second mischief is that those engaged in
futile and hopeless attempts to fight the inevitable
consequences of inflation--the rise in prices--are
disguising their endeavors as a fight against
inflation. While merely fighting symptoms, they pretend
to fight the root causes of the evil. Because they do
not comprehend the causal relation between the increase
in the quantity of money on the one hand and the rise
in prices on the other, they practically make things
worse. . . .
+
It is obvious that this new-fangled connotation of
the terms inflation and deflation is utterly confusing
and misleading and must be unconditionally rejected.

-Ludwig von Mises, Human Action A Treatise on Economics, Third
Revised Edition (Chicago, Illinois: Contemporary Books, Inc.
1966), pg. 423 [XVII. INDIRECT EXCHANGE 6. Cash-Induced and
Goods-Induced Changes in Purchasing Power -available also from
http://www.mises.org/humanaction.asp]

Regards,
Journeyman

In case you tuned in late, this post is Mises "answer" to
question 1. of the following six posed in an earlier post:

1. Why has the word "inflation" become confusing? What are the
results of this confusion?

2. What did Charles DeGaulle mean by "extravagant privilege?
What's another little-used word for it? What would happen if
"the privilege" were exercized world-wide?

3. Did markets and the people choose paper money over gold? If
not, who did?

4. Does government/Federal Reserve monetary control serve the
common good?

5. Is there enough gold for the world to go back on the gold
standard?

6. Is gold too expensive to be efficient for use as money?

What the General was referring to, was the privilege which the U.S. and Britain granted to the U.S., of having its paper money (which was at that time fiduciary media, that is to say, notes PAYABLE in gold at one ounce per $35 U.S Dollars) to be considered as prima facie reserves on the books of whatever foreign Central Bank happened to acquire these promissory notes of the Federal Reserve,AS GOOD AS GOLD. The "extravagant privilege" comment referred to the fact that no other country in the world could send its promissory notes abroad, to be used as reserves,in the Central Banks of the World.
This meant that the U.S. could purchase whatever it pleased in the world, with money issued by the Federal Reserve, essentially only promises to pay gold; after purchasing whatever its citizens, corporations, banks, etc could wish to purchase, these purchases were (and still are!) paid only with promises. This "extravagant privilege" could be made a little easier to understand with a simmpler term: "FARMING THE WORLD".
The U.S. Dollar as reserve currency of the world, is the greatest scheme of looting ever devised by the mind of man.
At present, the U.S. is looting the world at the rate of over $400 billion a year (trade deficit), which is the Dollars that go abroad to "pay" for imports to the U.S. And now, of course, the Dollars are no longer redeemable in gold - just papers! So it's an even more "extravagant privilege". (From fiduciary media, to fiat money)
Actually, there is no payment until an equal amount of goods flows from the U.S. to the rest of the world. Until that time, this process is simply tribute collected from a largely willing, because ignorant, world. That's the great U.S. economy, whose experts attempt to show the rest of the world how to do things.
Well, they can't show the rest of the world, because the rest of the world has to take the Dollars as reserves, or else...devaluation, financial collapse, capital flight, political destabilization.
That's the "extravagant privilege". But, what goes around comes around: the result is similar to what happened to the Roman Empire: the looting from the rest of their conquered world displaced working people and destabilized their agriculture, and created masses of idle Romans who had no employment and relied on the imports of wheat (by the Imperial Government) from Egypt to eat. They didn't have T.V. but they had circuses...paid for by the State.
Hope this piece helps someone understand a little more!

Aristotle

First, the workability issue and the apparent performance of the current currency system.
The boom and bust cycles of monetary inflation, at first at the credit level and then at the monetary base level are well known and innate features of debt money. They parallel the gold debt boom and bust cycles that central banks introduced. The latest such cycles were 1913-1929 expansion, 1929-1933 contraction. In the Bretton Woods system it was 1946-1966 expansion, 1967-1971 draw down of reserves, 1971 break. The current cycle in the gold markets is exactly as its predecessors in principle, though many features are not the same. The contraction phase - the deflationary phase of the central bank gold systems is equivalent to the stagflation/hyperinflation phase of the pure debt money systems.

The indirect gold backing of the dollar that FOA and ANOTHER imply and I think exists, is going to collapse in a deflationary manner in the paper gold market, and in a stagflation/hyperinflationary manner in the dollar that has been hitched to gold in paper form. As you noted later in your post, the short covering of dollar derivatives seems absurd. When dollar derivatives collapse, the source of value of the currency - the source of demand "to repay debt", disappears. The derivatives of gold do not CREATE the current demand for gold but serve to displace it and dilute its value as they are CREATED to fill the demand. The two phenomena are exactly opposites of each other.

The funny money systems can survive through periods of 100% annual price inflations - these survival mechanisms are built around indexing to prices - banks offer and demand indexation to the CPI or an equivalent, governments index their bonds, people index their wages, and the construction and composition of the CPI is heavilly scrutinized whenever there is doubt as to its reflection of price levels. The growth of such systems in inflation prone countries removed the benefit to government and banking of inflating the money supply as people form a habit of carrying nominally calculated debt and indexed assets. The people competed with government as to how quickly they spend the funds they don't have yet. The people won the race. Sounds wierd, but that has been my personal experience in such periods.

I will add that when this happens, the government and the banks (usually having been nationalized due to bankruptcy) will attempt to provide a stable substitute system that will retain people's confidence till the next credit expansion causes prices to take off.

While wide popular understanding of what is happening in the currency valuation dynamics of nations with a heavy inflationary tendency does improve substantially, it does not mean that alternatives are understood, nor is it understood that the lack of wild devaluation of paper money purchasing power at one point in time serves as a predictor of it happening later.

The stability of the dollar and the currencies of industrialized nations are primarilly outcomes of the support of the dollar through a few mechanisms that sop up the international dollar supply. The bulk of them are:
1. Dollar debt traps
2. Central bank reserve holdings of dollar assets

Both are deliberate mechanisms. Both have been constructed for the political purposes of sustaining the dollar and the US economy at the expense of Europe and later at the expense of both Europe and dollar debtors. The Bretton Woods concept of backing the dollar with gold so long as no substantial conversion occurs is reproduced faithfully in the current floating rate system with a gold "kicker". Goods from our creditors and from the other debtors back the value of our currency. Just as no gold came out of America when the redemption of dollars into gold occurred, so will the dollars on central bank books and investror's accounts will not buy substantial quantities of goods from the US when "more dollars" will no longer denominate their desired return on investment.

View Yesterday's Discussion.

Solomon Weaver,

Once again, I spent some time online, trying to find out the elusive answer: how much silver is left out there?...

Here are a few of the best online links that I have found that have information about silver. If anyone here finds that these present a compelling case for investing in Silver, I would recommend buying 90% silver coins dated 1964 from our usagold forum host. Ordering is as simple as dialing the phone: (800) 869-5115

http://www.gold-eagle.com/research/butlerndx.html
http://www.gold-eagle.com/silver_section/reports.html

http://www.kitco.com/pda3992.html

http://www.sentex.net/~resource/slvr98-1.htm

http://www.silverinstitute.org/news/pr24may00.html
http://www.gfms.co.uk/html/f_silver.htm

http://www.cpmgroup.com/
http://www.cpmgroup.com/silver.htm
http://www.cpmgroup.com/free.htm
http://www.cpmgroup.com/msimon_auvsag.html

http://www.ajpm.com/pages/why.html

http://goldsheet.simplenet.com/silver.htm

http://www.silverassets.com/assets.htm

http://www.metro.net/cam/#anchor705277
http://www.metro.net/cam/camnewsletter.html
http://www.metro.net/cam/#anchor329194
--silver mining companies listed at the silver page

http://www.hecla-mining.com/
http://www.hecla-mining.com/reserves.html

http://www.apexsilver.com/

http://www.panamericansilver.com/
http://www.panamericansilver.com/market.html
http://www.panamericansilver.com/market/fundamentals.html


The following are interesting quotes from articles written from 1995 to 1998, that specifically mention the dwindling above ground supply of silver:

Keep in mind that Warren Buffet bought his 130 million oz. silver to be shipped to London in 1997, announced in late '97? early 1998?
------------------------------
From:
http://www.cpmgroup.com/msimon_auvsag.html
Total world stocks of silver in bullion and coin form are estimated to have stood around 850 million ounces at the beginning of 1995. By the end of the year they are estimated to have dropped to 700.0 million ounces. This reduction of total silver bullion holdings, to a level equivalent to approximately one years worth of silver use, is one of the subtle changes that occurred in 1995.

The silver market was filled with rumors about one or two large institutional investors 'buying up all of the silver,' but the reality of the matter is that the investment buying in the silver market, throughout 1993 - 1995, has been broad based.

As silver stocks became more scarce over the course of the year, this tightening had an effect on prices. Prices shot higher in April, when the dealers who had been selling New York Comex futures and options had their bluff called. A large volume of Comex call options for May delivery were exercised. With insufficient physical metal available to cover these short positions, dealers had to scramble to cover their positions, pushing prices sharply higher. By early May prices had shot up to an intraday high of $6.22. Later in the year, other incidents reinforced the realization that silver supplies indeed were tight. As discussed earlier, bankers and metal traders were surprised to find that, despite the appearance of large amounts of silver in London vaults in the middle of 1995, the metal was held by investors and did not represent metal available to the market without a significant increase in prices. Silver lease rates also rose sharply in the second half of 1995, for the first time in more than a decade, presenting market participants with yet further evidence that something real had changed in the silver market.
------------------------------
From:
http://www.cpmgroup.com/survey96launch.html
Probably the most important, and most interesting, issue facing the silver market in 1996 and beyond is how much silver remains in inventories, either in bullion or bullion coin form.

I mentioned the 640.5 million ounce decline in inventories over the past six years. It is CPM Group's estimate that by the beginning of 1996 reported and unreported silver inventories worldwide totaled less than 700.0 million ounces. In other words, roughly half of the silver stocks that had been accumulated up to 1990 appears to have been used over the subsequent six years.
------------------------------
From:
http://www.metro.net/cam/#anchor329194
A classic approach is to look at the supply demand fundamentals. According to the CPM 1998 silver survey on page ten, the December 1997 reported and estimated Silver inventory was between 767 and 972 million troy ounces. Government stocks are 167.5 million ounces. The annual shortfall is approximately 200 million ounces. If we use the high figure, then in about five years there is no more silver and again the price reaches toward infinity. Again this is ridiculous, but does indicate the trend. It is most interesting to note that the CPM data indicates that the amount of silver is four times more scarce than gold. Again using the world gold councils figures of four billion ounces of gold above ground. This is interesting that four billion ounces of gold are available at some price and only one billion ounces of silver are available to the market at some price. The most refreshing fact is that the silver inventories are primarily out of government and banking control.

By definition if the electronic money has a good possibility of going to zero, that infers that precious metals have no limit.
------------------------------
From:
http://www.sentex.net/~resource/slvr98-1.htm
...COMEX inventories ... have been dropping to 12 year lows near the end of 1997. These inventories were down 31% on the year as of Oct/1997. The CPM group, as of Dec. 31 1996 has estimated unreported inventories are somewhere between a low of 102M ozs. and a high case scenario of 327M ozs. No matter how you look at things, inventories are getting dangerously low.

------------------------------
My note to myself in July '99, was that there was about 400 million ounces of silver in above ground inventories in the world.

Today, July 2000, the COMEX is down to 100 million ounces;
Warren Buffet has 130 million ounces; And there are about 1450 coin dealers online? My personal experience with coin dealers is that they are comfortable holding $100,000 in silver; at $5.00/oz, that's 20,000 oz. each shop x 1000 = 20 million ounces; relatively insignificant amount, yet might be considered to be held in "strong" hands, ie, not let go if there are limit up days back in New York.

Once again, I suggest to all forum lurkers who still have money to invest to get some actual physical silver before supply runs out completely...

(800) 869-5115 toll free phone

http://www.usagold.comTo Steve H and all patriots everywhere:

The officical position of the US Justice Department is that
the individual US Citizen has absolutely no second amendment rights under the Constitution. It is a right only of the national guard. They are arguing this in court.

Check it out at www.frontpagemag.com

In keeping with the spirit of this position, I hereby dub
the Department of Justice, the Department of Injustice.

Thanks for the link re: Inflation (Prudentbear).

I have been very conscious of the price of 'eggs' while shopping of late and its difficult to find anything that has not increased in cost.

I still get a little lost following the 'paper' aspects of gold (shorts,futures,derivatives, etc) but there is a couple
things I do know for sure.

a) The POO chart from your link (msg 33071) is interesting.
A rough average from 1987-1999, excluding the Gulf War spike
has oil in the $17-$19 range. Oil for 2000 must be averaging
close to $30; global demand dictates this price. The global
economies are firing on all cylinders. As you might say, too
much global money chasing too little oil. So, when does oil
come back down. When economies collapse and not before; barring a left field event, ie. OPEC decides to lower the POO because they feel sorry for us? Right.

b) The company I work for sells hardware. Every office I walk into has a new P3 on each desk, connected to a zillion
gig server. The office has a new phone system, voicemail system, fax, photocopier, cells. etc,etc. All these machines are running on the latest and greatest software. Why? All these systems and sub-systems were upgraded last year (Y2K) and with the money sloshing around last year, it was easy. Second quarter earnings and growth numbers from the hardware/software giants might be interesting.

c) Gold is not far above production cost. Lower POG will bankrupt marginal producers reducing supply rallying gold.
Lower POG stops exploration reducing future supply rallying gold. IMHO, gold less than $225-250 is impossible. Can one buy anything lower than the price to produce it?

The 'crazy canucks' celebrated Canada Day yesterday (133 years young); suffering from some sort of cerebral disorder
today manifested by lingering too long in a tent where the serve a frothy liquid causing one to sing the National Anthem severely off key.

Hope our American friends have a safe and mildly rowdy July 4th.

Canuck.

The difference between gold and fiat's seems to be the eternal tension between Man's successes and Nature's endurance.

My wife and I just had a semi-argument about our recent spending of "too much time" (read: two extra days of my relaxing from driving in Italian traffic) in the lush green Tuscany countryside ("nothing for me to do there") vs. in the cities. "Exactly my preference," say I, remembering the pheasant calls I had learned to recognize.

I had that time to imagine the Roman legions passing through those valleys on their way to maintain the Empire. The city that passed into history is obliterated by another on its site. The countryside remains a much closer replica of itself of 2000 years ago.

The 14 towers of San Gigminiano (survivors of 90 towers at one time) -- built and manned by (90?) warring families just down the street from one another.

Man can cook up some amazing constructs. The power of illusion. The power of agreement. Fiat currency, like gold, is NOT really anyone's liability. But it exists and carries value by mutual agreement and expectation. This could change at ANY moment -- but probably will not vanish overnight. So the only question is when and how. Once we have prepared our golden refuge, we may join others as curious observers to our own species' glorious folly.

Do gold advocates want to strip away all their illusions? All their flawed and self-deceiving agreements? We couldn't if we wanted to. They will do it to themselves, in time. Just not when we think they ought.

Nature created gold, just as it created Man's genetic code, and occasionally Man has to acknowledge Nature's work as more enduring than his own. But "not just yet, please... let us roll the dice/pull the handle/deal the cards just one more time..."

You critique Oro's use of some fairly specific numbers:

(---You continued your point with the comments--"The profits of trade are placed in rarities and gold. Like all profit motive operations (the only motive) the 100% of the enterprise exists because of the expected 15%-20% gross margin, the gross margin is only important because it provides the profit which can be invested or stored. Investments earn a return, gold is what is returned and not reinvested. Traditionally, a 3% net profit is all that is necessary, thus 97% of trade can be done without gold, but the only justification for the 97% is the 3% that will be put into gold.")

I want to speak up for Oro's doing this on several occasions (international debt trap, USD seignorage, etc.) because he helps me put some concrete dimensions to some concepts which until then were largely anecdotal. I think that way, too, and will extrapolate personal numbers from macro situations to frame my thinking, but not to run my business by.

("Hmmm, 40% tax rate plus 8% inflation plus 20% for missing time with my kid and 20% for tiring me out, and finally 20% for my wife's spending the additional: Think I'll go fishing Saturday instead of to the office.") (This facetious example is NOT comparable in seriousness to Oro's efforts. Since I'm in the tax business, I see all the ways that money taxes us, and ask "Where's my take-home?")

What I'm trying to say is I don't take Oro's analysis completely literally ("numerically"?) when he does this. It's beyond "back of the envelope" but it's meant to illustrate and further a discussion, not to present predictive statistics.

In the case of the 3% figure for gold, he gets me thinking about the wealth that passes through generations, mediated by the rise and fall of families, of corporate empires, and has to be re-earned in new lives and new ventures. It is both the insurance against old age and family upheaval, and one fruit of enterprise (which may have ripened alongside many other fruits if we look astutely).

3% also sets a realistic long-term expectation of accumulation in an era when polls reveal that our neighbors and co-workers expect upwards of 25% annual gains on their "savings". Sheeesh!

Two fine minds meeting -- just trying to grease the interface!

http://www.lemetropolecafe.comThis is a quote from today's long and VERY interesting Midas: "Jim Reilly, a Partner at Goldman Sachs and top commodity dog, told a delegate at the FT World Gold Conference that if buyers come in to push up the price of gold to $310 or $320, Goldman Sachs would offer unlimited amounts of gold paper to keep the price from going beyond that point."

OK. Now -- Aristotle, I WILL NOT continue to pester you, so I am throwing this question out to whoever wishes to answer. Who is buying all that paper gold? The middle class scorns gold in any form. Politicians and billionaires are buying physical gold. Goldman Sachs seems confident that it can sell unlimited amounts of their worthless paper, but to whom?

Thank you to anyone who is willing to answer!

http://www.sunspot.net/content/archive/story?section=archive&pagename=story&storyid=1150350216136I'm reading more and more about "hot" stocks going down the
tube, like the one above.

The market bubble is getting popped by too many of these
hot companies now going into bankruptcy.

More conservative investments, like gold, should soon become
beneficiaries.

Michael, I'm thinking about ordering some more gold coins.
(And, my wishes to you for a very pleasant Independence Day
weekend!)

http://www.usagold.com/gildedopinion/bigfloat.html
Questiion 2: What did Charles DeGaulle mean by "extravagant
privilege? What's another little-used word for it? What would
happen if "the privilege" were exercized world-wide?

Sierra Madre, your answer looks good to me! And here's what von Mises had to say, theoretically, and long before DeGualle spoke of "it" as an "extravagant privilige":

Let us assume that the international authority
[or, say, the Federal Reserve -j. ] increases the
amount of its issuance by a definite sum [of credit
money or paper/megabyte money -j. ], all of which goes
to one country, Ruritania [no, America -j. ]. The final
result of this inflationary action will be a rise in
prices of commodities and services all over the world.
but while this process is going on, the conditions of
the citizens of various countries are affected in a
different way. The Ruritanians [no, Americans] are the
first group blessed by the additional manna. They have
more money in their pockets while the rest of the
world's inhabitants have not yet got a share of the new
money. They can bid higher prices, while the others
cannot. Therefore the Ruritanians [no, Americans]
withdraw more goods from the world market than they did
before. The non-Ruritanians are forced to restrict
their consumption because they cannot compete with the
higher prices paid by the Ruritanians. While the
process of adjusting prices to the altered money
relation is still in progress, the Ruritanians are in
an advantageous position against the non-Ruritanians.
When the process finally comes to an end, the
Ruritanians have been enriched at the expense of the
non-Ruritanians.

-Ludwig von Mises, Human Action A Treatise on Economics, Third
Revised Edition (Chicago, Illinois: Contemporary Books, Inc.
1966), pg. 477 [XVII. INDIRECT EXCHANGE 19. The Gold Standard
-available also from http://www.mises.org/humanaction.asp]

What Charles DeGualle meant by "extravagant privilege" was the
"privilege" of printing paper currency that is used in countries
other than the one in which it is printed. As a matter of fact,
it is also an extravagant privilige within the country where it
is printed.

This Mises quote should sound familiar to regular readers of this
forum. Because the Federal Reserve has been "expanding credit,"
sending "dollars" overseas in various forms, Americans are
somewhat in the position of the Ruritanians; we've been enriched
at the expense of the non-Americans.

The other darker side of the coin, however, is the evolution of
"Big Float." (If you don't already understand "Big Float" see
the link in the header.)

The other name for the extravagant privilege? Seigniorage.

Regards,
Journeyman

In case you tuned in late, this post is Mises "answer" to
question 2. of the following six posed in an earlier post:

1. Why has the word "inflation" become confusing? What are the
results of this confusion?

2. What did Charles DeGaulle mean by "extravagant privilege?
What's another little-used word for it? What would happen if
"the privilege" were exercized world-wide?

3. Did markets and the people choose paper money over gold? If
not, who did?

4. Does government/Federal Reserve monetary control serve the
common good?

5. Is there enough gold for the world to go back on the gold
standard?

6. Is gold too expensive to be efficient for use as money?

http://www.lewrockwell.com/orig/corrigan7.html
From Lew Rockwell's site:

"The Bubble to date has run on the usual weary themes of our forefathers
- an overabundance of cheap credit, usually combined with innovations
in monetizing it, mass participation, often aided by advances in
communications, and the promise of boundless wealth based on the
fruits of Man's own natural genius.

"To see the Bubble end, we need to see at least two - and possibly all three
- of these factors fade out or reverse."

http://www.egroups.com/message/gata/501?By GATA Chairman Bill Murphy.


To subscribe to GATA's dispatches by email
and get them immediately so you don't have
to go look for them, send an email to:

gata-subscribe@eGroups.com

Leigh

"Goldman Sachs seems confident that it can sell unlimited amounts of their worthless paper, but to whom?"

Although some of the "gold paper" leaks out to a few unsuspecting parties (and fewer all the time), I believe Goldman Sachs and its accomplices have the size and are perfectly able to create and maintain this sort of market all by themselves.

Their real challenge is to off-load the exposure of their past "interventions" onto another entity, preferably to some government taxpayers, the general investing public, their stockholders, or to a competitor.

http://www.nationalreview.com/dissent/dissent061300.htmlWhile browsing mises.org for answers to "the six questions", I stumbled upon this article:

We've Got Inflation Now. The Fed's real problem.
By Gene Callahan, contributor to the Ludwig von Mises Institute

"But a rise in the price of one commodity cannot "generate" inflation. If the price of oil rises without an increase in the money supply, the only possible results are a shift of spending from other goods to oil, or a decrease in the amount of oil used. After all, without more money available, how could consumers spend more than they previously did on oil and at least as much as they previously did on everything else?"

Click on the link above for the rest of the article.

Speculative answer to your question.I really don't know too much about all the inner workings of big commodity houses like Goldman Sachs, but it seems to me that since the entire Gold market is relatively thin and since most long-side speculators (especially in the paper markets) are extremely skittish, GS wouldn't have to put out too much paper to tank the price - at least that is the hope they are betting with. I may be all wrong so don't take this as anything other than a guess.

You may be entirely correct about the commodity brokers,
and I've often wondered if the lack of transparency in
the gold market is "churning", where one arm of the same
company is selling to another "arm" in order to control
prices. I keep hoping Billy Murphy will help us all
unravel the confusion.

Is It A Real Snake ? OR Just A Piece Of Rope ?Hello to you. I find it extremely unlikely that a Goldman partner would make a statement like that, at this stage of the game, unless there is a BIG motive for doing so.

If anything I think the real truth when the paper gold game goes TOCOM, is Goldman will be in the "Position",to "GUT" the other players.

One must always remember that they are one of the Mother snakes of the Federal Reserve System.

Treacherous Vipers of whom if you ever hear public statements of them "talking their BOOK", expect the complete opposite of what they say they are going to do.

Thank you for your answers! I was wondering if GS is about to begin a campaign to make paper gold the coolest new investment in town. Can't you just see them next week on CNBC, talking about how the public is beginning to fear inflation (unnecessarily, of course!) and how holding paper gold will diversify an investor's portfolio and protect against volatility.

The investing public will line up to buy paper gold, and Goldman Sachs conveniently will be right there with an unlimited supply.

You see, I've been racking my brain trying to figure out who is buying these things nowadays. I know some very wealthy people who look askance at the mention of gold (no, they're not bluffing). The middle-class investors that I know are still hanging in with the stock market. It would take a major, brilliantly designed PR campaign to bring investors back to gold - but to paper gold and not bullion.

July 1, 2000, 12:42AM
Gas prices have Europeans fuming
By BRUCE STANLEY

LONDON -- Although gasoline prices traditionally are higher on this side of the Atlantic, typically
submissive European consumers are clamoring for relief from worsening pain at the pump.

From Britain to Hungary to Finland, the outrage at rising gas prices sounds almost, well, American in its
intensity.

"Prices are outrageous," seethed Budapest book publisher Tamas Bekes.

"It's madness," said Valerie Khoury, a housewife in suburban Paris.

European motorists are long accustomed to paying as much as four times what Americans shell out for
a tankful of gas, because of fuel taxes that can add a staggering 80 percent to the retail gas price in the
region. Nonetheless, they have become more dependent on their cars, for pleasure as much as for
work.

"The car for Italians is a habit, a tradition, like spaghetti," said Italian taxi driver Michele Di Russo at a
filling station in central Rome. "Gas prices will not affect its usage. The car is entertainment."

As in the United States, where prices have soared in some areas to more than $2 a gallon, recent
increases in the price of crude oil used to make gasoline are sending prices up. The cost of unleaded
gas has risen by 16 percent in France, 14 percent in Italy and 11 percent in Belgium over the past year.

There are few signs that resentment at the increases is ferocious enough to boil over into a consumer
rebellion.

"People have been bludgeoned by one successive rise after another. We're so used to them, we've
become desensitized," said Michael Johnson, spokesman for the Automobile Association of Britain.

According to Johnson's organization, the average price in June for a gallon of unleaded gasoline in
Britain was $4.94, more than twice what Britons paid a decade ago.

Norway is the only European nation with costlier gas, at $5 a gallon, the AA said. France is the next
most expensive, at $4.23, followed by Italy, Germany, Portugal, Austria and Spain.

The difference from one country to the next is mostly because of government taxes, which in Britain
and France account for more than 80 percent of the price of gas. Finland had the next highest fuel tax,
at 78 percent, followed by Belgium and Poland at 75 percent each, the AA said.

This tax bite has left some motorists feeling passive and powerless.

"We can't really do anything about it. It's in the hands of the government," said office worker Norah
Lydon, who spoke as she filled her tank in the London suburb of Edgware.

An average 27 cents of every dollar that Americans spend at the pump goes toward taxes. Thus the
tripling in world oil prices since December 1998 has caused gasoline prices to spike more dramatically
in the United States than in Europe.

"It's just not the big deal here that it is in the U.S. because the price is masked by tax," said Jeremy
Elden, an oil and gas industry analyst at Lehman Bros. in London.

Klaus Rehaag of the Paris-based International Energy Association argued that the U.S.-style car
culture is not as strong in Europe, where large cities have good public transportation and are linked by
dense rail networks.

But discontent over gas prices appears widespread and rising.

"Prices are just ridiculous," said Risto Hyvonen of Helsinki, Finland. "I don't drive any less now. But
whereas before I used to tank up at any old gas station, now I look for special offers."

The Finance Ministry in neighboring Sweden has received 80,000 letters in the past few months alone
protesting its 70-plus percent tax on gasoline, ministry spokesman Haakan Boberg said.

Public pressure already has proven effective in Austria. Last month, the Austrian state-owned oil
company agreed to trim 2.5 cents off each gallon of unleaded gas after automobile clubs and labor
groups complained that the country's prices were among the highest in Europe.

In Germany, costlier gas is forcing up prices for taxi rides, pizza deliveries and even emergency visits
from locksmiths.

Some Europeans are economizing by planning errand trips more carefully and taking buses or subways
where convenient.

But Czech businessman Martin Kukas spoke for many in the region when he acknowledged his
automobile dependency.

"Even if the price goes up further, there's nothing I can do," he said at a busy intersection in downtown
Prague. "I just need to use the car."

(Thanks To The ASSOCIATED PRESS, And Fair Use For Educational/Research Purposes Only.)

http://www.lewrockwell.com/rockwell/lonestar.html
Lone Star of Liberty

by Llewellyn H. Rockwell, Jr.

Party platforms are usually better and more politically principled
than the candidates who run on them. Written as they are by
rank-and-file activists, they put the heart and soul of the party on
display, even when neither the officeholder nor the governing
coalition lives up to the promise. Rarely has a platform in our
times been as good as the Republican one from George W.?s own
home state of Texas; indeed it?s so good, it?s got all the right
people mighty upset.

What?s especially interesting about this document is that it
indicates what? s on the mind of GOP activists in the state from
which the GOP presidential nominee hails. But unlike the
candidate, these folks are not interested in putting a conservative spin on the
Clinton-Gore ideological muddle. They are demanding a complete break with the
politics of the last decade.

The smarmy "third way" politics of our time is supplanted by full-throated,
Texas-style independence and radicalism that rejects statism and collectivism across
the board. Sure enough, Bob Herbert, writing in the New York Times, considers it to
be evidence of the "zany extremism of the Republican Party in Mr. Bush?s home
state." Well, most Texans would consider some of the goings on in New York a little
zany too.

As for Herbert, he would say the same (and probably has!) about Jefferson, Paine,
Henry, Adams, and the whole of the Southern political tradition in America. He
probably doesn?t care much for the Texas penchant for resenting attempts at outside
control. The platform only appears non-mainstream by today?s standards; by the
standards of American history and current anti-government opinion in major parts
of the country and the world, this document is right on the money.

The preamble begins with a sweeping defense of freedom and counterposes it with
government?s continuing attack on liberty. This is the single greatest insight one can
have about the current political situation. Freedom doesn?t mean having the
Herbertian right to other people?s money and property; it means the right to be left
alone to manage your affairs the way you see fit. Yet this one point eludes 9 out of 10
commentators on politics who either don?t understand it, or favor the wrong side in
the battle.

Lefties are quick to jump on Republicans who praise freedom and then demand that
government step in to shape society in ways to their liking. But the Lone Star GOP is
more sophisticated: "No government on earth can replace the nurturing love found
in families, churches, and communities. The more that government intervenes in
personal relationships, the more those relationships will be diminished, not
strengthened. This is why the more government spends ?trying to solve? poverty,
education, and the decline of the family, the more the problems grow."

The preamble admits that some people find freedom to be a burden. To them it
warns that government is never a solution. "They will sacrifice their future on the
altar of the government?s false promises-guaranteed education, guaranteed jobs,
guaranteed security. No government in history has kept those guarantees. Where has
communism or socialism worked?" This is the rhetoric of truth-telling, and not the
kind of thing you see in the mainstream press, or even the conservative press.

The platform proceeds with a distinction that eludes even many libertarians:

the importance of localized political decision-making as compared with
centralization. "Not only does the Republican Party of Texas proclaim the freedom
of the individual citizen from the general power of government, it also proclaims the
state?s proper freedom from federal control." At last, some clarity about states?
rights, which, in the American political context, always refers to the right to be free.

Even better are the named implications of this right: no census powers for the feds
other than those in the Constitution (counting heads); the elimination of executive
orders; an end to the "gathering, accumulation, and dissemination of finger prints,
Social Security numbers, financial and personal information" by government; no
more federal emergency powers; no more federal land use controls; no more taking
of private property by the feds.

Imagine the degree to which this agenda would gut the central government as we
know it. It would matter less who held the office of the presidency. Even if we
someday ended up with another Clinton, he would be denied the power to wreck the
country with the stroke of the pen - a power which Clinton has, and Congress has
failed to take away from him. Isn?t rule by good law rather than rule by men
(whether good or bad) what we should be seeking?

As we might expect from Texas, where guns are commonplace, the platform is
squarely against all gun control: "The Party calls upon the US Congress to repeal any
and all laws that infringe on the right of citizens to keep and bear arms; to reject the
establishment of any mechanism or process to record, register, or monitor the
ownership of firearms; to reject the imposition of excessive taxation or regulation on
the manufacture or sale of firearms and ammunition."

As for social issues, remember how the left is always trying to paint the right as
secretly theocratic? In truth, the threat runs the other way: the government has
come to believe that it is a god, and it has been trying to crush the freedom of religion
by erecting a secular theocracy. The platform seems to understand this, asserting
that "all Americans have the right to practice their religious faith free of
persecution, intimidation, and violence."

On environmentalism, the platform is rock solid. "We reaffirm the belief in the
fundamental constitutional concept of an individual?s right to own and use property
without governmental interference." Consistently applied, this provision would gut
the invasive and expensive eco-regulations which have locked up land and crushed
new technologies that would enhance our standard of living.

The Texas GOP comes out against the Department of Education, all interference in
the right to educate at home, the phony-baloney classification of traditional
discipline as child abuse, the federal imposition of sensitivity training in colleges and
universities, all affirmative action and quotas, the minimum wage, all privileges for
labor unions, and even government-owned infrastructure.

The platform is further against the Kyoto Treaty, "sustainable development," the
Endangered Species Act as a land-use control regulation, the Biodiversity Treaty, all
inheritance taxes, and the Clinton administration?s "move toward the socialistic
redistribution of our national wealth."

Left-liberal commentators have been whipping themselves up into a frenzy about
isolationism on the right, by which they mean opposition to American imperialism.
Well, the Texas GOP is exhibit A in how dramatic the turnaround from Cold War
internationalism to the new right-wing "mind-your-own-business" foreign policy
truly is. Hence, the platform demands a pullout from the United Nations, an end to
funding the IMF, the repeal of Nafta, and withdrawal from the World Trade
Organization. These are interesting positions. They suggest that the Lone Star GOP
should reevaluate its own leadership, which supported all these programs.

Bob Herbert was particularly upset that the platform calls for the abolition of the
Federal Reserve System and the restoration of the gold standard. Zany extremism?
Not at all. Paper money is big government?s credit card. The gold standard has the
advantage of ending inflation, ending business cycles, and restraining the growth of
the public debt and debt-financed government in general. It would also make sure
that an unelected banker like Alan Greenspan would no longer have the main power
over the economy; as even he once wrote, the gold standard and freedom go together.

A platform that says something like this isn?t extremist or wacky, as Herbert claims,
though it surely shocks the sensibilities of New York Times editorial writers. Its
sentiments represent a radical departure from the present command-and-control
system of Clintonized government. That is an agenda widely desired within the GOP,
and also among independents who don?t trust the GOP to carry out the program.

Devolution from central government and a restoration of liberty and property is
exactly what is called for in a post-socialist age. The desire for such radical change
isn?t limited to a fringe; it is the dominant opinion in one of the largest state party
organizations in the country. Why must the nation ?s press continue to report on
rank-and-file GOP opinions as if they are reporting on life on Mars?

In fact, if the platform has a problem, it is not its extremism but its periodic and
wholly unnecessary nod to conventional opinion. It permits funding for Nasa
(located in Texas), some protectionism (when domestic industries are outcompeted),
and the Americans With Disabilities Act (no coincidence, passed by the Bush
administration), and whips up hysteria against China.

Also, the platform endorses the Pledge of Allegiance in public schools, as if any child
should be made to swear allegiance to the central state in these times. This platform
certainly doesn?t, and that?s what?s good about it. Its significance is that it serves to
remind us that the opinions and taboos erected by our political leaders and the
mainstream press have little to do with the opinions of millions and millions of real
people, who, after all, have a history and a future, and are voters too.

June 30, 2000

Llewellyn H. Rockwell, Jr., is president of the Ludwig von Mises Institute in Auburn, Alabama. He also edits
a daily news site, LewRockwell.com.

Our "dynamo" host believes that certain currencies
are being manipulated to facilitate gold producer
hedging and that certain officials are encouraging
the manipulation of the gold market so the dollar
does not have competition from other reserve
currencies. That may not sound all that dramatic to
you, but this will be: Our host already owns tonnes
of gold (that is tonnes, not ounces) and is thinking
of taking delivery on $100 million to $120 million
of gold in the near future.
----------------------------------------------------
Light the match, dude, light the match.

Monsieur FOA may have clues on his return, yes?

:)

The "lie" has four components, the "barbarous relic", central bank, the stability of paper money, and obfuscation of the disparate nature of savings and investment. The dismissal of gold and free banking as a monetary system is often used as to avoid having to discuss its workings, which are self correcting. The damage that a central bank does to money and interest rate setting in the markets (whether paper or gold+paper gold) is so thoroughly ignored in today's bull market for the Fed, that seldom does one hear any discussion of a world without central banks. Paper debt money is capable of smoothing out ripples inherent in banking, but only at the expense of creating enormous imbalances that later induce collapse. The cycle is roughly 20-25 years of credit expansion followed by a 10 year adjustment through stagflation. Often, the cycle is as short as 5-6 years on the upswing. With much external support, the dollar has managed to survive another 20 years after the stabilization by Volcker - it does not mean that the apparent stability is here to stay, it only means that the current system is ripe for collapse.

Savings are not investment. When savings, a non-entrepreneurial allocation of resources, are deposited at a bank that is part of the central bank system, they automatically go into the entrepreneurial arena, and immediately start the process of wasting resources. In a paper money system savings can not be had at all, unless done in the form of goods purchased for later consumption and stored within reach. Banks, being entrepreneurial, invest the deposits (in gold banking with a central bank) entrepreneurially while diluting gold values with derivative substitutes. The existence of a central bank imposes the valuation of gold derived from inflation of paper gold as the competition among banks for solid credit is eliminated by the central bank's reward of emergency loans to the irresponsible bank that found itself over-leveraged � thus preventing the elimination of the irresponsible bank's fiduciary media. Since these are not eliminated, the volume of "good" fiduciary gold does not fall and the dilution becomes permanent. The savings that people hold at banks are not treated by them as investments, but that is what they are. They contain risks of default on top of the risk (rather than calling it risk we should call it certainty) of depreciation of fiduciary media.

Bonds and savings are contradictory terms. So are modern "savings accounts" one does not save promises, one saves assets; land, gold, housing, collectibles, equipment. The bulk of bank accounts are viewed by the depositors as savings, while treated by the banks as investments. The main tool of savings in the past, were gold and silver. The displacement of these with paper promises causes dilution during the long periods of monetary expansion, and causes a return to fair value only during the short periods of deflation of the paper gold.

In a world of debt currencies, where gold is not allowed legal tender status, currencies are only capable of providing the function of savings when they are paying sufficient interest so as to prevent people from saving in goods on-hand. The interest rate on savings media must only be sufficient to cover the saver's expectations of price inflation rate less that for storage costs (space, spoilage and effort), to induce the continued use of currency for the purpose of savings. When interest rates do not reach these levels, the saver will choose to replace currency accounts with basements stuffed with goods. This switch, once started, can not be easily reversed.

Investment is not savings. Investment is the putting of resources at risk for the prospect of future reward. By eliminating gold and silver as apparently effective means for savings (by the dillutive effects of paper versions of them), all people are forced to invest by putting their funds in a bank account and having banks invest the funds in a portfolio of loans. Alternatively, savers can put funds in government and other bonds. None of these solutions are true replacements of savings, since all are investments.

The various elements of the lie � the "fraud of paper money" � are there for you to contemplate. The smooth running of a Ponzi scheme during its expansion is not evidence of it being anything but the fraud that it is, it is only evidence of the fact that the fraud has not been exposed. One would expect that the fraud that is structurally inherent in the current monetary system (gold and its paper markets included) to survive longer when the dozen governments with the greatest resources act to keep it going. The fact of apparent "smooth running" is not at all a sign of the system being workable over the whole of a generation. So far, no monetary system other than straight precious metal accompanied by free banking (or without any banking at all) has ever survived more than 25 years without going through a deflationary or inflationary crisis. The period just before the system crumbles is usually one of high speed prosperity and of high rates of debt accumulation. The fact of apparent prosperity is not an indication of future conditions. Your exasperation, shared by may gold bugs, is to be expected, but is still misplaced.

I have said before that any debt money system can have its life extended at the cost of having a greater collapse when such a collapse is not avoidable. The cumulative damage done by debt money to the economy is not revealed spontaneously until the collapse. The central bank may attempt to slow the rate of damage and extend the "reckoning" to a later date, however, it has not the option of avoiding the damage, nor of preventing the "reckoning" at the end of the process. Failure of debt money systems is structurally assured, what remains uncertain are the timing, the rate of change, and the ultimate degree of damage.
View Yesterday's Discussion.

http://www.gold-eagle.com/gold_digest_00/hamilton070300.htmlGold boiled in oil...an interesting paradox....in Biblical days they boiled some of the Saints alive in oil until dead.....now it appears gold(looking 'dead') may boil in oil until alive.

http://www.santafe.edu/sfi/publications/Working-Papers/00-03-021.pdfThis essay is purposely written without mathematical symbols and without references, 1
except for one. That is my two volumes on the Theory of Money and Financial Institutions
March 24, 2000

THE THEORY OF MONEY 1

Martin Shubik

Abstract: The basic role of fiat money in a dynamic economy is considered. Its role as a virtual
asset whose store of value properties are the outcome of the dynamics is explored and the role the
limits on the money supply and the bankruptcy laws in bounding prices are considered. The
actions of the government may serve to bound individual expectations.

THE CENTRAL ASPECTS OF MONETARY DYNAMICS

There are three basic aspects to the understanding of the central role of fiat money in a
modern economy. They are (1) the understanding of the violation of symmetry in the initial
injection of outside or government money into the economy; (2) the understanding of the
laws conservation of money and how and when they may be violated and (3) the understanding
of the dynamics of the mix of trust, custom, law, communication and information in maintaining
the worth of "worthless" paper or a mere abstraction of value in a dynamic economy.
Abstract money is a substitute for trust in trade. The rules of the game provided by the
laws and customs of the society using a symbolic fiat money can, under the appropriate
circumstances support a system dynamics where individual expectations that other individuals
will accept this intrinsically worthless paper or cypher will be self-fulfilling. The dynamics may
provide for the reinforcement of these beliefs which will provide for monetary stability.
2
The beliefs have two components and work on two sets of information. They are the
beliefs of the individual agent in the acceptability of the money to other agents and the beliefs of
the individual agents about the trustworthiness of the "referee" or the central bank or other agent
for the government which controls the money supply.
The central government is a critical differentiated agent in the running of a modern
economy even if its only role is to guarantee the soundness of the currency and maintain the rules
of the game (such as the commercial code) required to facilitate individual trade. An important
feature of the central government is that it is implicitly or explicitly in direct communication with
every economic agent in the economy. In contrast, in the generation of private credit between
two individual agents much special information must be generated. "Due diligence" is
performed to determine credit worthiness. Reputation helps to decide on prime names and lesser
names. Bank money is a form of credit where information and communication are more
routinized than in the arranging of individual credit. It is provided by a set of agents differing
both from individuals and the government. The banks and other financial institutions are larger
than mere individuals and smaller than the central government. They are far more visible in an
information and communication network than are individuals, but they are less visible than
government.
The acceptance of government money depends on the beliefs of a predominant part of the
society that the government is not going to run the printing presses. In a stable and reasonably
honest society it is cheaper and easier to trust the government that random strangers. In return
for this trust the government is able to provide a symbolic commodity which is accepted as a
means of exchange with the system dynamics converting it into a store of value. It becomes an
ideal transferrable paper gold or a substitute for the need for individual trust. If the central
government does not "cheat" this (possibly invisible) money behaves as though it were an ideal
gold.

http://www.usagold.comTitle: gold--wealth--the transfer of wealth--the rise and decline of empires:

Sometimes we are so caught up with our daily worldly schemes,we become confused, perplexed when we can not discern certain phenomenas. The current world of gold is a perfect example. you know, I know, the CBs know, the people in the know know that gold IS true representation of wealth--not just another industrial commodity; and the current price of gold in terms of U.S. (fiat)dollar is cheap, dirty cheap. The major printing houses, that is, the important CBs in the world are selling their gold hoard( Australia, Canada, Belgium, Dutch,England, and maybe U.S.A.) Are these central bankers gone mad, insane or without any common knowledge of the past, the current and the future?

A little history, plus a little philosophy will help us escape the traping trees, thus see the whole forest.

About 200 years ago, Great Britain defeated China in a war dubbed as " opium war". As war compensation, China gave millions ounces of gold and silver to Britain, plus the territory of Hongkong ( actually it was a lease ), and Great Britain continued to export opium to China for silk, china, tea, and of course for gold, silver. After this opium war, the once mighty, proud Chinese empire declined, eventually collapsed. The rising of British empire truly established, and reached its peak in due course.

Now about two hundred years later, in 1997, Britain returned its crown jewel ( Hong Kong ) back to China. In 1998, Britain announced the shocking news of selling its gold hoard.

About two weeks ago, the People's Bank of China announced the purchasing of gold through a South African investment firm.

We know all the sales of gold from European countries have to go somewhere. Which country, nation and people has the monetary and spiritual strength defying the current fiat money regime to accumlate gold? The answer is obvious by now: the greater China ( mainland, Taiwan, HongKong ). The only difference between China now and Britain then is one used gun and warship, the other is using trade surplus.

Can we see the history evloving? Gold, the true wealth, is moving to its current destination. The flow and transfer of wealth, the decling of one empire and the rising of another.

" CBs are ready to release increasing amount of gold'should its price rises "; the selling of years accumlated gold by using the DUTCH auction method;the leasings; the hedges; the derivatives. They are all pieces of puzzles in the almighy GOD's hands. What goes around, comes around---Ying and Yang.

The sad thing is: People who are losing gold know they are losing the real wealth, the war, but still can not stop it! Actually they have to facilitate it. Thus they are called the cabal. That's called history!

For the true goldbug, your day will come, maybe sooner than you think, just have to wait for this part of history finished.

Jason Happy (33093)
A good narative for silver. However why not buy silver in bars eg 1kg etc, why the coinage as a preferred method of holding silver?

http://foxmarketwire.com:80/062800/dollar.sml"The scarcity of the new coins is not caused by impracticality. MEI coordinated
with the U.S. Mint to ensure the new golden dollar would work in vending
machines already rigged to take the Susan B. Anthony. Both coins have the same
weight, the same size and even the same electromagnetic signature." (More)

Those I know have been moving into all forms of gold in taiwan. Watch asia.

http://www.inr2000.navy.mil/JFKpage.html.

July 2, 2000, 3:46PM

Big guys will be muscling into financial planning game

By SCOTT BURNS

His name IS Frank Terrelli. He is standing before a screen ablaze with a PowerPoint slide, his fingers
spread and pressed against each other, carefully addressing an assembly of some of America's
smartest and most successful financial planners -- a veritable brain trust of financial planning.

The occasion? The second Wealth Management Symposium sponsored by Undiscovered
Managers, a Dallas mutual fund and research boutique.

The fund's prime mover, Mark Hurley, rocked the boat last year when he published a paper
asserting that individual planners would soon be competing with, and perhaps overrun by, large
financial services firms. A transformation would sweep the industry as large companies tried, quite
literally, to capitalize on vast new wealth, Hurley said.

By Hurley's estimate, a client with $1 million worth of investment assets would provide a financial
services company with $7,500 in gross revenue per year and a startling $5,000 in profit. That profit,
in turn, would be worth $60,000 in new market capitalization for a publicly traded company --
enough to create a financial services gold rush.

As Hurley sees it, the opportunity for market capitalization will pit large companies against the small,
highly personal and idiosyncratic individual practices that have characterized financial planning in the
past.

Terrelli, dressed in a black three-button suit that barely allows sight of the silver-gray silk tie, may be
part of that transformation. With his black hair pulled back into a short ponytail, Terrelli looks like he
and actor Steven Seagal share the same tailor and barber.

The former accountant is telling the financial planners how myCFO.com will serve the very, very
rich.

How much money should you have to be considered very rich?

Lots. As you may suspect from the parking jams of personal jets at airports, the new market for
completely furnished, turnkey mansions and the clutter in yacht basins across America, the idea of
"rich" is a rapidly moving target these days.

Trillions in "new money" has shoved aside the quaint conceptions of wealth embodied by "old
money." Remember, "semi-affluent" is now defined as a net worth of $1 million to $10 million. (For a
column on the new categories of wealth, visit www.scottburns.com-

/991017SU.htm. To see where you rank for wealth, by age and percentile, visit
www.scottburns.com/000604SU.htm.)

"Technology will commoditize all those functions that people do that don't bring value added,"
Terrelli said. "I firmly believe that the Web and the Internet will change the way we live and work."

His words echo what presenters from Fidelity, AXA and American Express have said earlier about
reaching clients with less money.

Most of the skills that individual financial planners use will be trivialized by technology in the next two
or three years. Online advisers such as Financial Engines and others are automating the Web to
design portfolios for individuals with far less than $1 million.

Terrelli described how the myCFO Web site will provide complete, segmented management of your
finances so that the captain of your yacht (held in a corporation) will see all bills related to the yacht
on his portion of your Web service and approve them for payment. He won't, however, have access
to any other part of your financial picture.

Similarly, the executive director of your personal foundation will do the same with bills for the
foundation. Ditto your houses, investments, trusts, etc.

No one ever said being rich was simple.

MyCFO, Terrelli said, will replace the traditional "family office."

One of the planners asks who myCFO has in mind as customers? How wealthy should they be?
And what will his firm charge?

Terrelli says that a net worth of $20 million is the minimum, with $50 million "ideal." A client with a
net worth of about $100 million would pay an annual fee of about $400,000 for the service, he said.

The room suddenly bristles with raised eyebrows.

Does this mean anything for you and me?

Yes. Buy a larger mailbox now and avoid the rush later. While few will be solicited by myCFO, all
of us can expect as many offers for wealth and asset management from financial services firms as
we've had credit card offers from credit card companies.

(Thanks To Scott Burns, And Fair Use For Educational/Research Purposes Only.)

Sir Turnaround,

VERY intriguing paragraphs!!

A couple of impertinent and largely irrelevant questions:

1. Why did you use as your subject, "I don't trust you that much"?

2. Are you Martin Shubik?

Regards, j.

Question 3: Did markets and the people choose paper money over
gold? If not, who did?

It was the market which in a selective process, going
on for ages, finally assigned to the precious metals
gold and silver the character of money. For two hundred
years the governments have interfered with the market's
choice of the money medium. Even the most bigoted
etatists [statists -j.] do not venture to assert that
this interference has proved beneficial.

-Ludwig von Mises, Human Action A Treatise on Economics, Third
Revised Edition (Chicago, Illinois: Contemporary Books, Inc.
1966), pg. 422 [XVII. INDIRECT EXCHANGE 6. Cash-Induced and
Goods-Induced Changes in Purchasing Power -available also from
http://www.mises.org/humanaction.asp]

Regards,
Journeyman

In case you tuned in late, this post is Mises "answer" to
question 3. of the following six posed in an earlier post:

1. Why has the word "inflation" become confusing? What are the
results of this confusion?

2. What did Charles DeGaulle mean by "extravagant privilege?
What's another little-used word for it? What would happen if
"the privilege" were exercized world-wide?

3. Did markets and the people choose paper money over gold? If
not, who did?

4. Does government/Federal Reserve monetary control serve the
common good?

5. Is there enough gold for the world to go back on the gold
standard?

6. Is gold too expensive to be efficient for use as money?

Does anyone suppose Adam Hamilton is our Aristotle?

Dear Al: Just last month I was asking Peter (via e-mail) if he thought Aristotle was William Simon, the former Energy Czar and Treasury Secretary who died in early June. It had been many weeks since we'd heard from Aristotle, and when I saw poor Mr. Simon's list of accomplishments I couldn't help but think that he must have run around in the same circles as Aristotle. It was such a relief to have Ari post again, which proved he was indeed alive!

Peter would never have told you that story (he's a gentleman), but since you brought up the subject, I just thought I'd tell you about my wild guess!

Journeyman (07/03/00; 10:29:59MT - usagold.com msg#: 33122)
Re: Theory of Money 1 @Turnaround msg#: 33115

"Sir Turnaround,

VERY intriguing paragraphs!!

A couple of impertinent and largely irrelevant questions:

1. Why did you use as your subject, "I don't trust you that much"?

2. Are you Martin Shubik?"

Dear Sir Journeyman,

1) The subject header was intend to provide a one-line rebuttal for a
two-volume work (MIT Press, I think?) How's that for economical? (smile)
I trust people in general, some more than others, but am quite unwilling to
allow just whomever to carry my wallet for me.

I posted this thinking perhaps Aristotle and others would find it of interest.
I don't have the order price of his book in 2002 dollars, perhaps under a $billion.

For myself? I view this work as yet another example of the debasement of intellect
that attends a debasement of what MS calls "money"- part of the "debauchery" our
predecessors spoke of.
Santa Fe Institute has a lot of wonderful people and has enabled fantastic contributions
in a variety of sciences, it saddens me to see them stoop so low for grants. From what
I read of the synoptic paper, MS needs some further grounding before attempting
this project. I wish we could ship ORO et al down there, but I don't think NSF grants
contain a gold clause.

2. See 1. ;-)

Going to see The Patriot. Will let all know how it was later tonight. :)

$hifty

http://216.46.231.211/credit.htm
Several quotes:

"Now that May data is available, we see that Fannie
Mae and Freddie Mac sharply increased credit
creation. For the month of May, these two powerful
credit creators had gross mortgage purchases of $32
billion, this compared to $17.5 billion during April.
In fact, May was the most aggressive month of mortgage
purchases since September. Perhaps it is coincidence
that these two periods of aggressive purchases
coincided with bouts of considerable financial
stress. Remembering back to September, spreads were
widening substantially, liquidity was disappearing in
the credit market, and the gold derivatives market
dislocated spectacularly."

"The fact that the GSE's returned to rampant credit
creation (joining the banking system!) the same month
that the Fed moved "aggressively" to increase
interest-rates 50 basis points, reinforces our
contention that Federal Reserve monetary policy has
become largely irrelevant."

"Apparently unappreciated by the Fed, it is the nature
of credit availability, and not the price of credit,
that has become the key issue for the great U.S.
financial and economic bubble."

Received my Sept. 2000 copy of Coin Prices Magazine today, and besides the usual listing of modern U.S. Coins and values, was a listing of coins used in the days before the United States declared its Independence from England.
Here is one that cought my eye:
HIGLEY OR GRANBY COPPERS:
DATE......GOOD......VG......FINE:
1737.....$8500.....$10,000..$12,500:
DESCRIPTION:
Looks to be about the size of a modern day U.S. quarter or a little bigger, one side has what looks like three torches en-circled by;" I AM GOOD COPPER".
The other side of the coin has what looks like a deer en-circled by;"VALUE ME AS YOU PLEASE".
(my comment:I love it!!!)

Now, Granby Connecticut is located about the middle of the state just below the Massachusetts state line and about(guessing)60 to 80 miles from Boston Bay, where the famous "TEA PARTY" was held.On the map it looks like a still rural area. If I could only talk my wife into going there for a few days with a metal detector and sneaking into some of those old historical spots.....hhhmmmmmmm.....onward!

If the maker of these coins marked,"VALUE ME AS YOU PLEASE" knew that by the year 2000 the value of "ONE"would equal:
About 40 ounces of Gold or,about 40 good horses,or about 250 calves, or about 100 chords of firewood, but would only buy a very small piece of land,might not be enough for a wedding,funeral, lawyers fee, or doctors fee,don't you think he/she may be surprised?
Food For Thought....beesting.

Sirs Aristotle and ORO,,,Real,Real,Real Great discussion!
ORO,with your permission I would like to make a few copies to give to friends.
Thanks in Advance....beesting.

I was late and did not want to miss the first few min.
Will have to go tomorrow!
Better to see it on the 4th!

$hifty

Feel free to use my portion of this discussion, I hope Aristotle will allow you to do so as well.

These days, you can get more silver for your dollar in coin form than if you prefer .999 fine bar form. Many coins came out of long term private storage in the pre y2k scare, when the coins became scarce, and prices jumped up to $7-10 oz. while silver rose to a mere $6.50 or so? However, the new purchasers were largely y2k hoarders, who have since dumped their silver back onto the market becasue y2k fears never happened. Supply and demand...

At about $5.00/oz, a 100 oz. .999 fine bar might cost $530, which is a $30 primium over spot, or $5.30/oz for the silver content.

At about $5/oz., I was able to buy $253.25 face value silver (times .72) or 182.34 oz. for $940.00, which comes to $5.15/oz for the silver content.

The coins then:

Cost less, no more is being made, comes in small & easily recognizable pieces with a large canvas bag... and you get more silver for your money... and has the potential to raise in value faster than actual silver due to collector value... seems a no brainer.

Call our host, and order today:
(prices vary daily, shipping may cost extra)
(primium percentages may drop with larger size orders)
(this is not a paid advertisement)
(I just know that this is how it all works...)
(800) 869-5115 toll free phone

http://www.SelectSectors.com/fsagx.gifFSAGX trend remains Up

Happy 4'th Of July to ALL

Having just had the privilege of seeing the movie PATRIOT and this being the wonderful 4th of July, only 224 years after that wonderful day in 1776, I thought it time for a post.

I owe a debt of gratitude to all those that have given of themselves. They have given me the sun each day to rise and watch over choices I make. They have given me the time to watch without worry over the growth of my children. They have given me the the gift of freedom. That gift, I can NEVER repay. But in my own words, I say to all who have ears. Do not challenge my freedom. Do not take or attempt to take away my ability to defend my freedom. Do not try to 'make safe' my country by enacting law after law that hinders my ability to hold a gun in my hands and to do what common sense tells me. I am well at ease that criminals have guns. I am at ease that crazies have guns. They do not scare me or my family. Nor should they frighten you. What should be of concern are those that would gather up people's emotions against what is and has always been the peoples 'tool'. Once you are without weapon you are defenseless. Being defenseLESS you are no longer free. Safe? Yes! Safe without free will. Subject to those who know our needs better than we. You anti-gun folks, you are not my countrymen. You are not my friends. You are at war with me and always shall be. You are clever. You understand how to manipulate people and to scare them. For your purpose is your own. I understand that. Your efforts are my generations challenge to "keep freedom if (we) can". I raise my voice up against you and your efforts. I raise my glare up against you. And I draw my last breath up against you to expose your deceit.


Viva la American Revoltionary!View Yesterday's Discussion.

Saw your post on Aristotle. Thanks. It is interesting to sometimes wonder just "who" everyone is.

See-Text@BelowTks HMS@kitco:

Heavy Metal Sunshine () ID#258273:
Copyright � 2000 Heavy Metal Sunshine/Kitco Inc. All rights reserved
Chris Coralans who several years ago predicted that July 1998 and April 2000 would powerful months in the markets ( which they definitely were ) based on his study of moon cycles ( Not Astrology ) Points to the new moon of July 16 as being a potent period for currencies gold etc. Von braun discusses this in the link below. Von braun is a bit inaccurate in that Carolans says that the period ten days before or ten days after is when we should see action if I heard it right. The 2nd link is a Wall Street Uncut interview with Chris Carolans where he describes his techniques, his logic and what he sees for July 2000. Defintiely worth the listen and the read.


http://www.gold-eagle.com/gold_digest_00/vonbraun070400.html

http://www.wallstreetuncut.com/scripts/mp3link.asp?target=wsu20000602-final

Jason Happy (33133)
Thanks for your reply & useful infomation.

Due to dynamics of supply where I live 1kg bars have been the 'order of the day', but when Silver moves 'it's going to really rock'. I can't buy enough of the stuff at the moment. Silver may be just be the most undervalued commodity in the world today.

Al Fulchino spare a thought for the British and 'what might have been'!

Thanks Aristotle for the kind thoughts, they are
indeed high praise. As previously stated I have great
admiration for those, such as hyourself, who are both willing and able to present a subject, which I, untill recently, have had little interest, in a manner which is readily comprehensible. While I, as well as many other citizens of this nation have been expecting a major financial collapse, and an accompanying sea change in government for a number of years, a connection to gold did not occur to me.

Now in my mid 60s, I have spent my life in physical labor, working as a carpenter, boat mechanic, airplane mechanic, police officer and soldier. Until recently I have had neither interest nor experience in the financial world. Having previously purchased some gold earles I began tracing their value. Thus recognizing its potential, last September
I purchased (2) August call options for a total of $900.00
including all fees and commissions.

In less than a month my broker called informing me that their combined value had reached $6500.00, inquiring as to whether I wanted her to sell them. With over ten months left on the options, and with an unshakable belief that gold was off and running, I declined. I sold them later for $3750.00.

With these kinds of losses, only a fool would continue selling options unless the game had been subsequently rigged, and only another fool would fail to recognize this fact.

I had previously told my wife that because of the potential loss compared to the potential gain, that who ever sold those calls was playing a fools game. I used part of my gain to purchase (2) October calls.

Now you know why I am still Perplexed

Between now and July 17th gold will shine.

Da basement for the Dollar.

Look it up, look at the Dollar. End of the story.

http://home.columbus.rr.com/rossl/gold.htm
The chart is in a new URL location. It has been a long time since I worked on this chart, having moved to a different city and getting settled.

wolavka, what is the basis for all your predictions?

Just Plain Folks: Everyday
people made difference in
American West

By Russell Gold
San Antonio Express-News Staff Writer

The American West was always a promised land just
over the horizon. There, a few miles beyond the last
settlement, were copious farmlands, bountiful game,
mountains rich in precious metals.

It's an image ingrained in the national mind for more
than two centuries. But the myth of the frontier has
never squared with the reality of the Western
experience.

That's the jumping-off point for Robert Hine and John
Mack Faragher and their vast new history of the
American West. Readable, abundantly illustrated and
never too theoretical, the book covers mostly familiar
terrain: Lewis and Clark's expedition, the
transcontinental railroad, the phenomenal growth of
Los Angeles and other urban areas.

But it is the authors' attention to the people who
shaped the historical experience � not the leaders,
but the everyday Americans � that sets this book
apart.

Take the book's handling of the 1849 gold rush and
the waves of mining fever that gripped the nation. This
version is peopled with gold rush widows and female
entrepreneurs who made more money cooking for
miners than their husbands found at the bottoms of
their gold pans.

The authors write about how empty-handed
American-born miners turned their frustrations on
immigrants in the camps. Ramon Navarro, a Chilean
miner, wrote in 1850 of an attack on his camp by a
mob that "demolished each house, not leaving a single
wall standing."

The situation was often worse for Chinese miners; and
for American Indians, mining strikes were often "an
unmitigated disaster," the authors note.

In fact, the rumor of a gold strike in the Black Hills led
to a clash between a federal government trying to
open the land to miners and the Sioux. The result was
the infamous Battle of Little Big- horn.

Worn down by the federal government's need to
control the land, Sioux leader Sitting Bull observed,
"Possession is a disease with them."

Historians Hine and Faragher use their preface to
praise the emergence of "new material with a steadier
emphasis on Native Americans, the role of ethnicity,
environmental issues and the participation of women in
the events of Western history."

They incorporate overlooked voices into this sweeping
history � female park rangers, Chinese railroad
workers and even Juan Cortina, known as the Tejano
Robin Hood, who operated in the Rio Grande Valley
before the Civil War.

To their credit, they also use these experiences to
rethink standard historical interpretations.

Consider the myth that independent, robust
homesteaders settled the West. Hine and Faragher
show how lumber companies, the railroads and cattle
companies used their influence in Washington � and
dummy homestead claims � to obtain much more
land than all the homesteaders combined.

Ten years after the Homestead Act of 1873, the
federal government boasted that the law had
"prevented large capitalists from absorbing great tracts
of public domains." The authors call this
pronouncement "a barefaced lie."

The book is so thorough in most areas that when a
subject is undeveloped, the absence is glaring.

The invention of windmills and barbed wire, which
separately helped shape the face of Western
agriculture, could have benefited from more attention.
But both are basically overlooked even as the authors
detail the emergence of Levi Strauss' durable
dungarees.

(Maybe this is a parochial quibble, since barbed wire
was first publicly promoted near San Antonio's City
Hall in 1876.)

Do these new perspectives fundamentally undermine
the myth of the American West? Hine and Faragher
have their work cut out for them here.

Our view of the West has always been rather black
and white � or perhaps Technicolor since Hollywood
began cranking out Westerns. But nothing is that
straightforward in the West; much that we associate
with the region is a result of the mixing of peoples that
the authors term "composite culture."

Log cabins were first built by Scandinavian pioneers,
and the techniques were spread by American Indians,
who borrowed the settlers' horses to create a great
nomadic hunting culture on the plains. Later it was the
pioneers' turn to borrow Hispanic cattle-raising
technique and spread it across the plains.

The authors conclude that in spite of new voices and
perspectives, the myth of the American West is too
deeply ingrained for mere facts to dislodge. But thanks
to their book, the myth has taken one on the chin.

(Fair Use Protections Apply.)

Thought I would share with the forum a bit of what happened to me the other day.
My pressure tank on my well went out (small rust hole) and I had water shootin 20ft in the air.
So off to my local plumbing supply shop to pick up a new tank. While I was there an older woman came in and was complaining about her NEW toilet. It had just been installed a few days before. ( At this point anyone with a newer style toilet knows where I'm going.) She was telling the store owner that she had to plunge it every time and flush it two or three times. The owner told her that there was nothing wrong with her New toilet . The problem was with the US Government. With their infinite wisdom they passed a law that all new toilets can only use 1.5 gallons of water per flush, instead of three gallons.( I have a friend with these new toilets and I know what she was talking about. You end up using more water than normal because you have to flush several times.) He told the woman that there is little that he could do for her. He then told the story of a few guys that were busted for smuggling toilets in from Canada.
I just cant believe that this is allowed to go on in the USA , and our fellow citizens do nothing to change this. We have been converted from peasants with pitchforks to peasants with plungers. I guess if I ever move out of my old house I will be taking my old toilet with me!
I fear by the time the people in this country wake up and try to change things they will find out its too late.

$hifty

Oral History Only.
Who were the "Scrappers" that took on the English during the Revolutionary War?
This is some of the history of some of them!

As most reading this are familer with the movie by Mel Gibson "Braveheart" lets continue the saga between the English Royals and the Independant freedom loving Scottish.

Most Scottish refused to recognise Englands Royal claim to ownership of Scotland, as the Scots had a Royal family of their own.A pitched bloody fued from the time of William Wallace(1297) to "The Battle of Culloden"(1746) happened.

Before and after the "Battle of Culloden" the English, realizing the Scottish would always remain faithful to the law of the family(Clan), began to break the families apart by DEPORTING as many Scots and dissenters as possible to the English Colonies in the New World(North America)

The Scottish suffered a terrible defeat at the "Battle of Culloden", and the English monarchy boasted that they'd never be bothered by the Scots again, deporting thousands.

However in the new land the Scots found they had a family structure similar to the Native Americans,with Chiefs and Elders in control of the whole family including "Septs" to the high council and ultimitly the head Chief. This similarity worked in favor of the new colonists as they learned how to survive and learned new and different fighting tactics from what we now call The Native Americans.

This time(1776) when it was "War as Usual" with the English, the Scots who had developed 600 years of pent up anger against the English,"Hit em with Everything we Got" and were a main components in the victories.

So, as those of Scottish decent may have been tought, we did lose "The Battle of Culloden",,but we didn't lose the last war with England;
The American Revolutionary War!!!
Next time you see one of those guys wearing a Kilt think about what his ancestors went thru trying to give you.....FFFRRRREEEEEEDDOOMMMMMM!!!!!!!

Happy Fourth of July to all those that choose "FREEDOM" over slavery!!!
....beesting.

http://www.santafe.edu/sfi/publications/Working-Papers/00-03-021.pdfI have not given the whole paper a thorough reading, but I would like to criticize a couple of points already.

From the text:
It is usual to contrast fiat money with a commodity money in terms of the former having the store of value property purely through the bootstrap of the dynamics of expectations, whereas the latter has an intrinsic store of value in its use in consumption or production. This dichotomy is by no means clean. In fact, in spite of the ideal condition that a trade utilizing an ideal commodity money should be intrinsic value for value, historically gold has usually carried a transactions value premium; i.e. there are individuals around who have no consumption desire for gold but who value it for its services as a means of payment. This observation can be made mathematically rigorous 5

5The condition of enough money is characterized both by the total amount of money in the system and its distribution (taking the transactions technology as given). We specify the three conditions concerning the sufficiency and distribution of money.
Enough money, well distributed An economy will have enough money that is well distributed if at any equilibrium no individual experiences a cash flow constraint.
Enough money, badly distributed An economy will have enough money that is badly distributed if it is possible to redistribute the money such that at an equilibrium no cash flow constraint would be binding for any individual.
Not enough money An economy will not have enough money, if at an equilibrium there is no way to redistribute the money such that all individuals can avoid a cash flow constraint..
When there is not enough money in a society for a given technology the price of gold will go to a premium above its marginal consumption value. Mathematically a shadow price appears for the cash flow constraints which become binding when there is not enough money for transactions.

A reason for an individual to prefer gold as a currency over fiat money was already observed by Ricardo. It amounted to the proposition that trust in gold as a currency is easier than trust in the politicians and bankers who are meant to control the fiat money supply.


Comments:
In this treatment, Shubik ignores a number of issues and ignores the main point of having a commodity money:

1. The trust in political and banking powers has not once been demonstrated to be placed where it belongs. History has revealed repeatedly that neither banking nor government are trustworthy. Analysis of the "natural" character of these "agents" shows that neither is structurally capable of avoiding mismanagement of fiat money. THE EXISTENCE OF FIAT MONEY AND THE CONCEPT OF MONETARY MANAGEMENT ARE INHERENTLY CONTRADICTORY TO PROPER FUNCTION OF THE FINANCIAL MARKETS.
1a. The motivating factors for government and bank issue of money - higher profit for both "agents" than is possible without fiat money - precludes the possibility of sound management. Thus there is a motivational limitation on the proper operation of a fiat monetary system.
1b. The mechanical problem of managing a fiat money system leads to arbitrary settings of interest rates at levels other than those that are needed for "correct" responses of "agents" to the underlying economic conditions. Rather than discovering the appropriate conversion rates for capital and income through demand and supply in the markets, the management function of the monetary authority obfuscates the supply and demand conditions by setting an arbitrary interest rate.

2. Cash flow constraints are NECESSARY for proper function of the financial markets. The liquidity limitations of commodity money systems are not drawbacks but a constructive function.
2a. The cash flows must be restricted in order to avoid the hidden redistribution of control over economic resources to government and banking "agents" from the creators of these resources. Government control is then achieved only through obvious means of taxation, banking is exposed to settlement problems as a result of bad judgments in a system without a government provided lender of last resort. Thus bad banking practices are exposed due to liquidity limitations, and the weak banking practices are eliminated through the bankruptcy courts.
2b. Liquidity limitations are necessary in order to allow transfer of control of economic production from those who have mismanaged their enterprises and necessarily produced losses in a liquidity constrained system, to those who have not produced losses - meaning that they have run their enterprises well and have accumulated funds that can be used to buy the assets of the bankrupt businesses.
2c. The fiat money system is a means to distribute losses from particular "agents" to the whole group of economic "agents" through the mechanics of monetary expansion in a system with no natural cap for monetary expansion.

3. The concentration of decision-making in a limited number of hands instead of the distribution of decision making to all participants is a necessary feature of fiat money, because it must be "managed" by someone. The paucity of inputs into decisions on interest rates and monetary base expansion/contraction leads to a necessary misallocation of economic resources, since only a few of the creators and consumers of these resources can exercise their judgments in the area of interest rates and the definition and size of the monetary base.

4. There is an imaginary component to the value of any money that is based on expectations and the fact of title possession not guaranteeing control over the asset. Only a physical money can provide complete control by the holder of title through the fact of possession. The premium such control may fetch on the markets, is balanced by the discount that a less convenient means of holding money would be given by the markets. When fear of breach of fiduciary responsibilities by monetary "agents" of government and banking is high, the premium for possession would be greater than the discount for inconvenience. When political problems such as war or tyranny are a fear (or a fact) of the markets, the title of possession falls to discount and only physical control has a premium. The fiat money system does not allow the participating "agents" to avoid the dangers of all of these threats but through the action of spending all money, and perhaps borrowing to spend now so as to avoid the future loss of purchasing power of expected future income. Once such perception becomes widespread, it becomes self fulfilling as the escape from fiat money holdings is impossible � each quantity spent moves to someone else's hands, who must in turn spend it. The commodity money that undergoes such a process can recover easily as the supply of it is restricted, and debtors end up forced to sell production and assets at a lower price in order to avoid bankruptcy resulting from insufficient cash flow.

There is much more to criticize but I will leave that to another opportunity.

A predisposition to a liking of a movie is usually confirmed with a thrilling experience. However, a more objective appreciation for accuracy and history may foster a different result:
*********
I saw the Patriot with my wife yesterday. It's about an american hero, played by an Australian who was really a slave owning, philandering despot, who had a reputation of atrocity in a previous Indian/French campaign. In short, a typical Hollywood fabrication. For me, the knowledge of the reality spoiled the movie.

Rhody.
*********
But then again one shouldn't really be too hard on a movie if it is a little weak on morality and ethics, it's only entertainment. Remember the "Godfather"? Another fascinating movie that did not have a moral position.

Like Rhody, however, I think it would have been better if they had picked a lead who wasn't a citizen of the British Commonwealth. The tyranny of the dollar strikes again.....

Best regards,

G.

http://216.46.231.211/Comm%20Archive/markcomm/090899.htmPrudentBear.com's highlighting of the issue of credit availability is further illustrated by their citation of Charles P. Kindleberger on September 8, 1999. Kindleberger said:

"Before banks had evolved, and afterward, additional means of payment to fuel a speculative mania were available in the virtually infinitely expansible nature of personal credit. For a given banking system at a given time, monetary means of payment may be expanded not only within the existing system of banks, but also by the formation of new banks, the development of new credit instruments, and the expansion of personal credit outside of banks."
(see main link above)

Now let's take a look at the US housing-related government sponsored enterprises (GSEs): the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

"Fannie Mae and Freddie Mac are two of America's biggest financial institutions- and also two of its most indebted, with around $1 trillion of debt between them"
The Economist, 15th April 2000
http://www.economist.com/editorial/freeforall/20000415/ld8928.html

Dr. Kurt Richebacher wrote:
"Home mortgage refinancings (refi) have zoomed to levels never seen before. Capitalizing on the decline in longer-term rates, homeowners refinance their mortgages at cheaper rates, frequently taking out larger loans, lowering thus their home equity. Periods of heavy refi activity have always been periods of strong consumer spending. Refi, stocks, home prices, tax refunds, auto bonuses, confidence, etc., are all up..... the financial system is firing on all cylinders to accommodate a consumer spending bubble."

- From "Bouble Trouble" [sic], June 1998, by James R Cook
http://www.investmentrarities.com/6-1998.html

More:
"It was the extraordinary purchases by Fannie Mae and Freddie Mac, the two Washington-based mortgage-buying behemoths, that righted the debt markets, he says. And it was this intervention that set the state for the five-figure Dow Jones Industrial Average. It is the vast expansion in financial credit that has sustained the asset inflation (that's 'bull market' to you CNBC viewers)." Freddie and Fannie, together with the Federal Home Loan Banks, expanded their balance sheets, Noland estimates, some $128 billion from October through December. 'If they hadn't bought all that paper,' he says, 'the hedge funds would have been stuck with it. It would have been a much, much different world."
- Doug Noland
http://www.gloomdoom.com/6-1999.html

More:
"I see Fannie&Freddie as the greatest instigators of credit excess in history. I even go one step further and believe they also create "money". "
- Doug Noland, from The Credit Bubble and its Aftermath:
A Time for Dialogue, one-day symposium hosted by David W. Tice & Associates, Inc., Tuesday, September 21, 1999

http://www.brill.com/economy/messages/3450.html

"Fannie Mae and Freddie Mac are the two largest government-sponsored enterprises (GSEs) and suppliers of funds to the one- to four-family housing market in America. A GSE is a privately owned, federally chartered corporation that operates nationally with specialized lending powers. The Congress creates GSEs to correct perceived failures in private credit markets. To assist GSEs in achieving their goals, Congress provides them with explicit subsidies. Fannie Mae and Freddie Mac, for example, do not pay state and local income tax on their earnings. More important are the implicit subsidies that GSEs receive. Although the federal government has disavowed any legal responsibility for their financial obligations, markets behave as if the federal government would almost surely make good on GSEs' obligations if the GSE could not. This saves the GSEs money by allowing them to borrow at an interest rate that is only slightly above the rate available to the U.S. Treasury"
- Fed bank of Minneapolis, Dec 1996

http://woodrow.mpls.frb.fed.us/pubs/region/96-12/FFrecap.html

Five or six weeks ago, wasn't USAGOLD being loudly accused of censorship by those on other gold forums? Wasn't Kitco held up as a utopian website where all views were welcome and self-policing ruled? Well, well, how life has changed in the past two weeks at Kitco Utopia. Posters have disappeared stealthily in the night. There is a big warning sign at the top of the forum webpage to any potential disruptive elements. It is understood that the society of Kitco posters must get along.

Right, Skinny?

http://www.smh.com.au/news/0007/05/business/business10.htmlBank of Japan gets radical: it could raise rates
By MICHAEL MILLETT in Tokyo
The issue could be decided on July 17, when the central bank board meets to frame interest rate policy.
====
Wishful thinking!
GO YELLOW Stuff!!
<;-)

Hey Usul - thanks for the links! Yes, it appears we are headed for another government-sponsored bailout (read monetization), of the 'new' S&L's. You can probably grab your history book at this point and see exactly who won and who lost in the last extravaganza for clues as to the outcome this time.

I suspect new money will be created when needed through the end of the year. The GSE's are political institutions. However once the election is over, things could change. It seems the only thing keeping this afloat is debtor confidence. I see today we are treated to the news that oil prices will soon return to 'normal' thereby allowing consumers to resume their borrowing just in the nick of time.

From Jim Grant's site:

"Like a commuter who shuttles
between Scarsdale and Wall Street, the
credit markets travel from Stringency
to Accommodation (and back again).
No timetable is published for the
cyclical journey of lenders and
borrowers, but an alert traveler can
orient himself just by looking out the
window. For instance, the rise in
junk-bond defaults, the troubles in
syndicated lending, the widening of
credit spreads, the expressed anxiety of
the banking regulators and the
disclosure last week by Wachovia Corp.
of a $200 million addition to its
bad-loan reserve all point to the
obvious conclusion that the train of
credit is fast approaching the city limits
of Stringency."

All Aboard! Happy Fourth Usul!

http://www.usagold.com
Braveheart being one of my favorite movies with Mel Gibson,I couldnt wait to go see the Patriot.It was an interesting enjoyable movie and it does help people to appreciate the sacrifices made during the Revolution. I recommend spending some Gold and going to see it.

In all objectivity however, I have to say I found the movie a little flawed. Mostly in the obvious imitation of Braveheart.
One scene Mell Gibson stakes a charging horse in the chest just like they did in Braveheart. Also the story of rebellion being sparked by a sons death is very reminescent of the rebellion being sparked by his wife death in Braveheart. And the hand to hand battle scences are very reminiscent of Braveheart. I would have to say it is somewhat of an imitation movie, but well done nevertheless.

Personally, I would have enjoyed it a little more if some of the actual history of the Declaration and The Constitution would have been shown.

But, all in all, good fare and maybe it will help the average American to appreciate the sacrifices that were made for him.

I'm not a disciple of Heilbroner by any stretch of the imagination, but on occasion I've been impressed at his ability to turn a phrase. I believe this is close to one of his quips--

"Mathematics has given rigor to the study of economics, but alas, also mortis."

If I have incorrectly attributed it, no matter. The point I'm making is that economic thought is accessible to everyone, and the great tragedy is that more people don't dabble in economic thought because they are unnecessarily intimidated or else distracted by the thin outer shell of seemingly rigorous mathematics. The more you see economics for what it really is, the more you see the importance of Gold's role in the grand scheme of life on Earth.

And in recognition of this special day,
Economic Freedom. Get you some. ---Aristotle

http://www.sunday-times.co.uk/news/pages/Saturday-Times/timwekfas02001.htmlHoltzman here,
--------------
We are more alike than different
--------------

I hope all of you in the U.S. are having a wonderful celebration. Over here, we tend to set off our fireworks on Guy Fawkes day, but for somewhat related reasons: Fawkes' original plan in 1605 was to set off his explosives in the cellars beneath the House of Lords whilst King James I was opening Parliament. Fawkes' plot was uncovered, he was put to death rather horribly, and a lot of the people sympathetic to his cause spent the following two years preparing to depart England forever. They named their New World settlement Jamestown in order to placate the king whose wrath they were trying to evade.

A century and a half later, their descendants Washington and Jefferson finally finished the job. Although they didn't kill George III or blow up Parliament, Americans did become the first English subjects to permanently throw off monarchy. Since then, most of Ireland has followed suit, Australia nearly did recently, and new Labour is doing its level best here at home. A charismatic and beloved monarch might yet hold the traditions together, but sadly all we've got is Charles. So it goes.

Yet to this day Englishmen annually rejoice in Guy Fawkes' failure, even those who most ardently crave the end of monarchy. Why rejoice? I daresay even those of you who spell Clinton with a K would shudder at the thought of a briefcase-sized nuclear device going off in the midst of a State of the Union speech.

I'm somewhat disturbed by early reports of Mel Gibson's most recent movie, because according to the reviewers it paints a very we/they schism between decent Americans on the one hand and nearly Hitlerian Britons on the other. But truth be known, the average British commoner was far from hateful of Americans. Indeed, a lot of my ancestors were (quietly of course) cheering your ancestors on. Colonists weren't the only subjects who thought George III was unfit to govern, nor were they the only subjects who resented having soldiers ransack houses in search of inappropriate numbers of guns, smuggled (and therefore untaxed) contraband, all the old familiar crimes against the state.

You and we are the same people (well, a lot of us and a lot of you are distant cousins, put it that way) and neither of us ever wants to face the day when we stand helpless whilst soldiers shoot our children in front of us. It is important to remember, however, that in every war that's ever been fought, the vast majority of the soldiers are terrified youths who just want to see home again.

But yes, in every war, there are also the (thankfully few) sadists who relish the opportunities for horror which war provides. Bear in mind, though, that for every redcoat atrocity in 1770s America (not to mention here in England), there was a comparable atrocity in 1960s Vietnam (not to mention Kent State). Indeed, Vietnam was to Johnson's administration what the revolt of the Colonies was to George III's: conquest that was doomed to failure from the start because the people under attack were united.

It all comes down to a simple reality: the only people who live free are those who have the capacity to defend themselves, and that hasn't changed since the Picts kept the Roman army out of Scotland nearly two thousand years ago. Let freedom ring indeed.


--------------
Right, enough pathos for now
--------------

I must tell you a story. A music professor I once knew, Ian MacFadden, spent his summers in America reawakening the ancient art of playing the pipes among descendants of long-sundered Scottish �migr�s. One summer, he was in the mountains of North Carolina, and as it happened he was to be there over the Fourth of July. A few days prior, during a quiet moment, he found himself on the camp's veranda chatting with one of the students, a boy of perhaps twelve years and possessed of the most impressive American accent.

The subject of conversation turned naturally towards the upcoming ho-down (spelling?) and the boy innocently asked Ian, "Is there a Fourth of July in Scotland?"

Oh dear, Ian suddenly realised with embarrassment, what a limited education this poor boy has had. "Ach no, lad," he began, trying to think of the most polite way to explain this, when the boy said with a devilish grin, "Well, what else comes between the third and the fifth?" Gotten. Utterly gotten. By a twelve year old. And Ian chased that twelve year old about half a mile, laughing despite himself, but he never did catch the lad. Twelve year olds accelerate down mountainsides at a substantially faster rate than do fifty year olds. Fortunately for him!

--------------
Well, it's a start
--------------

[see link at top]
According to The Times, the whims of fashion show signs of finally turning back to embrace gold. Evidently silver is no longer sufficient when one wishes to flaunt wealth on one's clothing, and I should imagine the insane prices of the other white precious metals have ruled them out as an alternative. Besides, the ultimate fashion failure would be to acquire a �5000 platinum necklace only to have others think it a �50 silver one.

Go gold!

Yours,
I.V. Holtzman

http://www.mises.org/humanaction.asp
Quesiton 4: Does government/Federal Reserve monetary control
serve the common good?

The choice of the good [as in "trade good" -j.] to
be employed as a medium of exchange and as money is
never indifferent. It determines the course of the
cash-induced changes [currently referred to as
"inflation" or "deflation" -j.] in purchasing power.
The question is only who should make the choice: the
people buying and selling on the market, or the
government?

....Whatever a government does in the pursuit of aims
to influence the height of purchasing power depends
necessarily upon the rulers' personal value judgments.
It always furthers the interests of some groups of
people at the expense of other groups. It never serves
what is called the commonweal or the public welfare.

-Ludwig von Mises, Human Action A Treatise on Economics, Third
Revised Edition (Chicago, Illinois: Contemporary Books, Inc.
1966), pg. 422 [XVII. INDIRECT EXCHANGE 6. Cash-Induced and
Goods-Induced Changes in Purchasing Power -available also from
http://www.mises.org/humanaction.asp]

In case you tuned in late, this post is Mises "answer" to
question 4. of the following six posed in an earlier post: 1.
Why has the word "inflation" become confusing? What are the
results of this confusion?

2. What did Charles DeGaulle mean by "extravagant privilege?
What's another little-used word for it? What would happen if
"the privilege" were exercized world-wide?

3. Did markets and the people choose paper money over gold? If
not, who did?

4. Does government/Federal Reserve monetary control serve the
common good?

5. Is there enough gold for the world to go back on the gold
standard?

6. Is gold too expensive to be efficient for use as money? |cm:NoShortageOfGold

Saw it...liked it. Powerful movie. On reflection, I think the strongest sub-message was the story of the slave "Occum". He started off having less than nothing...he was offered up by his master to take his master's place on the battle line. In the end he stood a "free" man by virtue of having fought for 12 mo. for the Continental Army. Occum then had pretty much the same as everyone else (nothing)but was far ahead of where he had been. There is a well defined line between overt slavery and indebtedness to bankers. The latter is a matter of choice. Is the line as well defined when a bureaucracy imposes heavy taxation...even with representation?

I suppose those who have less than nothing now but do not realize it,(the heavily leveraged) may enjoy a "liberation" of sorts when financial markets collapse. They will then see that all they thought they had was but an illusion of the credit/indebtedness game. Unlike Occum, I sense there will be a profound sense of loss rather than a birthing of hope. I wonder if the name is significant? (Occum's razor?)

When the playing field is leveled the question remains...who were the fools? An individual or family who lived below their means and retained earnings in liquid form, or he who leveraged the high life to exhaustion of the priviledge?

Until that question is resolved, (a necessity drawn from the arrogance/vanity of mankind) the end of the crisis and initiation of the recovery will be beyond grasp.

A moment of truth will come when decisions need to be made.

Those who feel themselves impoverished (I'm guessing the majority) will scream for the heads of those who lived frugally...that their advantage be neutralized. They will be the "new" carpetbaggers.

With the appearence of govt. confiscation of private capital, the field will truly be leveled.

If democracy rules, justice for the individual will depart. Such will be the fall of the once greatest republic these times have known.

Aussie though he is, I thought Mel portayed the part well. Just glad I'm colorblind!

If two or more theories explain the same observations, the principle of Occum's Razor states that the simplest theory is the best.

All the Colonists were not clear about why there was armed insurrection against the "crown". Occum had the advantage of a rather simplistic view of things.

http://www.cnbc.com/commentary/commentary_full_story_stocks.asp?StoryID=19090All-American Borrowing Binge
by Garret Glaser, CNBC Reporter
Jul 3 2000 4:15PM ET

"Once upon a time, American consumers frowned on piling up debt, but not anymore. Despite the record incomes Americans enjoy these days, new research indicates that consumers and businesses are on a real borrowing binge.
Wednesday's issue of The Wall Street Journal will take a look at the problem of debt overload in the United States, and CNBC's Garrett Glaser has a preview.

U.S. corporate debt is up 67 percent in the past five years to $4.5 trillion. And household borrowing is up 60 percent to $6.5 trillion...

Bankruptcies, though off record highs, are still way up. Approximately 1.3 percent of all U.S. households filed for bankruptcy last year, up from 0.8 percent five years ago.

And growth in the U.S. economy is slowing...

If unemployment jumps from 4 percent to 5.5 percent, millions could feel the pinch.

And because so many homebuyers are now putting down 5 percent or less on a mortgage, the fear is that they will simply default if they have to.

That's what happened in California in the early 90s. When home values tanked, mortgage defaults jumped. Home buyers simply "gave it back to the bank" rather than try to work out payments...

If that happens on a big scale, the government's Fannie Mae and Freddie Mac agencies, which buy and guarantee mortgages, could be hurt..."


ET- thanks for the July 4th wishes; I thank you
(not as one of the "old enemy", here in England,
but in the spirit of freedom that is embodied in
the US Constitution) and may I offer good wishes to
all in the same spirit.

http://www.dismal.com/thoughts/th_cc_063000.aspRisky Debt Service Burdens, By Celia Chen
The Dismal Scientist, 6/39/00 4:12 PM ET

"Many worry that a stock market crash will end this expansion. While a sudden loss of confidence in the economy may show up in stock prices first and produce a snowballing effect, the debt side of the nation's balance sheet poses as much downside risk for the economy as the equity side. In fact, household indebtedness arguably poses a larger downside risk for a slowing economy than a stock market crash.

The main problem is that indebtedness is concentrated among lower income households who have fewer financial resources to fall back on should they lose a job or even lose some overtime hours and thus are at greater risk of defaulting on their loans. In a worst case scenario, enough households could default to trigger failures in the finance industry that would send the economy into a recession, similar to the real estate crisis of the early 1990s..."

Excellant piece! I have added it to my personal archives.
Peace be with you brother.

The thought did pass through my mind, but the expected shudder did not come. Just a slight sense of panic accompanying the sadness at the prospect of so many dead people and the feeling of a door opening to new possibilities. The initial reaction though, was the feeling that this would be a shock.

Some of the possibilities seen through the imaginary open door did make me shudder, others filled me with hope.

I am sad to say that my response would be similar to that of many.

Perhaps we should all go through this exercize to see what our reactions are.

I may have this all mixed up, because I'm not sure I really understand things thoroughly, but has anyone thought that there might be a relationship between the trial balloon about selling our national gold and the fact that oil prices are going down? Could it be that gold is being traded for oil?

Our friend, Bill Murphy is also working on the problem. Here's a part of his interview on Kitco...

"After the wartime modifications to Fort Knox were made, over 10 years were
allowed to pass before the next major step in 1954. At that time a super-secret
complete inventory was taken of the Fort Knox gold. This was not the same as a
relatively cursory audit, so-called, of the gold which was done in 1953. The
project in 1954 involved a complete count with weighing and assay sampling of all
the gold there--about three-quarters of a million 400-ounce bars worth a total of
12-billion dollars ( $12,000,000,000 ) at that time, and that was at the old price
of $35 per ounce. That's twice as much as the Treasury ever claims to have now,
and even these claims are complete lies. In addition to all the weighing, counting,
and checking against records, the 1954 inventory included the extraction of a plug
of gold from every one-hundredth bar for assaying, and these samples were sent
to Assay Offices all around the country to minimize the chance of any collusion to
falsify the results. This seemingly enormous job was kept completely secret, and
was completed in only nine weeks. All of the gold was, of course, in the Central
Core Vault at that time--none was in the bird-cage compartments..

"The contrast with the so-called GAO audit of the Fort Knox gold last fall can
hardly be overstated. The alleged gold stock in 1974 was only half as large, and
they can only claim to have examined about 20% of that. Assay samples were
only taken from only about every thousandth bar--they were not plugged but
merely small chips were taken which could be taken from a corner, say, without
cutting through into the lead underneath. All the 99 samples were sent to a single
location, the New York Assay Office, and only 54 of these have ever been stated
to have been returned--with undefined results.

"Finally, the results of the alleged 1974 GAO audit--which was performed, by the
way, by 13 Treasury employees and only two GAO representatives--have never
been published. The closest thing to it is a ridiculous little document printed in
February 1975, which presents no findings of fact concerning the gold and timidly
says only "We believe" the gold is there!

"But returning to the 1954 gold inventory, the question arises:

"Why was it a secret? After all, the law requires an annual physical inventory of
the nation's gold reserves.

"This law has been generally circumvented and ignored; but one would think that
when its requirements were satisfied for once, in 1954, the fact would have been
made public. The reason for the secrecy of the comprehensive 1954 inventory,
my friends, is that its purpose was not that defined by law. Instead, the
Rockefeller interests were simply taking stock of the American gold reserves
which they intended to start spiriting away a few years later." ( from the Beter
tapes; 1975 )

It is interesting that GATA is still asking the same question as Dr. Beter asked in
1975: What has become of America's gold reserves? Who owns it? Does the
Federal Reserve own the gold that was once stored in Fort Knox? Or is it still
owned by the Treasury of the United States? In the absence of proper audits (
that Beter claimed should have been carried out every year ) , who is now
responsible for America's gold reserves? Is there any gold in Fort Knox at all? Is
GATA willing to step up to the plate with these questions and find out for the
American people what has happened America's gold? Is GATA serious about a
public audit of America's gold reserves?

Americans would like to know!"

When was the interview with Bill Murphy?
Do you have a date?

http://www.kitco.com/Murphy.htm.

The thoughts you offered to me in your post (7/2/2000; 8:12:28MT - usagold.com msg#: 33096) helped alert me to something that I hadn't considered in my attempts to communicate effectively with my fellow man and fellow Goldhearts. You said--

"Do gold advocates want to strip away all their illusions? ... We couldn't if we wanted to. They will do it to themselves, in time. Just not when we think they ought."

When I read that a bell sounded in the back of my mind--like I was the clapper when the Liberty Bell cracked. You are absolutely right! But it isn't so much that I think my fellow Gold advocates "ought" to see things differently under a timeframe of certain design. Rather, I see how their affinity to Gold brings many of them so close to "economic enlightenment" (and the attendant economic peace of mind,) and yet they remain in turmoil because they don't allow themselves to see things with an ever-so-slightly-different perspective.

In raising my awareness to this element--that some people will always choose to cling steadfast to their own illusions which have over time become an integral part of their identity--you have also served to confirm my thoughts that a different posting approach was in order for me. I have already embarked upon one approach (the designated door mat) which will continue, and as time allows I shall offer an assortment of posts that may be my most effective means to convey some of my ideas. I'll be calling them "The Evolution and Confessions of an Unrepentant Gold Advocate." They will chronicle the path in which I went from being a normal (and happy) person to becoming an even happier and contented Golden-eyed citizen of the World. I'll focus on the missteps I made along the way and how I worked through the pitfalls.

But before I wrap up this post, let me make one quick suggestion/alteration to a portion of your commentary. You said--

"The difference between gold and fiat's seems to be the eternal tension between Man's successes and Nature's endurance. Man can cook up some amazing constructs. The power of illusion. The power of agreement. Fiat currency, like gold, is NOT really anyone's liability. But it exists and carries value by mutual agreement and expectation. This could change at ANY moment -- but probably will not vanish overnight. So the only question is when and how. Once we have prepared our golden refuge, we may join others as curious observers to our own species' glorious folly. ... Nature created gold, just as it created Man's genetic code, and occasionally Man has to acknowledge Nature's work as more enduring than his own."

Great stuff. Yet I would offer an important elaboration on your excellent observation that "fiat currency, like gold, is NOT really anyone's liability." So true! On the face of it, some people might balk, and say "No way!" and point out that this runs counter to my own Saturday comment to ORO where I suggested that "the core of the financial system is The Effort to Service Debts." However, careful consideration will reveal that the dollar currency in your hand is, in fact, NOT in a practical sense a liability. It is a unit of account and a medium of exchange--and precious little else. It is just as you say, Mr Gresham. The Liability that so many Gold advocates point to is misplaced if they point to the dollar. The Liability is found in the terms of the loan and the borrower's promise to repay that which is borrowed.

To state it again, and more clearly, the dollar itself in not a liability, it is just a tool for commerce--an undefined and shifting unit of account which also serves as a medium of exchange. Here's the important part. As a helpful tool for commerce, the dollar is altogether inappropriate for use as savings in and of itself or as a means to denominate your wealth in contract form.

A good carpenter doesn't use a hammer to cut lumber, but that doesn't mean he has no use for a hammer. Of equal note, he does not build a foundation upon a puff of air.

Gold. Get you some. ---Aristotle

PS. I appreciate your comments directed to me and ORO, "Two fine minds meeting -- just trying to grease the interface!" Almost every time I read ORO's replies to my questions and comments I can see how fundamentally close we are. Our differences often come down to that of style and articulation, for which ORO certainly earns the greater praise.

Thank you! I dont remember the interview.I will enjoy reading it.

$hifty

I suddenly find myself very short on time--friends coming over to celebrate the day. Sorry that I haven't given adequate attention to your last request of me, but I see that Strad Master offered an answer that was good as Gold, and hard to improve upon. Keep in mind also that the contracts that constitute "paper gold" come in a wide assortment of design, each serving slightly different purposes in the overall orchestration giving us Gold at these prices in these times.

Gold. Get you some at great rates of exchange. ---Aristotle

Aristotle, thank you again for answering my question. I did get some new insight from Strad Master's kind response.

And thank you, Leland! I'd never read Bill Murphy's interview before, so it was interesting information.

Happy Fourth, everyone -- even Mr. Holtzman, who has probably already started July 5th.

CoBra(too), are you still with us? My birthday is coming up in two weeks. If you're reading this, would you please post a picture of a cake for my birthday? Probably all of us remember the scrumptious chocolate torte you posted for Megan's birthday last fall.

Netking (7/4/2000; 1:44:31MT - usagold.com msg#: 33139)
Al Fulchino Re;'A Call to All Who Would be Patriots'
Al Fulchino spare a thought for the British and 'what might have been'!



Dear Netking, I am not sure what direction you were going with your post. I say that to explain that I wondered if you wished to explore all the wonderful possibilities had the British chosen to treat their American colony differently. Can you imagine how wonderful it would have been to have dear old Maggie Thatcher and Ronald Reagan serve 16 years back to back? We are, of course, an extension of all that is and was good with the old empire,as well as what bad can happen and I MUST say that if there was another continent to settle, we would be very close right now to having our own revolution on our hands. The other point I thought you might be heading towards was to have some feeling for the British themselves. I am not sure. Perhaps you could clarify.

Shifty, That was an interesting link you made with the toilets I do get your connection. Perhaps we could accrue "water rights" for time we ah....er.....ummmm
"hold it" for the lack of a better and more graphic way of putting it. THAT WAY, we could get two or more flushes per toilet encounter. Think about it, you could even sell your excess rights. I smell a business opportunity

ted, hope all is well with you. I agree with your point about more Declaration info. But all in all this was wonderful. Going deep into the movie is not good for those who have not plunked down their gold, but as far as hollywood fare goes, I say, Good job! It isn't "Saving Private Ryan", but it is a wonderful, entertaining reminder of what we do not remember frequently enough

"Holtzman (07/04/00; 14:10:38MT - usagold.com msg#: 33155)
Let Freedom Ring Indeed
We are more alike than different"

AF: God Bless