By
FOFOA (who says he builds on the foundational writings of
Aristotle, Another and FOA) :
Friday,
December 17, 2010
In
game theory, a focal point (also called Schelling point) is a
solution that people will tend to use in the absence of
communication, because it seems natural, special or relevant to them.
The concept was introduced by the Nobel Prize winning American
economist Thomas Schelling in his book The Strategy of Conflict
(1960). In this book (at p. 57), Schelling describes "focal
point[s] for each
person’s expectation of what the other expects him to expect to
be expected to do."
This type of focal point later was named after Schelling.
Consider
a simple example: two people unable to communicate with each other
are each shown a panel of four squares and asked to select one; if
and only if they both select the same one, they will each receive a
prize. Three of the squares are blue and one is red. Assuming they
each know nothing about the other player, but that they each do want
to win the prize, then they will, reasonably, both choose the red
square. Of course, the red square is not in a sense a better square;
they could win by both choosing any square. And it is the "right"
square to select only if a player can be sure that the other player
has selected it; but by hypothesis neither can. It is the most
salient, the most notable square, though, and lacking any other one
most people will choose it, and this will in fact (often)
work.
Schelling himself illustrated this concept with the
following problem: Tomorrow you have to meet a stranger in NYC. Where
and when do you meet them? This is a Coordination game, where any
place in time in the city could be an equilibrium solution. Schelling
asked a group of students this question, and found the most common
answer was "noon
at (the information booth at) Grand Central Station."
There is nothing that makes
"Grand Central Station" a location with a higher payoff
(you could just as easily meet someone at a bar, or the public
library reading room), but its tradition as a meeting place raises
its salience, and therefore makes it a
natural "focal point." [1]
Salience:
the state or quality of an item that stands out relative to
neighboring items.
There are two simple, but seemingly,
apparently impossible-to-comprehend concepts. The first concept is
why money not only can
be split into separate units for
separate roles, one as
the
store of value and
the other to be used as a
medium of exchange and unit of account,
but why it
absolutely must
and
WILL split at this
point in the long evolution of the money concept. This means no fixed
gold standard, or any system that attempts to combine these
units/roles into one, making easy money "less easy" and
hard money "less hard." And by "must" I do not
mean that we must do this, I mean that it is happening today whether
we recognize it or not.
And the second concept, once the first
is understood, is how and why gold
and only gold will fill the monetary store of value role.
Not gold and silver. Not precious metals. Just gold. People often ask
why I don't mention silver. They assume that when I say gold I really
must mean gold and silver, or precious metals. So let me be clear.
When I say gold, I mean gold and only gold.
Money's most vital
function in our modern world is lubricating commerce, or more
specifically, keeping the essential supply lines flowing –
supply lines that bring goods and services to where they are needed.
Without it we would be reduced to a barter economy, eternally facing
the intractable "double coincidence of wants." This is the
problem whereby you must coincidentally find someone that not only
wants what you have to trade, but also, coincidentally, has what you
want in return. And in the modern world of near-infinite division of
labor, this would be a disaster. [2]
So we need money, and
lots of it. In fact, we need money in unrestricted amounts! (I'll bet
you are surprised to see me write this!) Yes, I said it, we need
unrestricted money in order to fulfill this most vital function in
our modern society – lubrication! But here's the catch: we need
the right
money in order to perform this
seemingly impossible task. Let me try to explain.
Money is
debt, by its very nature, whether it is gold, paper, sea shells,
tally sticks or lines drawn in the sand. (Another shocking
statement?) Yes,
even gold used as money represents debt. More on this in a
moment.
For
this reason, the
money used as a store of value must be something completely separate
and different from
the medium of exchange. It
must be so, so that
the store of value unit can expand in
value while
the medium of exchange unit expands in quantity and/or velocity.
You may be starting to encounter my thrust. Expand… and
expand. Unrestricted by artificial constraints.
Compare this
concept to a gold standard in which you fix the value of gold to the
dollar at, say, $5,000 per ounce. The assumption is that this is
where the price of gold will stay for a long time, if you manage the
system properly. So what is the result? You artificially constrain
the expansion of the medium of exchange fiat currency while also
restricting the value expansion of the store of value. You are
locking the two together. Do you think this works and makes sense?
I
said we need unrestricted money in order to ensure the lubrication of
the vital supply lines in our modern world. This is it. This is what
really matters. If we have a major monetary and financial breakdown,
what do you think will be the worst consequence? Do you grow all of
your own food? Do you make – or know someone who does –
all of your own stuff? How long could you survive without any stores?
Do you trust your government to be sufficiently prepared to take care
of you with no supply lines flowing?
Have you ever stretched a
rubber band until it breaks? You can feel the resistance grow
gradually and observe the smooth thinning of the band until finally
it loses its continuity and the two parts snap back stinging your
fingers. A tiny observer of this exercise, perhaps a flea resting on
your thumb (or an economist), one who doesn't really understand
rubber bands, might swear that it could be stretched forever. The
smooth change in the stretching rubber gives little warning of the
abrupt (sometimes painful) deformation that is coming.
This is
where we are today. The dollar standard is like a stretched rubber
band. It has been stretched and stretched, but it cannot provide the
unrestricted money that we need today. They think it can. And that's
why they are spewing it out in quantitative easy money boatloads. But
it's not the right money. As I said above, we need the right
money in order to perform this
seemingly impossible task.
That resistance you feel is the
artificial restraint built into the dollar system. It appears to be
infinitely expandable, but it is not. It is just like the rubber
band. Oh sure, you can print all the dollars you can imagine, to
infinity and beyond! But it won't work. It won't do the most vital
job, beyond a certain point. And yes, we
are beyond that point.
a
tiny micro economy
I want you to imagine a
tiny micro economy. Just two guys stranded on a tiny island. Let's
call the guys Ben and Chen. They have divided the island in half and
each owns his half. They each have a tree which bears fruit and three
tools for fishing, a spear, a net and a fishing pole. For a while
they both fished often. Fish were the main trade item between Ben and
Chen. Sometimes Ben would take a vacation from fishing and Chen would
provide him with fish to eat. Other times Chen would take a
break.
But after a while Ben got lazy, and Chen got tired of
giving Ben free fish to eat. At first they used sea shells as money
to keep track of how many fish Ben owed Chen. Then they switched to
leaves from the tree. Finally they just broke a stick off the tree
and drew little
lines in the sand.
If Chen gave Ben a fish, Ben drew (issued) a line in the sand on
Chen's side of the island. There were only two of them, so it was
easy to avoid cheating.
These lines sort of became Chen's bank
account. Each one represented the debt of one fish that Ben owed to
Chen. But after a while they started adding up, and Chen worried that
he would never get that many fish back from Lazy Ben. So Chen cut a
deal with Ben. Chen said he would keep accepting lines drawn in the
sand for fish, but he wanted to be able to use them to purchase some
of Ben's other stuff (since Ben didn't like to fish).
At first
he used them to purchase fruit from Ben's tree. But after a while the
pile of fruit just rotted on Chen's beach. Next he started purchasing
Ben's tools. First the spear, then the net and lastly the fishing
pole. But at this point Chen realized that Ben would NEVER be able to
repay those fish without his fishing tools. So Chen rented them back
to Lazy Ben.
Of course Ben was still lazy, and now he owed
rent on top of the fish he already owed. The lines in the sand grew
even more rapidly as lines were added to pay for rent even when Chen
hadn't given Ben a fish. Then Ben had a great idea. Why even go
through the charade of selling the fishing pole and then renting it?
Ben could just sell Chen some "special lines"
which had a "yield." For
ten one-fish lines, Chen could buy a special "bond" that
would mature into 11 lines in a year's time. They tried this for a
while, but all that happened were more lines in the sand. So many
lines! Nowhere to walk. Chen's "bank account" was taking up
all of his real estate!
Finally Chen had had enough. He called
Ben over and said, "Okay, since you refuse to fish for yourself,
let alone to pay me back, I want to use these lines to buy some of
your gold coins." Oh, did I mention that Ben had a treasure
chest of gold coins that had washed ashore? Of course these gold
coins were the last thing that Chen wanted, because what
good are gold coins on
a tiny island with only two inhabitants?
But actually, they
turned out to be an excellent record
of the debt Lazy Ben owed to
Chen the fisherman. You see, at first, Chen bought half of Ben's gold
with the lines he had already accumulated, transferring his "bank
account" over to Ben's side of the island and consolidating his
"wealth" into gold. It worked out to 100 lines for one gold
coin, or 100 fish per ounce.
But after a while, Ben realized
that he was running out of gold. He knew it would only be a short
matter of time until he ran out, so he
closed the gold window. And once again, Chen started accumulating
lines and special yielding "bond" lines.
Finally, they agreed that the
value of the gold coins had to be raised higher than 100 fish per
ounce. Ben suggested 500/oz., but Chen saw the short-sighted flaw in
his thinking. So
Chen said that the value of ounces should float
against
the number of lines issued by Ben. This way, Ben would never run out
of gold, and
his
lines would always and forever be exchangeable
for
gold coins. Finally, a sustainable accounting system!
Now
I do realize the glaring flaws in this analogy I cobbled together. So
spare me the critique. It is far, FAR from perfect. But it does help
with a few good observations.
First, the lines in the sand and
the gold coins are both
money
on this island. One is the
medium of exchange/unit of account and the other is the store of
value. The store of
value is quoted at any given time in units of lines,
but its value floats,
it is not fixed, so it never runs out. This method of accounting
forces Lazy Ben to part with something more substantial than simply
issuing more lines via line-yielding "special bond lines."
In
this case it was the accounting of transactions between a consumer
and a producer. But it works just as well between any two actors with
unequal levels of production and consumption. Some people just
produce more while others can't stop consuming. I'm sure you know a
few of each type.
Also, notice that gold coins and lines in
the sand both represent the debt owed from Ben to Chen. And with
gold, Chen can wait forever to be paid back (which, on this island,
is quite likely). The gold doesn't spoil, and Chen's possession of it
doesn't interfere with Ben's ability to fish or eat fruit. But notice
also that the
more lines in the sand that Ben issues, the more the value of the
gold (representing a debt of fish) rises. So
the longer Ben runs his trade deficit, the more debt he owes for each
ounce of gold that Chen holds.
This is not so dissimilar to
the special bond lines, with a few notable differences. The bond
values are not only quoted in lines, they are also denominated in
lines. So the principle amount paid for the bonds drops in value as
more lines are issued to lubricate the vital trade. To counteract
this "inflation," interest is paid by drawing more lines
without the reciprocal delivery of fresh fish. But these additional
"free" lines also dilute the value of lines, which leads
ultimately to infinity (or zero value) in a loop that feeds back on
itself.
The more fish Chen supplies to Ben, the more lines he
receives, the more bonds he buys, and the more lines he receives in
service to interest. Eventually Chen will be receiving two lines for
each fish, one for the fish and one for the interest. And then three,
and then four. And so on. Wouldn't you rather just have one gold coin
that floats in value? I know Chen would.
Another observation
is that the medium of
exchange on our island devolved into the most insignificant and easy
to produce item. A simple notation in
Chen's "account." Is that so different from what we have
today? And Ben could issue them with ease as long as Chen let him.
Once Chen had so many lines, he wasn't about to just abandon the
system, was he? Wipe the (beach) slate clean? No, Chen wanted to get
something for his lines. Something compact that didn't interfere with
Ben's ability to work off his debt should he ever decide to do so.
Something durable. Something physical from Ben's side of the island.
Something…
anything
other than those damn-stupid
lines!
I hope that this little analogy helps you visualize
the separation of monetary roles,
because those talking about a new gold standard are not talking about
this. I understand that sometimes you have to speak in terms familiar
to your audience in order to not be tuned out, but I also hope that
my readers come to understand how and why a
new gold standard with a fixed price of gold, no matter how high,
will simply not work anymore.
The
full explanation
of why it will not work is quite involved,
and I'm not going to do it here. But the short answer is that the
very act of defending a fixed price of gold in your currency ensures
the failure of your currency. And it won't take 30 or 40 years this
time. It'll happen fast. It wouldn't matter if Ben decided to defend
a price of $5,000 per ounce, $50,000 per ounce or $5 million per
ounce. It
is the act of defending your currency against
gold that
kills your currency.
You
can defend your currency against other currencies… using
gold! Yes! This is the very
essence of Freegold.
But you cannot defend it against gold. You will fail. Your currency
will fail. Slowly in the past, quickly today.
If you set the price too
high you will first hyperinflate your currency buying gold, but you
won't get much real gold in exchange for collapsing the global
confidence in your currency, and then you will have to empty your
gold vaults selling gold (to defend your price) as your currency
heads to zero. And do you think the world trusts the US to ever
empty its vaults? Nope. Fool me once…
If you set the price too
low, like, say, $5,000/ounce, you will first expose your own
currency folly with such an act and have little opportunity to buy
any of
the real stuff as the world quickly understands what has gone wrong
and empties your gold vaults with all those easy dollars floating
around. You will sell, sell, sell trying to defend your price, but
in the end, the price will be higher and you'll be out of gold.
Either that, or you'll close the gold window (once again), sigh, and
finally admit that Freegold it is.
Yes, the gold price must…
WILL go much higher. The world needs MONEY! And by that, I mean
recapitalization. Unfortunately the dollar is not the right money.
And printing boatloads of it will no longer recapitalize anything.
Today we are getting a negative real return on every dollar printed.
That means, the more you print, the more you DEcapitalize the very
system you are trying to save. Less printing, decapitalized. More
printing, decapitalized. Freegold…
RECAPITALIZED. Yes, it's a
Catch-22, until you understand Freegold.
There
Can Only Be One
A
"focal point" is the obvious, salient champion. But for
many reasons, some things are not as obvious as we would think they
should be. Mish ended his recent post, Still
More Hype Regarding Silver; Just the Math Maam, with the
following disclosure:
As a deflationist
who believes Gold is Money (see Misconceptions
about Gold for a discussion), I am long both silver and gold and
have been for years.
Now is it just me, or did
he say that because gold is money, he is long both silver and
gold?
Here's another one from a recent article on Zero
Hedge:
Part 3. People
lie…..
“…I want to make it equally clear
that this nation will maintain the dollar as good as gold,
freely interchangeable with gold at $35 an ounce, the
foundation-stone of the free world’s trade and payments
system.”
-John F. Kennedy, July
18, 1963
“That we stand ready to use our gold to
meet our international obligations–down to the last bar of
gold, if that be necessary–should be crystal clear to
all.”
-William McChesney Martin, Jr.
(Federal Reserve Chairman) December 9, 1963
Lesson: When
someone says you can exchange paper for precious metals – make
the swap before they change the rules.
Whoa. Wait. Did he just
take two quotes about monetary gold and extend the lesson to all
precious metals? Is this right? Should we all be assuming that "gold"
always means "precious metals?"
According to
Wikipedia:
A
precious metal is a rare, naturally occurring metallic chemical
element of high economic value, which is not radioactive…
Historically, precious metals were important as currency, but are now
regarded mainly as investment and industrial commodities…
The
best-known precious metals are the coinage metals gold and silver.
While both have industrial uses, they are better known for their uses
in art, jewellery and coinage. Other precious metals include the
platinum group metals: ruthenium, rhodium, palladium, osmium,
iridium, and platinum, of which platinum is the most widely
traded.
The demand for precious metals is driven not only by
their practical use, but also by their role as investments and a
store of value. Historically, precious metals have commanded much
higher prices than common industrial metals.
Here's
how I read the above description. Precious metals have a high
economic
value. But because of investment
demand, they also tend to have a price higher
than it would be on its
industrial merits alone. Gold and silver carry some additional
sentimentality for their past coinage. In other words, precious
metals are industrial commodities with an elevated price due to
levitation from investment demand. Fair enough?
Now to
understand Freegold, I think there are two issues that need to be
addressed. The first is the difference
between money, or a
monetary store of value,
and an
industrial commodity levitated by investment demand.
And the second, once the first is understood, is whether silver
belongs in category with gold
as money, or with platinum
as an elevated commodity. You
see, the very key to understanding Freegold may actually lie in
understanding the difference between gold and silver with regard to
their commodity versus monetary wealth reserve functions.
So
from here, I will explore the
valuation fundamentals of money versus levitated commodities.
And then I will explore the history of silver as money and ask the
question: Is silver money today?
First, money. Money
is always an overvalued something. Usually
a commodity of some sort. But it
can be as simple as an overvalued line in the sand, or a digital
entry in a computer database. But the key is, it is always overvalued
relative to its industrial uses!
That's what makes it money! If
it was undervalued as money, it would go into hiding, just like
Gresham's law says, be melted down, and sold for whatever use valued
it higher than its monetary use.
It is fair to also say that
commodities levitated by investment demand are overvalued in a
similar way. But there are a couple of important differences. First
is that all of our experience with commodity markets during currency
turmoil happened while the two naturally-divergent monetary functions
(the spur [medium
of exchange] and
the brake [store
of value]) were
rolled into one unit, namely the dollar. This left only the commodity
markets as an escape. Second is that monetary overvaluation usually
has official support while commodity overvaluation often has
government disdain.
There is this idea out there that if you
have a paper investment market for a commodity that is larger than
the physical units backing it (fractionally reserved, so to speak),
that [then?]
the commodity's price must
automatically be suppressed by the market. This is simply not true
unless we are talking about money masquerading as a commodity.
A
paper market brings in investment demand and leverage (borrowed
money), two levitating
factors that would
simply not be present if the paper market disappeared. And these two
factors, "the speculators," can take a commodity's price
well into overvalued territory. Just look at oil for an example. Even
the sellers of the physical stuff say they prefer a lower price than
right now, not to mention during the all-time high in 2008.
You'd
think the sellers of a physical commodity would love a higher price
driven by speculators. But they don't, because it
is only a real price if all the investment participants have a real
use for, and ability to take possession of, your physical commodity.
Otherwise it's just a casino.
Back to the Zero Hedge piece:
At today’s
prices, a million dollars in gold weighs less than fifty pounds, but
a million dollars in silver weighs more than 2,300 pounds! So ask
yourself, how many rich people are storing their own silver? How many
hedge funds hold physical silver in their own storage facility?
Cool! So a million in
gold only weighs 50 lbs.? Sounds like low storage fees and easy
delivery! 2,300 lbs. for silver? Wow, that sucks. How many rich
people are taking possession of their silver? Not many, I'd
guess.
To be honest, I really don't know if silver is
overvalued or undervalued today at $30/ounce. But if you are counting
on the industrial fundamentals of silver for your moonshot like the
Zero Hedge article is, or on a busted paper market like the
"vigilantes," you may be in for an unpleasant surprise. The
same fundamental arguments that are used today were also used back in
1982. [3] In gold, at least, we know that jewelry demand rises and
falls opposite the price of gold. [4] But then again, gold is money,
right? So, is silver still money?
Easy
Money
Silver
was certainly used as money in the past. So why not again today?
Maybe the people will rise up and demand silver money! Maybe China,
or somebody else, will remonetize silver and start a new silver
standard, right? After all, China was
the last to use a silver
standard.
I don't mean to pick a fight with silver. In fact, I
write this post with a heavy heart. But there is so much silver hype
right now that I feel I owe it to my readers to at least try to spell
out Another perspective. And China is certainly on the minds of the
silverbugs these days. How often have we heard about China
encouraging its citizens to buy gold and silver lately? (There's that
"gold and silver" again.)
But did you know that
China was practically dumping its silver a decade ago? And to this
day it is still a large exporter of silver. Not gold. Just silver. In
2009 China exported 3,500 tonnes of silver. That amount will probably
be cut in half for 2010. The drop is due to increases in both
industrial and investor demand, but also due to China's recent move
to stem the shipment of all natural resources leaving its
shores.
I'm sure many of you know that China was the last
country on Earth to end its silver standard back in 1935, in the
middle of the Great Depression. But do you know why? And would China
ever want to start a new
silver standard? Does it make
any sense now that they've sold most of their silver? And what has
changed since 1935 that would make them want to go back?
Something
very interesting happened after Jan. 30, 1934 when Roosevelt devalued
the dollar against gold. The price of gold went up 70%. What do you
think happened to silver? Did it go up more than gold? Did it shoot
the moon? Was it leveraged to gold? No, it dropped like an unwanted
rock.
In response to the falling price of silver, on June 19,
1934 (four and a half months later) the U.S. Congress approved the
Silver Purchase Act of 1934 which authorized President Roosevelt to
nationalize silver holdings (to buy silver). This decision resulted
in an increase in the world price of silver, which forced China to
abandon the silver standard in November 1935.
The US Silver
Purchase Act created an intolerable demand on China's silver coins,
and so in the end the silver standard was officially abandoned in
1935 in favor of the four Chinese national banks "legal note"
issues.
Remember what Mundell wrote (See Mundell in The
Value of Gold). The use of a commodity as money is the
overvaluing of that commodity for profit by the monetary authority.
When the US started buying commodity silver on the open market (to
prop up the price artificially) the Chinese people found it was
better to sell their silver coins for melt value than to use them in
commerce for face value (which was lower than melt).
This
effect to China's base money (silver) in 1934 was similar to what the
US felt in 1933 and 1971 with gold. The main difference being that
the demand for silver in 1934 was artificial (from one single entity,
the US govt.) while the demand for gold has always been real, global
and market-driven. This price supporting move (not unlike the
Agriculture Adjustment Act and other destructive price control
measures) by the US caused the
"Shanghai Financial Crisis" which
lasted
from June 1934 until November 1935, finally ending in Currency Reform
on Nov. 4, 1935.
So,
in 1934, the US govt. wanted to devalue (set the price of) the dollar
against gold and silver. In order to do so, it had to influence the
market of each. For gold, it had to inflict capital controls
internally and sell gold externally at the new higher price. For
silver, it had to BUY silver at the new higher price. Sell gold, buy
silver. The same exact thing that happened 45 years earlier with the
Sherman Silver Purchase act of 1890.
Pushed
by the Silverites, the Sherman Silver Purchase act of 1890 increased
the amount of silver the government was required to purchase every
month. It was passed in response to the growing complaints of farmers
and mining interests. Farmers had immense debts that could not be
paid off due to deflation caused by overproduction, and they urged
the government to pass the Sherman Silver Purchase Act in order to
boost the economy and cause
inflation,
allowing them to pay their debts with cheaper dollars. Mining
companies,
meanwhile, had extracted vast quantities of silver from western
mines; the resulting oversupply drove down the price of their
product, often to below the point where it was profitable to mine it.
They hoped
to enlist the government to artificially
increase
demand for, and thus the
price of, silver.
Under
the Act, the
federal government purchased millions of ounces of silver, with
issues of paper currency; it became the second-largest buyer in the
world. In addition
to the $2 million to $4 million that had been required by the
Bland-Allison Act of 1878,
the U.S. government was now required to purchase an additional 4.5
million ounces of silver bullion every month. The law required the
Treasury to buy the silver with a special issue of Treasury Notes
that could be redeemed for either silver or gold.
That plan
backfired, as people turned in the new coin notes for gold dollars,
thus depleting the government's gold reserves. After the Panic of
1893 broke, President Grover Cleveland repealed
the Act in 1893 to
prevent the depletion of the country's gold reserves. [5]
To
"set the price" of anything, you must either buy or sell
that thing. Governments
cannot just "set" prices. Whenever they try, the items just
disappear or go into hiding. If the price you set is lower than the
value, then you will have to sell. If the price is too high, you will
have to buy. More from Mundell:
"[In the 1870s]
France pondered the idea of returning to a bimetallic monetary
standard, but with American production of silver going up and Germany
dumping silver as the new German Empire shifted to gold, France
realized it would have to buy up all the excess silver in the
world on its own."
So... if your standard is
going to overvalue something, you must buy it. If you undervalue
something, you must sell it. And what was the US doing with gold
throughout the entire Bretton Woods system? That's right, it was
SELLING gold through the gold window. So it wasn't the gold that the
US monetary authority was overvaluing for profit. It was the
cotton-pulp paper in the FRNs! Cotton pulp! That's the overvalued
commodity today! [But
a $1000 bill doesn't have 1000 times as much paper in it as a $1
bill.]
Remember
what Another wrote? "Any
nation/state can put its economy/currency on a gold standard. They
only have two requirements. Own a stockpile of gold and raise the
price very high!"
Why
do you think you need a stockpile of gold to start a gold standard?
In the case of France in 1870 above, they realized they would have to
buy all
the excess silver in the world to keep a silver monetary standard.
You don't need a stockpile to do that! Yet you don't need to worry
about buying all the gold to have a gold standard. You need to be
prepared to SELL! That's why you need a stockpile. So what's the
difference?
Could it be that silver is only a commodity today
(and for the last 150 years at least) and because of this, any
monetary use is not backed by the free market? Any silver standard is
an unnatural levitation requiring BUYING of silver by the monetary
authority. While a gold standard gives the free market what it really
wants, gold, requiring SELLING of gold by the monetary
authority.
Can you find an example where the opposite
occurred? Can you show me where a government ever had to buy gold and
sell silver (at whatever price or ratio) in order to maintain its
system?
The US quit bimetallism during the Civil War, prior to
the Silverite movement. [6] This ended the government's "overvaluing"
of all silver for use in money. After the Civil War, there was a
difference between commodity silver (what the miners dug up) and
monetary silver (overvalued silver in US coins) because in order for
the US to sustain bimetallism (or a silver standard) it would have
had to value (buy) ALL the excess silver in the world at the
overvalued price of the coins.
This meant it would have to BUY
any and all commodity silver that was offered for sale (to prop up
the price). You see, silver
needs its price propped up (huh?
why?) while gold
appears to need its price suppressed (see:
The London Gold Pool). So rather than actually "valuing"
silver, the government compromised with the Silverites and agreed to
buy a specified quota of commodity silver. At least it did until it
ran out of gold in 1893. Something must have been wrong with that
16:1 ratio in the 1800s, huh?
70 years later, when the price
of commodity silver finally
overran the value of the coins
in 1964, it was because of cotton-pulp printing (inflation) only, not
global monetary demand! This is exactly how commodities act. They
respond directly to monetary inflation until the commodity value
overruns the face value.
So it seems that the free market
wants to exchange its "money" for gold. But "the
people" (at least in the late 1800s) wanted silver to be money.
They wanted to SELL their silver to the government while the
government SOLD its gold to the market. This is a one-way flow that
tends to end in a vault full of silver with no gold. So why did the
US Government intervene in the silver market and support this
folly?
The government caved primarily because of politics
(pressure from the Silverites – the farmers and miners out
west), and tradition secondarily (past use of silver as money, the US
Constitution, etc.). Politically, "the people" will always
want easy money. And silver was their easy money of the day.
Price
deflation in the late 1800s was hurting the farmers. The farmer
business cycle is seasonal. Borrow money for equipment and seeds to
plant in the spring. Then grow your product. Then harvest and sell in
the fall and pay off your debt with the proceeds.
The effect
of causing an inflationary environment through "easy money"
means that it is A) easier to pay off your debt in the fall than it
was in the spring (or the year before), and B) you get more money for
your crop than you did last year. The effect of a deflationary
environment is the opposite. Your debt gets harder to pay and you get
less money for your crop. It's the same for all businesses actually.
But farmers were a big political group in the 1800s that were all
roughly on the same business cycle.
This bears repeating: "The
people" wanted silver back then (late 1800s) because it was the
"easy money" of the time. "The people" NEVER
want harder money. Today silver
would be harder money, so it will never have the support of "the
people" (other than the silverbugs). 16:1 was quite obviously an
artificial monetary
ratio, because whenever they
maintained it, there was a run on the gold. The market wanted to push
the ratio much wider, and the government, in service to "the
people," fought that market force.
Today silver would be
"harder" money than cotton-pulp. This is why there will
NEVER be a big enough political movement of
the people that will
bring back a silver standard. We have now discovered easier money
than silver!!!
If you want harder money, it's gold. If you
want easier money, it's cotton-pulp. So where does silver fit in?
Well, it's just another industrial commodity with a lingering
sentimental mystique as the old "easy money."
And
where does gold fit in? Freegold of course! The monetary wealth
reserve as demonstrated by the Central Banks of the world!
So
what if gold really is the wealth reserve of choice for the giants
that A/FOA said it was? That means silver is nothing but an
industrial commodity today, being somewhat levitated by the lingering
hype. What if silver is just a commodity, like copper or
oil?
Monetary value is a self-supporting, self-sustaining
levitation. Money is the bubble that doesn't pop. The price of money
is arbitrary.
Not so with commodities.
So... is silver really money today? I
know gold is. Here's the evidence:
Does
anyone have any evidence that silver is still money today?
Yes,
I am aware that the stock of silver is disappearing into our
landfills. These "properties" of silver have been with the
metal since the early 80s, through decades of single-digit prices.
[3] So, is jacking the raw materials from industry and holding them
hostage for ransom at a higher price the real play today? (Hint: this
tactic often ends badly for the speculator.) Or is the real play
front running the new global monetary wealth reserve during a
transition in our international monetary system?
Here's one
silverbug who is starting to put two and two together! I think he
might also be reading FOFOA. ;) (Hi Joe. I think you are confusing me
with FOA in your video. But that's okay, it's a wonderful compliment
to me! Tip to others: If you mention me in a video include a link in
the description and I might just find your video.)
Posted
by FOFOA at 7:43
PM 124
comments Links
to this post
By
FOFOA , it appears -- a day later:
Wednesday,
December 8, 2010
I
can see that we have a few new faces here. We even have some fast
talkers! That's fine. Perhaps they have something useful to say.
Perhaps not. In any case, new visitors often mistake the term
Freegold
for many things it is not.
"Aristotle" is one who I greatly admire, for he took this
journey long before me. And the records of his discoveries along the
trail have been preserved for all who wish to follow. In my last post
were these words from Ari:
"After
a period of slower talking and deeper thinking, I arrived at a
position with a realistic eye on the middle ground giving me clearer
monetary understanding as it works in the real world…"
Freegold,
in my opinion, is not a competing monetary theory. Nor is it a
competing financial system. It is much more than these subjects of
frequent debate. In my world, Freegold is a
way to view unfolding events as they happen.
It is a view of the valley below, as seen from a high vantage. It is
a cypher for understanding what we see. It is not
a description of what should
be.
Instead, it is framework,
different from almost everything else you are reading, in which you
can interpret unfolding events in a different light.
FOA:
I (we) expect none of you to consider anything said here as credible.
Everything is given as I understand it. If you came with a notion
that I am someone who sees the future; grab the children and run far
away. For these Thoughts, and my ongoing commentary, are meant to
impact exactly as the "gentleman" said they would. People
hear them, and whether
believed or not, the words leave a mark.
A mental mark on the trail, if you will. And later, after the world
turns, our little "stacks of rocks" will be easier to
understand next time you are passing this way. In fact, your ability
to find your own way will forever be enhanced for having seen this
path in a different light.
Some
of you may have noticed that I added a quote at the top of the blog.
It is the first line from Another's first post, found
here, and it goes:
"Everyone
knows where we have been. Let's see where we are going!"
I
think this one line really encapsulates Freegold
and the reason why I started
this blog 2.3 years ago. It
is also the reason why Another began posting. Clarity
in orientation like this can often be found in very first posts.
Notice that he did not say, "Let's see where we should
be going." He also did not
say "Let's see what we are going back
to."
FOA used the
analogy of a river for the forward flow of time. Many times he used
this analogy, and the first and fullest description of his view on
this concept is found in his first post (imagine that!) on The
Gold Trail which came 2 ½ years after Another's first line
above:
We
must view the world in a broad context, just as much as in a detail
perspective. The larger perception can be just like looking at a
river in the valley from the ridge above. From far away it's easy to
see what direction national trends are flowing. The whole body moves
as one, always towards the sea. The problem comes when we get too
close and interpret things using only a small river section in front
of us. More often than not, the white water we see only hides a
deeper flowing truth.
In like sense, national
governments and society in general, are the same as those boulders
and eddies in the river. Seen up close, they sometimes give the
impression that the river is flowing up stream or sideways, when it's
only one small section of
a larger political will. The same is true in the modern gold markets.
The largest part of the river could be flowing in one direction with
an unstoppable purpose, but the various swirls and eddies make it
look like it's going in circles.
He
continues, with a reference to many "conflicting
factions":
Within
every social order, people have conflicting factions that try to
dominate the whole. But if one can understand and pinpoint the logic
and reasoning of several dominate groups, we can get a grasp for the
overall eventual flow. We have seen throughout history and in our
modern life that the human spirit most always reaches for, and leans
towards, natural conclusions to ages old problems. There is something
in us that makes mankind flow this way. Time and again we build up
our emotional will. Then
in a great flood we literally overwhelm the branches and rocks that
distort our progress through this stream of life.
Today,
it seems that the need for this natural flow has been perceived by
several of the world's large groups. We see this in the progress of
the gold market to date and it is something we have been discussing
publicly for several years now. We have given many different
perceptions of this changing modern gold market. Each appropriate to
its own period of time. Indeed, they were snapshots of political
will,,,, each taken in the context of the moment,,,,, all documenting
the
evolution of gold as a new force,,, a new player in the world
today.
Truly,
the stream is being prepared for the great flood that must come, will
come!
A
year and a half later Another
withdrew from posting comments permanently. Exhausted
from what FOA called "ears that bite," Another declared,
"tell them right now our position and walk away, it's over!"
I
ask you; were these the words of an advocate, someone who was
advocating for a specific change? Or were they the words of an
observer, or an inside participant, attempting to share some vital
information with outsiders? Were they the words of someone who was
proposing a new system? Were they the words of someone who needed
you to understand in order to
effect the desired change? Or were they the words of someone who
hoped you would understand, for your own wellbeing through the change
that is coming?
People often demand that Freegold
be reduced to a few lines of
description. An abstract for the Freegold concept is what they want.
They say that if there is inherent truth in Freegold, that is all it
will take and the truth of it will be evident from just a few words.
This is all well and good. And attempts at this have been made. But
experience has taught me that any reduction of this concept and the
reflex of the reader is usually to dismiss it. That reduction does no
favors for the concept, or for the reader. And that it is only after
long consideration that the truth begins to emerge. Luckily, it is
not a concept that needs
you to understand.
It is
also not a concept that you need to fully understand in order to
share in the benefits. As
long as you are buying physical gold bullion and coins, you are on
the right trail. But what I've seen happen is that the more people
understand Freegold, the larger the position they take in physical
gold. I have yet
to meet anyone who has shown me a deep understanding of this concept
along with a reason to NOT buy physical gold. In fact, this is my
advice to people that ask how much gold they should buy: Buy only as
much gold as you understand. In other words, only what you are
comfortable with.
Here is more FOA from right after Another's
withdrawal:
Looking
back, Another was a true master of understanding people's thought
processes. He knew that none
of us,
that's you, me or any of the rest of us raised inside a background of
American financial understanding, would
ever accept his position thrust; with him just spelling it out in the
open.
Especially when this whole financial / political transition has been
taking place over more than a
decade and a half.
By the way, he
started this some decades ago.
So, he decided to ask readers and listeners to think for themselves;
by presenting bits and pieces of the flaws in our "Western
Thought" as others saw it and as it pertained to his
world of gold and oil.
Not wanting to prove anything, while asking us to prove everything
for ourselves; as
these long term events unfolded.
I
understand that there are a large group of basic individuals that
fully understand our line of what is happening and are buying gold.
What I never envisioned was how many groups make up the gold trader
crowd; all standing apart from the Physical Gold Advocates. Further,
I never thought they would segregate into so many vocal
tribes, each trying to advance their own minor position in the gold
world and willing to step all over themselves and anyone else in the
process.
I find it all a real show / play to watch as it truly demonstrates
the very human dynamic Western governments have use to distort modern
gold thought. I now understand that Another did fully grasp just how
distorted this chain of thought was and went around it all by waiting
for events to completely destroy their concepts; instead of debating
with a host of gold tribes.
In
the end,
physical gold will win out and prove to be the greatest wealth
holding anyone has ever known.
Unable to grasp that only a transition of political influence by old
world players can break this modern American Western hold on gold,
these tribes are vulnerable to the same government influence they
long for. Their wealth will be portioned by those same Western
governments as world political reality forces our American leaders to
embrace a world "free market" in physical gold. While
abrogating, thru taxes and windfall appropriations, all forms of
paper gold ownership.
Today they chant; "we want our
leaders to recognize gold again"! OH, it will all right and the
impact such a recognition will have on these various paper gold plays
will leave these gold tribes dancing around a midnight fire! (smile)
If nothing else, the entertainment of watching them spew brime on
each other will be quite an act to follow. If nothing else it will
educate future investors as to where to look for reason. Indeed, the
law of ages never changes as one's
conduct in social interaction still identifies oratory as being
worthy or no. People that relish rash interaction always find
themselves surrounded by fools.
Eventually broke fools! (smile)
We've
had a few "vocal tribes"
show up here, haven't we? Let's see, we had the Silverites
show up. This group dates back to the 1800's. They never did like the
gold standard crowd. Too hard for them. Silver was the "easy
money" back then, and today, as then, it is seen as the poor
man's gold, or a way to (supposedly) defeat the "old money"
"power elite". Certainly this is ground tread by vocal
advocates, but not quite downstream from today's flow. It didn't work
back then, and…
We've also had the easy money camp show
up, on several occasions. They are certainly a vocal group! But then
they have a tough road ahead given that we are living through an easy
money collapse, which has never in all of history ended in the
spontaneous emergence of a new
easy money regime.
And
we've had the gold bugs here, in many varieties. All with very clever
ways to finally make gold a currency that can work, unlike the failed
and abandoned tries of years gone by.
It is this blogger's
very honest, humble and deeply considered opinion that there is not a
single precious
metals analyst or gold writer out
there today that can hold a candle to either Another
or FOA.
Not Sinclair,
not Rickards,
not Casey,
Turk
or Fekete.
Not GATA,
not Buckler,
not Douglas
or Ash.
Not any of the Silverites and certainly not me. And I'm not talking
about whatever inside information they had, although that clearly
exposed a deep and long background in these Thoughts. Nor am I
talking about grammar and spelling. I'm talking about a level of
understanding and wisdom (look that word up!) unmatched in any other
gold writer that I have ever
read.
Here was a fun
little [Nothing
like little: one can't find where it ends by just parsing. -FNC]
conversation that
happened after USAGOLD added the Gilded Opinion page, featuring one
"Professor von Braun" who happened to misspell a word that
FOA also misspelled. Hopefully you will get my point and a little
enjoyment from this exchange:
Hipplebeck
(10/23/00;
06:13:10MT - usagold.com msg#: 39699)
Trail
Guide=Prof. Von Braun?
bought=brought
Humble
Pie (10/23/00;
07:31:02MT - usagold.com msg#: 39703)
#39699
Hipplebeck
: I'm glad someone else noticed the bought vs brought thing . I
wonder!
Mr
Gresham (10/23/00;
08:11:22MT - usagold.com msg#: 39709)
Hipple/Humble/FOA
More
likely von Braun reading FOA. Our friend IS remarkably consistent
with his typing bloops. (I suspect he had a secretary most of his
business days.) He's probably not an editor at The New
Yorker.
Parsifal
(10/23/00;
12:43:12MT - usagold.com msg#: 39723)
Trail
Guide=Prof. Von Braun?
Hipplebeck:
bought=brought
Hard to ignore isn't it? Trail Guide so
consistently uses "brought" in place of "bought,"
I expect he does it deliberately. Why? It is a curiosity.
Where
does Prof. Von Braun post? The name is familiar to me, and I
associate it with gold market commentary, but I've forgotten where
I've read Von Braun. Also, could it be that "Von Braun" is
another alias? Wasn't "Von Braun" a German rocket scientist
the Americans co-opted after WWII?
nickel62
(10/23/00;
13:12:04MT - usagold.com msg#: 39728)
Von
Braun and FOA
I
have conversed with Mr. Von Braun and while I was impressed the two
times we exchanged emails I do not think he is on the same level of
FOA. These subjects are so difficult to convey however, you can never
really tell when someone is giving you the simple version of the
problem because they (correctly) perceive that you can only absorb so
much. I would tend to doubt it though. He posts on the Gold-Eagle
forum, and occasionally on Le Metropole Cafe.
PH
in LA (10/23/00;
14:45:38MT - usagold.com msg#: 39734)
Trail
Guide*Prof. Von Braun
Just
went over to Gold Eagle to review the Von Braun pages and came away
with the indisputable impression that he is not FOA. A facile writer
with an original and attention-grabbing turn of phrase, the professor
does not begin to exhibit the
depth and overall understanding of the issues that FOA does. This
would be a very hard deception to pull off. Believe it or not, it is
very difficult not to let slip what one knows while trying to
elucidate a point to further the understanding of others.
I doubt very much that FOA could do it. At the same time, he (FOA)
would find it very difficult to suppress the natural turns of phrase
and liquid prose style that von Braun exhibits while writing as
FOA.
Both writers are very consistent in their writing styles.
Misspelling the same word in the same way does not overcome that
fact. FWIW!
Trail
Guide (10/23/00;
19:26:57MT - usagold.com msg#: 39745)
(No
Subject)
My
spelling and punctuation is not right? I don't know what you mean?
(smile)
This reminds me of an old reply someone put to me when
I asked him to clarify himself on a strong position. "What do
you want, he asked? Good flavor or good taste? Because you can't have
both from me at these wages!" (Ha! Ha! What a guy!) He later
took time to explain everything.
You know, hearing every
comment today and with posters comparing my speech here:
I
used to give talks at small meetings all the time and they never
complained about my spelling! (laughing again)
You see, one of
you was right, in that I have never tried to publish or write
anything. My notes from meetings are what I work from and they are an
outrageous hodgepodge of foreign writing no CIA agent or secretary
could ever crack! (still laughing).
I'm much more of an eye to
eye, face to face, quietly making my position known, kind of fella.
Take MK or Mr. Turk; these men can write. Im not kidding when I say
that in their presents or in the company of other smart / important
people I would typically blend into the shadows.
First and
foremost, my reasons here are to simply keep the path warm until the
real play comes into view. If my poor writing skills don't make
things clear enough, it's ok because soon enough events take a hand
and clear the path enough to follow. True, talking to me in person,
you would say the same thing others do; "Trail Guide, you don't
sound anything like you write"! (smile)
Well, that
reminds me of the guy with an extremely large nose. He went into a
plastic surgeons office to get his leg burns fixed and they asked if
they could also fix his nose? He said absolutely NOT! If you did
that, I wouldn't be me!
So,,,,, in that light,,, if I gave
these posts to someone to edit, or had someone else translate most of
Another's thoughts to english, it wouldn't be me.
(smile)
===========
Holtzman wrote a good piece some
time ago and I lost its location. In it he made the distinction about
how we were arguing about the difference between paper gold and
physical gold, along with all our other debates. I think he said that
it was all useless and some of us risked embarrassing ourselves if
paper / real gold spiked together. We should just diversify and watch
the show, he said. (I think that's what he said?)
To a degree
I do exactly as he mentions, except that I don't trust paper gold at
all when the going gets rough. Our difference is the same valley that
separates PGAs (Physical Gold Advocates) from many modern hard money
followers. It's a difference of "learning location".
You
see, it all has to do with how one orients oneself in the world
today. Indeed, understanding the word "orient" provides
some of the answers. Interesting word, orient.
The old romans
didn't have compasses and they depended on the position of the sun to
gain location and direction each day. Every morning they would watch
to see where it rose. They gave the name "oriens" to this
location. In other words, the east. Later, "oriens"
obviously a latin derivative, was slipped into english and it became
orient. Not only was orient used to describe one's positioning in the
world, it also referred to all the lands east of Europe. The Asians,
etc..
In time, most
of the world's thought could be broadly divided into Western and
Eastern.
How well one understood such thought and the people forces that
created them, depended very much on how well we could orient our own
thinking! Are you still with me? (smile)
For myself, I have
placed my feet squarely on the ground that faces East to gain a
better understanding. Because from here not only do the majority of
the world's people live, there also resides most of the reserves of
oil. Remember, "oriens" became "orient" and that
traditionally was all the lands east of Europe. The Middle Eastern
oil fields included!
Now, over time and across the space of
human experience, Europe has become much better "orientated"
to the "orient" way of trading and thinking than the West.
To this end they will always meld better with them economically than
the US can.
Indeed, this is something Mr. H had better
"orientate" himself with because I suspect he is British.
You see, I say this because only the Brits use "orientate"
and that back-formation of a word has been in use there for about a
century. Truly, plenty of time for him to understand why the Duke of
Edinburgh once said,,,,,,, "the English are much more culturally
and emotionally "orientated" towards Europe". Check it
out for yourself? Perhaps that fine gentleman also knew the "oriens"
from where oil did flow!
and that my friends is why their
English paper gold is going to one day burn.
Now, did I get
those letters and dots in the right places? (smile) I don't think
so!
Trail Guide
Ha!
Well, there you go. That's a bit of the fun found in the old REGULAR
archives. I saw that Jeff found the document Martijn posted on
Scribid. Notice that it is called the A/FOA
*REGULAR* archives. That means it came from the regular forum,
not from ANOTHER
(THOUGHTS!) or The
Gold Trail.
Martijn put a lot of work into that document,
reading all the regular forum archives from 9/22/98 through 12/16/01
(FOA's last post) and pulling out most of the FOA comments that are
not in the main archives. And while discussions like the one above
are not in there, it is easy to jump from Martijn's document back
into the regular
forum to see what other people had to say about it.
Freegold
is a deep concept, with
"infinite resolution," a point I have made recently through
the use of Benoit Mandelbrot's (RIP) fractal geometry. Along this
same train of thought, someone emailed me recently saying, "I am
reminded for some reason, of Isaac Asimov's foundation series - Hari
Seldon and 'the plan'. Freegold is truly a story of epic
proportions." (smile) I replied, "Yes, Freegold is epic.
This description of Asimov's 'psychohistory' – that it can
predict the future, but only on a large scale; it is error-prone on a
small scale – describes the way chaos and fractals relate to
our understanding of the Freegold concept."
You see,
Freegold is not a competing system or theory. It is a paradigm that,
once understood, reveals unending truth (infinite resolution). But it
cannot be reduced to a couple paragraphs. It must be tested over and
over again, from as many perspectives as one can imagine, which is
what I try to do on this blog. As one of my great supporters
wrote:
…From
what prior principle did Newton deduce universal gravitation?
Newton's theory is the product of a grand induction, an integration
of prior inductions made by Kepler and Galileo, based on observations
of planetary orbits, and of the behavior of physical bodies on
earth.
Freegold, too, is a grand induction. Your method of
approaching the issue from a variety of perspectives, all leading to
the same necessary
conclusion,
after precisely defining your concepts, is essential to a proper
inductive process (which, by the way, the mere enumeration of swans
is not).
…given a certain context of knowledge, and
given a certain observation (and there need only be one observation,
no enumeration necessary), the induced proposition will be seen as
necessary. That is, to deny the proposition will be to deny the
validity of the observation, or to contradict the entire context of
your knowledge.
Because the mind is finite, the immediate
context supporting your induced conclusion will be limited. The role
of deduction at this point will be to explore the applicability of
your result to a broader context. Think of Newton, having just
induced the inverse square law in the context of local and orbital
mechanics, now asking himself, "How might my equation apply to
the shape of the earth?" and then deducing the equatorial bulge
and the tides…
There
are four key aspects to Freegold. There are also many more, but these
four are key. That's not to say they are all necessary. They are not.
But it is to say that in order to understand Freegold you must at
least understand the significance of these conditions:
1. The
end of the dollar standard (the end of its timeline as the main
global reserve currency)
2. The end of parity between paper gold
price discovery and physical gold price discovery
3. The
Euro-Freegold concept/project, (at least) 31 years in the making
4.
The flow of oil
I have compiled a few FOA posts here that at
least touch on these four important aspects. They are by no means the
complete picture, but more of a tease to get you to read the whole
thing. Enjoy!
Trail
Guide (08/21/00;
21:04:03MT - usagold.com msg#: 35283)
Reply
Hello
SLF and Welcome!
I say welcome because I think you are new
here. But then again, I haven't read back through all the discussion
that happened while away. As you know many of the posters on this
forum present exceptional perspective. The kind that demands a
comment or answer before moving along. Often one must be careful not
to read them or risk being trapped here. (smile) Yours is the first I
saw today, no doubt there are many others in the archives for later.
So let's stop a while.
Your post # 35259:
--- I have
been following your posts for a couple a years. I am trying to get a
grasp on your current thoughts. As time goes on I am trying to see
how current events will affect Gold/Dollar. It is my impression that
you believe the Euro will be the currency that dethrones the Dollar
as the Dollar hyper inflates. What are your latest thoughts about the
weak Euro strong Dollar? -----
SLF, I see this whole
progression of events as an international chess game. It's
a game that has been going on and evolving for many years.
It's hard to discuss it in an investment format because far too many
"hard money" traders continue to grasp each move on the
board as a short term isolated happening. From this view, they play
these events for quick profits. Mostly they lose big, because this
particular game is unlike anything in the past and continues to
evolve away from past historical precedent.
On the other hand,
there is a whole world of people out there that are making a killing
for reasons they profess to fully comprehend. Yet
truly, their wealth making is little more than a mistake of historic
human proportions and they will have it all taken away for reasons
fully incomprehensible!
SO,,,,
For us to see the whole board we must wade away from shore. Away
from all the shallow water traders and into the deep blue. There we
can feel the real current.
Our
dollar has had a usage period that corresponds with the society that
interacts with it. Yes, just like people, currencies
travel through seasons of life.
Even gold currencies, in both metal and paper form have their "time
of use". Search the history books and we find that all
"OFFICIAL" moneys have at one time come and gone with the
human society that created them. Fortunately, raw gold has the
ability to be melted so it may flow into the next nation's accounts
as "their new money".
This ebb and flow of all
currencies can be described as their "timeline". We could
argue and debate the finer points, but it seems that all
currencies age mostly from their debt build up.
In a very simple way of seeing it, once
a currency must be forcefully manipulated to maintain its value, it
is entering the winter of its years.
At this stage the quality of manipulation and debt service become the
foremost determinant of how markets value said money. Suddenly, the
entire society values
their currency wealth on
the strength and power of the state's ability to control, not on the
actual value of the money itself.
Even
today our dollar moves more on Mr. Greenspan's directions than from
the horrendous value dilution it is receiving in
the hands of the US treasury.
This
is where the dollar has drifted into dangerous waters these last ten
or twenty years. If you have read most of Another's
and my posts,
it comes apparent that preparation has been underway for some time to
engineer a new currency system. A
system that will evolve into the dollars slot once it dies.
Out
here, in deep water, we can feel what the Euro makers are after. No
one is looking for another gold standard,
or even something that will match the long life and success of the
dollar. We only know that the dollar's timeline is ending and a new
young currency must replace it. No great ideals, nor
can we save the world! But a reserve currency void is not
acceptable.
Now
look back to shore and watch the world traders kick ankle deep water
in each other's faces over the daily movements of Euros. From here,
up to our necks in blue water, you ask "What the hell are they
doing?" I'll tell you. They are trying to make $.50 on a million
dollar play! Mostly because they
are seeing the chess game one move at a time.
(smile) Truly, their real wealth is in long term jeopardy.
Our
dollar has already entered a massive hyperinflation. Its timeline is
ending and there will be no deflation to save it. The currency and
all the multitude of derivative instruments that make up our money
system have expanded rapidly over the last 20 years. [1] Even at a
super hyper rate for the last five years or so. We cannot read it
because much of what we "Western" savers call paper wealth
has really become money substitutes thats value is supported by the
government. This paper wealth creation cannot reverse and is
beginning to enter the "natural world" of real things. The
best sign that the currency has entered its last, final inflation is
seen in the manipulated price gauges. Truly, this is only the
beginning. Eventually
we will see roaring price increases in everything, even as our
government indicates level prices or perhaps a deflation in our price
structure.
This has to happen, because there is no saving a society's currency
that has indebted itself beyond any known example in man's past.
In
our time we will all see the Euro become very strong. You will read
and hear this. But, Another and I have known for some time that it
will be the dollar falling away that will make the illusion complete.
I say this because all currencies are but an illusion of
value.
Eventually, either before or after the dollar's
transition, the illusion that makes currencies real will also undergo
a change. That illusion / vision is the current world paper gold
market. Often known as the dollar gold market. This marketplace will
fail with the dollar's timeline and so too will its use to value
gold. In this time gold will not soar in value, rather all currencies
will seek their true relationship to a "FreeGold"
market. The US dollar will someday see $30,000+ for an ounce of gold.
So too will the Euro price gold much higher ($$3,000 to
6,000???).
It is here that our Euro has planned to play the
game to the end. (more later)
In your post:
---- When
Another talks about "slow oil" what does he mean? Is the
current short term oil price increase the beginning of something
larger and more sustaining?---------
Yes, SLF! The transition
from a world of dollars into something else is truly an evolution.
There is no definite point where political wills draw the line. Once
the Euro was born and "online" the dollar evolution began
to speed up. Oil, out of a seemingly impossible position, suddenly
began to rise in price. The paper gold markets were adjusted in what
was the first step of their destruction, the Washington Agreement.
Now, oil prices are set to evolve high enough to test not only the
dollar's strength, but to force the physical gold market to separate
from its paper controlling world. Indeed, our paper gold markets will
very much simulate the same manipulation of price gauges as the CPI.
All in an official attempt to say that our dollar is not dying. In
many ways, it will be the paper longs that abandon the gold markets
(forcing prices ever lower) even as the physical price soars. Yes,
the shorts may make a killing but the money they make will be
worthless!!!!!!
Your post:
--- In reading your last
post on the trail, you say "one Gold is coming my friends, one
Gold"-----
I think Another means that oil flow will slow
until we have one physical gold price. Perhaps this is the end of
Another's beginning odyssey of many years ago. It could be that the
REAL GAME HAS BEGUN!
My friend, the future of physical gold is
to become a wealth holding of a lifetime. However, the world will not
take lightly to such a recognition of private wealth gain. I hold
physical gold in good proportion but am prepared to see its current
paper fictional value plunge to Another's very low dollar price. A
paper price that will be as fictional as $1.00 gasoline during a
dollar hyperinflation. This is the reason I hold a lifetime position
in a few gold shares. Their value may plunge to zero before things
change (an event the shallow water boys could not stand with). Even
in the face of a soaring physical price, investors may choose to
believe the paper markets over reality. Don't laugh, they believe the
CPI today and continue to buy bonds????
Your post:
---
I know you don't have a crystal ball to see the future, but I am
under the impression you are a person that has high level information
about what is going on with Gold/oil/currencies.--------
AS
Another often put it, "I am but a simple person". Events
will make this knowledge real, not the words of myself or Another.
Indeed, only "time will prove all things".
I hope to
continue this, be back next day? , thanks
Trail Guide
Trail
Guide (08/28/00;
20:35:52MT - usagold.com msg#: 35674)
The
big trade!
Hello
Everyone!
I would like to start this as an offshoot from my
post earlier today to Peter Aster (msg#: 35638). It seems we have run
into a roadblock of thought. Perhaps a traffic jam would be a better
analogy.
Let's talk:
In its most basic form, this
presentation has been that;
----in the worldwide modern paper
markets, contract trading has taken over the role of setting gold
prices at a tremendously understated level.----
Years ago hard
physical trading once did that job and did it at a correct level
relative the physical product that was changing hands.
For us
to follow and grasp this concept change correctly, we must start at
the very beginning of simple economic principle.
When someone
buys a product and takes possession of that product he impacts the
value of that item as it relates to the next person in line waiting
to buy. Like this:
----------
When Joe buys one of five
apple from the table of a vendor, he leaves only four apples left on
the table to be bid on by the next buyer. This ages old act of "hard
trading" demonstrates the whole human interaction with supply,
demand, need and emotions. When the next buyer sees that only four
apples are left, where there were once five, whether he likes it or
not his mind will consider the above supply and demand possibilities.
All the while personal need and emotions mix in his brain.
The
result may or may not be a different bid from the first buyer of an
apple. But it will be a true value assessment based on actual, hard,
real time circumstances known at that moment.
When Joe brought
that apple, he impacted real supply and forced the market,,,,,,,
that's everyone trading behind him,,,,,, to form "hard opinions"
about "real demand" and "real supply". In this
dynamic, the next trade is not priced by "soft opinions"
based on conjecture of "will Joe really take delivery".
You
see,,,,,, in real life,,,,,,, in real trading,,,,, Joe taking
delivery now, hard down, undisputed,,,, and this forms a different
"mind set to bid" by the next in line. This mind set is
what creates a "real value bid" instead of a "possible
value bid". These "hard bids" based on "hard
opinions" overshadow and usually bid higher for product than
"soft opinions". In times of "Hard Trading",,,,"Soft
opinion" bids even fail to materialize mostly because "Joe
has shown that he does take delivery"! ========
Now,
I
had today, asked 10,000 Kansas investors to line up along their
border with Colorado. This nice straight border is very long and
allows room for everyone to have some space. I asked half of them
(that's 5,000 (smile)) to stand on the Western side of the border
(Colorado for you non Americans) and the other half of them to stand
directly opposite on the Eastern side (Kansas). All of these people
did this in a hurry and they remembered to bring the very last
$50,000 in cash they had to their name along with a pen and
paper.
This was quite a mess to organize, so I hope everyone
will appreciate this effort! (smile)
So,
Today, while
the Comex was still open and trading,,,, and the US dealer markets
were open,,,,, I instructed all 10,000 of these people to enter into
a REAL LEGAL PRIVATE OFF MARKET CONTRACT with each other for "1,000
ounces of gold". In effect, I asked that 5,000 of these
investors contract to buy from the other 5,000 the equivalent of "ten
100 ounce gold contracts" that would expire in one hour. That's
one hour before the gold markets closed today.
Yes, that's
50,000 contracts for five million ounces of gold that existed during
trading today.
Further, not only did the sellers not have any
physical gold, their last $50,000 in margin cash could not possibly
buy the 1,000 ounces to deliver. Nor could the 5,000 long traders
hope to use the last $50,000 they had to their name to buy that same
1,000 ounces. But their margin deposits did seem to make the deal
real.
So,
While this trade took place and the contracts
were in force (they were legal and binding),,,, I called several
bullion dealers to ask if the gold market was being impacted. I also
watched the computer screen intently to see if anything would
happen.
Surely, with five million extra ounces of gold being
traded, it would have changed the price of gold.
"Just
think, five thousand rich Americans contracting for five million
ounces of gold should have done something!"
Well, it
didn't. So all 10,000 Kansas investors canceled their contracts by
buying each other's commitments and went home a little
smarter.==========
OK,
The reason this little trade
didn't impact the "real value" of physical gold was because
they didn't trade any real gold. As big as the numbers seem, the real
physical supply of gold was never touched. All
they traded with each other was their "soft opinion" about
the future price of gold. Again,
I say soft because they only traded bluffs that were for far more
metal than their real financial assets could cover.
Their
trading, like so much paper trading today creates and expands a soft
paper market that not only overstates demand, but more importantly
allows sellers to "vastly overstate supply without DRAWING FROM
THE APPLE TRAY.
Further, the worldwide paper markets our
margin money has helped sustain, continue to trade an outstanding
interest that is far in excess of real available bullion. ------""""
Yet this outstanding interest is the supply gauge that so understates
what physical gold would trade at as it's used to price the much
smaller dealer gold demand"""
----.
===========
Oh,,,, I'm sure 5% or 10% of my Kansas
traders actually did make and receive delivery while I wasn't
looking. They most likely had some gold and extra cash to make the
deal. But with the size of the world gold market it didn't really
notice.
By far, the majority of these investors were playing
out my observed typical "Western Style". They trade the
price of gold while waiting for someone else to buy enough physical
gold to impact supply. All the while helping support a system that
dealers use to price bullion at an understated price. Again, a price
that's not created by taking real bullion off the market in a volume
equal to contracts traded.
=======
My reply to one investor
heard saying, "why does anyone have to take delivery at
all?".
My good man, then you would end up just like my
Kansas traders as they wade in our modern mess. Always settling up
and trading nothing, and doing it at a lower price. Because the paper
price of bullion will continue to fall from a continued increase in
paper supply. No different than the way our governments lower the
value of money by supplying more of it. The correlation between the
two concepts is indeed staggering. [2]
This logic is almost
like our early currency thinkers asking, "you know, we really
don't need gold as a currency. Let's just trade
dollars!"!===========
Thanks
Trail Guide
FOA
(2/26/2000;
11:13:56MT - usagold.com msg#7)
Foundation
A
Day Walk
If I had a nickel for every time we thought the
dollar was finished, I would have a bunch of nickels! Remember back
in the early 80s or even further back into the 70s. All we heard was
how the dollar was finished and going to crash and burn. Books about
hyper inflation and the need for gold / swiss francs were all over
the place.
I read all of them to gain perspective and also
acted on some of their advice. Made some money on it too. But even
then, something just didn't completely ring true about the whole
scenario. Indeed, in hindsight, gold never did return above $800, the
dollar didn't hyper inflate and most of the world kept using the
dollar as a reserve.
Today, we can more fully understand why
so much of that early insight failed to deliver.
True, the
dollar was seen as a basket case back then. It had just been pulled
from its gold bond and prices were going up all around us. However,
because the world had been on a simi dollar / gold standard, all
nations that had previously signed onto using the US buck as their
currency reserve now did so with even more resolve. More important,
it seemed than using gold itself was out of the question as every
country's Central Bank brought dollars as fast as we printed them.
The dollar still settled most all trade accounts while dollar reserve
buying made an obvious show of support for this world system. No
matter how much bad press was offered, they were staying on track and
they have continued to do so right up into the 90s!
But all of
this flew into the face of what every economist was saying, back
then. The common understanding of the era was: if the US didn't stop
over printing its money, we would all experience a major price
inflation,,,,,, and no one could stop it! Again, "major"
inflation didn't happen and to ask a further question: if the dollar
system was so bad, why didn't the world just dump the reserve system
and refrain from using it further? In other words, let the dollar be
"the US
dollar"
but don't use it as a backing for your own money system.
Thick
Brush Now
Going against the logic of "sound money":
throughout all the currency turbulence of the 70s and 80s era
(including today), the US never did reign in the over printing of its
currency. It continued almost nonstop money supply expansion for its
local economy and in addition sent a good portion of its cash all
over the world. On and on the US trade deficit continued to do its
work of feeding ever more US cash into foreign economic systems. We
printed paper currency by borrowing it into existence,,,,,, used it
to purchase real goods overseas ,,,,,, while foreign governments
actively soaked up this dollar flood by expanding their own money
supply.
Like this: When you buy an item externally, a dollar
is sent overseas to pay for it. Usually, through the world currency
trading arena, that dollar is converted into the local currency of
the nation which the goods came from. But more often than not,,,,,,,
as we print that dollar out of thin air, the foreign government takes
the dollar into its reserve account and prints one of their units for
deposit in the local economic system. They do this because: if the
foreign CB didn't save the dollar as a currency reserve ,,,,,, and
sent it back into the world currency markets to "buy" an
existing unit of their money supply,,,,, this action would drive up
their currency value vs the dollar and make the price their goods
non-competitive in world markets. In other words, a US citizen
couldn't use a printed (borrowed) dollar to buy an item for $10.00
that outside the "dirty float" of exchange intervention
would cost $15.00.
This is how the "dollar reserve
process" inflates the money supply worldwide as we (USA) run a
trade deficit for our benefit. It keeps the dollar exchange rate
higher than it would naturally be thus allowing a US citizen to buy
goods at a cheaper price than our expanding money supply and implied
currency value would normally dictate. A process in and of itself
that invites still more dollars to flow out and purchase still more
external goods. Had foreign CBs not taken so many dollars, the ever
expanding US money supply would have long ago impacted currency
exchange rates and forced a major price inflation internally (in the
US). Yes, the major inflation so many saw coming,,, back then,,,,,
would have arrived,,,,, then.
So why did these other CBs do
it? The standard explanation was that this created a market for their
goods here in the US. Yes that's true, but it begs the question; did
no one in their land want to buy goods manufactured locally,,,,,, and
pay for them with the same printed money supply? Why is it the US
could inflate its money supply to buy cheaper goods externally for no
more than the price of printed paper? But, in the same country our
paper was sent to, they couldn't print their own currency to buy
their own goods? Why couldn't they raise their real standard of
living somewhat using the same process like the US,,,,,, and doing so
without the burden of inflation or importing foreign
currencies?
Again, why would our printed, inflated money
movements not create price inflation for us (USA) in goods purchased
externally? What if they (foreign goods producing countries) printed
an amount of their money equal to the inflow of dollars,,,, but,
without holding paper dollars as reserves to back it,,,,, brought the
exact same goods from themselves. Common prevalent economic theory
says price inflation would result? Or would it? Or better said: why
them and not us?
Into the deep woods again
Again, and
as above,,,,, In the 70s, it was widely held that the dollar reserve
system forced other countries to inflate their local currencies,
thereby importing dollar price inflation. But, as time went by,,,,,
indeed a decade or two now,,,,,, the same process continued nonstop,
with no change. It seemed that some "other" countries had
found a "new way" to somewhat circumvent the dilemma. Or
was this "new way" something sold to them in order to
extend the dollar system's timeline?
Many of the lesser third
world countries experienced a combination of sporadic hyper inflation
and deflation as we forced the dollar reserve system down the throats
of their citizens. Their people's living standard constantly fell as
they worked ever harder to produce more goods in return for more of
our printed dollars. But, instead of using the extra inflow of
dollars (positive trade balance) to buy their own currencies in the
local system,,,,, thereby keeping their currency strong,,,,, they
used that dollar flow as collateral to borrow (from IMF and
international banks) more dollars from the world dollar float (mostly
called Eurodollars). The lure (or the hard sell) was that they could
build up their infrastructure,,, increasing their production
efficiencies (human productivity's),,,, thereby raising the national
standard of living. Further, they were sold the unneeded idea that
even if they didn't completely use the dollar surplus to borrow more,
they
should hold those dollars in reserve (buy and hold US treasuries) and
print more of their own money!
Again,
it seemed they had no advocate to push for their own best interest.
No one told them that their people already worked cheaply enough to
more than offset the competitive loss of a stronger local currency.
No one told them that with a strong local currency structure,,,,(
that using the dollar surplus to buy their own currency would
create),,,,,,,, would allow them to borrow in their own capital
markets. A more go slow approach that builds long term benefits. This
process would free them from the entanglements of making
international debt payments in another money. Indeed, the costs of
those involvement's later proved overwhelming!
Now the trail
becomes more open
For third world countries their
international dollar debt exposure eventually locked them into a
servitude to the dollar reserve system. Despite all their natural and
human resources, currency involvement had taken a lion share of any
productivity increases and increased lifestyle this modern world
offered.
However, it did help the cause for the dollar reserve
system. By creating an ever growing international debt in dollars,
eventual dollar demand to service this debt would only increase.
Thereby keeping its value artificially high. In addition, any
leftover floating dollars quickly took the form of US treasury debt
held in these small countries treasuries. There they were used to
further hyper inflate their own currency supply.
For the more
developed gold owning countries of the G-7, they had a different
question in mind. Again, if taking in inflated dollar reserves was
the act of importing US dollar inflation into ones local economy,,,,,
and in the process creating a market for your goods overseas,,,, why
not just print your own currency without taking in dollars,,,,,, and
in doing so give the same buying power the US citizens have in your
market,,,,,, to your own people?
If it's not price
inflationary to take in part of a world "inflated dollar supply"
and create jobs for your people locally,,,,,, why would it be any
more inflationary to print your own currency outright? Indeed, why
does one need a dollar inflow to legitimize the same money inflation
process? That being currency inflation to create jobs?
Why
should we (as dollar asset holders) think about this question?
Because someone else is and doing something about it today!
Back
to a marked trail
Today,,,,,, and after all of this,,,, the
dollar never did crash from price inflation. At least nothing like
what was expected earlier in the last two decades.
The dollar
reserve system was never going to fail then because the major world
economic powers were willing to use (waste) all the productive
efforts of the world's people to keep it running. Looking back we now
understand the thinking behind this. Without the dollar acting as a
reserve, we would have had to go back to a gold system. There was no
other currency structure strong enough or deep enough to carry the
load.
But, gold had been proven to be much too easy to
circumvent as a national or world currency. It seemed human dynamics
would never allow an economic system that operated on a pay as you go
process without gold debt. If
history had proven anything it was that if we have a money,,,, fiat
or gold,,,,,, we are going to lend it, borrow it and in the process
create debt. Yes, even using gold!
Even
if we have a pure gold system, human nature will find a way to turn
it into securities. In doing so we
will,,,,, come hell or high water,,,,,, lend more gold than we have
and borrow more than we can pay back. One has but to return to the
history books to see it all in plain print. Over and over again, we
start with a solid gold foundation and soon degrade it into trash.
It's not just the American way,,,,, it's the world's way.
Because
the modern world had progressed into the efficiencies of using high
speed digital fiat currencies, no one at that time or today, was
willing to crash the whole system by returning to gold. I suspect
that the world's richest would have lost a lot, but so to would "us
regular" people. Even with our savings in the form of a "digital
illusion", at least we had a job to go to and a dream in our
bank account. Removing the dollar and returning to gold would have
erased the illusion and temporarily shut down the jobs.
So,
dollar hyper inflation never arrived and gold did not make its run
because
world CBs bet your productive efforts on supporting the dollar
reserve. In the process, the US standard of living was raised
tremendously on the backs of most of the world's working poor. But
this is not about to last!
A
broad view from the ridge
Not
long after the US defaulted on its gold loans,,,, dollars held as
gold certificates,,,,,, major thinkers began the long process of
forming another world currency. One that would not maintain the
fiction of a gold standard with the somewhat fixed gold prices
inherent in such a system. The creation was distorted, to say the
least. Just as the River in my first post was often seen in
distortion, so too was this currency issue. It began with the
European Currency Unit (ECU) and has later progressed to its present
state of the Euro.
After
operating on a fiat system for 20+ years people are starting to
realize that the
only thing that backs a currency is the real productive efforts of
their people.
Yes, over
time we always borrow more than our productive efforts can pay back
and proceed to crash the money system.
But
what else is new? (smile)
We call this a money's "timeline"
and it's as new an idea as life, death and taxes! Time
and debt age any money system until it dies.
The world moves on. Only
this time gold is going to play a different part in the drama.
We will all watch it unfold.
It seems people saw something
else that would make the Euro unique. Paid-up assets also stand
behind circulating money. Indeed, if someone owns a $100,000 dollar
piece of land , has a good producing job and borrows $50,000 against
his land,,,,,, the world is likely to circulate that debt note as a
fiat land backed currency. But, if his gold (the land) is worth $1
million in a free physical market,,, AND RISES FURTHER IF CURRENCY
SUPPLY OUTPACES REAL PRODUCTION,,,,,,, and his other debts are
relatively low ,,,,,, the same note would circulate just as
effectively if the $50,000 was borrowed against
his name alone.
In
essence, the jump into the Euro is more based on a new currency that
is more honest in dealing with our historic human dynamics. Let's try
not lying to ourselves and admitting that gold alone in a currency
will not remove our will to borrow and lend and therefore eventually
defraud each other! Would it not be better to at least not shackle
the money to gold? Indeed, a real physical freegold market will
constantly be devaluating any fiat currency over a long term. While
removing the need for CBs to maintain fixed exchange structure
through a dirty float against gold.
But, the most important
aspect is in the escape valve gold would provide to developing
countries with positive trade flows. Those that wish to settle their
debts outside the currency arena using gold as a settlement. Or, if
they wish, to buy gold in the open market with their trade
reserves.
The secret to all of this is in the "Legal
Tender laws". Allowing
gold to be used as a Legal Tender,,,,
"for the settlement of all debts public and private",, but
changing
international law such that no
form of debt can force its payment in gold!
This opens a one way street for gold and a two way street in fiat
currencies. No one will lend gold because they cannot force its
return in the courts, thereby making gold a physical
only
international
currency. Yet, on the other hand, we all must borrow in this modern
world and currencies will be the only avenue for this. Creating a
demand (and added value) for them [fiat currencies] in addition to
general use demand.
The first thought many will have is that
everyone will just buy gold to make debt payments, driving out fiat
currencies. But remember, if you have debts they will be [enforced]
in currency settlement only. One will weigh the cheapest form for
repayment! Gold in this atmosphere will be completely free to trade,
become extremely expensive and stay that way.
We rest
now
True there is a lot more to this story. Some posters have
been discussing it publicly for some time on the USAGOLD forum. If
you want a wonderful background reading on what "Freegold"
would mean,,, get your laptops out tonight and read the entire link
below. There is also considerable agitation voiced against this
view.
First read all of:
Aristotle
(2/7/2000; 7:15:24MDT - Msg ID:24589) It begins!
-----*
Executive Summary --an Outline of Observations *----- [3]
My
position: The world is going to change its currency system before
long and this will greatly impact the wealth of dollar asset holders.
Not to mention physical gold holders. As a note for further
consideration and talks,,,,, we have talked before about the
"Texas Railroad Commission" and how it once declared oil a
public utility and later controlled its production. In
the future, international
law must declare all large gold reserves to be "public
utilities" in the countries they reside.
Mines
will be very profitable and good investments after they recover from
the destruction of our existing paper gold market. Still, their total
production will be controlled and somewhat taxed. Small private
operations will more likely be heavily taxed.
We will pick up
the pace later (smile). Eventually getting to oil and the markets
today.
Fires out.
Thanks for reading,,,,,, FOA/ your Trail
Guide
Sincerely,
FOFOA
[1]
For more on this topic, see Credibility
Inflation
[2] For more on the subject of "soft supply and
hard demand" see my old post, The
Call of the Century, named for Another's open-ended call to buy
physical gold in the $200's.
[3] I second FOA's recommendation.
Read the link.
PS. I have received two separate submissions
from readers for Freegold
theme songs (I
would not go so far as to call them anthems). I think they are both
excellent candidates. So over in the right-hand column you will find
a poll where you can vote for which one you think is best!
In
this instance, I recommend that you first read the lyrics, pass
judgment on the lyrics, and then watch the video. It may help
counteract "artist bias" in the voting. Remember, you are
voting for the most Freegold-worthy song, not your favorite artist or
even your preferred music style. Here's the first one:
Do you
ever feel like a plastic bag
Drifting through the wind
Wanting
to start again
Do you ever feel, feel so paper-thin
Like a
house of cards
One blow from caving in
Do you ever feel
already buried deep
Six feet under
Screams but no one seems to
hear a thing
Do you know that there's still a chance for
you
Cause there's a spark in you
You just gotta ignite the
light and let it shine
Just own the night
Like the Fourth of
July
'Cause baby, you're a firework
Come on let your colors
burst
Make 'em go "Aah, aah, aah!"
You're gonna leave
them all in awe, awe, awe
Boom, boom, boom
Even brighter
than the moon, moon, moon
It's always been inside of you, you,
you
And now it's time to let it through
Cause baby you're a
firework
Come on show 'em what you're worth
Make 'em go "Aah,
aah, aah!"
As you shoot across the sky-y-y
You don't
have to feel like a wasted space
You're original, cannot be
replaced
If you only knew what the future holds
After a
hurricane comes a rainbow
Maybe a reason why all the doors are
closed
So you could open one that leads you to the perfect
road
Like a lightning bolt, your heart will glow
And when
it's time you'll know
You just gotta ignite the light and let
it shine
Just own the night
Like the Fourth of July
Cause
baby you're a firework
Come on show 'em what your worth
Make
'em go "Aah, aah, aah!"
As you shoot across the
sky-y-y
Baby you're a firework
Come on let your colors
burst
Make 'em go "Aah, aah, aah!"
You're gonna leave
them all in awe, awe, awe
Boom, boom, boom
Even brighter
than the moon, moon, moon
It's always been inside of you, you,
you
And now it's time to let it through
(I'm sorry that
this video doesn't include the last verse of the song, but it
compensates in other ways)
Katy Perry –
Firework
this
fascinating concept of Freegold.
On
USAGOLD:
ANOTHER
(THOUGHTS!)
FOA's
The Gold Trail
Hall
of Fame Posts
Regular
Forum
On this blog (in no particular
order):
Equilibrium
Bondage
or Freegold?
Synthesis
The
Shoeshine Boy
How
Can We Possibly Calculate the Future Value of Gold
Relativity:
What is Physical Gold REALLY Worth?
Gold:
The Ultimate Wealth Consolidator
The
Debtors and the Savers
"It's
the Debt, Stupid"
Open
Letter to EMU Heads of State
The
Dukes of Wetton
All
Paper is STILL a short position on gold
Your
Own, Personal, Freegold
Call
Me Contrarian
The
Triumvirate of Wealth
Dead
End
The
Bermuda Triangle of Currency
Mona
Lisa or Ben Franklin?
The
21st Century Bank Run
Greece
is the Word
Living
in a Powder Keg and Giving Off Sparks
Gold:
The Ultimate Hedge Fund
I
can feel it coming...
Gold:
The Ultimate Wealth Reserve
Metamorphosis
Gold
is Wealth
Gold
is Money - Part 1
Gold
is Money - Part 2
Gold
is Money - Part 3
Fair
Value Gold?
Say
Goodbye to Wall Street
Shake
the Disease
The
End of a Currency
No
Free Lunch
Confiscation
Anatomy - A Different View
Confiscation
Anatomy – Part 2
The
Waterfall Effect
Taking
Delivery of Physical
The
Underwater Beach Ball Effect
The
Judgment of Value
Freegold
On the relevance of oil to Freegold:
GOLD
& MONEY: More Than Meets the Eye
The
King and his Gold
It's
the Flow, Stupid
Also, Ender's comments beginning here:
"The concept of
Freegold is something that means different things to different
people. It is amazingly simple, yet curiously complicated. We are on
the path, yet the world races at a snail’s pace.
"From
my point of view, Freegold is not a “solution for” but
will be the “result of” the current financial mess that
we are in today. To better understand what lies ahead, one must be
willing to have an open mind and think objectively. More importantly,
the seeker must be willing to set aside triggering emotions that
prevent thinking as the ‘other’…"
Posted
by FOFOA at 11:42
PM 157
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