the liquidity argument of the dollar regime

The Chinese want the world to know that they are increasing their gold reserve in order that the product (the “fruit”) of their wealth be consolidated with a view to further fructifying.

US of A dollar versus gold

US of A dollar versus China et alt.

Who’s the real Mercantilist? China or Geithner?

Who’s the real Keynesian? China or Geithner?

Gordon Brown?

The dollar-regime is promoting itself with the argument that the liquidity of the regime would be in sharp contrast with the non-liquidity of mercantile gold.

The regime is arguing that one can get rid of dollars and dollar derivatives “ad nutum” (instantaneously), whereas, says the regime, one would not be able to find a buyer for gold when one wants to sell it.

This has always been the argument of the advocates of a dollar standard instead of a (mercantile) gold standard (hoarding).

Yes,
the Mercantilist theory, which formed the foundation of economic thought from about 1500 to 1800, says that countries should export more than they import and, if successful, would receive the value of their trade surpluses in the form of GOLD [capitalisation mine] from the country or countries that ran deficits.
(John D. Daniels and Lee H. Radebaugh, “International Business”, Addison Wesley, 1995, 7th ed., p. 168)

Ir is true that
the main concern of the Mercantilists was with the so-called balance of trade and the alleged need of governments to secure an excess of exports over imports, as the means of increasing the quantity of money in a country that lacked its own gold and silver mines.
(George Reisman, “Capitalism – A Treatise on Economics”, Ottawa, Illinois: Jameson Books, 1998, 3rd ed., p. 6)

It is also true that
the concern of the Mercantilists with increasing the quantity of money led them to anticipate the essential fallacy of Lord KEYNES [capitalisation mine] in the last century, namely, that it is necessary for government to intervene in the economic system for the purpose of stimulating “demand” and “employment”.
(Reisman, loc. cit.)

But,
in order to keep this dollar liquidity alive, the dollar regime must continuously proceed to further devaluation.

And, adds Dr Reisman on p. 527,
Mercantilism bears a close similarity to the ideas of KEYNES and his followers in its concern with finding a source of economic “STIMULUS” and its fears that in the absence of such stimulus, the economic system must languish in employment and poverty. Its views on the ability of a larger quantity of money to reduce interest rates are also indistinguishable from those of KEYNES. [all capitalisations mine]

Now,
WHO’S THE REAL MERCANTILIST?

China or Geithner?

WHO’S THE REAL KEYNESIAN?

China or Geithner?

Gordon Brown?

Yes,
further devaluation is completely opposed to Mercantilism.

Indeed,
in Mercantilism, the wealth one has acquired is being consolidated in or through constant purchasing power.

Contrast
this to the dollar barrel in which more and more holes are appearing.

To the extent
that more dollars are being poured into the barrel,
to that extent
more holes are appearing in the barrel.

To the extent
that more dollars are being poured into the barrel,
to that extent
the échappatoires, the escape holes, must be larger to allow for the liquidity of the regime.

It is absurd to keep mercantile gold away from this.

If the dollar regime were to decide to keep mercantile gold away from the barrel, the dollar and its regime would self-destruct.

Who will indeed be prepared to keep dollars cerckeling around if their loss of purchasing power accelerates with the cerckeling around?

Gold advocates want the product (the “fruit”) of their wealth to be consolidated with a view to further fructifying, not with a view to further cerckeling around.

This is what the Mercantile Chinese want the world to know about their increasing gold reserve.

Gold exists INSIDE the liquid and continuously devaluating fiat system
THEREFORE
this wealth consolidator will always remain tradable.

Since the dollar regime has outrageously mismanaged the dollar liquidity, the regime has no other option but to accept the mercantile-gold competitor.

If FreeGold were to be further postponed,
the liquid dollar-regime will only be further marginalised.

At the end of the day, the regime will then fall into disuse.

Tomorrow, it will no longer possible to compromise between the dollar and gold.

Overthrowing the dollar regime will no longer even be necessary.

Ivo Cerckel
ivocerckel@siquijor.ws

The value of the US of A dollar is changing fast
hence, China is accumulating gold

“Our” stock markets are currently involved in a bear rally. Our Masters have now decreed that the financial crisis is over.

For our Masters, there is indeed no alternative than that the crisis is over because if the crisis is not over, then our Masters will face immediate natural political death.

Manipulation of confidence (confidence in what?
in the world reserve currency, of course) becomes then of the utmost importance.

This is a Catch-22, or a situation which presents the illusion of choice while preventing any real choice, for our Masters. (1)

The present financial crisis is the end-game of a failing system.

We are indeed in a systemic financial crisis. This crisis is due to the phenomena of irredeemable digital liquidity and fraudulent fractional-reserve banking. (2)

But mystics are people who surrendered their mind at its first encounter with the minds of others. (3)

Hence, whereas the International Monetary Fund (IMF) was gloomy earlier this week (4), the mystics of the Group of Seven Leviathans (G7) were cautious, but optimistic on Friday, and were pointing to signs that the worldwide slump is easing, and predicting a rebound by later this year. (5)

Also on Friday, gold prices rose modestly after China said it had become the world’s fifth largest holder of bullion after secretly increasing its reserves by 75 per cent to 1,054 tonnes since 2003. Gold added 0.9 per cent at $910.20 a troy ounce, taking its gain over the week to 4.9 per cent. There was talk that China’s announcement could prompt a broader reassessment of gold’s role as a reserve asset by other central banks. “The move does send a positive signal to the market, re-igniting gold’s relevance as a monetary asset,” said Suki Cooper of Barclays Capital. (6)

“The financial crisis means the US dollar’s value is changing fast, and it may retreat from being the international reserve currency. If that happens, whoever holds gold will be at an advantage”, said Hou Huimin, vice general secretary of the China Gold Association. (7)

If the US of A dollar is reduced to its intrinsic value, Gresham’s Law (“bad money drives out good money”) is no longer applicable because the US of A government will no longer have the opportunity to intervene in monetary matters in order to debase the intrinsic value, zero, of that piece of paper, called the US of A dollar (8)

Gold, hiding in oil, will then again reign supremely.

Ivo Cerckel
ivocerckel@siquijor.ws

NOTES

(1)
Catch-22 is a term coined by Joseph Heller in his novel Catch-22, describing a set of rules, regulations or procedures, or situation which presents the illusion of choice while preventing any real choice. In probability theory, it refers to a situation in which multiple probabilistic events exist, and the desirable outcome results from the confluence of these events, but there is zero probability of this happening, as they are mutually exclusive.http://en.wikipedia.org/wiki/Catch-22_(logic)

(2)
http://bphouse.com/honest_money/worthless-digital-liquidity-and-fractional-reserve-banking-are-fraudulent-%E2%80%93-let-the-system-collapse-now/

(3)
http://aynrandlexicon.com/lexicon/mysticism.html

(4)
IMF’s Strauss-Kahn says crisis still far from over
Thu Apr 23, 2009 11:41pm BST By Lesley Wroughton
http://uk.reuters.com/article/topNews/idUKTRE53M4BL20090423?feedType=RSS&feedName=topNews
SNIP
WASHINGTON (Reuters) – IMF Managing Director Dominique Strauss-Kahn said on Thursday the global economic crisis still had “long months” to go before it was finished.

(5)
From The Times
April 25, 2009
Mood at G7 meeting is cautious, but optimistic
Gary Duncan, Economics Editor, in Washington
http://business.timesonline.co.uk/tol/business/economics/article6165660.ece
SNIP
Finance chiefs from the Group of Seven leading economies last night boosted optimism that the worst of the global recession may well be over, pointing to signs that the worldwide slump is easing, and predicting a rebound by later this year.
In a cautious assessment, the G7 finance ministers and central bank governors emphasised that risks of further decline persisted, but concluded: “Recent data suggest that the pace of decline in our economies has slowed and some signs of stabilisation are emerging. Economic activity should begin to recover later this year.”
G7 officials remain wary of prematurely declaring victory over the worst global downturn since the Second World War. They renewed pledges to take whatever actions were necessary “to accelerate the return to trend growth”.
The relatively upbeat G7 conclusion was clouded by dire developments in Europe and the US that suggest there is more economic pain to endure.

(6)
News of Chinese buying ‘re-ignites gold’s relevance
By Chris Flood
Published: April 24 2009 23:34 | Last updated: April 24 2009 23:34
http://www.ft.com/cms/s/0/f02eba70-30fa-11de-8196-00144feabdc0.html

(7)
China reveals huge rise in gold reserves
BY Chris Flood in London
Published: April 24 2009 09:31 | Last updated: April 24 2009 12:32
http://www.ft.com/cms/s/1d23f80c-30aa-11de-bc38-00144feabdc0,s01=1.html
Text no longer available because it was
Last updated (again): April 24 2009 19:06

(8)
Gresham’s law reads: “Bad money drives good money out of circulation”.
Taken at its face value Gresham’s law violates the general rule of the market that the best methods of satisfying consumers tend to win out over the poorer.
Actually, Gresham’s law should read: “Money overvalued by the State will drive money undervalued by the State out of circulation”.
Gresham’s law thus says that when government intervenes in monetary matters IN ORDER TO DEBASE CURRENCY, bad money drives out good money.
(Murray N. Rothbard, “Man, Economy, and State – A Treatise on Economics”, Auburn, Alabama: Ludwig von Mises Institute 2001, (originally published 1962), p. 783)