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    Gold as default reserve

    Posted by Ivo Cerckel on May 9th, 2009

    La confiance fait défaut

    confidence, overconfidence, and abuse of confidence

    Once dollar hegemony will collapse, the future will belong (the future does thus already belong) to those who can demonstrate their creditworthiness with their gold (hiding in oil) collateral. Our Masters are still able to prevent this because we are still living in a fraudulent world of unbacked paper money and fractional-reserve banking.

    Consider this simple fact: we engage in an exchange of goods and services everyday by using money as the means of exchange; and we offer our labour in exchange for money, which, in itself, has no value. We only do this because we believe that we will, in turn, be able to exchange that money for more goods or services. This fact tells us much about the confidence that we place in money itself. And it tells us much more about the confidence that we place in each other, said European Central Bank president, the late Dr Willem F. Duisenberg, in his 9 May 2002 Acceptance speech of the International Charlemagne Prize of Aachen for 2002. (1)

    Caterpillar: Who are YOU?

    Alice: This was not an encouraging opening for a conversation. I — I hardly know, sir, just at present — at least I know who I was when I got up this morning, but I think I must have been changed several times since then.

    Because some people have been over-confident in what they could achieve with money or how they could achieve more money and others have abused the sheeple’s confidence through issuing unbacked paper money or through banking on a fractional-reserve basis, confidence is collapsing.

    “La confiance fait défaut”, allow me to translate this as “confidence is defaulting”, because unbacked paper money and fractional-reserve banking are fraudulent.

    The need therefore arises for a protection against this default.

    In order to continue to instill confidence in other people, you need a universal collateral (gold (hiding in oil)) which demonstrates your credit-worthiness.

    The bigger you are, the more gold collateral you need.

    But the value of this gold reserve collateral must be valued continuously.

    And that’s where the shoe pinches. The global imbalances between trade surpluses (Asia) and trade deficits (the West) continue to grow.

    Under the international gold standard, discrepancies in balances of imports and exports were sometimes settled by shipment of gold. (2)

    What? Alice, euhr Cerckel, is crazy! He wants that again. No, he wants gold as a freely floating financial-wealth-reserve, that is, as a default reserve. He wants central banking to be repealed. And he wants banks to be allowed again to issue certificates for some of the gold they hold in reserve and he wants the value of these certificates to increase to the extent that the ounces, kilograms, or tonnes of gold held in reserve by the issuing bank increase. (3)

    Yes, of course there are global imbalances, there is no more standard to balance imports and exports and therefore our Masters need a New Bretton Woods, which does longer exist since 15 August 1971, when US of A president Richard Nixon unilaterally broke it. Bretton Woods linked the said dollar at fixed parity of 42 something dollar to an ounce of gold and all other currencies to the dollar. Nixon said njet!

    The manipulation of the price of gold has arrogated to itself the function of balancing imports and exports.

    As price of gold has been raped, it can no longer fulfil its function.

    Houston, we’ve got a problem!

    How will we achieve a honest valuation of gold?

    They want to devise a new straitjacket like Bretton Woods and they think that that will avoid the total collapse.

    No way!

    The collapse is arriving.

    Even the Gulf states seem therefore prepared to unpeg or depeg their currencies from the US of A dollar.

    They are conceding that the said dollar still remains the “dominant” global currency,
    but they are prepared to revise their position if things change. (4)

    They are thereby displaying that they also realise that dollar hegemony will end soon.

    Once the Dollar International Financial and Monetary System will collapse,
    manipulation of price of gold (to support that System) will have come to an end
    and the future will belong (the future does thus already belong) to those who can demonstrate their creditworthiness with their gold (hiding in oil) collateral.

    Just like in 1913, 1933 and 1968-1974, this will bring about a gold revaluation.

    Our Masters are trying to prevent this with what they call quantitative easing, or euphemistically credit easing, both of which used to be called credit expansion until nine months ago.

    Their attempts are doomed to fail.

    If our Masters would immediately recognise this failure, the price of gold would explode.

    Our Masters are still trying to prevent this.

    They are still able to prevent this because we are still living in a fraudulent world of unbacked paper money and fractional-reserve banking.

    Time is up!

    Caterpillar: Who are YOU?

    Alice: This was not an encouraging opening for a conversation. I — I hardly know, sir, just at present — at least I know who I was when I got up this morning, but I think I must have been changed several times since then.

    The Duchess:
    I quite agree with you. And the moral of that is: Be what you would seem to be, or if you’d like it put more simply: Never imagine yourself not to be otherwise than what it might appear to others that what you were or might have been was not otherwise than what you had been would have appeared to them to be otherwise.

    Alice: But I don’t want to go among mad people.

    The Cat: Oh, you can’t help that. We’re all mad here. I’m mad. You’re mad.

    Ivo Cerckel
    ivocerckel@siquijor.ws

    Alice: And how many hours a day did you do lessons?

    The Mock Turtle: Ten hours the first day, nine the next, and so on.

    Alice: What a curious plan!

    The Gryphon: That’s the reason they’re called lessons, because they lessen from day to day.

    NOTES

    (1)
    International Charlemagne Prize of Aachen for 2002
    Acceptance speech
    by Dr. Willem F. Duisenberg, President of the European Central Bank,
    Aachen, 9 May 2002.
    http://www.ecb.eu/press/key/date/2002/html/sp020509.en.html

    (2)
    Henry Hazlitt, “Economics in One Lesson”, New York: Arlington House Publishers, 1978, 2nd ed. (first ed. published 1946 by Harper and Brothers), 85, p. 86
    Chapter 12 The Drive for Exports
    http://jim.com/econ/chap12p1.html

    (3)
    The main rationale behind this proposal is of course the other way around. No gold or silver backed system can change human nature which dictates that no issuing bank can withstand the temptation to print more receipts that it has gold in reserve.
    (Roland Leuschel and Claus Vogt, “Das Greenspan Dossier, Wie die US-Notenbank das Weltwährungssystem gefährdet. Oder: Inflation um jeden Preis”, http://www.finanzbuchverlag.de, 2006, 3rd ed., pp. 299- 300)
    This means that to the extent more receipts are issued than gold is held in reserve, the value of the currency decreases.

    (4)
    KSA, Qatar, Bahrain to maintain dollar peg
    http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentID=2009050837317
    SNIP
    SINGAPORE – Saudi Arabia, Qatar and Bahrain officials said on Thursday that they see no need to change their more than two-decade-old fixed-exchange rates to the US dollar.
    “We are committed to the peg because it serves us well,” Saudi central bank Governor Mohamed Al-Jasser said yesterday at an Islamic Financial Services Board conference held in Singapore. The dollar still remains the “dominant” global currency, he said.
    “If things change, one way or the other, that’s what the central bank is there to do, to continue viewing all aspects of the economy and take whatever is necessary to ensure stability,” he added.

    2 Responses to “Gold as default reserve”

    1. Ivo Cerckel Says:

      This video gives one more reason to repeal central banking:

      Is Anyone Minding the Store at the Federal Reserve?
      http://www.youtube.com/watch?v=PXlxBeAvsB8
      06 May 2009
      Rep. Alan Grayson asks the Federal Reserve Inspector General about the trillions of dollars lent or spent by the Federal Reserve and where it went, and the trillions of off balance sheet obligation.

      Ivo:
      The Federal Reserve Inspector General does NOT know the answer.

    2. Ivo Cerckel Says:

      Central banking cannot possibly be independent.

      Central banking must be repealed, not strengthened.

      GCC urged to strengthen central banks
      By Mohammed Elsidafy on Tuesday, May 12, 2009
      http://www.business24-7.ae/articles/2009/5/pages/11052009/05122009_6bdb23d34de342b1bb3fb908208647da.aspx
      SNIP
      GCC and other Arab countries were yesterday urged to strengthen their central banks and grant them the independence they needed to control banking operations.

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