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Archive for August, 2011

The Freegold proof is in the Finnish-Greek pudding

Posted by Ivo Cerckel on 30th August 2011

Euro countries angered at Finland for secrecy over Greek collateral pact
Dissatisfaction also reported in Commission
Helsingin Sanomat – 29 August 2011
http://www.hs.fi/english/article/Euro+countries+angered+at+Finland+for+secrecy+over+Greek+collateral+pact/1135268931501
SNIP
The smaller countries of the common European currency, the euro, and the European Commission, are reportedly upset at Finland for not disclosing the content of the bilateral agreement between Finland and Greece on collateral for Finland’s loan guarantees. The matter did not come out before Minister of Finance Jutta Urpilainen (SDP) announced the agreement at a press conference on August 16th.
The Social Democratic Party said that the key eurozone countries were informed about the result of the negotiations.
UNSNIP

Note that no central bankster is involved in the negotiations.

This is the crisis of the guv’mints established on euroland.
This not the crisis of the euro.

The proof is in the pudding.
Greece cannot use its share of the gold reserves of the euro, which are held by the European System of Central Banksters, as collateral.

Aug. 1, 2011, 11:16 a.m. EDT
Greek central bank lifts gold reserves further
http://www.marketwatch.com/story/greek-central-bank-lifts-gold-reserves-further-2011-08-01
SNIP
LONDON (MarketWatch) — The central bank of Greece added further to its gold reserves in June, lifting its holdings by 1,000 troy ounces for a second consecutive month.
UNSNIP

TO REPEAT – Ad nauseum:

FreeGold meant for the behind-the-scenes architects of the euro, and still means, that the euro has a gold component and a paper component, but puts a “firewall” between both so that gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies.
It is the (quarterly) marking to market (MTM) of the gold reserves of the Eurosystem, not to the Bretton Woods model of $42.2 like the USA central bank (originally $35), by the ESCB which provides that wall.

The euro is the first currency that has not only severed its link to gold, but also its link to the nation-state, said ECB president Duisenberg in 2002 upon receiving the Charlemagne Prize in Aachen
http://www.ecb.eu/press/key/date/2002/html/sp020509.en.html

Upon receiving the same prize in June 2011, ECB president Trichet said:
The {Maastricht] Treaty has mandated the ECB to keep safe the money of Europe’s citizens {not the guv’mints established on euroland}
http://www.ecb.int/press/key/date/2011/html/sp110602.en.html

The point is that the Eurosystem’s response (volume expansion) to its current systemic threat (the debt crisis) is not surprising. Does this mean the euro will collapse (experience hyperinflation)? No. Because, for one reason, it has severed the link to the nation-state. The euro is behaving perfectly predictably in maintaining the nominal performance of its system through expansion,
but it cannot be forced to fund the future government profligacy of the PIIGS
through volume-only expansion.
That link is severed.
http://fofoa.blogspot.com/2011/07/euro-gold.html

The process of marking to market (MTM) the Eurosystem’s gold reserves has resulted during the FIRST decade of the Freegold (ECB MTM FLOATING gold price) “experiment”, in gold rising from 30% to 60% of the Eurosystem’s (international liquidity) reserves.
http://fofoa.blogspot.com/2010/07/gold-ultimate-wealth-consolidator.html

The euro and Freegold are coexisting to supplement each other, without interacting with each other.
That’s how the polity achieves its democratic legitimacy and speaks with one golden voice.
No harmonisation of politicians, bureaucrats or laws has been required to that effect.

The ESCB is the European “System” of Central Banksters,
not the European “Service” of Central Banksters
as Brussels Court of Appeal says in its 01 June 2011 judgment
Re: gold reserves of the National Bankster of Belgium, the Belgian central bankster.
http://www.nbb.be/doc/ts/enterprise/juridisch/arrest20110614.pdf

Ivo Cerckel
honestmoney@maktoob.com

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Lagarde est débile – she destroys our potential for imagination

Posted by Ivo Cerckel on 28th August 2011

Lagarde Urges Mandatory Recapitalization of European Banks
August 27, 2011, 3:41 PM EDT
By Sandrine Rastello
http://www.businessweek.com/news/2011-08-27/lagarde-urges-mandatory-recapitalization-of-european-banks.html
SNIP
Aug. 27 (Bloomberg) — Christine Lagarde, the new International Monetary Fund chief, said European banks should be forced to build up their capital to prevent the continent’s debt crisis from infecting more countries.
Bolstering banks’ balance sheets “is key to cutting the chains of contagion,” Lagarde said today in remarks at the Federal Reserve’s annual forum in Jackson Hole, Wyoming. Without an “urgent” recapitalization, “we could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis.”
UNSNIP

The 1944 Bretton Woods agreements linked the USA dollar at fixed parity of 35 dollar to an ounce of gold and all other currencies to the said dollar.
On 15 August 1971, USA president Richard Nixon broke the 1944 Bretton Woods system,
Since that day the IMF has no more reason to exist.

Since 15 August 1971 central banksters print money on a fractional-reserve basis. They print money irrespective of the gold they in reserve.
Since the 1971 repeal of the IMF, fractional-reserve banksterism by non-central banksters also grew exponentially.
Ms Lagarde now wants to reduce these fractions by forcibly injecting capital (fractions) in the banks?

The European Central Bankster marks the gold reserves of the European System of Central Banksters (ESCB) to market, not the model of $35 (now $42.2) like the USA.

Would the fresh funds Europe’s banks to prevent a “debilitating liquidity crisis”, not be better spent by the ESCB through adding gold to their gold reserves?

Liquidity – whatever that debilitating concept may mean – would in the process be replaced by a tangible asset that is portable, independent, divisible, durable, and recognisable, replaced by something that survives when liquidity is being to its intrinsic value.

http://www.op-stjoseph.org/blog/sirius_xm_radio_august_12_2011
FIRST THREE MINUTES
SNIP
The real world becomes substituted by a virtual reality which we think is an identical doubling, a perfect mirroring of the real world.
Is the universality of man real or digital?
Our potential for imagination, for our mind seeing the richness of what our eyes and ears receive, is not invited to consider this more deeply
The work has been done and done perfectly
Money is no longer based on exchange-value or use-value
Instead capital flows through digital transactions based upon structures and speculations removed from the basic need of existence, flowing through the telephone and the electronic airways
Our technological mind has projected itself as a screen with a semblance of universality, that we are all connected.
But are we not led away from ourselves?
UNSNIP

Ivo Cerckel
honestmoney@maktoob.com

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Vive la vente à découvert !

Posted by Ivo Cerckel on 12th August 2011

Nos régulateurs financiers sont dépourvus de toute expérience

Les autorités de régulation des marchés de la France, de l’Italie, de l’Espagne et de la Belgique ont décidé de manière concertée de “lutter” contre les ventes à découvert qui sont un mécanisme spéculatif qui consiste à emprunter un actif dont on pense que le prix va baisser et à le vendre, avec l’espoir d’empocher la différence au moment où il faudra le racheter pour le rendre au prêteur. Cette pratique est accusée de précipiter la chute des actions les plus fragiles et d’aggraver l’instabilité sur les marchés financiers.

Le principe de causalité dit que rien ne peut être la cause de soi-même.

L’homme obtient la connaissance du principe de causalité après avoir obtenu la connaissance du principe de non contradiction, qui est uniquement applicable à la pensée humaine et non à la réalité, et qui énonce qu’il est impossible d’être et de ne pas être en même temps et sous le même aspect.

Tout comme le principe de non contradiction, la connaissance du principe de causalité s’obtient par l’expérience.

De combien d’expérience avons-nous besoin?

Nos régulateurs financiers ne disposent apparemment d’aucune expérience.

Ils sont dès lors forcés d’avoir recours à des inductions et des déductions pour blâmer les spéculateurs. Ce faisant, ils oublient que l’interdiction de toute spéculation produit le même effet que de faire défense aux écureuils de se constituer un stock de noix pour l’hiver – cela conduit à la famine et à la mort.
(Walter Block, “Defending the Undefendable”, New York, Fleet Press Corporation, 1976, p. 175)

A présent, nos régulateurs financiers interdisent les ventes à découvert.

Quel sont les effets à long terme de l’interdiction de les ventes à découvert? Nos autorités veulent éviter le désastre. Elles le précipiteront, alors qu’elles accusent précisément les ventes à découvert de “précipiter” la chute des actions les plus fragiles.

Le contrôles de prix ne fonctionnent ni vers le haut, ni vers le bas. Et nos soi-disant autorités croient que l’interdiction des ventes à découvert arrivera au résultat voulu ?

Le revolver gouvernemental défend désormais aux individus de conclure des contrats boursiers mutuellement bénéfiques.

Ceci ne peut que conduire au chaos et au mécontentement radicaux tels en Russie soviétique et Allemagne nazie.

Ivo Cerckel
honestmoney@maktoob.com

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Archer was my friend

Posted by Ivo Cerckel on 10th August 2011

Yes, he was a good man.
He was also a moral lawyer.
When I was unjustly attacked in court, he refused to invoke an even more unjust argument of mine against the attacker’s lawyer.

May you rest in peace, Archer!
You redeemed my previous life in Europe,
I will never forget you.
But if it pleases the Lord to allow me into heaven, we’ll meet again.

Archer was my friend!

Ivo

NegOr lawyers decry murder of colleague
BY ALEX PAL
Monday, August 8, 2011
http://www.visayandailystar.com/2011/August/08/negor1.htm
SNIP
Lawyers in Negros Oriental have condemned Friday’s shooting of lawyer Archer Baldwin Martinez, which led to his death some two hours later at a Dumaguete City hospital.
In an emergency meeting last Saturday, the Integrated Bar of the Philippines, Negros Oriental Chapter, passed a resolution urging the National IPB, Supreme Court and the Department of Justice to help in solving the murder of Martinez and other lawyers in the country.
“We believe that the killing of Martinez was case-related because he was a good man who had no problems in his dealings with others,” IBP Negros Oriental president, Arturo Dupio, said.
So far, police have yet to name a suspect in Friday’s attack, which happened inside Martinez’ office at the second floor of the Leq Tak Building, corner San Jose and Sta. Catalina streets, Dumaguete.
Martinez, 48, was shot thrice in the chest and was rushed to the Holy Child Hospital where doctors later pronounced him dead.

Posted in Uncategorized | 3 Comments »

Brussels Court of Appeal wants to destroy the euro – Updated with Svarca DePage and SECOND ARGUMENT

Posted by Ivo Cerckel on 6th August 2011

“Ius novit curia!”

The Brussels Court of Appeal cannot tolerate that a fallible human judge is being replaced by an impartial golden one.
Nor, second argument, can it link the “monetary adjustment” of 1972 to the Belgian act/statute (loi/wet) of 23 December 1988 which severed the link of the Belgian franc to gold, thereby opening the road for the euro [to, not only do the same thing, but also to sever the link to (the) “sovereign states”] .

It is the gold reserves of the European “System” of Central Banksters (ESCB) which make the decisions that are best for the euro overall.

FreeGold meant for the behind-the-scenes architects of the euro, and still means, that the euro has a gold component and a paper component, but puts a “firewall” between both so that gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies.

It is the (quarterly) marking to market (MTM) of the gold reserves of the Eurosystem (1), not to the Bretton Woods model of $42.2 like the USA central bank (originally $35), by the European Central Bankster (ECB) which provides that wall.

The point is that the Eurosystem’s response (volume expansion) to its current systemic threat (the debt crisis) is not surprising. Does this mean the euro will collapse (experience hyperinflation)? No. Because, for one reason, it has severed the link to the nation-state. The euro is behaving perfectly predictably in maintaining the nominal performance of its system through expansion,
but it cannot be forced to fund the future government profligacy of the PIIGS [Portugal, Italy, Ireland, Greece, and Spain]
through volume-only expansion.
That link is severed.
[The euro is the first currency that has not only severed its link to gold, but also its link to the nation-state, said ECB president Duisenberg in 2002 upon receiving the Charlemagne Prize in Aachen. (5)]
http://fofoa.blogspot.com/2011/07/euro-gold.html

The process of marking to market (MTM) the Eurosystem’s gold reserves has resulted during the FIRST decade of the Freegold (ECB MTM FLOATING gold price) “experiment”, in gold rising from 30% to 60% of the Eurosystem’s (international liquidity) reserves.
http://fofoa.blogspot.com/2010/07/gold-ultimate-wealth-consolidator.html

The euro and Freegold are coexisting to supplement each other, without interacting with each other.
That’s how the polity achieves its democratic legitimacy and speaks with one golden voice.
No harmonisation of politicians, bureaucrats or laws has been required to that effect. (2)

The ESCB is the European “System” of Central Banksters,
not the European “Service” of Central Banksters,
as Brussels Court of Appeal says in its 01 June 2011 judgment
Re: gold reserves of the National Bankster of Belgium, the Belgian central bankster.
http://www.nbb.be/doc/ts/enterprise/juridisch/arrest20110614.pdf

After having quoted (in small characters) on page 7 an applicable legal provision referring to the ESCB with its correct name, the court goes on (in normal characters), on the same page 7, to speak of the European “Service” of Central Banksters.
At the top of page 8, the court then quotes again in small characters the correct name.
Ceci n’est pas une erreur matérielle. Mesdames et Monsieur.
Dit is onwil in hoofde van het hof om het recht uit de hand te geven.
(The small characters have probably been typed by somebody else than the writer of the judgment.
The small characters are quotes, they have probably been typed not by one of the three judges, but copied by one of his or her secretaries (“griffiers” in Dutch, “greffiers” in French).
The normal characters have incorrectly been typed by one of the three judges who, the latter, don’t understand the ESCB.
The court does thus not understand the ESCB.)

By doing that, the said Court of Appeal has once again demonstrated that it cannot tolerate that a fallible human judge is being replaced by an impartial golden one.

A l’origine la monnaie a été conçue comme un instrument facilitant le paiement et remplaçant le troc.
A 19me siècle, le franc était défini comme représentatif d’une certain quantité de métal précieux et pouvait être échangé à la Banque de France contre cette quantité d’or et d’argent.
D’autre part, si le franc était l’instrument habituel de paiement, les parties pouvaient toujours prévoir un paiement avec une autre monnaie.
Une loi [française] du 12 aout 1870 est venue imposer le cours légal : le créancier est tenu d’accepter paiement en francs.
Une loi [toujours française] du 1er octobre 1936 a fixe le cours forcé ; les francs ne peuvent plus être échangés à la Banque de France contre une quantité de métal précieux.
De ces textes découlent l’interdiction pour les paiements internes, des clauses-or (paiement en pièces d’or) , des clauses valeur-or (paiement en euros, le montant de la dette variant en fonction du cours de l’or), des clauses en monnaie étrangère (paiement en euros, le montant de la dette variant en fonction du cours de la monnaie étrangère). Les paiements internationaux échappent à cette interdiction.
Depuis le 1er janvier 1999, la monnaie de la France est l’euro qui était divisé en unités nationales (franc en France) jusqu’au 1er janvier 2002. Cette nouvelle monnaie se substitue par simple changement de nom et conversion automatique.
(Rémy Cabrillac, “Droit des Obligations”, (oui Pierre, comme toi dans ta jeunesse), Paris, Dalloz, 2010, 9me éd, paragraphe 439
The situation under Belgian law is similar, says Van Ommeslaghe, though not identical, says Henri De Page. (3))

interdiction pour les paiements internes des clauses valeur-or (paiement en euros, le montant de la dette variant en fonction du cours de l’or) ?

IF the price IN euro is not allowed
to fluctuate in accordance with the price of gold,
THEN
it is the exchange rate (i.e., the price) OF the euro
which fluctuates in accordance with the price of gold.

By referring to the ESCB as the European “Service” of Central Banksters. the Brussels Court of Appeal has once again demonstrated that it cannot tolerate that a fallible human judge is being replaced by an impartial golden one. (4)

Au cours des années 1980, il est apparu que les principes gouvernant les sûretés traditionnelles étaient trop protecteurs des intérêts du débiteur [tel le banquestère central]
et des solutions de substitution [tel(telles?) Freegold] ont dû être imaginées.
(Dominique Legeais, “Sûretés et Garanties du Crédit”, Paris, L.G.D.J., 2011, 8me éd, paragraphe 15)

It is the gold reserves of the European “System” of Central Banksters (ESCB) which make the decisions that are best for the euro overall.

SECOND ARGUMENT

Thinking about the euro started after 15 August 1971 when USA president Richard Nixon repealed the Bretton Woods Agreements (and thus the IMF whose only function is to maintain the Bretton Woods Agreements). The Bretton Woods Agreements linked the USA dollar at fixed parity of 35 dollar to an ounce of gold and all other currencies to the said dollar. In August 2011, the fixed parity is of $42.2, the link of the said green paper to gold has thus not been severed

Hence , the court speaks in section 1, page 4, and section 10, page 10, of its judgment
of the “monetary adjustment” of 1972
but the court is unable to link this “monetary adjustment” to or with the Belgian act/statute (loi/wet) of 23 December 1988
which the judgment mentions in section 6, page 7
and
which severed the link of the Belgian franc to gold,
and which thereby opened the road for the euro to sever the link not only to gold, but also to the nation-state, i.e., to the “sovereign states” about which sections 8 and 9 babble on page 9 of the judgment.

“Ius novit curia!”

The euro is the first currency that has not only severed its link to gold, but also its link to the nation-state, said ECB president Duisenberg in 2002 upon receiving the Charlemagne Prize in Aachen. (5)

The [Maastricht] Treaty has mandated the ECB to keep safe the money of Europe’s citizens [not: of the monetary union of the guv'mints of euroland] (6)
(Le Traité [de Maastricht de 1992] a confié à la BCE le mandat qui de préserver la valeur de la monnaie des citoyens européens (7)),
confirmed ECB president Trichet in 2011 upon receiving the same Prize in the same city – the Prize being the Prize of the city.

Ivo Cerckel
honestmoney@maktoob.com

DISCLAIMER:
Ik ben geen advocaat bij het Hof van Cassatie van het Federaal Koninkrijk België.

NOTES

(1)
Le traité de Lisbonne a introduit le terme “Eurosystème ” dans les traités. Celui-ci est utilisé depuis le départ par la Banque centrale et est lié au fait que les textes fondateurs supposaient que tous les Etats membres de l’Union européenne adopteraient l’euro et que le Système européen des banquetères centraux se chargerait [tel Van Rompuy à l’avenir ?] par conséquent de toutes les tâches liées à la monnaie unique.
(Marianne Dony, “Droit de l’Union européenne”, Editions de l’Université de Bruxelles, 2010, 3me éd, paragraphe 283)

(2)
As I said:
The euro and Freegold are coexisting to supplement each other, without interacting with each other.
That’s how the polity achieves its democratic legitimacy and speaks with one golden voice.
No harmonisation of politicians, bureaucrats or laws has been required to that effect.euro and Freegold are coexisting to supplement each other.

To paraphrase the 2011 authors of Wyatt and Dashwood
[concerning harmonisation of EU company law – Hi Bob!],
who don’t explain the euro :
It has always been possible to rationalise measures of ECB involvement in rescuing the bottoms of the ministers of the guv’mints established on euroland. It is more difficult to confirm the effectiveness in practice of such measures
(Wyatt and Dashwood’s, “European Union Law”, 2011, 6th ed., p. 700).

Koen Lenaerts and Piet Van Nuffel (Robert Bray and Nathan Cambien, eds.) “Constitutional Law of the European Union”. London: Sweet & Maxwell, 2011, 3rd ed.,
explicitly say “No bail-out”
Still the euro which is the result of the regulation, say Lenaerts and Van Nuffel, – nay, which would according to them and according to the talking heads (and their writing counterparts) guiding public opinion be the result of precisely of the regulation which is being violated – did not suffer from this.

How come?

Monetary policy in the Member States participating in EMU is fully determined by the European System of Central Bank (Eurosystem or ESCB), says section 11-039 of Lenaerts and Van Nuffel.

Section 11-040 of Lenaerts and Van Nuffel starts by saying that the four “basic tasks” of the ESCB are
to define and implement the monetary policy of the Union
to conduct foreign-exchange operations,
to hold and manage the official foreign reserves of the Member States without prejudice to the governments of Member States holding and managing working balances in foreign-exchange; and
to promote the smooth operation of payment systems.

Section 11-040 contains four more paragraphs.
One explaining the (1) of the first paragraph.
One explaining the (2) of the first paragraph.
One saying that the ESCB is also responsible for contributing to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system; and
One saying that the ECB has the exclusive right to authorise the issue of banknotes within the Member States participating in the third stage of EMU.

The (3) which says that “one of the basic tasks of the ESCB is to hold and manage the official foreign reserves of the Member States without prejudice to the governments of Member States holding and managing working balances in foreign-exchange” is thus not being explained.

This is all the more surprising when one goes to the ECB website and then to ECB’s International reserves r External reserves
and realises that the foreign currency reserves (in convertible foreign currencies had at the end of June 2011 an approximate market value of 146,272, whereas Gold (including gold deposits and gold swapped)’s value was more than double the foreign currency reserves and valued at 361,442
http://www.ecb.int/stats/external/reserves/html/index..en.html

Jacques Delors erred.

The Stability and Growth Pact was not necessary.

(3)
Pour Henri De Page un “signe monétaire” qu’il n’y a pas lieu de confondre avec l’ “unité monétaire” a, en droit civil, “cours légal” lorsque la loi “lui attribue force libératoire dans les payements”

Pour ce juriste belge, il y a, d’autre part, “cours forcé” lorsque la loi précise qu’un signe monétaire, qui a cours légal, “devra être accepte par les parties dans les payements, nonobstant toute convention contraire ”

Et De Page d’écrire que cours forcé , au sens où il l’entend, et inconvertibilité du billet sont “presque toujours liés”, mais qu’il n’en est pas “nécessairement” ainsi. et ce qui le prouve, dit De Page, c’est que après que les alinéas 1er et 2 de l’article unique de l’arrêté royal belge du 2 aout 1914 aient, tout comme la loi française du 5 aout 1914
MAAR COURS FORCE WERD PAS IN 1936 INGEVOERD< ZEGT CABRILLAC – DAT HEEFT DUS EEN ANDERE BETEKENIS – AUTRE SIGNIFICATION QUE CHEZ CABRILLAC QUI DIT QUE LE COURS FORCE N’A ETE INTRODUIT QU’EN 1936
, lié le cours forcé et l’inconvertibilité, le Roi des Belges a, par Son Arrêté Royal du 25 octobre 1926 maintenu le cours forcé tout en rétablissant la convertibilité du billet.

On dira peut-être, dit De Page dans une note au paragraphe 461 que lorsque le billet est convertible, il n’y a aucune utilité a exiger des espèces métalliques, puisque le billet est payable a vue en valeur-or. Sans doute, et, nonobstant, le cours forcé subsiste. Cela démontre bien, dit-il, que les deux notions qu’il cherche à distinguer sont différentes.
(Complément au Traité élementaire de Droit civil belge par Henri De Page, Volume II, Complément aux Tômes II et III du Traité, Bruxelles, Bruylant, 1951, Tôme III, paragraphes 460 et 461)

Pour Pierre Van Ommeslaghe, le conseil du Banquestère National de Belgique, dans son syllabus “Droit des Obligations”. p. 1987/972
le cours légal signifie que les débiteurs doivent accepter les papiers en paiement SAUF convention contraire
le cours forcé signifie l’obligation pour les débiteurs d’accepter les papiers NONOBSTANT tout convention contraire.

Van Ommeslaghe poursuit (dans son syllabus 1991-92), p. 1987/974 en disant que la loi du 23 décembre 1988 (donc postérieure à 1987) supprime la fiction selon laquelle les billets seraient représentatifs d’une créance en francs sur sa cliente.

C’est bizarre qu’aucun des auteurs cités ne parle des Accords de Bretton Woods signes 22 juillet 1944 à Bretton Woods
http://fr.wikipedia.org/wiki/Accords_de_Bretton_Woods

Van Ommeslaghe enseigne, en outre, que ” la pratique a en effet crée pour les besoins de la vie des affaires particulièrement, des actes abstraits de leur cause, indépendamment de toute intervention positive du législateur, par le jeu de l’autonomie de la volonté”.
http://bphouse.com/honest_money/2011/07/14/gold-reserves-are-abstract-guarantees-bernanke-vs-paul-is-gold-money

Je n’ai pas encore trouvé le temps de lire ce que Dominique Legeais écrit au sujet des garanties à première demande. dans son ouvrage “Sûretés et Garanties du Crédit” (Paris, L.G.D.J., 2011, 8me éd), cité plus haut.

J’espère recevoir cette semaine (8-12 août) l’ouvrage suivant d’Amazon.co.uk par UPS: Inga Svarca. “First Demand Bank Guarantees: First Demand Bank Guarantees for the Security of International Contractual Obligations”, DM Verlag Dr. Müller (5 Feb 2010)

(4)
see also my review of the 2009 4th edition of Kapteyn and VerLoren van Themaat
http://www.amazon.com/review/R2OAOGVE688LBX

Ubi societas, ibi ius, February 14, 2010
By
Ivo Cerckel

This review is from: The Law of the European Union and European Communities (Paperback)

The back cover, which appears on this page under the “Editorial Reviews – Product Description”, says that, unusual for surveys of European law, this 4th edition of the classic “Kapteyn & VerLoren van Themaat” provides a detailed description and commentary on the Economic and Monetary Union (EMU). Dr Fabian Amtenbrink, a professor of European Union law at Erasmus University Rotterdam, wrote the sections 1, 2 and 3 of chapter X “Economic, Monetary and Social Policy” of the book.

Money is a substance, a thing to which we can refer by the use of the demonstrative phrase “this so-and-so”, readily acceptable in exchange by everyone in a given geographical area and is sought for the purpose of being re-exchanged.

Professor Amtenbrink says that the euro was framed so as to retain its value in order to maintain price stability. He does not say how the floating currency which the euro is retains its value. He evades the point of demonstrating what is the anchor which prevents the euro from floating away. For professor Amtenbrink, it is the law, the 1992 Treaty of Maastricht, which provides the anchor for the democratic accountability of the managers of the euro. He can therefore only talk about the foreign exchange (forex) reserves of the euro not of its gold reserves. He does not say that soon after the 01 January 1999 introduction of the euro, European central banks, including the European Central Bank (ECB) and central banks from inside and outside euro area, but excluding the International Monetary Fund (IMF), concluded on 26 September 1999 the Washington Agreement whereby they said that gold would remain an important reserve asset and that they would therefore limit their gold sales.

Thinking about the euro started after 15 August 1971 when USA president Richard Nixon repealed the Bretton Woods Agreements (and thus the IMF whose only function is to maintain the Bretton Woods Agreements). The Bretton Woods Agreements linked the USA dollar at fixed parity of 35 dollar to an ounce of gold and all other currencies to the said dollar. Hence the IMF, which prohibits linking a currency to gold, did not sign the 1999 Washington Agreement.

Let me explain.

Money needs an anchor, an anchor in reality, not in the mind. Money cannot be itself the anchor if it has no reality. Money cannot be itself the anchor if it exists only in the (digital) mind. The reason why money needs an anchor is not to evoke, not to bring into the mind, the gold standard, but to anchor money by providing for a wealth reserve among the forex reserves. Calling this process “anchoring” relates to the way that ships down anchor to keep themselves in a specific place to avoid drifting way. Gold in the central banks’ strong-rooms has the same role to fulfil as the Mona Lisa at the Louvre, a wealth reserve in the strong room of a monetary union.
Under the 1944 Bretton Woods Agreements, money had such an anchor. The Agreements linked the USA dollar at fixed parity of 35 dollar to an ounce of gold and all other currencies to the said dollar.

On 15 August 1971, USA president Richard Nixon repealed the Bretton Woods Agreements.
“Houston, we’ve got a problem!”

Upon Britain joining the European Economic Community (EEC) in January 1973, that’s immediately after the repeal of Bretton Woods by Nixon, professors Dominic Lasok and John W. Bridge therefore started the Preface to the 1972 first edition of their “Law and Institutions of the European Communities” (Butterworths) as follows:
” ‘Ubi Societas, Ibi Ius’. To understand the nature of the law one must understand the nature of the society from which it emanates and which it purports to govern.”

At that moment, also began the long process of forming another world currency.

Realising that no gold or silver backed system can change human nature which dictates that no
money-issuing democratic majority can withstand the temptation to print more receipts than it has gold in reserve, thereby decreasing the value of the currency,
major thinkers came the conclusion that instead of maintaining the fiction of a (the?) gold standard,
which defined money as a certain quantity of gold,
with the somewhat fixed gold prices inherent in such a system,
it would be more appropriate to devise a system excluding, in the long term, the USA dollar from the forex reserves of their paper currency,
and to replace the dollar element of these reserves with gold.

Before the ECB was born on 01 January 1999, central banks of the world had traditionally carried their gold reserves at values that typically reflected their price at the time of acquisition or by legislative decree. With the birth of the euro, the ECB said it would begin carrying all components of reserve assets on its books on the basis of actual market value — which were then to be reassessed quarterly. The ECB openly marks its gold reserves to market. But there is no law about this. It has not yet been discovered how free-floating gold reserves can determine the value of a currency. The day the law will be enacted, it will become clear that by repealing Bretton Woods, Nixon “de facto” and “de iure” also repealed the IMF whose only function is to maintain the now-repealed Bretton Woods Agreements. (I wrote “Ubi societas, ibi `ius’ “, hence I am writing the classical Latin “de iure”, not the medieval Latin “de jure”.)

This does however not mean that the law determining how free-floating gold reserves determine the value of a currency will have to be enacted by EMU. The Chinese renminbi or yuan, the Indian rupee, the Russian rouble and others, among those others, most prominently and most recently the Gulf Co-operation Council (GCC) with its proposed single currency, are also looking for a mechanism achieving the same result.

This is a problem for 21st-century lawyers who, like professor Amtenbrink, decree that monetary policy in principle forms part economic policy (what is that “economic policy”? laissez faire, laissez passer, le monde va de lui-même?) and who then argue that the former policy has “ex ante” been delegated to the ECB, but that this “ex ante” delegation cannot suffice to provide the (”ex post”) mechanisms of the democratic accountability of the ECB. (pages 957-958)
“Democratic accountability” of monetary policy is professor Amtenbrink’s criterion.
Four decades after Nixon broke Bretton Woods and Britain joined the Common Market, also known as the EEC, (the) international society is still looking for way how free-floating gold reserves can (”democratically”, would professor Amtenbrink say?) determine the value of a currency.

Professor Amtenbrink knows that the 1992 Treaty of Maastricht on European Union drew up a monetary constitution so that the euro would retain its value in order to maintain price stability (see inter alia pages 901, 943, and 981). He says on page 899 that prior to the 1992 Treaty of Maastricht, there was no sufficiently well-”anchored” basis in the EEC Treaty for monetary union which could go further than the level of a mere co-operation between Member States. He thereby expressly decrees that “money” cannot but have an “anchor” in legislation, i.e., the Treaty of Maastricht. But Amtenbrink does not say how the euro retains its value and maintains price stability.

In his 2009 book “The Euro: The Politics of the New Global Currency” (Yale University Press), of which the hardcover edition was very critically reviewed by this reviewer over at Amazon.co.uk, David Marsh speaks at least about “the gold and foreign exchange reserves” of the euro, but professor Amtenbrink dares not even mentioning the four-letter word “gold” and only speaks about the “forex reserves” of the euro.

Forex reserves consisting of worthless paper money can only possibly be used for intervention on forex markets. Such reserves are worthless, no, useless, to determine the value of a currency..
Not long after the introduction of the euro on 01 January 1999, fifteen, since the August 2009 renewal nineteen, European central banks, including the ECB and central banks from inside and outside euro area, but excluding the IMF, did therefore conclude the Sunday 26 September 1999 Washington Agreement on the sidelines of an IMF meeting. By this Agreement, the signatories declared that gold would remain an important part of global monetary reserves and agreed to limit their gold sales to no more than 400 metric tons (500 metric tons for 2004 – 2009, but 400 metric tons again for 2009 – 2014) annually for the next five years.

Up to this day, Britain still has not replaced sterling with the euro. Neither did Britain sign the Washington Agreement. Quite to the contrary, disregarding the 1999 advice from the Bank of England, disregarding also the 1972 “ubi societas, ibi ius”-advice from Lasok and Bridge, the British 1999 chancellor of the exchequer or minister of finance, one Gordon Brown, proceeded to sell on his own 400 tons of the Bank of England’s bullion, that was more than half of the country’s gold reserves, in a series of auctions between 1999 and 2002, when the price was at a 20-year low. (Note 4 for Editors of “HM Treasury News Release–7 May 1999 – Restructuring UK Reserve Holdings” speaks about “metric” tons. This would thus be the same amount (weight?) of 400 metric tons as the maximum amount (weight?) of the combined annual sales of all the signatories to the Washington Agreement.)

The Washington Agreement could not possibly have the status of a law as it sanctions the “de facto” and “de iure” repeal of the IMF by Nixon on 15 August 1971.

Professor Amtenbrink therefore dares not mentioning the Washington Agreement as this would destroy his criterion of the democratic accountability of monetary policy.

It is the market, not the undemocratic European Council, which will determine how free-floating gold reserves will determine the value of a currency.

The society from which the euro emanates is one which opposes the IMF.

From the dawn of philosophy to, and very much including the present, philosophers have been uninterruptedly engaged with, and uninterruptedly baffled by, the question “What is that which is?”. Now this question “just is” the question “What is substance?”. (Aristotle, “Metaphysics”, Zeta 1, 1028b2)

One of the four meanings of “substance” for Aristotle is “to ti èn einai”, the “what-it-was-to-be-that-thing” of something. (”Metaphysics”, Zeta 3, 1028b33) This suggests the idea of what something was all along going to, destined to, become. On page 83 of his “A `Briefer’ History of Time” (Bantam Press, 2005), professor Stephen Hawking writes with Leonard Mlodinow that gold is a remnant of supernovas that occurred before our solar system was born.

(5)
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

(6)
Building Europe, building institutions
Speech by Jean-Claude Trichet, President of the ECB
on receiving the Karlspreis 2011
in Aachen, 2 June 2011
http://www.ecb.int/press/key/date/2011/html/sp110602.en.html

(7)
Intervention de Jean-Claude Trichet, Président de la BCE
à l’occasion de la remise du Prix Charlemagne 2011
à Aix-la-Chapelle le 2 juin 2011
http://www.ecb.int/press/key/date/2011/html/sp110602.fr.htm


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Christine Lagarde and EU Harmonisation

Posted by Ivo Cerckel on 1st August 2011

Harmonisation of laws did not work,
Lagarde now wants harmonisation of politicians and other bureaucrats.

In an interview with the Financial Times this morning, Christine Lagarde, the former French finance minister, now managing director of the International Monetary Fund, criticises public discord between eurozone ministers and the European Central Bank over the last bail-out and argues for communication in a harmonised fashion [so as to] speak with one voice. (1)

The euro is the first currency that has not only severed its link to gold, but also its link to the nation-state, said ECB president Duisenberg in 2002 upon receiving the Charlemagne Prize in Aachen (2)

If the euro has severed the link from the ministers established in the eurozone, why should the ECB, guardian of the euro, speek in a harmonised fashion with these ministers?
Why should the ECB save the bottoms of these ministers and thus of the guv’mints to which they belong?

The public architects of the euro made its birth on 01 January 1999 dependent upon guv’mints meeting the criteria set forth in the 1992 Maastricht Stability and Growth Pact (SGP).
These criteria are for the moment being violated by the guv’mints of the PIIGS (plus France, Belgium and the rest)
The euro is still not suffering on foreign exchange (forex) markets.
This demonstrates that the harmonisation pursued by the SGP was a useless exercise.

It has always been possible to rationalise measures of company law harmonisation in terms of promotion of cross-border business activity. It is more difficult to confirm the effectiveness in practice of such measures
(Wyatt and Dashwood’s, “European Union Law”, 2011, 6th ed., 700).

So because harmonisation of laws did not work, now Lagarde wants harmonisation of politicians and other bureaucrats.

FreeGold meant for the behind-the-scenes architects of the euro, and still means, that the euro has a gold component and a paper component, but puts a “firewall” between both so that gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies.
It is the (quarterly) marking to market (MTM) of the gold reserves of the Eurosystem, not to the Bretton Woods model of $42.2 like the USA central bank (originally $35), by the ESCB which provides that wall.

The point is that the Eurosystem’s response (volume expansion) to its current systemic threat (the debt crisis) is not surprising. Does this mean the euro will collapse (experience hyperinflation)? No. Because, for one reason, it has severed the link to the nation-state. The euro is behaving perfectly predictably in maintaining the nominal performance of its system through expansion,
but it cannot be forced to fund the future government profligacy of the PIIGS
through volume-only expansion.
That link is severed.
http://fofoa.blogspot.com/2011/07/euro-gold.html

The process of marking to market (MTM) the Eurosystem’s gold reserves has resulted during the FIRST decade of the Freegold (ECB MTM FLOATING gold price) “experiment”, in gold rising from 30% to 60% of the Eurosystem’s (international liquidity) reserves.
http://fofoa.blogspot.com/2010/07/gold-ultimate-wealth-consolidator.html

The euro and Freegold are coexisting to supplement each other, without interacting with each other.
That’s how the polity achieves its democratic legitimacy and speaks with one golden voice.
No harmonisation of politicians, bureaucrats or laws has beren required to that effect.

To paraphrase the 2011 authors of Wyatt and Dashwood, who don’t explain the euro (3):
It has always been possible to rationalise measures of ECB involvement in rescuing the bottoms of the ministers of the guv’mints established on euroland. It is more difficult to confirm the effectiveness in practice of such measures

Maître Lagarde is the impartial guardian of the IMF’s resources and credibility, just like the goldreserves of the eurosystem are impartial guardian of the euro.

The euro does not need a human guardian.
Its guardian angel is a four-letter word: “gold”.

Ivo Cerckel
honestmoney@maktoob.com

NOTES

(1)
July 31, 2011 10:32 pm
Lagarde warns EU to speak with one voice
By Alan Beattie
http://www.ft.com/intl/cms/s/0/f0138740-bb6e-11e0-a7c8-00144feabdc0.html
SNIP
Christine Lagarde, managing director of the International Monetary Fund, has said European authorities must ‘stick to the script’
+
In an interview with the Financial Times, the former French finance minister said public discord between eurozone ministers and the European Central Bank over the last bail-out had created confusion in the markets. “Putting on my European hat for a microsecond…we did not communicate it in a harmonised fashion, nor did we particularly speak with one voice,” she said, adding that this time the Europeans must “stick to the script”.

(2)
http://www.ecb.eu/press/key/date/2002/html/sp020509.en.html

Upon receiving the same prize in June 2011, ECB president Trichet said:
The {Maastricht] Treaty has mandated the ECB to keep safe the money of Europe’s citizens {not the guv’mints established on euroland}
http://www.ecb.int/press/key/date/2011/html/sp110602.en.html

(3)
The 2011, 6th edition, of Wyatt and Dashwood’s, “European Union Law” does not discuss the euro

Ivo:
Since the agreement by the heads of state and government of the European Community at the European Summit in The Hague in 1969 to prepare a plan for …. economic and monetary union [was the EEC not yet the European "Economic" Community ?] and the resulting 1970 Werner Plan (or Werner Report) which was drawn up by a working group chaired by Pierre Werner, Luxembourg’s Prime Minister and Minister for Finances and which was revived and extended in in the late-1980s by European Commission president Jacques Delors, the euro project was never the euro project as such but was the plan for European Economic and Monetary Union (EMU)

The resulting 1992 Treaty of Maastricht on European Union therefore made participation in the third phase of EMU, participation which could only be granted if the member state met the four convergence criteria – of inflation rates, government finance (annual government deficit and government debt), exchange rate, and, long-term interest rates -, a necessary condition for adopting the euro as legal-tender currency by the member state.
The framers of the Treaty on European Union nevertheless thought that in order to maintain price stability within the Eurozone in the third stage of EMU, their four criteria had to be imposed upon or required from the Member States.

As the title of section 11-037 of
Koen Lenaerts and Piet Van Nuffel (Robert Bray and Nathan Cambien, eds.) “Constitutional Law of the European Union”. London: Sweet & Maxwell, 2011, 3rd ed.,
explicitly says “No bail-out”
Still the euro which is the result of the regulation, say the authors, – nay, which would according to Cambien and according to the talking heads (and their writing counterparts) guiding public opinion be the result of precisely of the regulation which is being violated – did not suffer from this.

How come?

Monetary policy in the Member Status participating in EMU is fully determined by the European System of Central Bank (Eurosystem or ESCB), says section 11-039 of the book which is hereby being reviewed.

Section 11-040 of Lenaerts and Van Nuffel starts by saying that the four “basic tasks” of the ESCB are
to define and implement the monetary policy of the Union
to conduct foreign-exchange operations,
to hold and manage the official foreign reserves of the Member States without prejudice to the governments of Member States holding and managing working balances in foreign-exchange; and
to promote the smooth operation of payment systems.
Section 11-040 contains four more paragraphs.
One explaining the (1) of the first paragraph.
One explaining the (2) of the first paragraph.
One saying that the ESCB is also responsible for contributing to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system; and
One saying that the ECB has the exclusive right to authorise the issue of banknotes within the Member States participating in the third stage of EMU.

The (3) which says that “one of the basic tasks of the ESCB is to hold and manage the official foreign reserves of the Member States without prejudice to the governments of Member States holding and managing working balances in foreign-exchange” is thus not being explained.

This is all the more surprising when one goes to the ECB website and then to ECB’s International reserves r External reserves
and realises that the foreign currency reserves (in convertible foreign currencies had at the end of June 2011 an approximate market value of 146,272, whereas Gold (including gold deposits and gold swapped)’s value was more than double the foreign currency reserves and valued at 361,442
http://www.ecb.int/stats/external/reserves/html/index.en.html

Socrates At the Egyptian city of Naucratis, there was a famous old god, whose name was Theuth; the bird which is called the Ibis is sacred to him, and he was the inventor of many arts, such as arithmetic and calculation and geometry and astronomy and draughts and dice, but his great discovery was the use of letters. Now in those days the god Thamus was the king of the whole country of Egypt; and he dwelt in that great city of Upper Egypt which the Hellenes call Egyptian Thebes, and the god himself is called by them Ammon. To him came Theuth and showed his inventions, desiring that the other Egyptians might be allowed to have the benefit of them; he enumerated them, and Thamus enquired about their several uses, and praised some of them and censured others, as he approved or disapproved of them. It would take a long time to repeat all that Thamus said to Theuth in praise or blame of the various arts. But when they came to letters, This, said Theuth, will make the Egyptians wiser and give them better memories; it is a specific both for the memory and for the wit. Thamus replied: O most ingenious Theuth, the parent or inventor of an art is not always the best judge of the utility or inutility of his own inventions to the users of them. And in this instance, you who are the father of letters, from a paternal love of your own children have been led to attribute to them a quality which they cannot have; for this discovery of yours will create forgetfulness in the learners’ souls, because they will not use their memories; they will trust to the external written characters and not remember of themselves. The specific which you have discovered is an aid not to memory, but to reminiscence, and you give your disciples not truth, but only the semblance of truth; they will be hearers of many things and will have learned nothing; they will appear to be omniscient and will generally know nothing; they will be tiresome company, having the show of wisdom without the reality.

Phaedrus Yes, Socrates, you can easily invent tales of Egypt, or of any other country.

Socrates There was a tradition in the temple of Dodona that oaks first gave prophetic utterances. The men of old, unlike in their simplicity to young philosophy, deemed that if they heard the truth even from “oak or rock,” it was enough for them; whereas you seem to consider not whether a thing is or is not true, but who the speaker is and from what country the tale comes.

Phaedrus I acknowledge the justice of your rebuke; and I think that the Theban is right in his view about letters.

Socrates He would be a very simple person, and quite a stranger to the oracles of Thamus or Ammon, who should leave in writing or receive in writing any art under the idea that the written word would be intelligible or certain; or who deemed that writing was at all better than knowledge and recollection of the same matters?

Phaedrus That is most true.

Socrates I cannot help feeling, Phaedrus, that writing is unfortunately like painting; for the creations of the painter have the attitude of life, and yet if you ask them a question they preserve a solemn silence. And the same may be said of speeches. You would imagine that they had intelligence, but if you want to know anything and put a question to one of them, the speaker always gives one unvarying answer. And when they have been once written down they are tumbled about anywhere among those who may or may not understand them, and know not to whom they should reply, to whom not: and, if they are maltreated or abused, they have no parent to protect them; and they cannot protect or defend themselves

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