Honest Money

Gold is Wealth Hiding in Oil

Freegold and Mumbai November 15-16 International Banking Summit

Posted by Ivo Cerckel on September 20th, 2011

1.
YES BANK LIMITED, the state-of-the-art high quality, customer centric, service driven, private Indian Bank catering to the “Future Businesses of India”, in collaboration with FINANCIAL TIMES, the world’s leading business newspaper, is hosting on November 15 and 16 at the Taj Mahal Palace Hotel in Mumbai, India, the first-of-its-kind International Banking Summit
“Maximising Future Opportunities in India’s Fast-Growing Financial Sector”,
one of the largest platforms for the international banking industry to meet with its Indian counterparts.
http://www.ftconferences.com/yesbank2011/

The Indian banking sector has undergone a profound transformation since the first key liberalisation moves two decades ago. Although the financial industry remains largely state-controlled, private banks have multiplied and grown rapidly, with an increasing presence abroad, while foreign institutions have a notable, though still constrained, share of the market.

As the Indian banking sector becomes increasingly INTEGRATED into the global financial system, it faces new and pressing challenges, both regulatory and competitive. The Reserve Bank of India is expected to allow large conglomerates to acquire banking licenses, with the main aim of BOOSTING FINANCIAL INCLUSION, while foreign banks may be allowed to expand their business by setting up wholly owned subsidiaries.

The Summit will
discuss these changes are being as the better performing emerging economies such as India gain ever-increasing global attention
and address the challenges and explore how they can be turned into opportunities for both local and foreign institutions.
http://www.yesbank.in/index.jsp?navigationUrl=%2FYES+Bank+Repository%2Fen%2FCorporate+Banking%2FInternational+Banking%2FFT-YES+BANK+International+Banking+Summit+2011

2.
This blogger thought that the commodity with which banks conduct their business is called “money” or “currency” and is therefore very surprised that the rupee, nor a fortiori the gold-rupee, is on the programme.

Money, read “currency”, 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,
(George Reisman, “Capitalism – A Treatise on Economics”, Ottawa, Illinois: Jameson books, 1998. 3rd ed. p. 142)

“Money” is a dead, meaningless concept. If you want to use it, then define it.
Circulating Currency has a concrete meaning.
(Windmills, Paper Tigers, Straw Men and Fallacious Fallacies
by FOFOA
December 28, 2010
http://fofoa.blogspot.com/2010/12/windmills-paper-tigers-straw-men-and..html

Whereas before 15 August 1971, when USA President Richard Nixon broke the Bretton Woods system, the US dollar was a Gold derivative, current IMF rules (article IV, section 2, (b), of the IMF Articles of Agreement) prohibit members from linking their currencies to Gold.
Since that date, the IMF has no more reason of existence.
If the IMF continues to exist, this is in order to support the bankrupt dollar regime, thereby making of Gold a dollar derivative.
This blogger submits that power is the ability of creation of unproductive debt for which you came others pay so that the creditor enjoys a risk-free life.

Gold is nobody’s debt, safe from default. This allows the man in the street to collect gold reserves which are less risky than the currency of the country he’s living in

3.
The programme of the Mumbai International Banking Summit argues that as the
Indian banking sector becomes increasingly INTEGRATED into the global financial system.
the Reserve Bank of India (RBI) is expected to allow large conglomerates to acquire banking licenses, with the main aim of BOOSTING FINANCIAL INCLUSION, while foreign banks may be allowed to expand their business by setting up wholly owned subsidiaries.

One of the main aims of the European Integration project is that of MARKET INTEGRATION. Thus the [founding 1957 European Economic Community (EEC)] Treaty sought from the outset to ensure the free movement of goods, persons and services within the European Union. With time, the Treaty also included in its aims the free movement of capital and a single currency for some of its Member States.
(Wyatt and Dashwood’s, “European Union Law”, 2011, 6th ed., p. 391)

[EEC] Treaty provisions regarding the movement of capital are in the nature of a programme rather than directly applicable measures. Moreover, Community legislation is meant to assume a co-ordinating rather than strictly normative rôle. In this respect there is little room for case law to develop, the work being left to the legislator facing a political challenge because the issues, as in taxation, touch the raw nerve of economic control.
(Dominic Lasok and John W. Bridge, “Law and Institutions of the European Communities”, Butterworths, 1991, 5th edition, p. 474).

European Central Bank chief Trichet’s predecessor Duisenberg said in 2002 upon receiving the Charlemagne Prize in Aachen that
the euro is the first currency that has not only severed its link to gold, but also its link to the nation-state
http://www.ecb.eu/press/key/date/2002/html/sp020509.en.html

Did Duisenberg thereby remove the raw nerve of economic control ?

Upon receiving the same prize in June 2011, Trichet himself 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

Should the RBI not first allow the rupee also to sever link to gold, but also its link to the nation-state, before financial inclusion could be boosted?

Would it not be advisable that the November 15 and 16 Mumbai International Banking Summit discuss this matter?

4.
FreeGold could mean that the rupee would have a gold component and a paper component, but would put 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 would be the regular marking to market (MTM) of the RBI gold reserves, not to the Bretton Woods model of $42.2 like the USA central bank (originally $35), by the RBI which would provide that wall.

Rupee and Freegold would be coexisting to supplement each other, without interacting with each other. That’s how the polity should achieve its democratic legitimacy. Just like Charles-Louis de Secondat, baron de La Brède et de Montesquieu (1689 – 1755), divided government power into three branches and called his idea the “separation of powers”, so does Freegold separate the gold component and paper component of the currency. Whereas Montesquieu freaks have never been able to find a way to make sure that the separation of powers is not being violated the MTM-firewall guarantees that the separation is not a vain word.

The old gold-standard could not change human nature which dictates that no ruler can withstand the pressure to print more receipts than he has gold in reserve. The old gold-standard did moreover not provide for the possibility that an increase of the ounces, kilograms, or tonnes of gold held in reserve would lead to an increase in the currency’s value. Its chief weakness was however that it could be repealed by the politicians. (Roland Leuschel and Claus Vogt, “Das Greenspan Dossier, Wie die US-Notenbank das Weltwährungssystem gefährdet. Oder: Inflation um jeden Preis”, finanzbuchverlag.de, 2006, 3rd ed., pp. 300 and 304)

India does not want a gold standard decreed by legislative fiat, but India wants Freedom [from oppression by the dollar regime].

Ivo Cerckel
honestmoney@maktoob.com


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