Vic Van Rompuy and ECB balance sheet
Posted by Ivo Cerckel on 16th February 2012
Dear EU president Herman Von Rompuy,
Your father, professor Vic Van Rompuy, was the original sole editor of a collective book by Leuven economics professors introducing undergraduate students to the science-or-not-so of economics.
The book was aptly called “Introduction to Economics” (“Inleiding to the Economie”)
and published by Universitaire Pers Leuven.
The 2000 edition of the book, still called “Introduction to Economics”, was under the editorship of professors Lodewijk Berlage and André Decoster, and was updated from previous editions by Madam Dr. I. Van der Auwera (What happened to Anne Vleminckx?).
One of the eight other authors is still professor Paul De Grauwe.
Nay,
the 2010 edition of the book,
now under the title “Economics – An Introduction”, “Economie – Een Inleiding”,
which I didn’t see here in the Philippines,
has a foreword by … Herman, not Vic but one his sons – you – Von Rompuy.
http://upers.kuleuven.be/nl/titel/9789058677976
The table 17.2 on
p. 471, not 411 as I had written previously, section “The supply of money” (“Het aanbod van geld”) of Chapter 17 “The money market” (“De geldmarkt”)
Parts of the 2010 edition of the book are available here
http://books.google.com.ph/books/about/Economie_Een_inleiding.html?id=WWxP4Mw_x8kC&redir_esc=y
“The supply of money” section of the new Chapter 18 has however not been copied by Google.
of the 2000 edition gives a schematic representation of the balance sheet of the European Central Bank (ECB) – thank you Dr. I. Van der Auwera.
The table gives two elements on the left or active side.
Three elements on the other side.
The second element on the active side is
“Claims on inhabitants/residents (private and public)”
(“Vorderingen op ingezetenen (privé and publiek)“)
The first element on the active side is “GOLD [capitalisation mine] and foreign currencies”
(“Goud en buitenlandse deviezen”)
The balance sheet reports financial position. When a comparative balance sheet for two periods is presented, it shows whether cash increased or decreased.
(Charles T. Horngren, Walter T. Harrison and M. Suzanne Oliver, “Accounting”, Prentice Hall, 2009, 8th ed. (as reprinted for the Philippines), p. 710)
In your speech “A currency for Europe” yesterday, Wednesday 15 February 2012, at the occasion of the launch of a campaign about the euro
at the University of International Business and Economics, in Beijing,
you said that:
“The Chinese leaders recognise that the economic fundamentals of the euro are strong: low inflation, a lower public debt and deficit than in the United States or Japan, an equilibrium on the balance of payments for the eurozone as a whole.”
http://consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/127993.pdf
Do you really think that the Chinese leaders and the successors to your father – don’t confuse your father with your brother Eric – at Universitaire Pers Leuven are imbeciles
and that they do not consider the fact that the ECB has gold on its balance sheet important?
Lemme explain to you:
The Accounting book I just quoted said that:
The balance sheet reports financial position. When a comparative balance sheet for two periods is presented, it shows whether cash increased or decreased.
For the balance sheet of a Central Bank like the People’s Bank of China and the ECB,
the question is not as for other corporations whether cash increased or decreased,
BUT whether GOLD {real money, not cash] increased or decreased.
http://bphouse.com/honest_money/2009/09/11/with-chinese-freegold-from-a-reserve-currency-to-a-world-standard/
I am happy to inform you
that the Shanghai Freegold Summit is definitely taking place at the Hilton DoubleTree Hotel in Huaqiao/Kunshan from 20 to 23 July 2012;
http://bphouse.com/honest_money/2011/12/16/freegold-conference-shanghai-china-july-20-23-2012/
that the Summit is indeed being organised by the International Society for Individual Liberty
http://www.isil.org/
which page now announces the event;
that I will be a speaker there – booooooo, boooooo, boooooo;
that my paper will still be my euro paper of 2003
(an early version of that paper was published in early February 2000 – that’s 12 years ago – in what was then known as the Belgian newspaper “De Financieel Economische Tijd”):
“With Chinese Freegold from a reserve currency to a world standard”
by Ivo Cerckel
Tuesday, 2 September 2003
http://www.free-europe.org/english/2003/09/with-chinese-freegold-from-a-reserve-currency-to-a-world-standard/
replace “derivates” in the text with “derivatives”;
Here’s the latest:
Tuesday February 14, 2012
Shanghai eyes OTC gold trading
http://biz.thestar.com.my/news/story.asp?file=/2012/2/14/business/10731535&sec=business
SHANGHAI: The Shanghai Gold Exchange plans to launch over-the-counter gold trading and is in talks with the China Foreign Exchange Trade System to conduct these trades via the interbank market, according to an official from the exchange.
The exchange also has plans to start exchange-traded-funds for gold to tap rising demand in China. It was also considering rolling out palladium contracts. – Reuters
I know also:
Chinese “gold rush”: country diversifying assets
Published: 01 February, 2012, 13:58
http://rt.com/business/news/china-gold-economy-assets-231/
SNIP
China is the world’s fifth-largest holder of gold and seems to be in the market for more. Analysts believe Beijing snapped up around 500 tons of gold in 2011, double what it bought in 2010.
UNSNIP
and I know this:
China gold imports from HK surged in 2011
Last updated: February 7, 2012 4:15 pm
By Leslie Hook in Beijing
http://www.ft.com/intl/cms/s/0/d26cd2d6-518d-11e1-a99d-00144feabdc0.html
SNIP
China’s gold imports from Hong Kong more than trebled in 2011 from the year before, hitting a record 428 tonnes as savers flocked to the yellow metal as a hedge against inflation.
China is expected to overtake India soon as the world’s largest gold consumer, and the figures, which are considered a proxy for China’s overall gold imports, underscore the country’s growing appetite for the metal.
UNSNIP
FT will be angry because I quote.
They should first send me their weekly “Best of Lex” and then their daily etc.
But what’s really happening here?
Welcome to SGE
Shanghai Gold exchange
Shanghai Gold exchange (SGE thereafter), approved by the State Council and founded by the People’s Bank of China, performs the regulated functions stipulated by Management Rules of Gold Exchange and organizes gold transactions with the principle of openness, fairness, justness and honesty.
http://www.sge.sh/publish/sgeen/
Yes, this was part of the answer:
Tuesday February 14, 2012
Shanghai eyes OTC gold trading
http://biz.thestar.com.my/news/story.asp?file=/2012/2/14/business/10731535&sec=business
But does the People’s Bank of China also proceed to the marking to market of its gold reserves at the Shanghai Gold exchange?
Seems improbable? I don’t know.
that I must therefore confess that I still have more questions than answers about the gold policy of the People’s Bank of China which policy is, I think, similar to that of the European System of Central Banks and (thus) of the ECB;
that I hope to provoke some answers next July in Shanghai.
Try to cogitate about that!
And this, Herman!
Ad nauseam:
The euro is the first currency that has not only severed its link to gold, but also its link to the nation-state.
(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.int/press/key/date/2002/html/sp020509.en.html
Freegold means that the euro has a gold component and a paper component, and 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 model of $42.2 like the USA central bank (originally $35), by the Eurosystem which provides that wall.
Gold is an item not related to euro monetary policy operations.
Let gold trade freely behind the real firewall – like it did for the Ancients,
a wealth asset that stands beside money,
yet has no modern label or official connection to money.
Or, Herman, do you write introductions to (your father’s) books you don’t read?
Or to books you consider worthless?
Gij zijt zot, Kamaraad!
(The gentleman may be krazy! Cannot be?
Check your premises, said Ayn Rand.
Tis impossible to be and not to at the same time and in the same respect, the Philosopher, i.e., Aristotle, had said in his Metaphysics.)
met de complimenten van Zorro,
Ivo Cerckel
honestmoney@maktoob.com
This was my tribute to
https://twitter.com/#!/freegolds
Freegolds
@freegolds
the correct angle of view is gold pricing the currency.. instead of the currency pricing gold.
goudforum.com • http://goudforum.com/
who in one of his tweets asked why no mainstream economist draws attention to the fact that the ECB has gold on its balance sheet .
Posted in Uncategorized | 2 Comments »