Harry Veeder wrote: > *----- Original Message -----* *From*: Terry Blanton > <hohlr...@gmail.com> *Date*: Sunday, January 4, 2009 6:30 pm > *Subject*: Re: [Vo]:Predictions for 2009 > > > You might be our first poster from Argentina. Welcome! Are you > > having a good summer? > > > > Your post prompted me to look to see who has the most gold: > > > > http://www.globalfirepower.com/list_gold_reserves.asp > > > > Maybe I will buy some yuan tomorrow. > > > > It would be interesting to see which country has the most gold > > *including* jewelry. > > > > Terry > > > > On 1/4/09, Mauro Lacy <ma...@lacy.com.ar> wrote: > > > Hi All, thanks for the interesting topics and info. As a means of > > > reciprocity, here are some predictions, info, and some opinions. > > > > > > Some are predicting the dollar will end its global status as reserve > > > currency(i.e. the dollar will collapse) this year. See > > > http://www.marketoracle.co.uk/Article8031.html > > > for a very good analysis. > > > > > > Also worth reading is > > > > > > http://caps.fool.com/blogs/viewpost.aspx?bpid=125230&t=01000785550515854591> > and related links and comments. This comment I'm specially fond of: > > > "A gold backed currency would be a good start toward a sustainable > > > economic model, but if it involves a central bank, then it is > > doubtful> that it will work out in the long run. Politics will > > drive central > > > banking policies just as they do now. If the central bank allows > > > fractional reserve banking, even with a gold standard, it will still > > > lead to boom and bust cycles in the economy." > > > (first comment in > > > http://seekingalpha.com/article/112731-will-the-new-gcc-single- > > currency-include-gold) > > I think there were booms and busts before the creation of central banks. >
Probably. Everything is cyclical, you know. What the author of that sentence is saying is that a central body of issuance of money can _artificially_ create booms and busts(so called business cycles) by controlling the amount of currency in circulation. Reduce the amount of money in circulation, and you'll produce a recession. Increase it, and you'll produce a boom. The other important thing that he's saying, is that a gold backed currency is no remedy for that. Besides, there are others cycles: Natural ones: if you are in an agricultural economy, a massive bad harvest(due by example to a natural disaster), will probably result in a economic recession. Systemic ones: You can't avoid a recession(and even a collapse) in the long term in a monetary system like the one we have now, due to systemic conditions. This is longer to explain, but basically, it is as said before: if money grows exponentially, and your economy's goods and services don't, you'll end up into a recession sooner or later due to this very imbalance. As an economy, you have three options to try to avoid this; two are monetary and one is economic: - prop up the system with with more of the same kind of money, simply delaying the day of reckoning and augmenting the problem. (i.e. this recession.) To do this is insane, but if you are obliged by the allegiance to your close friends in the finance circle, which don't want to go bankrupt, you maybe can have no other option. - reduce the amount of money in circulation (liquidity freeze, i.e 1930 recession.) - desperately trying to come up with enough goods and services to match your money growth(i.e. the grow grow grow! motto. Which is kind of metastatic, isn't? this will result in a collapse of the economic "organism", i.e. the "guest" kills the host, and itself.) This aspect of the system is very significative, because in this process, we can literally consume the Earth trying to match our money growth. The ashes of that consumption will be a big pile of dollars. We'll "cash in" the Earth, so to speak. And then, we'll be left with nothing but dollars(or gold) to consume(i. e. King Midas legend.) It is, in the end, the desire to escape from the natural cycles of deterioration and decay, which put us in a kind of growth spiral which in the worst case scenario end ups with the destruction(consumption) of great part of our environment; and consequently, into a big economic collapse. Take into account also that, as long as you grow, it becomes more and more difficult to continue growing(resources become scarcer or difficult to obtain, etc.) From there results the general deterioration of quality of life and impoverishment of great part of society that we are witnessing today(as time progresses, practically everything has to be monetized, to try to match the money growth. Plus to this, the system is concentrated, that is, real wealth "flows" to the center in an attempt to reedem the debt actual money is in itself.) The sane alternative is sustainability: an economy that merely sustains itself, adjusting and following the natural cycles of growth and decay, without the compulsory need and illusory goal of continuous exponential growth. The very nature of our actual money imprints upon us the urge (and systemic necessity) to do the opposite. > Harry >
