Tuesday, 2 October 2012

Hoarding





Having recently been engaged in some conversations on the merits and demerits, in addition to the morality of, hoarding, I thought it might be a good idea to take a closer look at the matter.

The economic and moral charge leveled is that hoarders deprive others in the economy of much needed goods and capital.

Perhaps it's time we laid this old warhorse to rest.

Let us start by defining what it is to hoard.

hoard

    [hawrd, hohrd]  Show IPA
noun
1.
a supply or accumulation that is hidden or carefully guarded for preservation, future use, etc.: a vast hoard of silver.

verb (used with object)
2.
to accumulate for preservation, future use, etc., in a hidden or carefully guarded place: to hoard food during ashortage.

verb (used without object)
3.
to accumulate money, food, or the like, in a hidden or carefully guarded place for preservation, future use, etc.



There are a few things to keep in mind here.

Firstly that the world is finite, with finite resources. Secondly, we require some of these resources in the process of sustaining life.

There are two valid criticisms that can be made against the act of hoarding. The first is that a hoard may perish before the hoarder has the opportunity to use it, and as such he destroys real wealth and deprives someone else of perhaps a meal or a life.

The second being that hoarding is generally an inefficient use of productive wealth. Such a hoard could have been used to create more wealth and everyone would have been richer for it.

Those who criticize the act of hoarding extend this rationale to any thing hoarded, gold attracting particular ire.

Before we look at the latter, let us first look at a near equivalent : money.

What does it mean to hoard money? What is money in terms of our needs for sustaining life?

Money represents a claim on the productive economy. It is not wealth in and of itself. Remembering that the world has finite resources, money is a force of directing the use of such resources in certain enterprise rather than others. Being an accounting mechanism, it does not have correlation with the real wealth in the world (food, commodities, land, etc) at any one snapshot in time. It does however have correlation with future real wealth given it's function of directing production.

Being that money lubricates trade, the hoarding thereof means that future investments are not directed by productive savers; though in our modern economy it is debatable that this could be the case at all.

In the modern economy loans for productive investment are created out of thin air by banks. So a stock of accounting stubs are not strictly required to fund investment. Furthermore central banks that notice a decline in velocity ( the effect of hoarding cash) simply compensate by creating more fiat, and so the effect on society is negligible.

Sidenote : Central bankers believe they can remove this excess liquidity, when people inevitably dishoard the cash, in an orderly fashion. I remain unconvinced.

What then of gold?

Maybe most remarkable in this is that Gold is not itself something that is needed or consumed in satisfaction of our basic material needs for survival. But due to it being perfectly and uniquely suited for this universal role in trade for any other person's available wealth as necessary to meet our own specific needs, Gold has become such a near proxy for the real wealth we require for life that many of us have permitted ourselves the casual inclusion of Gold into our otherwise strict definition of wealth.” - Aristotle

Gold, like money is not real wealth.

Casual inclusion of gold with real productive wealth leads to the mistaken conclusion that saving in gold removes value from the economy.

The reality is that either fiat or gold is simply a claim for some real productive items in the future. Those that hoard gold in fact do society a great service, not only do they expend their productive ability in creating more than they produce, in return they accept nothing but a promise that they may be repaid in real wealth some day in the future.

Gold cannot be created out of thin air, and so for the individual saver it is more sensible to hoard than money as it is not continually debased.

In conclusion, feel free to pile your shiny yellow rocks as high as you can without fear that you are doing anyone a disservice.



Peace

The Fool

Ps.




135 comments:

  1. "Savings is a process by which you don't immediately consume the fruits of your labour, so that you are able to consume a little more at a later stage in life or during some emergency. So when you save, you give up consumption of real resources such as oil, labour, food, etc. These resources are thus freed to be then taken up by the entrepreneurs and put into productive use by the process of investment, thus increasing the productivity of the nation and its people and in the process generating what we call future wealth and economic growth.

    With this understanding one should realise that you can save by buying into… even for that matter a “pebble on the roadside”; it is not a “wastage of national wealth”, as such a saving would mean that real resources are freed for the entrepreneur to invest and create new products.

    So, calling gold investment a ‘wastage' is erroneous and misleading; on the contrary, as indicated above, the savings should happen in assets which actually have no real use… So, by investing in gold the real resources within the country are not affected."
    The Hindu Business Line June 5, 2012

    "Sec. 46. The greatest part of things really useful to the life of man, and such as the necessity of subsisting made the first commoners of the world look after, as it doth the Americans now, are generally things of short duration; such as, if they are not consumed by use, will decay and perish of themselves: gold, silver and diamonds, are things that fancy or agreement hath put the value on, more than real use, and the necessary support of life. Now of those good things which nature hath provided in common, every one had a right (as hath been said) to as much as he could use, and property in all that he could effect with his labour; all that his industry could extend to, to alter from the state nature had put it in, was his. He that gathered a hundred bushels of acorns or apples, had thereby a property in them, they were his goods as soon as gathered. He was only to look, that he used them before they spoiled, else he took more than his share, and robbed others. And indeed it was a foolish thing, as well as dishonest, to hoard up more than he could make use of. If he gave away a part to any body else, so that it perished not uselesly in his possession, these he also made use of. And if he also bartered away plums, that would have rotted in a week, for nuts that would last good for his eating a whole year, he did no injury; he wasted not the common stock; destroyed no part of the portion of goods that belonged to others, so long as nothing perished uselesly in his hands. Again, if he would give his nuts for a piece of metal, pleased with its colour; or exchange his sheep for shells, or wool for a sparkling pebble or a diamond, and keep those by him all his life he invaded not the right of others, he might heap up as much of these durable things as he pleased; the exceeding of the bounds of his just property not lying in the largeness of his possession, but the perishing of any thing uselesly in it.

    Sec. 47. And thus came in the use of money, some lasting thing that men might keep without spoiling, and that by mutual consent men would take in exchange for the truly useful, but perishable supports of life.

    Sec. 50. But since gold and silver, being little useful to the life of man in proportion to food, raiment, and carriage, has its value only from the consent of men… by receiving in exchange for the overplus gold and silver, which may be hoarded up without injury to any one; these metals not spoiling or decaying in the hands of the possessor."
    John Locke 1690

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    Replies
    1. FOFOA

      Thanks for the visit.

      I understood when I wrote this that it is nothing new, nor better said than has been before.

      Still there remains pleasure in discovering old truths for yourself and putting them in your own meagre words.

      If my simple writing helps one other grasp this truth, then it has not been in vain. :)

      Peace

      TF

      Delete
  2. I like your writing. Thanks for sharing.

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  3. Hi MF,
    been a long time ;)
    Re: Hoarding
    let's look at the it from another perspective:
    The hoarders are the most social contributers. Think of it this way: During shortage ("SHTF") I can live on my hoards and will not be one of crowds storming the stores, so there will be more stuff available in the stores for the ignorant none-hoarders, BECAUSE of the "evil" hoarders.
    Greets, AD

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    Replies
    1. True, but the amount of hoarders is small, and so the impact is not significant.

      Delete
  4. P.S.
    Re: Hoarding gold
    As the real Advocatus Diaboli ;) I like to add: By hoarding gold you encourage the gold industry to mine for more gold: A resource and environmental consuming action. One of the outcomes ignored by FG.
    Greets, AD

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    Replies
    1. Hmmm. Well if we agree that Some commodity would need to fill the store of value role, then I don't suppose it matters which one it is. The environmental impact would exist either way.

      TF

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    2. I read a gold jewerly magazine recently ("inside information" ;), I was at the jewerly for my wife and the dude, knowing I am a goldbug, gave it to me), it said, that 100million people worldwide live from gold mining. Despite if this is true or not, I was shocked by the number.

      I hate to repeat myself, but mining is something always neglected by FG. As I said earlier, when FOFOA just says "problem will be solved by nationalization/taxing to infinity of miners", that is just IMHO a very bad excuse of knowing that there is a flaw in the FG reasoning.
      Greets, AD

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    3. Do me a favour and explicitly state what this "flaw in the FG reasoning" is?

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    4. the flaw is:
      "at what FIAT currency price are/will miners be paid?"

      1.) Nationalization/Taxation to infinity is just a ridiculous excuse in the FG concept. Because that would only mean that the governments gets the spread. And the government spend the spread on real wealth&goods, which means taking real stuff from the real physical plane, which belongs in the FG concept the gold hoarders/dishoarders.

      2.) Never ever came FOFOA up with a real(istic) concept of a gold market in FG environment. Today the market is a paper market, all gold bugs hate or question it, anyway but that's the way it is to get to a price discovery. And can we agree that this paper market is heavily influenced by future mining?

      So the dog will be still be wagged by the tail until those issues are solved. IMHO this only changes when gold mining stops. Will it stop? And answer is NO.

      Greets, AD

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    5. And if you dont believe me, why dont you believe Mr.Robert Zoellick, the by FG celebrated RPG guy, who said exactly the same: The gold price is too low. (well knowing and meaning the mining price is too low, but this part was ignored by the FG crowd)?

      Delete
    6. I think you are focusing on a very small part of the whole here. If I buy and ounce today, does it matter to me whether it is recycled gold, or newly mined gold? No. Gold is gold. To say that the price of gold is too low, could but does not necessarily refer only to the mining price of gold.

      The nationalization/taxing on mines is something the people will demand in all likelihood. Mines taxed or not doesn't really matter in Freegold.

      Delete
    7. MF,
      in the supposingly balanced FG world (and yes, I am not stupid, I guess I understood FG concept thesis better than most of the FG cult follower), please answer the following questions concerning the behaviour of gold "on the other side":
      1.) Is the flow of gold in terms of weight from the hoarders to dishoarders of the above ground in possesion supposed to be higher or lower than today?
      2.) Is the price of gold in terms of fiat per ounce higher or lower than today?
      3.) In general: If the fiat price of gold per ounce is rising, will more or less gold be mined?
      4.) The flow of gold in terms of weight consist of the overall weight changing hands (hoarding/dishoarding PLUS mining), yes or no?
      5.) If you still cant see the problem, look at todays numbers (supposingly): ~1500mt from changing hands of above ground gold versus 2500mt newly mined... what is the future ratio? compare that to the scenario according to the answers 1)...4)

      Cant you see the flaw now? Maybe I have missed something, maybe I will see it, once you honestly answered the above questions.
      Greets, AD

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    8. AD

      I am always open to discussing flaws in FreeGold theory, so thank you for trying to make me aware of some. I appreciate the intent.

      2.) Higher, perhaps 30-50 times what it is today.

      1.) The flow for individual savers on a per month basis will obviously be lower than today due to the much higher price. However....at present perhaps a fraction of one percent of individuals savings is in gold, and none for companies (afaik). Furthermore the new paradigm will highlight the importance of saving and as such I expect a higher percentage of individual income to go to savings. So taking all this into account, the savings rate in gold is likely to be perhaps 200-300 times what it is today. If we take into account the rise in price of gold, the total change would be higher savings in gold (weighing more), of perhaps 6 times as much as today.

      Remembering that supply and demand are fundamental to determination of price, the rate of gold savings will affect the amount gold increases by in price from where it is today.

      3.) In general, more of course. Yet there are limitations to this of course. From memory the estimated amount of gold left underground is perhaps 100,000 tonnes. So even if this massive price rise means that the first few years mining is expanded to the hilt, at some point the available resources is constraining.

      4.) If we are speaking stock to flow ratio's? No. If we are speaking general flow of gold, yes, all physical changing hands, discounting perhaps intermediaries.

      5.) You assume of course lower weight change and higher mining meaning that ratio increases, and see a problem in this. There are two flaws with this view, beyond the wrong assumptions. :)

      The first is that the number 1500 tonnes changing hands today you cite cannot be accurate. All mined gold changes hands..it is sold after all, at a lower price if there is not enough demand at higher price. All mined gold changes hands. There is no ratio to consider here.

      The ratio you are considering... actual supply versus investment demand is also simple the resolve. The answer is price. If more is supplied by mines than the current price allows for in savings, then the price goes lower..until all gold changes hands. This is economics 101 no?

      Peace

      TF

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    9. I forgot to add, that this demand vs supply is what will determine the price of gold..so what our multiple will be 30-50.

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    10. Good morning MF,

      The ratio you are considering... actual supply versus investment demand is also simple the resolve. The answer is price. If more is supplied by mines than the current price allows for in savings, then the price goes lower..until all gold changes hands. This is economics 101 no?

      That might be your current 101 economics, but can we agree, that this is exactly the opposite to the supposing Freegoldeconomy?
      Can we agree that in FGeconomics, expressions like supply and investment demand do no longer apply, but rather dishoarding from spenders and hoarding by supplus savers? Price will only be determined in an ideal FG environment by this flow only!
      Now add the flow of mining, it is not neutral to this flow, it is exactly the opposite, and I am talking massively. Here's why:

      That's the point I made, with the two figures (assuming today based on WGC estimations, please feel free to assume other numbers the outcome is the same): 1500t/yr "FG"-flow (scrap, savers sales...) plus 2500t/yr from mining. The FG saver buys from the total sum of both. Only when the FG flow (the one from the dishoarders) is much bigger than the mining flow (relatively speaken) you can only have a Freegoldeconomic. Since the mining flow looks like it is constant (by nature) or even increasing (by fiat price increase), to arrive at FG the dishoarding/hoarding flow has to be bigger. But if the sum of both is bigger than today, the price would be less.
      Dont you get the flaw, or are you to biased?

      Greets, AD

      P.S. I am not saying that there never ever can be a FG environment, but not at those flows which will most probably last another 10-20yrs.

      P.P.S. I enjoy the conversation, since no FG trolls are around...Dumb aerial bus drivers and barbers....and I have the impression that once in a while in some seconds you are capable to put the FG baggage besides.

      Delete
    11. at present perhaps a fraction of one percent of individuals savings is in gold, and none for companies (afaik). Furthermore the new paradigm will highlight the importance of saving and as such I expect a higher percentage of individual income to go to savings. So taking all this into account, the savings rate in gold is likely to be perhaps 200-300 times what it is today. If we take into account the rise in price of gold, the total change would be higher savings in gold (weighing more), of perhaps 6 times as much as today.
      So here you make the assumption that more gold in terms of weight will be released from the current savers? In exchange of what?
      How do you get to that idea? I will not sell my gold (I have everything I want that I can think of, thats why I am saving my surplus in gold), and probably "the giants" (in case they exist like FG supposes) also wouldnt. You assume that this much will come from the "shrimps"? I seriously doubt that one, remember the post "gold hoarders die alone"?

      But that point you made, is very interesting besides the flow: How is holding what. The number of total holders is important, as well as their individual amount, as well as their intentions. And here we can only speculate nobody knows at all. But this context is my favorite reason to hold gold.
      Greets, AD

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    12. Good day AD

      I think I should start paying attention to using precise terms so that we can avoid misunderstandings.

      "That might be your current 101 economics, but can we agree, that this is exactly the opposite to the supposing Freegoldeconomy?"

      No, we cannot. Price is, has always, and will always be set by the matching up of supply and demand. Paradigm does not matter.

      "Can we agree that in FGeconomics, expressions like supply and investment demand do no longer apply, but rather dishoarding from spenders and hoarding by supplus savers? Price will only be determined in an ideal FG environment by this flow only!
      Now add the flow of mining, it is not neutral to this flow, it is exactly the opposite, and I am talking massively. Here's why:"

      Price will be determined by the matching up of all supply versus all demand, this included mining. Yes, mining as a supply factor has a negative impact on price.

      "Only when the FG flow (the one from the dishoarders) is much bigger than the mining flow (relatively speaken) you can only have a Freegoldeconomic. Since the mining flow looks like it is constant (by nature) or even increasing (by fiat price increase), to arrive at FG the dishoarding/hoarding flow has to be bigger. But if the sum of both is bigger than today, the price would be less."

      I am interested in why you think that investment/scrap supply must exceed mining supply to have freegold.

      " But if the sum of both is bigger than today, the price would be less."

      No. It does not have to be. Supply is one one side of the equation that determines price. You are ignoring demand.

      "So here you make the assumption that more gold in terms of weight will be released from the current savers? In exchange of what?"

      I like this question. Before I get around to replying though, let me use more precise words to answer your previous no 1.

      A question for you first though. If previous savers of gold do not sell gold, ( hence supply is constrained) what happens to the price of gold? If you agree the price would increase from this, do you think some of those who would not sell before will sell now?

      Now. Let me get back to answering this : "1.) Is the flow of gold in terms of weight from the hoarders to dishoarders of the above ground in possesion supposed to be higher or lower than today?"

      First let me state, that savings is about preserving a nominal amount of purchasing power. If I want to save $100,000 dollars, I do not care about weight of gold. If gold is priced at $50,000 per ounce then I will buy two ounces, if it is $100,000 per ounce then I will buy one ounce. Either way purchasing power is preserved.

      How much of the market for 'gold' today is actual physical? More importantly how much of that 'gold is for saving purposes? Let us be generous and assume 10% of the current market is in actual physical gold held for saving purposes. I'm sure you agree this is generous.

      So we are assuming perhaps 2500 tonnes of mining supply + 1500 tonnes of scrap, so 4000 tonnes total and to be again generous we assume a price of $2000 per ounce. There is roughly 31500 ounces per tonne so that makes the total nominal savings today about $250 billion per year. So 0.35% of world GDP roughly ( this ignores black markets and only takes into account the official GDP of roughly $70 trillion).

      Let us assume that post FreeGold ten times as much savings go to gold, so 3.5% of world GDP. Conservative no?

      So the annual demand is then $2.5 trillion of dollars that need to be saved.

      Now let us look at weight flow. Let us assume that mining production goes up to 4000 tonnes, and you think private flow is less so let's make that 1000 tonnes, ok? So a total of 5000 tonnes.

      So what is our new price of gold?

      $2.5 trillion divided by (5000x31500)....About $16,000.

      So, for savings, what is important is nominal purchasing power to be stored, not weight of gold. Price adapts according to those two parameters.

      Does this clarify?

      TF

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  5. "A question for you first though. If previous savers of gold do not sell gold, ( hence supply is constrained) what happens to the price of gold? If you agree the price would increase from this, do you think some of those who would not sell before will sell now?
    The price does not necessarily rise. See, that is the paradox when it comes to value vs. price: If you dont have an "ask price" you dont have a price discovery. Dont believe me? How much do I have to pay for one of your kidneys? Some chinese sold his for $600, to buy an Ipad... So what does that mean for the above ground supply of 16billion kidneys?

    "I am interested in why you think that investment/scrap supply must exceed mining supply to have freegold."
    the more it exceeds, the more it is representative for the FG price discovery.

    "No. It does not have to be. Supply is one one side of the equation that determines price. You are ignoring demand."
    since when is gold a commodity where you have a "demand"? See, that is the flaw, but when you look at mining it looks that way...
    If you dont follow me on that one, maybe you follow one of the FG gurus, from FOA: "gold is a strange thing, it tends to dry up when the price rises" :)

    "Let us assume that post FreeGold ten times as much savings go to gold, so 3.5% of world GDP."
    That is a really absurd expression. Globally there are NO SAVINGS. Gobal balance is always ZERO!!!
    And when I buy gold, nothing goes nowhere: I just exchange fiat versus gold. Afterwards the same amount of gold exists and the same amount of fiat. According to the FG concept this released and flowing fiat enables to resolve the conflict between debtor and saver. See, I perfectly understand FG :)
    But I dont buy into it, that anything is resolved, the rising gold prices are only a signal of the conflict, but not the solution to the core or the root of the conflict in the first place.

    "So the annual demand is then $2.5 trillion of dollars that need to be saved."
    to translate that into my wording: the conflict is increasing each year by 2.5trillion. So FG would cover this conflict by gold. Great, but why is there a conflict in the first place? What does this conflict say about the real physical plane? The real physical economy?
    Greets, AD

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    1. AD

      "The price does not necessarily rise. See, that is the paradox when it comes to value vs. price: If you dont have an "ask price" you dont have a price discovery. Dont believe me? How much do I have to pay for one of your kidneys? Some chinese sold his for $600, to buy an Ipad... So what does that mean for the above ground supply of 16billion kidneys?"

      Of course I agree that some things are not for sale, like my kidneys. :)

      However gold is not kidneys. At some price enough marginal savers would be willing to sell, if only because their saved stash now exceeds their savings needs. A price of $50,000 does not work, how about $100,000? No? How about $200,000? You see at some price enough marginal savers will cash out and supply will meet demand.

      Also don't forget as the price goes from say $50,000 to $100,000 the demand by new savers in weight is Halved...so now only half as much gold needs to be sold by previous holders to match up the nominal need for savings. If we go to $200,000 from $50,000 then only 1/4 as much weight needs to change hands. Yes my example is extreme, but you see how this change in price will make it balance at some point yes?

      "the more it exceeds, the more it is representative for the FG price discovery." I am sure it will exceed it at some point...the amount of gold in the ground is limited after all. But I do not see this as a conditionality for freegold to happen. I'd be curious if you still think so,as to why.

      "since when is gold a commodity where you have a "demand"?" The demand is not for a specific gold weight, but for a specific amount of nominal savings to go into gold. This is the demand I speak of.

      This which you quote : "gold is a strange thing, it tends to dry up when the price rises", is true in the current system. It will change under freegold too : it tends to become more abundant as the price rises. To understand why, look at why it dries up at present, and if that will be true under freegold.

      "That is a really absurd expression. Globally there are NO SAVINGS." No it is not absurd. Savings is deferred consumption by some party. Yes, globally in the physical plane that 'saving' is consumed, but that consumption is traded for a promise to repay value in physical plane in the future. This is savings.

      The conflict exists because debtors want their debt burdens to be less, so like soft or easy money and will advocate for that, while savers want their debts to be repaid in full so like like hard money. When as single medium is used for both these parties lobby for their individual preference to government and the conflict is manifest. Freegold sidesteps this conflict by splitting the two moneys.

      TF



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    2. "The conflict exists because debtors want their debt burdens to be less,"
      well, that's the "official FG excuse". No, the reason I see is much more ugly: It is the Atlas shrugged world. The fucking deptors never even intended to pay something back, because they can not. We have the Ben&Chen Island. That was a great post, indeed. But FG will not change anything, that is the horrible truth. Either Ben will starve or rob Chen, that is the ugly simple truth.
      Greets, AD

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    3. You are right to some extent. Ben already had his free lunch and Chen will never be repaid. That is the whole point of why Chen has chosen Freegold, because he does not want to be robbed again in the future.

      Fool me once, shame on you; fool me twice, shame on me.

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  6. "So here you make the assumption that more gold in terms of weight will be released from the current savers? In exchange of what?"

    I like this question. Before I get around to replying though...

    _____________
    reread the post, but somehow I missed the answer to my question.
    Because I am really interested, to know when I should sell my huge stash. For what? To buy T-bonds? Or to buy some chinese plastic crap? Or a spyphone5? See, I am wondering each day what I should buy, maybe some Berkshire Hathaway...

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    1. Today? There is nothing I would sell it for. After freegold though and the madness has passed? Yes, perhaps one can consider some shares.

      Gold can be overpriced too, even under freegold. Arbitrage at the margin should yield you more gold in the long run...so it could make sense to sell gold at some price, if it rises too much and you don't think it's a sustainable price.

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  7. AD

    The world is not a fair place. There is a saying : there is no use crying over spilt milk.

    What is done is done, the best we can do is move on.

    There is another thing I wanted to say...mr big shot industrialist.

    You need to learn gratitude.

    We have this pattern where you come here with lots of problems and I do my best to explain my perspective and help your understanding. Then when most of the big points are no longer contended, you start to focus on small details in a sulky manner, which I also try and dispense with. Thereafter you normally leave until the next 'big issue' pops up.

    Seeing as you are not paying me for my time and insight, the very least you can do is to say thank you, if I have helped further your understanding.

    For a long time now I have not brought this topic up, because I thought you would do so on your own at some point. I am starting to think however that perhaps you do not know that this is the civil thing to do, and so I thought to mention it.

    Peace

    TF

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    1. MF,
      regarding FG I think, that we still have the same differences. And repeating the same stuff over and over again, does not solve anything (which apply to both of us).

      The OT was hoarding, I guess we have basically the same opinion on that, so nothing to argue. In fact, maybe it was you, who reconsidered his arguments some time ago, to also start hoarding in the physical plane, not just on the golden monetary plane. Something I always pointed out from the very beginning.
      The topic hoarding lead us to mining. I really dont see any new inside about that, except that you prefer to sweep it under the carpet of "a small detail".
      Greets, AD

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    2. AD

      Ok, so let me get this straight. I have been wasting my breath the whole time..and your position is and remains ( from this thread) :

      1- Gold hoarding engenders environmental destruction.
      2- Freegold cannot happen unless gold mining stops.
      3- Governments will get most of the gold spread from new mining and this is so very unfair.
      4- The flow of gold from savers post freegold will be lower than today.
      5- A higher gold price means more gold will be mined
      6- So from (4) and (5) the ratio of gold flowing from savers to mined gold will be smaller than today meaning the price of gold will go lower.
      7- Only some of the gold mined today is sold...the rest is in idk limbo.
      8- Gold price is exempt from supply-demand economics..and behaves in exactly the opposite fashion ( post freegold)
      9-Gold price post freegold will be determined only by flow of gold between savers. Mining supply will have no impact.
      10- Excepting, in no 9 above, once this price has been determined mining supply will not be neutral with respect to the above flow. (ie it will affect price)
      11- Demand does not matter in determining gold price, only supply.
      12- Savers post freegold will not sell any gold, regardless of price.
      13- There is no demand for gold or rather cannot be since none will be sold.
      14- Globally there are no savings. ( TF- Someone has better inform china...I'm sure they'd love to spend all those dollars on real goods today)
      15- Buying gold has no impact on anything. Amount of gold and fiat remains the same, so nothing really happens.
      16- Debtors have no intention to ever repay. They simply steal or starve.
      17- Freegold will have no impact on no 16.
      18- The Motley Fool has never talked abut or cared about making any provisions beyond buying gold. AD has graciously tried to help point out the importance of storing some food, etc. (TF - Complete nonsense of course...I have been speaking of such things for years, though I did say they were distracting from main points in some of our conversations, and so should perhaps be ignored while focusing on those)

      That about right then?

      TF

      Delete
    3. Ps. I've left many things what we agree on off this list. There are also things on the list we agree about, though me in a conditional manner not a absolutist one.

      Delete
    4. Hi MF,
      I am really honestly kind of disappointed to read a little bit of anger in that post :(

      See, it is not about being right or wrong, or whos wasting whos time, can we agree that true FG observers should only watch the trail, but without any bias where it should lead?

      Can we agree that the most important issue in that matter is to post the right questions, not the right answers (like e.g. JR is attempting to have the right answers without the right questions)?

      So to stay in that matter:
      what will be the flow in terms of weight? Before, during and after the transiton?
      I think that hopefully we can agree, that this is the most essential question? No? Isnt that the answer after all? Isnt that the answer to the value of "money" (either MoE or SoV) in itself?

      I seriously think that FOFOA himself knows very well, that the flow is the key, in everything, both MoE as well as SoV. So when talking about golden flow (in terms as value as well as weight) it always comes down to from where to where. Where are we now and what will the equilibrium be? The answer is, we can only speculate (and we can take limit assumptions (I dont know the right translation in german it is "Grenzwertbetrachtung" ("limit value consideration"?), I studies a major in mathematics). For sure are only the mechanics and the weight from the mining, the rest flow (dishoarders<=>hoarders) is just an assumption.
      Greets, AD

      Delete
    5. and my thesis is:
      If (or as long) the flow from the mining (=gold is bidding for dollars) is bigger in terms of weight than the FG flow (dollar is bidding for gold) you dont have a FG environment.
      Can we agree on that one?
      Greets, AD

      Delete
    6. AD

      I was not angry, rather exasperated and disappointed in you.

      The level is self-involvement and and ego I perceive from you is simply incredible.

      Even if it were true that my words had no impact, it would still be civil to be appreciative of the effort made.

      I try to approach these discussions honestly.

      To say my words have had no impact shows incredible dishonesty or disrespect from you.

      When I raise an objection to a point that you make, and you subsequently offer no resistance, then any normal person would assume that you then agree.

      If this is not true then it means you gave my words no consideration.

      For example I said to you that there is a difference between FOA's comment between now and Freegold. You did not object.

      If you did not understand or agree, the honest thing to do would be to further discussion.

      The way you approach the discussions combined with your above : "regarding FG I think, that we still have the same differences. And repeating the same stuff over and over again, does not solve anything (which apply to both of us)." Is interpreted by me as follows.

      Either you are so arrogant and self-involved that you can admit not mistake, nor having learned anything from anyone, nor express gratitude therefor; OR you hold my opinion in such low esteem that you do not consider what I say at all, nor think about it, nor give any thought to the possibility that I may have some idea what I am talking off...which is incredibly disrespectful when coming to have discussions on my blog.

      In neither case can I see any reason for me to spend my valuable time on trying to help you understand my perspective.

      TF

      Delete
    7. AD

      As to your thesis. I have stated before that I find it interesting and asked you to explain why you think so.

      My expectation is the exact opposite. That the closer we move to the transition, the less gold is sold by investors and largest share of selling is done by mines. Only post freegold do I see savers gold flowing again. Even then I'm not sure why you think the latter flow should be greater than the former.

      TF

      Delete
  8. AD

    If I may, I think your biggest stumbling block is your sense of justice gets in the way.

    I absolutely agree with you that things at present are bullshit/not right/unjust.

    However our reactions to this differs.

    A few years ago I held the same position as you, railing against the injustice in the world and wanting it to be put right.

    In the meantime I have learned that there are some things i cannot change, and that I need to accept them as they are and move on. This does not mean I condone them, but it means that I no longer waste energy trying to change the unchangeable.

    This change has brought me peace.

    TF

    ReplyDelete
    Replies
    1. MF,
      yes, you're right, it is a little bit about justice, but not exclusivly.

      The key to my experience was to have earned more fiat (<= contributing and paying 50% tax to the real physical plane) than I could spend in my life from the remaining.
      At that point I started to ask myself, what is that really, that I accumulated.
      It took me some years to really understand money (probably due to "the crisis"), and yes, I am still kind of angry, but I am getting more calm. It is just the way it is, and I am valueing fiat much less than real life stuff that is surrounding me.
      So today I am only getting once in a while upset when I hear people mixing up fiat value/accounting vs. real value.
      Greets, AD

      Delete
    2. P.S.
      but what I really like to point out: The physical plane is not constant!!! many freegolders assume that just he reorganisation of the monenatry plane will do everything. That is simply a false and dangerous believe. If or once there will be a crack in the monetary plane, nobody knows how the physical plane will react.

      Delete
  9. "For example I said to you that there is a difference between FOA's comment between now and Freegold. You did not object.

    If you did not understand or agree, the honest thing to do would be to further discussion."


    So please!!! explain to me how a bigger flow in weight terms can happen, at much higher prices (prices in terms of equivalent purchasing power compared to today)?
    Sorry, but that makes no sense at all in 101 economics, but also not in some other la-la-economics. Who's the buyer, who's the seller of those weights?
    Will mine flow? NO WAY, WHY SHOULD IT (that's why I hedge my gold with silver&equities&food)
    Will Rothschilds flow? NO WAY, WHY SHOULD IT
    Will the Sauds flow? NO WAY, WHY SHOULD IT
    Especially the latest post of FOFOA proves that: The overhead costs of the giants is so small compared to the currency income flow. So please name those buyers AND SELLERS!

    I mean, come on, that's the whole purpose of gold: To settle debt, remember final payment. And debt comes from surplus on the other side. As I said, the Sauds, Rothschilds and myself have everything already, as well as their equities. So why do you think:
    1.) The stream of stuff change directions and debt&surplus will be elsewhere?
    2.) The regular debt serfs are fucking broke and already sold most of their gold. So even if me, the Sauds and the Rothschilds are exchanging some ounces back and forth just to balance between us to have e.g. exactly 90% in gold savings, where is your presumingly huge continues weight flow coming from and going where?

    Although I dont think so, but let's assume for a second the typical FO(FO(A)) prediction is: "The giants will be sucking every little bit of gold through the line of the brokers telefon.....", lets just say it is true.
    TO DISHOARD IT AFTER THEY BOUGHT IT? IN EXCHANGE OF WHAT? Suddenly hoarding fiat?

    So whatever essential statement from the FG stuff is taken, it is contradicting with some other essential statement.

    ReplyDelete
    Replies
    1. AD

      You do seem to get stuck at what I consider odd places.

      From your latest your position seems to be :
      - gold goes into hiding when the price goes up
      - You cannot see that the weight of gold changing hands can increase from current levels
      - Especially as the price will be higher under freegold
      - and you also cannot see that there will be anyone to sell this bigger weight of gold as...
      - the giants won't have any need to sell (and)
      - the debtor shrimps are already dishoarding

      What is most interesting here is the implicit and erroneous assumptions made. I think if I address those, then perhaps things will be clearer.

      Those assumptions are :

      - As price increases, gold flow decreases...always
      - The weight of gold changing hands must increase from where it is today to have freegold

      Let's start with the quote of FOA you seem to be misunderstanding, or rather haven't thought through, and also misquoted and misattributed.

      "Gold has always been funny in that way. So many people worldwide think of it as money, it tends to dry up as the price rises." - ANOTHER

      The reason there is truth in this has to do with two things, confirmation bias and future expectations.

      Firstly when those holding gold see the price rising, this confirms for them that they were correct in holding it. It also points to a loss of purchasing power in currency ( on most goldbug minds). Furthermore there can exists a expectation that this trend of purchasing power loss will continue, and that is not a far-fetched idea in today's crazy markets.

      So these are the reasons it hold true today.

      Have you thought about whether this will all be necessarily true under freegold?

      Under FG the a change price of gold would be a indicium of two things, either purchasing power has been reduced in currency, or savings have increased. There are many posts at FOFOA on why it would be a optimal strategy for central banks to manage their currencies wisely and not go on a printfest. If we may, let us assume for the sake of this conversation that you believe the ECB that they will meet their target of 2% inflation. That takes care of future expectation. Now if gold rises more than this, it may be either due to savings increasing or because of misperception. In the latter case it could be sensible to sell some gold now, wait until the price inevitably declines when the misperception is cleared up, and then buy back more gold than you had to start with.

      Does this help you see why that statement by ANOTHER is not an absolute?

      Onward.

      continued)

      Delete
    2. (continued)

      Let me start by agreeing that there is no need for any superproducer to dishoard (unless he sees an opportunity like above and decides to take it). He produces enough to meet his needs and produces extra...he will likely always be a buyer of gold (at least until the oil runs out in the Saudi case).

      However at a higher freegold price, if they move the same amount of savings into gold as they do now, they will be buying less weight than they do today.

      Let us consider the question : how much gold in weight must flow to satisfy demand?

      Let us assume a annual saving of $5 trillion that wants to find haven in gold. How much gold is needed.

      Our simplistic equation is : Gold weight x gold price = total gold savings. An equation in three variables. We know one. This means the equation has infinitely many solutions.

      If we further assume a price of $50,000 per ounce, then the amount of weight that needs to flow is 100 million ounces. If we assume $100,000 per ounce then the weight needed is 50 million ounces.

      This is a dynamic situation, where both the price and weight changes..so ANY solution would work.

      If only mine supply is available and nobody else is selling then this is fine. The price simply adjust until needs are met.

      Of course as mentioned above, as the price changes, some arbitrageurs will speculate on it and more weight becomes available. A very dynamic and complex situation. One that can only be solved by the market in real time.

      This is why I have said the solution is price.

      There is no fixed amount that needs to be for sale for all savers to move into gold.

      There is also no reason that I can see why saver dishoarding must exceed mining supply.

      Of course the above is a very simple example looking at only one aspect. We made the implicit assumption that everyone was using the same currency. It gets a bit more complicated when multiple currencies are involved and gold crosses borders. Once again, so complex that only the market can solve it in real time.

      I hope that by looking at your assumptions, you can see why your question seems strange to me.

      I see no need to identify which savers will supply gold, simply because the question is impossible to answer. Human beings make their own choices. And even if none sell, it doesn't matter.


      TF

      Ps. Do I sense anger this time?

      Delete
    3. Pps. The amount of savings is also not strictly known, and also changes. So a dynamic equation in three variables it is. Again, infinitely many solutions.

      Delete
    4. Good morning MF,
      (checked the post in the morning, cause I couldnt wait to get maybe wiser;)

      "Let us consider the question : how much gold in weight must flow to satisfy demand?

      Let us assume a annual saving of $5 trillion that wants to find haven in gold. How much gold is needed."


      I seriuously think, that you have some misconception about savings. You assume that there exists something like "annual savings (demand)", but it does not. The savings/surplus comes from the money printing. Where comes the money printing from? Because the producers are not spending the fiat income. Why do we notice this effect more and more? Because the camps of the producers and none producers is widening more and more, also due to the social/political longtime effects of marginal use of governments investments, of social welfare and dumbing down the masses. The fiat is printed so that the producers wouldnt stop, that is the explizit political will (from everybody, the government, the consumers and the producers). Nobody wants to abandon the social retirement programs, to valuable for the governments in running the ponzi scheme (financially and socially to have depending serfs) and an income for the producers, WarrenBuffets and the bankers.
      This gap/difference will not change with FG, except that a little less printing might be needed, if the Cash4gold flow is valued higher. But the setup in the real world (flow of goods versus tokens, either gold or fiat ones) does not change (just as you said, as long the Sauds dont run out of gas or Germany stops engineering, or chinese shipping plastic crap...).
      So maybe you understand my dilemma: Where do the sellers and buyers come from in terms of bigger gold weight supply in the long continues run?
      One of the FG assumptions is that the gold will flow at higher prices, everybody (shrimp?) will sell at $200.000. Please consider this seriously: The fucking shrimps are only hoarding to "become finally rich". When these people cash out, it is not about creating competetive equities, it is to finally get their Ferrari. Let them have it for once in their lifetime, but than it is gone in consumption and the overall setup of producers & consumers does not change at all. That $200.000 flow is not sustainable at that price level, at least not at the same weight flow level.

      Greets, AD

      Delete
    5. and if you dont believe me, here a significant example: Guess why the Greek military expenditure quote is _STILL_ bigger than the US? Most important note the difference here: The US produces the weapons by themself which is kind of dollar neutral (and have real return of investment from them, at least thats what they think), the Greek import them exclusively and let them rott in the harbours.
      So please stop this stuff about the Euro is so great because of the right austerity measures that will be taken. NO THEY WOULDNT.

      Delete
    6. AD

      "I seriuously think, that you have some misconception about savings. You assume that there exists something like "annual savings (demand)", but it does not. The savings/surplus comes from the money printing."

      Perhaps I have a misconception. Here is how I see it.

      Savings is excess production in the physical plane that is not consumed. This excess production is also exchanged for fiat. That fiat is then either kept as savings ( bad idea) or can be exchanged for gold to save in.

      How much is printed does not matter. Money also has a price. Whether my excess is 20 fiat currency units which buys me a banana, or 10 fiat currency units which buys me a banana is irrelevant (as long as the economy is not unstable).

      So, I don't see printing as being relevant to savings.

      I assume there exists something like efficient production, which leads to more being produced by some than they need to consume.

      " Where do the sellers and buyers come from in terms of bigger gold weight supply in the long continues run?
      One of the FG assumptions is that the gold will flow at higher prices, everybody (shrimp?) will sell at $200.000. Please consider this seriously: The fucking shrimps are only hoarding to "become finally rich". When these people cash out, it is not about creating competetive equities, it is to finally get their Ferrari. Let them have it for once in their lifetime, but than it is gone in consumption and the overall setup of producers & consumers does not change at all. That $200.000 flow is not sustainable at that price level, at least not at the same weight flow level."

      As I said, it doesn't matter. You are right that some shrimps will be cashing out for ferrari's and this will supply a short term 'glut' of available gold that will not be continuously available. After they have shot their load once, that won't be happening again. Sure.

      If we look at long term exchange though, if a price of $200,000 does not work...then it goes to $400,000 or whatever is needed, until available weight supplied matches up with nominal savings requirement.

      It does not matter. Price solves everything.

      "So please stop this stuff about the Euro is so great because of the right austerity measures that will be taken."

      Didn't do any of that. I just said let us assume they keep their promise so we could make the thought experiment as simple and easy as possible to look at the relevant idea, and not complicate it needlessly.

      TF

      Ps. I saw DP had some thoughts on the above. Chickens,eggs and omelettes

      Delete
    7. Hi MF,
      Perhaps I have a misconception. Here is how I see it.

      Savings is excess production in the physical plane that is not consumed. This excess production is also exchanged for fiat. That fiat is then either kept as savings ( bad idea) or can be exchanged for gold to save in.

      Let me explain, why I think you still have a misconception and why in a simple example:

      Think of you as a lumberjack, you have your own garden, animals, a river for fishing and once in a while you do some hunting for fur and meat. So altogether you are really selfsustaining. But hey, let's not forget you are a lumberjack, meaning you produce much more wood than consume and once per week you go to the market to sell your wood.
      Does this not 100% apply to your above definition? Arent you a great "saver"?
      Oh, I forgot to mention, all other people coming to the market are lumberjacks just like you, will be funny to see you exchanging the wood...

      See the problem: "Surplus" on the physical plane does not exist in the way you look at it. So I say, surplus only exist in terms of valuation by others. Voila, we just invented money. So no matter how hard you work and cut those trees and "consume less than you produce", does not make you a saver in the sense you look at it. In order to become a saver in the way you look at it, you need money (creation). So either ultra hard money (gold barter) or easy money (todays freely expandable CB's balance sheets).
      Okay, now we just invented money and you go home with the innovative tokens. Guess what, that wood you just "sold" will be consumed. After a few days the physical world will be the same once your lumbered wood is burnt, but you can proudly call yourself a saver, since not you burnt your wood, but somebody else.
      See my point? And in that context your argumentation around "saving requirements" make somehow no sense to me.
      So you raise the price to astronomical price of $400.000 (are we still talking saving demand or leverage?). Okay, you convinced a giant to let 400 ounces drop into the flow of the market. Who will catch it and where will those rest? What will the giant buy from the fiat? And why do you think that now the overall flow of weight will increase further?
      I simply dont get it, how you arrive to a higher weight flow with the setup of todays "value producers" and "value consumers".
      Greets, AD

      Delete
    8. AD,

      I think that the part that you are not getting is that the world is not made up of just lumberjacks. The world is made up of:

      - title clerks that titled the land (proving legal ownership) your lumberjack hunts on
      -fishing pole makers to make fishing poles for him to fish with
      -gun or knife makers that you your hunter used to hunt the animals that provided the fur & meat
      -market makers that made a market for you to trade your lumber
      etc

      Your example doesn't reflect reality. Can you provide another one illustrating your issue(s) with FG?

      It seems to me that you are not taking into account double coincidence of wants issue (among others).

      Milamber

      Delete
    9. AD

      I am uncertain if the intent is to baffle me with bullshit, or if you simply give no thought at all to the words you type.

      Milamber is correct that your example is not reflective of reality.

      In fact, it is hard for me to imagine a example more divorced from reality, even ignoring and compensating for the logical inconsistency.

      I will correct the logical mistake and then restate your problem to highlight the implicit implications explicitly.

      "Oh, I forgot to mention, all other people coming to the market are lumberjacks just like you, will be funny to see you exchanging the wood..."

      This needs to go.

      If not the suggestion is twofold. Firstly that wood has no trade value ad Everyone has a wood surplus. Secondly that these 'people' are remarkably stupid.

      I imagine an internal conversation like this : I receiving no income from wood; what shall I do...lumberjack harder.

      Removing that, your example presents some alternative universe...where the inhabitants engage in the basic trades for survival and no more. A kind a pre-civilization group of hunter-gatherer individuals.

      Your implicit implication is that all capital goods produced are consumed immediately....burned up if you will.

      This means these individuals sleep outside, or live in caves, have no beds, tables, or any tools at all. The lumberjacks wood production seems to be only used for firewood, which is good since they must be breaking up small and old trees with their bare hands.

      In reality, the buyer of goods with tokens has obtained that token by one of two ways. Producing himself more than he consumes, or borrowing. In the first case capital formation occurs, in the latter the promise of future capital formation occurs.

      I am using the following definition of capital for the purpose of this discussion : a resource that is either created or naturally available, that has a specific use and a specific length of time of use.

      So for example a apple may be useful as lunch and expires fairly quickly if unused, whereas a bed may give 20 years of use before it needs to be replaced, and even the the raw materials may still have some value.

      The tokens exchanged then represent a claim on either current capital goods or the promise of future creation of capital goods.

      So savings represent real things in the economy, or future real things.

      Specifically savings are useful to create capital goods, which retain value and increase production efficiency.

      The concepts left out in your example is double coincidence of wants, specialization of trade and capital formation.

      "I simply dont get it, how you arrive to a higher weight flow with the setup of todays "value producers" and "value consumers"."

      As I have said many times. The weight does not necessarily have to be higher. For saving in gold, weight does not matter, nominal purchasing power stored does!

      TF

      Delete
    10. MF,

      I think we are getting closer. Not to necessarily agree in all thesis, but to crystalize the issues. I agree that the lumberjack example was abstract and does not reflect reality. It is just like Ben&Chen Islands, except the opposite. If you dont like my example, let's turn to your cult leader FOFOA's example ;). In that example :

      1.) Where do the "savings" come from on Ben&Chen's Island?

      2.) Are the savings on the physical or monetary plane?

      The way I look at the overall purpose or benefit of money is, that it ought to provide a tool for efficiency improvements. This roll is mainly accomplished by it's function as UoA.

      And I know that this is kind of hard to accept for a "hard working honest saver". I perfectly understand your stance, what you want it to be. I was raised as a hard working german prussian, now with the most deeply libertarian believe and trust me, it is not about what you and me hope it to be. For us the question can only be, how do we get paid in full the best way and fuck the rest.

      IMHO your false believe is, that:
      "So savings represent real things in the economy, or future real things.
      Specifically savings are useful to create capital goods"

      1.) have you ever seen tokens creating real goods? NO! The only assumption we can make from the savings is, that the entity that collected these tokens earlier, knows best how to direct the physical plane by his tokens in his type of business, therefore it is probably useful (besides justice, whatever that might be) to let him have savings (and not to counterfeit or steal them for consumption).
      2.) This probably only works best when he assumes that he is paid fair.

      maybe this is something to think about: Who have been the first people in outer space? The ones with the hardest SoV aka India aka Freegold-Valhalla? No, it had been people with no money at all.

      With this in mind, back to the main issue:
      "As I have said many times. The weight does not necessarily have to be higher."
      If the weight of the "savings flow" in the monetary plane, is lower than the mining weight.....
      Greets, AD

      Delete
    11. AD,

      You have posited an analogy that you claim demonstrates flaws in FG theory. I am asking you to either clean it up or come up with a better one, because your analogy doesn't work for a variety of reasons.

      Incidentally, in FOFOA's example he points out the glaring flaws in his analogy:

      "Now I do realize the glaring flaws in this analogy I cobbled together. So spare me the critique. It is far, FAR from perfect. But it does help with a few good observations."
      http://fofoa.blogspot.com/2010/12/focal-point-gold.html

      He uses his analogy (like all good analogys) to drive home a few points. I am still trying to understand yours.

      Milamber

      Delete
    12. Isn't it true that the "weight of the savings flow" demanded is already, today, far greater than the weight flow coming from fresh mine supply but it is satisfied largely by the creation of paper contract "gold substitutes" - which most people continue (for now?) to perceive as being the same thing as physical gold. I am trying to imagine a world where the current relatively small percentage of the investing public investing in gold are suddenly convinced that these paper substitutes are not after all the same thing as gold, so they turn instead to buying gold itself. Then I imagine a world where those people are far from alone. Will sufficient additional mine supply be forthcoming, which will swamp all of this additional demand for real, actual, physical gold?

      I suppose it is possible.

      http://www.youtube.com/watch?v=eWM2joNb9NE

      Delete
    13. Hi Milamber,
      no the analogy has nothing to do with flaws in FG, that was not the point. The point was to show to MF his flaw what he considers "savings", or to ask him what are those savings that he is talking about. It is MF who can not really point out what the "gobal saving demand" is. On which balance sheet can I see it or can I touch it on the physical plane? Where does it come from....

      To maybe close the topic, what is "savings", it is the surplus in fiat you dont need. Why dont you need it? Because instead of forcing the market place to bid it away from you by offering stuff that you might want (forcing severe recession in a gold-barter system), newly is printed to keep the phony party going.

      Because if you read the whole threat: We are still discussing about the amount of weight that does or will flow continuesly (today or in the next 10yrs future and/or in Freegold-Valhalla). Because it comes all down to the flow in terms of total weight.
      The overall flow is the sum of the "FG"-flow PLUS!!! the flow from the mining <<== that is the flaw in FG that these two flows are acting against each other.
      And MF's arguing "well there is that continues never ending saving demand..." is not valid here.
      Greets, AD

      Delete
    14. Boner Parte,
      paper gold does not "surpress" the price of physical gold. PERIOD. It is a completely different product.

      Just as paper food does not suppress the price of physical food. (The public claims more the opposite: that it would increase the price of food).

      Is it stupid to have or trade paper gold? For a "saver" I say yes.
      Does it suppress? For every paper long (paid with money you dont have) you have a paper short (gold that does not exist). So the answer is no.
      It comes down to: Do you want physical gold as a final payment, or do you want a promise to be paid fiat currency whatever the exchange tells you that the paper gold might be worth in fiat paper.

      Greets, AD

      Delete
    15. P.S.
      The only thing I see that does suppress the gold price are gold leases, holding the physical gold in front of a mirror. If you are interested in that, I strongly recommed the book from Dimitri Speck "Geheime Goldpolitik".
      Here's a summary in english:
      http://www.larsschall.com/2012/10/10/gold-market-manipulation-explained/

      Delete
    16. AD

      “ I agree that the lumberjack example was abstract and does not reflect reality. It is just like Ben&Chen Islands, except the opposite. If you dont like my example, let's turn to your cult leader FOFOA's example ;). “

      Neither of those analogies were very useful for the purpose of reality.

      Perhaps you should consider this ebook : http://freedom-school.com/money/how-an-economy-grows.pdf

      Your lumberjack example is essentially page two.

      The above will give you some idea of how savings relate to the real world.

      “1.) have you ever seen tokens creating real goods? NO!  “

      Shit man. You really have a way of reading things literally when you are in the mood.

      “ It is MF who can not really point out what the "gobal saving demand" is. On which balance sheet can I see it or can I touch it on the physical plane? Where does it come from.... “

      I did and I have. Savings 'demand' comes from excess production on the individual level, beyond what is consumed.

      “ Because it comes all down to the flow in terms of total weight. “

      No it doesn't. How many times must I repeat that weight does not matter.

      TF

      Delete
    17. What you are describing is the human search for efficiency improvement to make life easier and to save time by sharing work. The UoA function on a free market is the most usefull element to compare the efforts to accomplish something in the future compared to today. But UoA can not exist without MoE. The stability of the SoV function is (besides justice) just helpful for better calculation (in terms of not being fooled by yourself when doing the calculation).
      But at the end of the day, Ben&Chen will never have a fisher boat, regardless of how many lines in the sand or gold in their pocket they have, unless they build a boat. Never wondered why in the different cultures in human history regardless of what you call "savings" tokens the progress was so different? YOU HAVE TO GET THE SHIT DONE BY WORK AND BRAIN, or like PeterSchiff likes to call it, you can not print wealth, nor by exchanging gold. Just take a look at the rise of Germany and look at your Freegold-Valhalla aka India.
      What you refer to as your "savings" tokens, represent just your "fair share" on the efforts put into the work of the improvement. But just by "saving" aka collecting the tokens of consumers, nothing happens.
      Again: MoE, UoA & SoV are tools to help progress (and I agree probably the most important ones that human mankind developped), but absolutely nothing else!!! And the interest on money just represents a kick in the butt to get you out and improve, paying back more to the overall superorganism on the physical plane, than receiving in advance.
      Greets, AD

      Delete
  10. Something relaxing in the meantime:

    In all german mainstream media this week a massive promotion of gold started (except it didnt really explain the nature of golden versus fiat tokens, but hey, that might be something too much to expect from the public to understand). So maybe you get your Euro-Freegold, when >2trillion german surplus euro currency units storm the coin dealers ;)
    Greets, AD

    ReplyDelete
    Replies
    1. I find this interesting. Can you provide more information and perhaps some links?

      Thanks

      Delete
    2. Gold is not longer treated as a volatile stuff for jerks, but more or less the most stable place to save. Besides a bashing on "capital savings insurances" started, due to the awareness of financial repression.

      http://www.welt.de/print/wams/finanzen/article109669897/Wenn-die-Herde-irrt.html
      http://www.welt.de/print/die_welt/finanzen/article109639124/Deutsche-sparen-sich-die-Altersvorsorge.html
      http://www.sueddeutsche.de/geld/fuenf-szenarien-zur-wirtschaftsentwicklung-so-schuetzen-sie-ihr-geld-in-der-euro-krise-1.1492949
      http://www.welt.de/finanzen/altersvorsorge/article109637377/Gold-wird-fuer-deutsche-Sparer-zum-Euro-Ersatz.html
      http://www.bild.de/geld/wirtschaft/inflation/so-sichern-die-deutschen-ihre-euros-26384878.bild.html
      http://www.focus.de/finanzen/altersvorsorge/umfrage-zur-altersvorsorge-in-deutschland-die-deutschen-geben-die-private-altersvorsorge-auf_aid_831271.html

      (even AFAIR "The Spiegel" (a very socialist statist journal) started)...and plenty of others, dont have them on hand right now.
      I guess the coverage of gold started with the speech of Jens Weidman: "gold is the classic, the euro is just printed cotton".
      There is a saying: "not every german might believe in god, but everybody believes in the Bundesbank".
      Greets, AD

      Delete
    3. http://www.wiwo.de/finanzen/geldanlage/geldanlage-wenn-das-gold-redet-schweigt-die-welt/7224412.html

      Delete
    4. the other day, somebody posted a link to some article that Portugal run out of scrap Cash4gold...

      ...well, yesterday in the print version of the national french mainstream newspaper "Le Parisien", there was on complete page exclusively from Cash4gold shops.
      So time now to suck up the lovely yellow from the frog-eaters :D
      Greets, AD

      P.S.
      Did I mention: It is really really hard to find a place in France to buy gold?

      Delete
    5. 1/2

      AD wrote

      “no the analogy has nothing to do with flaws in FG, that was not the point. The point was to show to MF his flaw what he considers "savings", or to ask him what are those savings that he is talking about. It is MF who can not really point out what the "gobal saving demand" is.”

      AD, before we go any further, can you take a look back up thread and please cite the specific phrase you are talking about now? I have a very hard time trying to follow your line of reasoning. If you have valid criticisms of FG, I would love to read them and think about them, but so far, I am not understanding your arguments.

      Let me see if I can explain my confusion, by citing you in this thread:

      First you claimed that this was the flaw:

      AdvocatusDiaboli6 October 2012 01:10:00 GMT+02:00 wrote:
      the flaw is:
      "at what FIAT currency price are/will miners be paid?"

      1.) Nationalization/Taxation to infinity is just a ridiculous excuse in the FG concept. Because that would only mean that the governments gets the spread. And the government spend the spread on real wealth&goods, which means taking real stuff from the real physical plane, which belongs in the FG concept the gold hoarders/dishoarders.

      ....

      Then you claimed that supply & demand will no longer be operational (and said that it can be seen unless one is too biased to see it):

      AdvocatusDiaboli7 October 2012 10:42:00 GMT+02:00
      The ratio you are considering... actual supply versus investment demand is also simple the resolve. The answer is price. If more is supplied by mines than the current price allows for in savings, then the price goes lower..until all gold changes hands. This is economics 101 no?

      That might be your current 101 economics, but can we agree, that this is exactly the opposite to the supposing Freegoldeconomy?
      Can we agree that in FGeconomics, expressions like supply and investment demand do no longer apply, but rather dishoarding from spenders and hoarding by supplus savers? Price will only be determined in an ideal FG environment by this flow only!
      Now add the flow of mining, it is not neutral to this flow, it is exactly the opposite, and I am talking massively. Here's why:

      That's the point I made, with the two figures (assuming today based on WGC estimations, please feel free to assume other numbers the outcome is the same): 1500t/yr "FG"-flow (scrap, savers sales...) plus 2500t/yr from mining. The FG saver buys from the total sum of both. Only when the FG flow (the one from the dishoarders) is much bigger than the mining flow (relatively speaken) you can only have a Freegoldeconomic. Since the mining flow looks like it is constant (by nature) or even increasing (by fiat price increase), to arrive at FG the dishoarding/hoarding flow has to be bigger. But if the sum of both is bigger than today, the price would be less.
      Dont you get the flaw, or are you to biased?

      Cont...

      Delete
  11. cont...

    2/2

    Then you state that you no longer have need to ever buy anything ever again. Because you already have everything. So consequently you (and everyone else as fortunate as you won’t ever convert gold (SoV) to cash (MoE):

    AdvocatusDiaboli7 October 2012 11:29:00 GMT+02:00
    at present perhaps a fraction of one percent of individuals savings is in gold, and none for companies (afaik). Furthermore the new paradigm will highlight the importance of saving and as such I expect a higher percentage of individual income to go to savings. So taking all this into account, the savings rate in gold is likely to be perhaps 200-300 times what it is today. If we take into account the rise in price of gold, the total change would be higher savings in gold (weighing more), of perhaps 6 times as much as today.
    So here you make the assumption that more gold in terms of weight will be released from the current savers? In exchange of what?
    How do you get to that idea? I will not sell my gold (I have everything I want that I can think of, thats why I am saving my surplus in gold), and probably "the giants" (in case they exist like FG supposes) also wouldnt. You assume that this much will come from the "shrimps"? I seriously doubt that one, remember the post "gold hoarders die alone"?

    But that point you made, is very interesting besides the flow: How is holding what. The number of total holders is important, as well as their individual amount, as well as their intentions. And here we can only speculate nobody knows at all. But this context is my favorite reason to hold gold.

    ...

    Then you make a strange (at least to my eyes) correlation between selling a kidney (not a real good SoV) and some gold (made to be a SoV)

    However, I don’t have time to keep going through the thread. But I tried following your reasoning. I have to admit that I am at a loss here. I have no idea what you are trying to say.

    So if you would, please restate your disagreement with FG (or with TF’s description of savings) so I can attempt to understand what you are trying to say.

    Milamber

    ReplyDelete
    Replies
    1. Milamber,
      thanks that you went trough the main issues and summed the essential ones up. What else can I say, it is basically all in there. So how do I start? Going into each and every issue again for the overall picture or start a new approach?

      Okay, I start a new approach, IMHO:
      It is all about price discovery. And only by price discovery you have a flow. But you probably agree that the crazy thing is that the "yardstick price" of today (and under freegold as well) is the fiat currency. So things are bidding for fiat, fiat bidding for things. When they meet, we have a valuation between the fiat and the thing.

      FG assumes:
      I) that we have a situation of a perfect focal point, when all fiat surplus which is supposed to be used as savings will bid so long/hard until it is converted into gold.
      II) gold is only dishoarded to fiat (brought/put to the auction), not to be hold, but rather be spend very soon on some other stuff the hoarder really wants (typically as consumption but for possible investment as well).

      During the predicted transmission to this equilibrium there will be a massive flow in terms of weight, because all fiat will be running to gold. But the higher the price rises the less weight has to move to reach the equilibrium (remember FOFOAs "inverted waterfall").
      After the transistion all fiat surplus is converted into gold and we have only the flow of gold that the purchased by fiat from the net producers from the dishoarders.
      That is the FG concept, can we agree so far?
      --------------------------
      Okay now the flaw or better lets say contradiction:

      After the transistion which will probably not last longer than a few month(?), looking at the real world we still have the same net producers (or like FOFOA calls them superproducers). They basically produce the same amount of fiat surplus than before, since the whole idea of FG is that fiat basically only devalues against gold (lets just forget hyperinflation discussion for a second). But since the price has risen dramatically the flow of weight due to the same amount of fiat surplus would only be much smaller.
      ===>>> hoarding flow is supposed to be (much) smaller in terms of weight than from today. Today we have a hoadring flow of: dishoarding+mining ~ 1500t+2500t. From the above assumption it has to be significantly smaller after the transition.

      Now look at the mining: There is this nice rule one ounce cost one ounce. Okay, if you look at the mining. What is the nature of the miners? To sell there stuff in competition against fiat. There flow and probably in the near future is 2500mt/yr.
      ===>>> constant and probably rising mining supply of 2500mt/yr

      Today we have a hoading flow of: dishoarding+mining ~ 1500t+2500t=4000t
      So no matter what you do, you never get below a flow of the mining in terms of weight. It is not the ask/bid of the true FG environment that determines the price, but the flow from the mining.

      If there is any logical problem with that, please let me know.
      Greets, AD

      Delete
    2. P.S.
      I forgot the industrial consumption, let's be generous and say 500t and subtract that from the mining, no matter what you do: Today we have a hoarder flow of 4000t and you never get below 2000t.

      Hard to make a prediction just on the weight flow but I say, before gold will rise only in the typical amount of natural inflation the price will rise 3-6 times compared to todays purchasing power, with the same typical rise it had so far.

      And if somebody say: Well but we will have armageddon, war, HI, gold to the moon etc.... yes, but guess what, the physical plane will crash as well, so you can be happy if you keep your purchasing power, because there wouldnt be any goods to get in the physical plane for the next >10yrs.

      Delete
    3. @Milamber

      “thanks that you went trough the main issues and summed the essential ones up. What else can I say, it is basically all in there. So how do I start? Going into each and every issue again for the overall picture or start a new approach?

      Okay, I start a new approach, IMHO: “

      AD is a slippery eel to catch. He never admits that previous arguments have been soundly refuted, and simply thinks up new nonsense each time, trying to insinuate it is the same argument and that his argument was never addressed.

      Perhaps he is simply trolling.

      @AD

      “Today we have a hoading flow of: dishoarding+mining ~ 1500t+2500t=4000t
      So no matter what you do, you never get below a flow of the mining in terms of weight. It is not the ask/bid of the true FG environment that determines the price, but the flow from the mining.

      If there is any logical problem with that, please let me know. “

      You still do not get that price is determined by supply and demand. All three variables of which can change. Even after I painstakingly explained it. Do you even bother to read what I write?

      TF

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  12. 1/2

    AD,

    Hmm. I think we have a pretty significant divergence on understanding FG. And please note that I am certainly willing to stipulate that I could have some concepts incorrect. With that said, I am going to respond to your comments & see where that takes us.

    “Okay, I start a new approach, IMHO:
    It is all about price discovery.”

    If by it, you mean Freegold, then I disagree. If it was solely about price discovery, then wouldn’t gold be irrelevant to KSA? They would simply demand more MoE ($) for their oil & leave it at that. I think that they want to make sure that they get a (the?) best SoV out there as well as a MoE that they can use to trade for other items.

    “And only by price discovery you have a flow.”

    If you mean that buyers & sellers meet to agree upon a price, then I agree with this statement.

    “But you probably agree that the crazy thing is that the "yardstick price" of today (and under freegold as well) is the fiat currency.”

    No, I disagree. It is not just the fiat currency. It is only the fiat currency as long as that fiat currency functions as a MoE that gets you items in the physical plane as well as a SoV. If it fails to do that, all bets are off. Also keep in mind that any Fiat currency has to perform its function against the GPL and improvements in living standards or it won’t be used. The dollar that was in use back in 1950 is worth less than the dollar in use in 2012, but that dollar has worked well as a UoA & MoE. Where it has failed utterly is as a SoV.

    “So things are bidding for fiat, fiat bidding for things. When they meet, we have a valuation between the fiat and the thing.”

    As long as this means that buyers and sellers meet and agree on a price, then I agree with this statement. Again as long as the FIAT allows the users to get other things, like a pretty good SoV.

    “FG assumes:
    I) that we have a situation of a perfect focal point,”

    Sorry, I disagree with this statement. A perfect focal point?

    I like Aristotle’s quote,

    “…l attempt to clearly lay out what I feel this "perfect" monetary system to be -- the *perfect* system for a consistently imperfect world, that is…”.
    http://www.usagold.com/halldiscussion.html

    Please show me where FG assumes that gold is the perfect focal point. Doesn’t It make the case that gold will become THE focal point? That is not the same thing as saying it is the perfect focal point. There is no such thing.

    cont

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    Replies
    1. cont
      2/2

      “when all fiat surplus which is supposed to be used as savings will bid so long/hard until it is converted into gold.”

      I disagree slightly. Not all fiat surplus will be converted into gold. Most will. I think a lot of the US govt promises will.

      “II) gold is only dishoarded to fiat (brought/put to the auction), not to be hold, but rather be spend very soon on some other stuff the hoarder really wants (typically as consumption but for possible investment as well).”

      Hmm. I don’t see that at all. Doesn’t FG posit:

      -A lot of gold will sit still, even after the collapse of the LBMA and the gold derivatives market and/or the hyperinflation of the $?
      - The majority of gold that does move, will be used to settle trading imbalances?
      - Each currency zone will pay for their citizens gold (if nationalizing the mines doesn’t bring in enough)

      And isn’t this so that we get back to allowing gold to govern unseen as a SoV, but yet allow Fiat to expand as a MoE as needed?

      “Gold… governs all the components of our international transactions with faultless effectiveness… it is a forceful but unobtrusive master, who governs unseen and yet is never disobeyed.” Jacques Rueff
      http://fofoa.blogspot.com/2011/09/once-upon-time.html

      “During the predicted transmission to this equilibrium there will be a massive flow in terms of weight, because all fiat will be running to gold.”

      Hmm. I must have missed that. I thought that FG states that there will be a massive revaluation (possibly overnight, but no one really knows), but that of the 174000 TONS of above ground gold, most of it will stay still. Can you show me where FG theory states that there is a going to be a “massive flow in terms of weight”?

      “But the higher the price rises the less weight has to move to reach the equilibrium (remember FOFOAs "inverted waterfall").”

      I agree with this statement. The higher the price of gold, less gold will move (assuming the GPL doesn’t also rise)

      “After the transistion all fiat surplus is converted into gold and we have only the flow of gold that the purchased by fiat from the net producers from the dishoarders.

      Can you show me where this is stated? I must have missed it. I thought that the FIAT would still be there, it is just that gold will have to be elevated substantially in terms of price so that it covers all the debt (At least in the US’s case). Isnt that one of the points of FOA’s statement,

      “My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed.”
      FOA (4/19/01; 17:50:29MT - usagold.com msg#65)
      http://www.usagold.com/goldtrail/archives/goldtrailthree.html

      I always understood FG to be a way to get the world away from using the dollar as a SoV w/o going to war. I have also been under the impression that this is by no means guaranteed. Once the US has to cut its deficit spending, all hell is going to break lose & no telling how that plays out.
      Also, I thought that there would still be currency (FIAT) issuers in FG and they can always use their currency to bid directly on gold, correct?

      “That is the FG concept, can we agree so far?”

      No, I don’t agree.
      I will stop here & see what you have to say. I see a lot of disagreement in our respective interpretations of FG. Again, I may be off base in my understanding of FG, so by all means please correct me (and you too Fool!) if possible.

      Milamber

      Delete
    2. @Milamber

      "Can you show me where FG theory states that there is a going to be a “massive flow in terms of weight”?"

      It is sensible that immediately post transition a lot of gold bugs that held on will cash out to buy themselves some mansions and ferrari's. So a elevated flow for a bit, yeah that can happen.

      TF

      Delete
  13. Hi Milamber,

    "a focal point, the focal point, perfect focal point..."

    you wanna play on the words? I assume hopefully not, doesnt make any sense to me. I know that there is a difference between these three, but in the overall context there's no difference.

    Please dont take that as being unpolite, but I think it is not usefull to go after each and every sentence you wrote, wouldnt bring us any further, so I try to push to the main issues (at least that I see). I also completely ignore the BS about predictions from FO(FO(A)) and conspiratist retarded stuff (like: the BIS brought down the UDSSR and wants to bring down the $reserve, $IMF, HI...thats just AlexJones & LindseyWilliams stuff). As I stated above, I studied mathematics (just like the dude from the video I linked above Dimitri Speck, so my one and only approach is to bring it down to the roots of the working principles and to work from there.
    1.) Who is buying gold versus who is selling gold? Why I'm buying gold? The one and only anser is, because I have a surplus of fiat inflow and gold is my SoV. Who is selling gold? The only answer is: The one that might either wants the repay debt or to buy something else.
    2.) What does 1.) mean for the price discovery.
    3.) What are the implications of 1.)&2.) for the flow in terms of weight. Right now and during "transition" (whatever, whenever that might be), and at equilibrium.
    ==>> that is the interesting part when considering the mining influence on the FG working principle on the price discovery.

    Have you ever thought of these issues in general? Without any FO(FO(A)) bias?

    See, I learnt alot from FO(FO(A), but not the stuff they wrote, but by thinking about the stuff they wrote.
    To give you an example:
    “My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed.”
    Nice one. But unprecise. It should read: "Debt is the very essence of fiat, but the more debt defaults, the more fiat is devalued." Fiat is only destoyed/wiped out in terms of not exist any longer, when it is repaid, finding it's way back to the source by repayment, to the CBs.

    Maybe to give you something to thing about: I really enjoyed the debriefing of Aquilius. So even during HI the MoE from the rapidly debased currency worked quite well.

    Again, I appreciate the discussion, but at the end it all comes down to 1.)..3.)
    Greets, AD

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    1. 1/2

      AD wrote

      “ “a focal point, the focal point, perfect focal point..."

      you wanna play on the words? I assume hopefully not, doesnt make any sense to me. I know that there is a difference between these three, but in the overall context there's no difference.’

      No. I don’t play word games. I do find it imperative when having conversations with people via message boards/email, etc to be precise in my words/definitions. So, when you write,

      “FG assumes:
      I)that we have a situation of a perfect focal point”

      I think that is an inaccurate assessment of FG and I said as such. To me that is not a word game, that is being clear on what we say/write in what we are trying to communicate.

      “Please dont take that as being unpolite, but I think it is not usefull to go after each and every sentence you wrote, wouldnt bring us any further,”

      That’s fine. I don’t really get bothered by unpolite or whatever. I am looking for valid criticisms of FG here. I think there are some, but I am not understanding the ones you raised in r esponse to the Fools post on hoarding.

      “ so I try to push to the main issues (at least that I see). I also completely ignore the BS about predictions from FO(FO(A)) and conspiratist retarded stuff (like: the BIS brought down the UDSSR and wants to bring down the $reserve, $IMF, HI...thats just AlexJones & LindseyWilliams stuff). As I stated above, I studied mathematics (just like the dude from the video I linked above Dimitri Speck, so my one and only approach is to bring it down to the roots of the working principles and to work from there.”

      OK fair enough.

      “1.) Who is buying gold versus who is selling gold? Why I'm buying gold? The one and only anser is, because I have a surplus of fiat inflow and gold is my SoV.”

      Hmm. I disagree with that statement. Here are my objections:
      - What about CB’s? I don’t think that your above applys to them & their gold purchases.
      - Private party participants, I do think buy gold (or goldish paper) for three main reasons:
      a. Marginal Utility SoV
      b. Price speculation (etf, miners, other goldish paper)
      c. Cultural affinity towards gold. Think Indians who buy gold.

      “Who is selling gold? The only answer is: The one that might either wants the repay debt or to buy something else.”

      I don’t think that the only answer is repay debt or to buy something else (and as an aside in your "only answer" you list two answers. Logically that is kind of confusing to me. How can there be an only answer if there are two possibilities?) But anyways what about the following:

      - Do you think miners sell their gold for only those two reasons? Historically, haven’t they hedged a lot of production for various reasons?
      - What about the IMF sales to India a couple of years ago
      - What about CB leasing and all the selling that occurs within the LBMA?
      - What about outfits like the Perth Mint? I think Bron would tell you a different story about why they sell gold than it being to repay debt or buy something else.

      cont...

      Delete
    2. cont...

      2/2

      “2.) What does 1.) mean for the price discovery.”

      I don’t think it means anything, because I disagree with your assertion. If you can prove it, I would love to hear counter arguments to the objections I have raised.

      “3.) What are the implications of 1.)&2.) for the flow in terms of weight. Right now and during "transition" (whatever, whenever that might be), and at equilibrium.
      ==>> that is the interesting part when considering the mining influence on the FG working principle on the price discovery.
      Have you ever thought of these issues in general? Without any FO(FO(A)) bias?”

      See this is why I desperately want to understand the point you are making, but the premises that you are supplying I think are not as solid as you are making them out to be. Maybe they are, but I think that I have raised some reasonable doubts that I would like to hear your response to.

      “See, I learnt alot from FO(FO(A), but not the stuff they wrote, but by thinking about the stuff they wrote.”

      Me too. But I like to think that I learned (and am learning) by reading what A/FOA/FOFOA wrote as well as Ari, Victor, you, The Fool, Blondie, Mortymer, Desperado, Alien, Texan, Ender, Rickards, Bron, Screwtape, Turd, etc have written.

      This is a whole nother world that I never even knew existed until 2008. Not that I didn’t know about gold and international trade, but I had no knowledge about its history in BOP, the difference between, UofA, MoE, SoV, etc. So I am grateful to all for the dialogue.

      Even (ESPECIALLY) when someone writes something I disagree with.

      “To give you an example:
      “My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed.”
      Nice one. But unprecise. It should read: "Debt is the very essence of fiat, but the more debt defaults, the more fiat is devalued." Fiat is only destoyed/wiped out in terms of not exist any longer, when it is repaid, finding it's way back to the source by repayment, to the CBs.”

      Hmm. My understanding of the US dollar structure (and I learned a lot of this from Chris Martenson’s Crash Course) is that the US dollar system that is in place right now is based on debt. Without debt we have no dollar. So I disagree that Another’s statement is inprecise. I think that is states exactly what happens when a debt is defaulted on.

      “Maybe to give you something to thing about: I really enjoyed the debriefing of Aquilius. So even during HI the MoE from the rapidly debased currency worked quite well.

      Again, I appreciate the discussion, but at the end it all comes down to 1.)..3.)”

      Me too. I think the debriefs are fascinating. I am actually very surprised that FOFOA came out of the shadows, so to speak. I hope this is a prelude to him becoming more visible in the alternative financial press (IE Financial Sense Newshour, Max Keiser, Korelin Report, KWN, etc).
      I think that him discussing FG with more entities would do wonders for engaging more minds in the debate.

      Milamber

      Delete
    3. Hi Milamber,
      thanks alot for the feedback, it gave me quite some things to think about (helps clearing the mind;)

      We are still talking about FREEgold? Right?
      My point 1...3) adressed that FG environment. Remember, that is the "free" part in FG.

      And the purchases/sales by the IMF are exactly the opposite to "free". Exactly the gold leases by the CB are the opposite to "free". So my premises to test the FG concept was, to eliminate those IMF interventions and CB leases for a moment. So thats why you might want to draw them all from your list, when concentrating on a theoretical FG concept testing. So, what is left on your list:
      Indians: They are basically already true Freegolders, except they call their SoV jewerly what for me is bullion.
      CB: Their purchases/sales in FG would be what is refered to as RPG. To settle inbalances in a neutral matter, but this is 100% compliant with my description 1.)"surplus of fiat"
      Perth Mint: Just a bullion dealer, buying below spot selling above spot, not caring about the rest, they are not gold holders or spenders, in fact they are probably interested to keep their inventory as small as reasonable possible (therefore of cause using paper gold as well), just happy to pay Brons salary ;)

      So, what is left on the list....
      MINERS!!! (have you noticed, that FOFOA never touches the miners? The Freegold-Church only focuses on miners when it comes handy for silver bashing, and actually IMHO they are right. But whenever this topic is touched in terms of gold he wipes it away with this BS story about nationalization, ignoring the mechanics of the flow in terms of weight)

      So again, it comes down to: the hoarders vs. dishoarders flow in a Freegold environment (1.) and the more or less constant contrary flow in terms of weight from the miners.

      No matter what kind of economics camp you follow, all agree that the "velocity of money" has concequences on pricing. Since fiat is pricing gold or vice versa gold is pricing fiat, or if it helps you better to get the point "one flows through the other", the overall flow (which is actually the overall velocity, in case of gold the "secondary money") of gold in terms of weight is essential. And if the mining flow is that relatively big compared to the dishoarders flow and stays that way, you dont have a FG environment.
      Just as Robert Zoellik meant, when he said gold is too chep...(from mining).

      Still dont believe me? Please go back to the famous posts from costata about silver. What is different between silver and gold? It is the flow/stock ratio (the essential prove of the "focal point gold"). But at todays prices most physical gold lies still just like my stash (but it has to lie still, in times when it moves prices will tend to fall. So actually in terms of flow we can consider it today as in a landfill just like consumed silver. The higher the gold price rise the more it might tend to flow into further stronger hands (giants, super/net producers call them as you want), again reducing the flow to reach equilibrium at a smaller weight flow. But right now we have the absurd situation that gold is behaving like a commodity, because the above ground stock rests and the mining flow is preventing the FG mechanics.
      IMHO that is the only concept of FG: To understand this flow, due to settleing fiat debt with "the final payment" (secondary money), solving the conflict between savers and debtors how FOFOA calls it.
      Greets, AD

      P.S.
      You made a really tough point about the focal point wording: "A...the...perfect...." focal point. I really cant find the best answer to that one. That one is really starting to hurt my head ;) I can only come up that it might be only a phisolophical decission in the end?

      Delete
    4. Hmm. My understanding of the US dollar structure (and I learned a lot of this from Chris Martenson’s Crash Course) is that the US dollar system that is in place right now is based on debt. Without debt we have no dollar.
      without debt you dont have fiat money. Without debit there can not be credit. If you have neither credit nor debit, you only have barter. Or the nice saying from the FOFOA comments: "Freegold runs bartertown".
      So how much is your credit worth in maximum? Just take a look at your debtors, what can they provide you best case. That's what your credit is worth. So if some debtor (e.g. a lazy fat ass american house speculator) walks away from his debt (<=default) there wouldnt be any repayment to the system from him, so his individual debit is still in the system but the other side the credit has become actually worthless.
      Keep that in mind, when reading the original and my version of the sentence. That is also why the ECB is trying to refuse cancelling the governments debts of the PIGS, instead monetizing it (kicking the can down the road), but the overall consequence is the same it is just a question of admitting it.

      Delete
    5. 1/2

      “We are still talking about FREEgold? Right?
      My point 1...3) adressed that FG environment. Remember, that is the "free" part in FG.”
      My bad. I was mixing time frames (IE while current $IMF system is in place with Post FG transition). I will read your comments with the understanding you are speaking POST FG transition time frame.

      “And the purchases/sales by the IMF are exactly the opposite to "free". Exactly the gold leases by the CB are the opposite to "free". So my premises to test the FG concept was, to eliminate those IMF interventions and CB leases for a moment. So thats why you might want to draw them all from your list, when concentrating on a theoretical FG concept testing. So, what is left on your list:”

      Makes sense

      “Indians: They are basically already true Freegolders, except they call their SoV jewerly what for me is bullion.”

      Agreed.

      CB: Their purchases/sales in FG would be what is refered to as RPG. To settle inbalances in a neutral matter, but this is 100% compliant with my description 1.)"surplus of fiat"

      Can’t a CB just create as much FIAT as they need to? Meaning can’t a CB *always* have a surplus of FIAT to do with what they want? And if they create too much, then their currency value goes down (inflation). If they don’t create enough then it rises (deflation)?
      And isn’t that where the ECB is different? In how they are structured in regards to gold on their balance sheet? I thought that is what all the hoopla is about regarding MTM each quarter? So that in the FG future the ECB needing to create FIAT for whatever reason will drive the Euro down but drive gold up (especially if they take their newly created Euro and bid directly on gold). Isnt this a major piece of what FG gives us? It allows gold to resume its role as he governor slapping CB’s that behave badly, so that they create the right amount of FIAT based on the market for gold. Of course the ECB has structured it so that their wristslaps wont hurt as much as ones delivered to other CB’s?

      “Perth Mint: Just a bullion dealer, buying below spot selling above spot, not caring about the rest, they are not gold holders or spenders, in fact they are probably interested to keep their inventory as small as reasonable possible (therefore of cause using paper gold as well), just happy to pay Brons salary ;)”

      Agreed. But I was including them to point out that there are other actors than just the two that you mentioned.

      “So, what is left on the list....
      MINERS!!! (have you noticed, that FOFOA never touches the miners? The Freegold-Church only focuses on miners when it comes handy for silver bashing, and actually IMHO they are right. But whenever this topic is touched in terms of gold he wipes it away with this BS story about nationalization, ignoring the mechanics of the flow in terms of weight)”

      I guess we have to agree to disagree in that I think that FOFOA does touch on the miners; You just think his treatment is wrong. Obviously, no one *knows* the answer, but I think that FOFOA makes a very compelling case why the nationalizations will occur (and I wonder how the Perth mints of the world get treated in FG) I can recount (and I know you can too) lots of historical precedents where a government nationalizes an industry for whatever reason. This happens across time and cultural boundaries. I don’t see why it won’t happen after the current $IMFS collapses & gold is put back in place as the best SoV. I think that the upheaval that occurs will allow governments to do whatever is necessary to repair the damage and move forward. I just hope that it happens w/o a destructive war where millions (billions?) die.
      So I would like to hear your reasons *WHY* nationalizations won’t take place. I have heard FOFOA’s and I agree with him that there is a high probability of them occurring.

      cont...

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    6. 2/2

      “So again, it comes down to: the hoarders vs. dishoarders flow in a Freegold environment (1.) and the more or less constant contrary flow in terms of weight from the miners.
      ...Since fiat is pricing gold or vice versa gold is pricing fiat, or if it helps you better to get the point "one flows through the other", the overall flow (which is actually the overall velocity, in case of gold the "secondary money") of gold in terms of weight is essential. And if the mining flow is that relatively big compared to the dishoarders flow and stays that way, you dont have a FG environment...But at todays prices most physical gold lies still just like my stash (but it has to lie still, in times when it moves prices will tend to fall... The higher the gold price rise the more it might tend to flow into further stronger hands (giants, super/net producers call them as you want), again reducing the flow to reach equilibrium at a smaller weight flow.But right now we have the absurd situation that gold is behaving like a commodity, because the above ground stock rests and the mining flow is preventing the FG mechanics..."

      I think I can see your point now, but I think that you are missing a key point. Let me see if I can make it. You had made mention that you were discussing a Post $IMFS world. In essence FG has happened. But then you state that FG can’t happen because if more and more people sell their gold then price gets driven down. Before I go any further, is that a correct summation of your statements/belief?

      If I have your statements correct, then I think I see where the confusion sets in. You are discounting the punctured equilibrium aspect of FG that FOFOA discusses.
      During the transition period is when the price of gold is going to undergo radical transformation. It is during this time that anyone who is holding physical gold will get a onetime windfall in gold being revalued. Once that occurs (and it only happens once), then the velocity of money comes back into play in setting the day to day price of gold; but only at a much higher price. So FG sees the price of gold go to $50K (2012 US dollars) and then once the new stasis in place it will float up and down based on a variety of factors that you allude to. Miners (nationalized or not), savers dishoarding, CB’s buying, economic cycles, wars, etc. wil all play a role in the continuous pricing of gold. But it will be pricing physical gold as a worldwide SoV not a commodity.

      “In economic terms, we have just entered one of the rare short periods of rapid change. And in so doing, an unparalleled opportunity is presented to all commoners who would hold physical gold through the duration of this "punctuation". It is a de facto transfer of wealth that will rival some of the greatest windfall gains in history.”
      http://fofoa.blogspot.com/2009/09/evolution.html

      “P.S.
      You made a really tough point about the focal point wording: "A...the...perfect...." focal point. I really cant find the best answer to that one. That one is really starting to hurt my head ;) I can only come up that it might be only a phisolophical decission in the end?”

      I just happen to like Ari’s description regarding the perfect solution for an imperfect world. I agree that there is no “perfect” solution. But I think that FG is the best one to allow all to live as harmoniously as possible on this planet. Doesn’t mean there wont be wars, and freeloaders, and all the rest. It just allows savers an avenue to shield themselves from as much of it as possible without harming anyone else.

      I enjoy the discourse.

      Thanks

      Milamber

      Delete
    7. "Can’t a CB just create as much FIAT as they need to? Meaning can’t a CB *always* have a surplus of FIAT to do with what they want? And if they create too much, then their currency value goes down (inflation). If they don’t create enough then it rises (deflation)?"

      Nope, sure they can print their own paper to buy gold in order to devalue it. But they most probably only buy gold with the surplus of other peoples paper to get rid of it. Not like today the stupid Swiss financing the german governments lifestyle by buying german bonds. So if some CB for whatever reason wants to devalue their currency sure, buy gold with their own paper. On the other hand their MTM tells the holder of that paper what it worth :)

      "During the transition period is when the price of gold is going to undergo radical transformation."
      Jep, that would be interesting. But on the other side when an equilibrium of flow will be reached when the flow is getting smaller (earlier fiat savers have completed "shifting" to gold), due to the supposingly higher price, less weight in terms of weight will flow to settle the now newly occuring imbalances.
      We are still at the very same mechanics of FG flows and the opposing miners flows acting against each other, that I am describing all the time.

      NOW, again the reason for the flaw:
      Although I really deeply believe that this nationalization is just BS to have an excuse to hide the ugly fact what is opposing those 20bagger-FG-IWantMyFerrari-prices, let's just assume for a second that those happen: Governmens tend to spend whatever they have a hand on. Always was that way the last 10000 yrs. and always will be that way, you cant argue that one. Okay, now they have a gold mine. They will sell every single ounze they can get out of the mine. That IS the constant flow I am talking about, in terms of weight, just like today.

      Greets, AD

      Delete
    8. Something else to mention, because I think I got your misconception about the supposingly bigger weight flow (as well as the problem of MF):

      Lot's of FG savers argue:
      "well, but...but...there are so many savers....xy % of savings each year...that huge flow..."

      No it's not and to give you an example here why it's not: Let's say there is that transistion to FG. After all the dust settles long term savings have been converted and stored in gold. e.g. the national norwegian retirement fond has turned from earlier world wide bonds to gold. After the transition that fonds now ends up with let's say e.g. 100t.
      Let's look the norwegian workers, as well as the norwegian retirees. The workers pay into the fond fiat, the retirees receive fiat at the same time at the same rate. Why would any gold of that fond flow? Its the opposite, it rests still in that currency zone. In fact, if Norway continues to export oil and have a fiat surplus, why would any gold flow out of Norway at all anyway? Only a still continues inflow of gold due to the export fiat surplus settleing the imbalance, but in terms of weight much less, due to the higher price crossing the currency border.

      Or where is my misconception?

      Greets, AD

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    9. 1/2

      AD,

      This is another example of where you confuse me. And I freely admit that this may be due to my misunderstanding of how CB’s operate. When I write,

      "Can’t a CB just create as much FIAT as they need to? Meaning can’t a CB *always* have a surplus of FIAT to do with what they want? And if they create too much, then their currency value goes down (inflation). If they don’t create enough then it rises (deflation)?"

      And you respond with,

      “Nope, sure they can print their own paper to buy gold in order to devalue it. But they most probably only buy gold with the surplus of other peoples paper to get rid of it... So if some CB for whatever reason wants to devalue their currency sure, buy gold with their own paper. On the other hand their MTM tells the holder of that paper what it worth :)”

      I read that as a nonsensical answer. You are saying No they can’t, but then yes they can in order to buy gold to devalue it. But they actually only use other people's paper to buy gold. What?? I am confused as to what you are trying to say here.

      It is my contention that a CB can print as much FIAT as it wants, and then use whatever transmission channel it has set up in its currency area to get said FIAT into the economy.

      Furthermore because of the $IMF system that is in place and because FOFOA’s dilemma has NOT been resolved, the world continues to use the US dollar (and corresponding debt obligations) as its SoV & MoE. This is what causes CB’s to accumulate paper NOW. In the future they won’t accumulate in a FG environment.

      Then you write,

      “…But on the other side when an equilibrium of flow will be reached when the flow is getting smaller (earlier fiat savers have completed "shifting" to gold), due to the supposingly higher price, less weight in terms of weight will flow to settle the now newly occuring imbalances.
      We are still at the very same mechanics of FG flows and the opposing miners flows acting against each other, that I am describing all the time.”

      I don’t think you have adequately described why there will be an issue with the flow after the revaluation. Or if you have, I am just not smart enough to understand it.

      Right now Gold is not used to settle trade imbalances in the $IMF system, so a lot of weight in gold can be exchanged for a little FIAT. After the revaluation smaller amounts of gold (in weight) will be able to be exchanged for larger amounts of FIAT. The actual exchange ratio between gold and FIAT will float in a FG financial system. CB’s, governments, miners (nationalized or not), private savers, speculators all will be exchanging Gold for FIAT, FIAT for gold as needed. How much gold in terms of weight will be determined by the price.

      cont...

      Delete
    10. AD

      To continue with this concept... “ They will sell every single ounze they can get out of the mine. That IS the constant flow I am talking about, in terms of weight, just like today. “

      Have you considered the numbers?

      My country for example has a GDP of $408 billion at the moment. The South African government spends about 33.9% of GDP at present, or about $138 billion.

      Now, South Africa produces about 220 tonnes of gold per year at present.

      At roughly 31500 ounces per ton, that is 6.93 million ounces...assuming a price of $55,000 per ounce that gives an income of about $381 billion per year. Adding perhaps $100 billion of normal revenue excluding current from gold, that makes for a serious paycheck, $480 billion, or about three times what they spend at the moment. You say they will spend it all. We will have to see.

      As you are wont to say, you don't live here so you don't know the local situation. There is much talk about how natural resources should benefit all people and future generations.

      TF

      Delete
    11. Ps. Even if they do..it does not matter. Price solves everything.

      Delete
  14. 2/2

    “NOW, again the reason for the flaw:
    Although I really deeply believe that this nationalization is just BS to have an excuse to hide the ugly fact what is opposing those 20bagger-FG-IWantMyFerrari-prices, let's just assume for a second that those happen: Governmens tend to spend whatever they have a hand on. Always was that way the last 10000 yrs. and always will be that way, you cant argue that one. Okay, now they have a gold mine. They will sell every single ounze they can get out of the mine. That IS the constant flow I am talking about, in terms of weight, just like today.”

    But in a Freegold environment where gold is held as a SoV (not a MoE), wouldn’t a govt keep gold on its balance sheet so that it can attempt to offset it’s FIAT printing? And only exchange gold when its FIAT is not accepted for trade settlement? Why sell Gold when you can print a note and exchange it for a good? Doesn’t a government and a CB have something that a private party doesn’t? The ability to print a piece of paper and have it denominate value? Isn’t this what FOA was talking about when he wrote,

    "the printers of paper do never tell the owner that the money has less value, that judgment is reserved for the person you offer that currency to"

    Why sell your gold (if you are a CB or govt) if you have the ability to use paper to pay debts?

    So I think your statement that govt’s will spend all of their nationalized gold is wrong. Depending on the govt, they will either exchange the gold quite judiciously for FX reasons, or not need to spend it at all if their currency is accepted internationally as the MoE.

    But the days of one currency having an exorbitant privilege because everyone SAVES in that currency will be over.

    Hopefully that makes sense. Your comments are really causing me to rethink everything about FG which is what I was hoping for. So far I guess I am still in the cult. But that may also be because I am too dim witted to understand the argument you are making!

    Milamber

    P.S. Fool, thanks for letting me word vomit all over your blog. If I need to stop, let me know.

    ReplyDelete
  15. AD wrote,

    “Lot's of FG savers argue:
    "well, but...but...there are so many savers....xy % of savings each year...that huge flow..."


    Can you restate the above FG argument that you are maintaining that FG savers are making. I don't understand what you are stating.

    Milamber

    ReplyDelete
  16. Hi Milamber,

    I really enjoy the discussion, but I really hope without sounding arrogant, I think you should read more about the double bookkeeping/balance sheet and working principles of CBs.

    Maybe the problem is that too often people talk about "printing", which it is actually not, it is expanding/contracting the balance sheet towards the banking system (inside and/or outside of the currency zone), therefore acting for international payment settlement as well as currency management.
    And the government also does not print, it can only borrow through the banking system into existence (short term inflationary) or by borrowing from savers by bonds (longterm inflationary).
    IMHO It does not make any sense for the government to hold any gold, that should only the CB hold (on their balance sheets). I agree that for the FED/US-Treasury it is kind of strange, maybe a relic of the past? But for alot of countries there are very special arrangements about the ownership of the CB, still different balance sheet do still make sense.

    Again, I dont want to insult but in your post many things go completely upside down, on the other hand I think I am by far not an expert to explain central banking all of that in one post. I think FOFOA did some decent posts on that in "PRG#1...#4, Exorbitant Priviledge, MTM Party" (if you read them leaving the FG baggage at the door ;).

    Besides that, it does not really matter: My point were the effects of the flow (velocity of gold) and the consequenting valuation limits influenced by mining. That aspect actually has nothing to do with central banking or multiple currencies and when you look at it, you can even figure out the effect in just one currency zone.

    Remember Ben&Chen Island? Remember the golden chest in the end?
    Okay, put on the island two more people each of them that will for 1-2 fish per day mine one gold coin per month. Okay, did I mention that Chen can only fish one extra fish per day?
    Now how much is now Ben's golden chest worth? Does it's value change if these two miners are on that island yes or no?
    Greets, AD

    ReplyDelete
  17. “I really enjoy the discussion, but I really hope without sounding arrogant, I think you should read more about the double bookkeeping/balance sheet and working principles of CBs.”

    Did I write something incorrect? If so, what?

    “Maybe the problem is that too often people talk about "printing", which it is actually not, it is expanding/contracting the balance sheet towards the banking system (inside and/or outside of the currency zone), therefore acting for international payment settlement as well as currency management.”

    I agree that the term printing is non specific and can convey a variety of meanings. I thought that by mentioning the transmission channels it would be understood that CB’s have their effect through indirect means. Buying Bonds, changing RR, changing the Discount rate, etc.

    Again, what did I write that was incorrect?

    “And the government also does not print, it can only borrow through the banking system into existence (short term inflationary) or by borrowing from savers by bonds (longterm inflationary).
    IMHO It does not make any sense for the government to hold any gold, that should only the CB hold (on their balance sheets). I agree that for the FED/US-Treasury it is kind of strange, maybe a relic of the past? But for alot of countries there are very special arrangements about the ownership of the CB, still different balance sheet do still make sense.”

    I was speaking of gov’t/CB as partnership because in reality they are. Yes there is separation of powers and yes there can be fights about policy, but Central banks and their home govts work hand in glove. The only exception to this rule that I see is the ECB and it is a CB that is working with dozens of govts.

    “Again, I dont want to insult but in your post many things go completely upside down,?

    What did I get upside down?

    “on the other hand I think I am by far not an expert to explain central banking all of that in one post. I think FOFOA did some decent posts on that in "PRG#1...#4, Exorbitant Priviledge, MTM Party" (if you read them leaving the FG baggage at the door ;).”

    Yup have read them several times; sorry still have the FG baggage :)

    “Besides that, it does not really matter: My point were the effects of the flow (velocity of gold) and the consequenting valuation limits influenced by mining. That aspect actually has nothing to do with central banking or multiple currencies and when you look at it, you can even figure out the effect in just one currency zone.”

    And I still don’t see that you have made your point. I think that I have raised some valid criticisms of your points that you haven’t addressed.

    “Remember Ben&Chen Island? Remember the golden chest in the end?
    Okay, put on the island two more people each of them that will for 1-2 fish per day mine one gold coin per month. Okay, did I mention that Chen can only fish one extra fish per day?
    Now how much is now Ben's golden chest worth? Does it's value change if these two miners are on that island yes or no?”

    That depends on factors that you haven’t stipulated.

    If you keep it in FOFOA’s analogy that he used and gold is the focal point, then yes the value changes because you have increased the amount of value being created by the new fisherman, but you haven’t increased the weight of gold, so the value of each coin will go up to represent the SoV of the physical plane. But if you are accounting for it on a per capita basis then you could argue that it stays the same because the value went up because you have more people creating value but net net the ratios stayed the same. So the answer from my perspective can be yes & no depending on how you are viewing it.

    That’s why extending analogys like that tend to break down because a simple analogy can’t account for all the varied ways a question can be answered.

    Milamber

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    Replies
    1. I am starting to wonder actually if you want to see the point at all anyway. So here's my last attempt:

      Let's assume that in the physical world (producers vs. consumers vs. savers vs. spenders,...) everything stays the same and you have your transition and just a devaluation of fiat against gold happen (what people considered their fiat to be long term savings have been converted into gold).
      If you fix this physical plane (just for assumption), you will reach at an equilibrium in terms of golds fiat value and its purchasing power. The flow of goods and the flow of fiat surplus/deficit are just the same (just for assumption).
      Now please tell me in such a scenario (regardless of nationalization of mines):
      1.) how big will be the flow without mining and with mining?
      2.) what will the price of fiat be with mining and without mining?

      I am now really wondering to hear your opinion on that one.
      Greets, AD

      Delete
  18. I am way too busy to take part in the rapidly expanding conversation, but will make time when I can.

    This though, struck me as curious.

    "They will sell every single ounze they can get out of the mine."

    Interesting assumption AD.

    Is gold in the ground/vault not just as valuable as oil in the ground/storage tank?

    TF

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    Replies
    1. MF,

      just look at the SouthAfrica ghetto and tell me your estimation what your government will do. What I said is just common sense, sure you can argue it for the sake to save FG reasoning, but please share with us your conclusions of your personal observations and wisedoms of the great SA government and what they will probably do once they get their hands on the mines.
      Oh I forgot, there is in fact one argument in your direction that they will not pull out so much gold in terms of weight: Socialism or call it better what it is: nepotism in the name of the state, never worked, never will, so they will fuck up the mining so badly that the weight output will be reduced. Let's at least hope for that one.

      and about your comment: gold in the ground, I like to quote Mark Twain: A gold mine is a hole in the ground with a liar sitting on top. That's why I never will buy into PM mining regardless of nationalization talk.
      Greets, AD

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  19. 1/2

    “I am starting to wonder actually if you want to see the point at all anyway. So here's my last attempt:”

    As I stated at the outset, I wanted to better understand your objections with what Fool wrote about hoarding in particular and FG in general.

    “Let's assume that in the physical world (producers vs. consumers vs. savers vs. spenders,...) everything stays the same and you have your transition and just a devaluation of fiat against gold happen (what people considered their fiat to be long term savings have been converted into gold).”

    I will try and work within the confines of the reality that you want me to assume, but when you assume a reality that is illogical, it makes it quite difficult. What I mean by that is you write “everything stays the same and you have your transition” Uhm, by definition it is not the same. Not only that, but this transition that has to occur if FG is to come about will assure that everything “won’t stay the same”. Ergo we will have finally evolved enough to resolve FOFOA's dillemma.

    “If you fix this physical plane (just for assumption), you will reach at an equilibrium in terms of golds fiat value and its purchasing power. “

    Sort of. After the punctured equilibrium, then the weight of the gold flow will depend on the daily market price of physical gold (in size) delivered.
    If the price of gold rises to $1,000,000/oz and floats around that price based on all the variables that go into pricing. then less gold will have to flow than if the price of gold rose to $50,000/oz. This of course is assuming that the GPL (purchasing power) stays the same in both examples.

    “The flow of goods and the flow of fiat surplus/deficit are just the same (just for assumption).”

    Do you mean that they balance out? Then yes, all trade flows balance out in aggregate by definition. The problem in today’s world is that the balancing out aspect of it is the US dollar/Treasury Bond.

    “Now please tell me in such a scenario (regardless of nationalization of mines):
    1.) how big will be the flow without mining and with mining?
    2.) what will the price of fiat be with mining and without mining?
    I am now really wondering to hear your opinion on that one.”

    Well won’t flow depend on price? And won’t the price will in turn influence the flow? Kindof a double feedback loop?

    Watch the Kyle Bass video where he talks about why he took delivery of the gold for the UT Endowment fund,

    “When I talked to the head of deliveries at COMEX NYMEX, I was like, ‘What if 4% of the people want deliveries?’ He said, ‘Oh Kyle, that never happens. We rarely ever get a 1% delivery.’ And I asked, ‘Well what if it does happen?’ And he said, ‘Price will solve everything’ And I said, ‘Thanks, give me the gold.’”

    cont...

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    Replies
    1. cont

      2/2

      That is why you can’t really identify how big the flow will be, because you don’t know how much gold in weight it will take to balance out trade imbalances priced in currency once we reach a point where physical delivery of gold (in size) is the final trade settlement mechanism. Most of the time, trade will be settled via currency's (best bet is the Euro). Why? because if you have a currency that is buttressed by gold on its balance sheet ,and you have a floating price of gold in a currency that you denominate, then the flow of gold (in terms of weight) will be directly related to how much gold you can acquire (again in terms of weight) for your currency. And you can control how much of your currency is out there in the physical world chasing real physical things.

      And that right there is why there is no correct absolute answer to your question. Gold can be priced at whatever it needs to priced at in order to liberate its flow. Or said another way, gold can absorb whatever currency flows you want to throw at it. The actual weight of flow is irrelevant (other than logistical calculations).
      Hopefully that clears up the confusion.

      If I have something wrong, then please, point it out and (like I have done) provide a rational response detailing why I am wrong as opposed to just saying I am wrong. I am willing to learn, and have no problems admitting when I am wrong, but so far, you haven't proven any of my statements false and you haven't offered any supporting evidence or logical argument supporting your contentions.

      Milamber

      Delete
    2. Seems AD is concerned that, at a mega-high price for gold, the flow of new stock coming in from the mines will overwhelm the trade surplus currency looking for final settlement; so the price will fall back to earth with a loud thud. Or maybe more of a pop?

      There will be insufficient currency-based demand for physical gold to sustain the high price in the face of the continued weight flow from the mines. He also I think believes the weight flow from mines might increase, but let's not go there.

      In a deflationary depression he could well be right. Money would be tight and even if consumers wanted to place high demand on goods & services (presenting the surplus to the producer), they can't afford to. But with a mandate for price stability everywhere you look and nothing stopping the production of more currency to make it happen, deflation doesn't stand a chance. There will be no shortages of money anywhere for long.

      Delete
  20. Hi Milamber,

    thank god, you are finally starting to get it, I was just about to give up ;)

    Well won’t flow depend on price? And won’t the price will in turn influence the flow? Kindof a double feedback loop?
    In a certain way yes, think of it this way: but it will still approach an equilibrium as long as you have the same boundary values (the same producers vs. consumers), just like trying to calculate the limit of a function in mathematics, even if you have different parts in the equation that you can not grasp the limit of the function does exist.
    Exactly that's also what FOFOA drew in his graph "inverted waterfall" the upper plateu. Or when he talks about how gold in FG will act as a battery/capacitor that is never 100% full but still approaching full (since never somebody will own all gold).
    You are starting to get it. Now try to get your head around what an ongoing constant flow of gold in terms of weight into the market place from the mining would mean for that normally perfect approaching theoretical FG equilibrium.

    It is all about the flow. Not just gold, if you think longer about it, you might even see that everything even the value of fiat money is derived from its flow relative to other things between the market participants...(okay that's getting too metaphysical, so let's stay with the toughts around mining ;)
    Greets, AD

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    Replies
    1. “thank god, you are finally starting to get it, I was just about to give up ;)”

      Well, I don’t know if I am getting it as I still don’t see the problem that you are referencing :/

      'Well won’t flow depend on price? And won’t the price will in turn influence the flow? Kindof a double feedback loop?'

      “In a certain way yes, think of it this way: but it will still approach an equilibrium as long as you have the same boundary values (the same producers vs. consumers), just like trying to calculate the limit of a function in mathematics, even if you have different parts in the equation that you can not grasp the limit of the function does exist. Exactly that's also what FOFOA drew in his graph "inverted waterfall" the upper plateu. Or when he talks about how gold in FG will act as a battery/capacitor that is never 100% full but still approaching full (since never somebody will own all gold).”

      But it will approach equilibrium AFTER the current $IMF system has imploded. FOFOA’s punctured equilibrium. The battery capacity of gold will get charged WAAAAAAAAAY up during this period. After this initial charging, then the charge will go up and down based in response to trade imbalances, currency flows, etc.

      “You are starting to get it. Now try to get your head around what an ongoing constant flow of gold in terms of weight into the market place from the mining would mean for that normally perfect approaching theoretical FG equilibrium.”

      Uhm. I have my head wrapped around the mine flow & from my vantage point it doesn’t matter. Once we have evolved to using Gold as a SoV and NOT as a daily MoE and used to settle BOP, then the mine flow will compete with savers dishoarding gold as the FIAT price rises high enough to entice them to dishoard. If not enough savers are dishoarding, then the mine flow will supply the amount of gold needed. And the price of gold will rise to settle the imbalance. And as the price rises, more savers will be enticed to dishoard their gold. Some will. Some won’t. and that will drive price down. Some savers will also bid for gold as well & that will lower the price of gold.
      And since the price of gold at this point will probably be north of $50K/oz in 2012 $, do you think that gov’t’s are going to let the mines operate as they have been? I don’t. I think that the gov’t will take them over. If you disagree, lay out for me a rational for why the mines won’t get nationalized or taxed into effective govt ownership.

      Milamber

      Delete
    2. But it will approach equilibrium AFTER the current $IMF system has imploded.
      Thats what I am talking about the whole time.

      Besides that, what is that what you always talk about IMF implosion? You mean no more $-reserves? Yes, so what? That's just a pretty strong devaluation of $ probably against everything not just gold. And when we talk about about gold's possible future value, we are talking about purchasing power, not just the overall devaluation.

      "...then the mine flow will compete with savers dishoarding gold as the FIAT price rises high enough to entice them to dishoard. If not enough savers are dishoarding, then the mine flow will supply the amount of gold needed."

      Only "then"? oh really? How do you get to that funny assumption of such mechanism? That is against any kind of logical reasoning of any economical human action every observed. The mines will ALWAYS bid for MoE, ALWAYS now, during and after the supposingly magical transition. And they will therefore try to get as much out as possible. You think worldwide millions today being fed by gold mining will just go home only waiting for the permission from some "central FG planner" to make their living to mine for gold in the weight quantities the church of FG decides? Get that in your head. What is so hard to figure out about that one? Is this stupid FOFOA crap of turning blind on mining so deeply rooted for confirmation bias?

      http://www.youtube.com/watch?v=7ubJp6rmUYM
      http://www.youtube.com/watch?v=wArsCU50r6E&feature=plcp

      Is that all you can come up with in terms of reasoning "...my vantage point it doesn’t matter. Once we have..."

      Delete
    3. I get what you are saying AD.

      My response has not changed. Price solves everything.

      TF

      Delete
    4. No you are not getting it, because you wrote in another post recently proudly how many tons of gold SA will export and how the people thinking to nationalize and to spend that money. ON WHAT? What is it, that you need and can not accomplish yet, but only after higher gold prices in SA?

      http://en.wikipedia.org/wiki/Rentier_state

      in the long run brings you nowhere. As an extreme example read the history of the Nauru island. Most of the time it brings even more deterioration to a country, just like the US with exporting dollars.
      Greets, AD

      Delete
  21. AD,

    I guess I will stop here. I have given you ample opportunity to make your case. I don't think you have.

    In your last response, you partially quote what I wrote out of context, and then you choose to not address my main points.

    I think we will have to just agree to disagree.

    But I did enjoy the conversation.

    Thanks,

    Milamber

    ReplyDelete
    Replies
    1. Milamber,

      yes had been fun. Despite MINING!!!!!!!!!!111 THAT YOU SIMPLY DONT GET!!!!!1111, okay just joking ;)

      have you ever thought about, how the price of gold in a supposingly "perfect" FG environment can be arrived to? What makes that very nature of price of gold in perfect equilibrium (let's just assume for a second that there is not that evil neglectable mining)?
      Have you ever thought about that, without just plainly FG-lala-church assumption from todays figues? I mean, the real nature of the price discovery in itself? Trying to figure it out by yourself the mechanics of pricing? Not just dumb "well it is the SoV therefore it has to be....". I mean in the overall worldwide balance sheet picture (which is amazingly always ZERO, despite the bullshit that people might tell you, "well there are so many savings".

      What is the very essence about gold when being priced in fiat?

      I dont necessarily ask for an answer. Just wondering if you tried to figure out that pricing principle by yourself despite the FACT the worldwide balance sheet is zero...

      Greets, AD

      Delete
  22. Hey MF.

    Some patience you have on this thread. Hello also to AD.

    A few points if I may:

    1. MF you wrote (re China I assume, maybe oil too):

    'You are right to some extent. Ben already had his free lunch and Chen will never be repaid. That is the whole point of why Chen has chosen Freegold, because he does not want to be robbed again in the future.'

    Would you agree that in fact Chen has merely chosen gold? There is zero evidence of freegold being in any way involved in the choice? Would you comment on why you mentioned freegold here, and perhaps consider your thought process? Is the comment evidence of your bias, rather than a reasoned conclusion?

    2. I have long argued that freegold as espoused by the golden 3 takes no account of the fact that ordinary folk in most of the world have never and will never save in gold (even when hugely undervalued). Mnmark makes the point again more recently elsewhere. No one can refute that point. Is it possible for freegold-lite to just work at international level, or for the really big money? Or perhaps a quasi-gold standard is more likely, given that has always been the next step from an easy money regime?

    3. Is there really much/anything more that can be added on the freegold thesis by anyone, that has not already been written? I watch drunken videos and can't help but smile at how things have deteriorated since all with a questioning mind were chased away. A mutual admiration society is all that remains. It is good to see that you at least maintain a willingness to engage even with the most difficult of disbelievers, perhaps even with me.

    Finally, can you help me to understand (or are you willing to discuss)the apparent contradictions in these words please (all from the same post):

    'As Jacques Rueff described it in 1932, this "plain and simple" recommendation would "endow the world with the most marvelous instrument of international co-operation in its history… The system was to function perfectly well until it was shattered—also at Genoa—by the second committee of experts, which in April and May, 1922, contrived to demolish the work of the house of Centurione."'

    and

    ''Gold will return to its pre-1922 function, but that does not mean we will return to a pre-1922 gold standard. This post is not about the merits of the gold standard. It is not about praising the hard money camp’s decision in 1445 over the easy money camp’s decision in 1922. It is about the choice of the Superorganism over the management of men. The pre-22 gold standard, although it allowed gold to function, still carried the same flaw I point to so often; that using the same medium for exchange and savings leads to regular recurring conflicts between the two camps.'

    Jacques Reuff was clearly a gold-standard lover, and it seems helped design this ' most marvelous instrument of international co-operation in its history… The system was to function perfectly well until it was shattered—also at Genoa—by the second committee of experts' and yet in this post the writer seems to project his own freegold indoctrination onto Reuff, where no evidence actaully exists.

    Have you considered that a higher gold price (to break the dollar and paper gold)might have been the SOLE aim of the Euro architects, and that anything and everything related to freegold is merely the wishful thoughts of two anonymous bloggers, now a few more? Have you actually considered that I wonder?

    Because I have, and I view that freegold as espoused has a less than 1% chance of arriving, freegold-lite at an international level only I put as an even money shot with a return to a gold standard.

    Best wishes.

    Gary.

    ReplyDelete
    Replies
    1. Hi Gary,
      dont want to interrupt the discussion, but to add to your points:

      Today physical gold is literally piss cheap, if assuming there would be any FG mechanics in the background (planned by the "giant"...call it whatever you want).
      Maybe you noticed over my posts, that I see the value of gold derived from need of settling imbalances (when viewed through the FG lense). IMHO only ongoing imbalances (=debt to extinguish) gives gold value. Either intercontinental or as well inside a currency zone.

      Having said that, if I look at current prices and numbers with compared to e.g. 1971(when gold was definitely underpriced) all of this (Euro)FG talk simply does not fit. Look at the continues international deficit running from 1971 until now, the price of gold has NOT kept up at all.
      Or when talking about inequality inside a currency zone: In 1970 there have been only AFAIK 2 billionairs, now there are 3000(!).
      So I simply just dont get it. Maybe in the end gold is just a commodity for womens jewerly.
      Greets, AD

      Delete
    2. Hello Gary

      *bows*

      1. “Would you agree that in fact Chen has merely chosen gold? There is zero evidence of freegold being in any way involved in the choice? Would you comment on why you mentioned freegold here, and perhaps consider your thought process? Is the comment evidence of your bias, rather than a reasoned conclusion? “

      I think you go a bit too far. ;) You are of course correct, China has chosen gold, specifically to replace the USD as reserve( if those leaked diplomatic Cables are to be believed :”P). Excuse my imprecise wording.

      2. “ I have long argued that freegold as espoused by the golden 3 takes no account of the fact that ordinary folk in most of the world have never and will never save in gold (even when hugely undervalued). Mnmark makes the point again more recently elsewhere. No one can refute that point. Is it possible for freegold-lite to just work at international level, or for the really big money? Or perhaps a quasi-gold standard is more likely, given that has always been the next step from an easy money regime? “

      Sheeple do as sheeple do. I know it is hard to imagine in the current paradigm that J6P will be saving in gold. Post Freegold it would again be hard to imagine J6P not saving in gold. ;) We won't be going back to a gold standard or quasi-one. Victorthecleaner did a nice post on the why here : http://victorthecleaner.wordpress.com/2012/02/22/currency-wars-why-the-united-states-cannot-return-to-a-gold-standard/

      3. :) “ It is good to see that you at least maintain a willingness to engage even with the most difficult of disbelievers, perhaps even with me.  “

      I am always willing to entertain opposing views. If I'm wrong I want to know. :P

      “Finally, can you help me to understand (or are you willing to discuss)the apparent contradictions in these words please (all from the same post): “

      Why am I called upon to defend Jaquess Rueff? ^^

      “The system was to function perfectly well until it was shattered—also at Genoa” Hmm. I'm not sure FOFOA knows how gold functioned in that period. He may do, but perhaps not. Professor Fekete's work covers it. The system that functioned 'perfectly well' then, Real Bills, is not Freegold.

      “Have you considered that a higher gold price (to break the dollar and paper gold)might have been the SOLE aim of the Euro architects, and that anything and everything related to freegold is merely the wishful thoughts of two anonymous bloggers, now a few more? Have you actually considered that I wonder? “

      I have not until you brought it up. I don't however see how they could not have thought through the implications of using gold as floating Reserve, instead of dollar debts. It contradicts with the French position in 1971, the unique nature of the euro, being separated from nation state and fixed price...it just makes no sense.

      Your suggestion is akin to them having jumped off a cliff for the thrill, and giving no thought to how it would turn out. A very dim view of central bankers, which I do not share. I sense they are intelligent and would have thought it through.

      TF

      Delete
    3. Hello MF, thanks for your comments.

      Re the three points:

      1. I would suggest politely that it wasn't so much imprecise wording, more your fitting China's actions to the conclusion you have already reached. Something that perhaps the freegold advocates are prone to repeat frequently.

      2. Time will tell regarding savers, but evidence the world over is that humanity does not learn its lesson, and will keep saving in a nation's currency even after a collapse. I have yet to see an example where this isn't the case, although I do accept that India and China have a cultural attachment borne out of millenia of currency collapses. Perhaps in a few millenia the Western world will have the same approach and freegold can begin.

      3. I think your assumption that floating gold was likely to be the ultimate result of the Euro's design is just that, an assumption. Based on Reuff's admiration for the gold standard, I'd say a more plausible assumption is that the Euro was designed to kill the paper gold market, take out the dollar, and then return to some form of gold standard. My assumption is based on Reuff's own words, whereas yours is based on the words of anonymous bloggers. History proves that after an easy money collapse it has always been followed by a return to a hard money standard which has produced a long period of stability. You may find this historical perspective of interest:

      http://www.weberglobal.net/Historyofmoneycompleter.pdf

      My view is that the central bankers knew exactly what they were doing when they designed the Euro, but that none of us know whether they intended to kill the dollar/paper gold and return to a gold standard, or whether they hoped freegold would be the final destination. Most freegolders will refute this view, but based solely on their own bias, as Reuff was clearly a gold standard man, yet somehow Fofoa twisted him into a freegolder to suit his bias.

      If you really step back and think without bias, you cannot fail to agree with me. But I suspect freegolders are 'in too deep', either way, thanks for engaging, and we agree gold is the best bet til the storm passes.

      Kind regards.

      Gary.

      Delete
    4. "I'd say a more plausible assumption is that the Euro was designed to kill the paper gold market"

      It is a matter of record the Europeans supported and grew the paper gold market, because the alternative was collapse of the dollar and a chaotic return to some form of gold barter system that they understood the world really didn't want to go to.

      Doesn't sound so much like people who dreamed of breaking the dollar to go to a gold standard. But it is also a matter of record they have stopped supporting the paper gold market.

      Delete
    5. Well, your comment about supporting the paper gold market refers (of course) to pre-Euro Europeans, whereas my comment refers to the Euro design, which was specifically aimed at destroying the dollar and paper gold.

      You appear to have put 3 + 7 together, come up with 4, and used that to deduce that the Europeans are hellbent on freegold, and not a return to a gold standard.

      Well done.

      Delete
    6. And you, in your spirited and admirable desire to be the one who proves the Freegold theory incorrect, appear to have taken 3+7 and come up with bauxite.

      The euro group wish to raze all paper to the ground, including their own. Likely?

      Break the dollar? Yes.
      Gold barter? Not likely.

      If they had wanted a paper collapse and inevitable gold standard rising from the ashes, they would have just let it happen before.

      Delete
    7. If any CB would want FG-RPG they could have it for a much longer period of time. They just simply dont want it, desprite what some cult freegoldies might want.
      Examples?

      Just by pegging the Sfr. to the euro, the SNB could have stacked up 10000t of gold by now. But, NO they prefered to buy toilett paper from Mrs.Merkel for the € with negative yield. WHY?

      Or Mexiko CB buying 94t of gold recently. But no, they dont want physical, they prefer paper in London. Just as all the gold at the NY-FED that nobody never ever wanted to have delivered (and probably never will). WHY?

      The CBs dont ever care about legal accounting methods, already that alone would have potential for triggering FG-RPG.

      FG-RPG is a joke, nothing else. No evidence at all, nowhere.

      Delete
    8. I'd like to do some word replacement here.

      AD's critical reasoning is a joke, nothing else. No evidence at all, nowhere.

      xD

      Why would they want to be seen as cause of the collapse of the dollar system? That is insane.

      Delete
    9. Anon

      I like your words, whoever you are. Would you mind picking a letter or number to sign posts with, just so anons ( anonimi? ;) ) cannot be mistaken. I left the anon posting open for a reason, and do not mind at all. Nor if you choose not too.

      Delete
    10. Gary

      1. I admit to being biased. But I also admit it was a mistake, and that your terming is more correct than my biased one.

      2. Yes, let's see.

      3. " as Reuff was clearly a gold standard man, yet somehow Fofoa twisted him into a freegolder to suit his bias."

      Hmm. I think the first is correct, yet that FOFOA merely observed he had some good ideas, not entirely in the scope of a classic gold standard.

      TF

      Delete
    11. Ps. I also have a blog post on monetary history. A very condensed one...that likely does not agree with the paper you linked.

      Delete
    12. A little old (2007), but still interesting.

      $11Bn overall trade surplus.

      Trade deficit with Germany.
      Trade deficit with US.

      $5.9Bn of (non-monetary) gold imported just from the US alone.

      Delete
    13. No, *I* am Anonymous!!

      Delete
    14. But neither of you can be Anonymous, because we are.

      Delete
    15. "Why would they want to be seen as cause of the collapse of the dollar system? That is insane."

      It is insane to blame somebody for whatever, just by doing correct accounting, just like every other individual is obliged to do on the planet.
      THAT IS INSANE!1
      Greets, AD

      P.S.
      I'm not anonymous, there's only one original AD.

      Delete
    16. P.S.
      I really wonder how the cute freegoldies explain why FG-RPG will be delayed (now for how many years) another 20yrs. Will the change be less or more severe in the future? Just wondering to understand the excuse for that one.

      Delete
    17. Spoonfeeding dollars into the system won't crash it, as well a slow commensurate rise in gold. The discipline that they have thus far maintained is indicative of the tectonic movement of the geopolitical strata. Ideally there will be no rash or even discernible activity. The perfect result is to simply keep shifting these plates until we wake up one day and the world has been remapped. Reality of course is that there are points of friction that cause tremors of unpredictable frequency and proportion all along the way. At some point critical mass will be reached, and the dollar contract markets for gold will no longer be able to contain its price as market perception on a large enough scale discounts paper parity with the real metal accordingly. It is at this juncture that the gold reserves of the CBs will provide immense expansionary leeway, as they are for a season revalued constantly upward. This bona fide liabilityless reserve base will make the ECB member banks the premier lending institutions to fuel the economic growth of the euro zone, and those align themselves with it.

      [..]

      The strategy of the level-headed is to slowly remap the globe financially. This involves as much as possible a SLOW transformation from one currency paradigm to Another. These dollars en masse will not return home. They were born in exile and will die in exile. We will hyperinflate ourselves, and won't need help from overseas...

      Delete
    18. yes, pretty pretty pretty slowly............ No doubt that this could be the excuse. I know.

      That being written how many years ago? Yep, nine years+.
      Okay, let me check...... mining costs of gold today ~$800-$1200. So today, nine years later we arrived at 50% above mining costs.

      FG assumes something like north $50K (todays purchasing)....hmmmmm. that would make it 50times mining costs....hmmmmm.....just roughly I arrive at another 80years. So keep stacking.

      In this context, that has nothing to do with slowly, that increase is NOT EXISTING!!!
      You might as well call whatever commodity e.g. "Free-Copper" the focal point of whatever lala-land.

      Delete
    19. Trust me, I&#39;m an economist18 October 2012 at 15:03:00 GMT+2

      Jah, +1 for 80 more years of Goldilocks.

      Some say she escaped into the forest and found her way safely home. Others say this is just a fairy story and that a terrified five-year-old girl had no chance when faced with three ravenous bears.

      You, gentle reader, must decide.

      Delete
    20. jep, 80yrs.

      Let's look at it from the bright side of life:
      http://business.financialpost.com/2012/08/28/chinese-turn-backs-on-stock-market-invest-in-walnuts-instead/
      A good pair of chinese walnuts bought today will have risen in price just the same, but probably more, so forget about gold and better start stacking nuts, at least you can eat them in really bad times :^D

      Delete
    21. http://www.youtube.com/watch?v=S3tAjV2zPXs

      Delete
    22. Thanks for your comments MF, I hope you didn't mind me raising those issues, and you are as reasonable a person as you ever were.

      I find it absolutely fascinating that the truest of freegold converts feel the need to argue with every comment that expresses some element of doubt as to the way the future might unfold, or past events. It really is very akin to religious fundamentalism, their level of belief, the words of the 3 golden ones their bible, written by their Gods.It is clear that for some it has effectively taken over their lives, it is now their life. How sad an existence that must be, as they have such strange personalities because of it. My condolences to any so afflicted, they are very few in number, they deserve our sympathy, and even as they know this is the case, they are now so ensnared they can never escape, ever. Perhaps their freegold personalities are more rewarding than their real lives, I can see why that might be.

      I personally am thankful that I remain open-minded, and despite being all-in and hoping that freegold arrives soon, I continue to see the flaws and other possible outcomes.

      Best wishes to you.

      PS, does this guy remind you of anyone at all, it took me a while but the voice is very similar:

      http://www.hark.com/clips/gjbkfqxqns-when-i-think-of-those-voluptuous-risian-females

      Delete
    23. We love you Gary!
      Debrief! Debrief! Debrief!

      Delete
    24. Gary

      Lucky for me then that my personality was strange before I discovered freegold. :P

      It's not so strange really, since you come here from a adversarial position. That puts me in the situation where anything I let slide implies tacit agreement....essentially what AD does...only to then pretend it never happened.

      Peace

      TF

      Ps. Thanks for the ad hominem. Haha.

      Delete
    25. I'm sorry you consider me adversarial MF, I merely point out facts and my observations. I did not consider you adversarial when you arrived at Fofoa with a different view, and your discussions (even with AD) have always been reasonable. Funny how a different view is viewed as perverse or adversarial by freegolders. And yet their views (often unsupported by any actual evidence) is taken as gospel. Maybe only those on the outside can see that too.

      My 'ad hominem' was not intended to reflect on you by the way, and I firmly believe anyone that ends up saving in gold is a bit strange (or perhaps that's the rest of the world?).

      Wrong blog, but as an all-in gold saver, for me gold is a store of my current claims on the goods and services available in this wonderful world. Currencies are therefore irrelevant to me and my gold, I shall at some point exchange a real physical item for something else real and physical. At that point my gold will move through a paper currency en route to something real.

      See ya!

      Delete
    26. I didn't mean anything negative by it. One who opposes you is by nature an adversary, whether it be life and death or friendly discussion. :)

      I firmly believe that I'm actually okay and it's the rest of the world that is strange. :D

      Delete
    27. @AD
      Even if you are right and CB plus miners sell into freegold to capture what has been the savers` prize in the physical world, than they ultimately loose when they are depleted. Yes thats 60% delution of savings but don`t worry you will not live long enought to have it all.

      Delete
  23. AD, I didn't read most of your posts sorry.
    Also, gold may be metaphorically piss-cheap, but my piss doesn't sell for $1750 an ounce, does yours ;)

    Regards.

    ReplyDelete
  24. also to add: China gives a crap about the properties of freegold, despite what freegoldies might tell you, here's the prove:

    http://business.financialpost.com/2012/08/28/chinese-turn-backs-on-stock-market-invest-in-walnuts-instead/

    "“The government has been hoping for more money to flow into traditional collectables because their price rise doesn’t affect politics or normal people’s lives,” Chi said."

    So instead having at least their very own people extinguishing debt inside their border and getting rid of green paper, they rather have them playing with walnuts. Think about that one.

    ReplyDelete
  25. Hi all! Again found a new wonderful blog discussing important things which are not discussed in public very loudly! Thanks.
    AD/TF: For the case you have not seen. Vera nice summaries! http://talkfreegold.blogspot.de/2012/10/freegold-overview.html

    ReplyDelete
  26. To make it clearer:
    With "wonderful blog" I was adressing this blog here, foolishperspective ;)
    Although talkfreegold is very helpful too ;)

    ReplyDelete