Friday, June 1, 2012

Marshal Auerback — A possible remonetisation of gold?

With the ECB ruling out the use of its balance sheet as a means of recapitalising Europe’s increasingly fragile banking system, the search is on for alternatives. The Daily Telegraph ran an article earlier this week looking at Germany’s proposed European Redemption Bonds as asolution to the euro crisis.
Under the proposal southern European debtor states would pledge their gold reserves as collateral under a EUR2.3trn stabilisation plan. The SDP opposition supports the idea and the Greens have said they will block ratification of the Fiscal Pact unless this is adopted. The plan splits the public debts of EMU states. Anything up to 60% GDP would remain sovereign and anything over that would be transferred gradually into the redemption fund. The fund would gradually retire the debt over 20 years. Whilst Germany would suffer higher credit costs – (Jefferies calculates it would cost Germany 0.6% GDP annually) – it would have the security of gold lodged to the fund, and is therefore acceptable to the German public. Germany’s Five Wise Men also say this cost to Germany would be modest compared with the growth that would come from a disciplined economy. The fund would also relieve the ECB of its need to monetise to bail out Europe, again something Germany desires.
Read it at Pinetree Capital | MacroBits
A possible remonetisation of gold?
by Marshall Auerback
(h/t Kevin Fathi via email)

The old gold fetish rears its head out of the swamp of the history of failure and disaster.

More concerning:
"Any “United States of Europe” will in become a de facto ”United States of Germany” if this proposal is a go.

21 comments:

Bob Roddis said...

The old gold fetish rears its head out of the swamp of the history failure and disaster.

Mr. Hickey:

You make pretty bold statements on a topic about which you know less than nothing.

Also, I would think that people who seem to recognize an oncoming police state but simultaneously support unconstrained funny money "printing" via keystrokes by that same government are the folks exhibiting a fetish.

Tom Hickey said...

Gold ownership is rival and exclusive, not something to base international coordination on. The gold standard leads to mercantilism in trade and mercantilism leads to war.

Bob Roddis said...

Gold leads to both interpersonal and "international" coordination because it cannot be created out of nothing like fiat funny-money, its value cannot be artificially altered by monopoly governments and it cannot be used for surreptitious shifting and theft of purchasing power and wealth. Further, because governments cannot alter its value, gold-based money has no nationality and would pass at the same rate around the globe breaking down artificial government barriers to peace and free trade. Because it cannot be created out of nothing, it cannot be used to fund wars except on a "pay-as-you-go" method (which would cause the public to object).

Those of the fiat funny-money fetish hate gold because it constrains their plans for top-down control and manipulation of average people through the surreptitious theft of purchasing power and shifting of wealth and assets. The entire MMT program is a proud trumpeting of that goal. Someone needs to put a stop to it.

AndyCFC said...

Should give Bob the articles by Izzy @ the Ft i sent you earlier ;)

Dan Kervick said...

Yeah, all the "average people" I know have basements full of gold. Let's go back on the gold standard so those average people can get control of their lives back and take it away from our democratic government!

Bob Roddis said...

Mr Kervick:

I'm not proposing a "gold standard". I'm proposing that each person be allowed to use whatever type of money they choose and to end the government's outrageous employment of monopoly fiat funny-money to steal and shift purchasing power and wealth.

Since "democracy" is nothing but two sharks and a kitten voting on what's for dinner, such a policy is obviously intended to constrain the mob-back thievery and pillaging so near and dear to MMTers and other "progressives".

Matt Franko said...

Dan,

From Bob: "Since "democracy" is nothing but two sharks and a kitten voting on what's for dinner,"


Now I see what you mean with these Libertarians.... very disturbing.

resp,

Bob Roddis said...

What's wrong, Mr. Franko? Are you concerned about discussing the placing of limits on mob appetites?

Matt Franko said...

Dan has been warning of a nascent trend he has picked up on whereby radical Libertarians seem to be advocating for suppression of Democracy... voter suppression, rule by elites, etc...

We are under a constitution Bob, does not seem like "mob rules".

resp.

Greg said...

"I'm not proposing a "gold standard". I'm proposing that each person be allowed to use whatever type of money they choose......"


What could possibly go wrong with this scenario?

Bob Roddis said...

What's to limit the majority from enslaving (or eating) the minority? You guys haven't even thought about this stuff. I'm quite please to learn the state of your terminal naivete.

I'm proposing that each person be allowed to use whatever type of money they choose......"

What could possibly go wrong with this scenario?


Exactly. Those who choose wrong might get burned and learn a lesson, never to be burned again. It's clear you guys are totally unfamiliar with these topics ... and unfamiliar with economics and history for that matter. I'm pleased to learn this.

Leverage said...

Hey Bob, I pretty much doubt you have any real experience in the markets. I've seen the same people (usually wealthy) get burnt time and time again by the same stupidity (and the same assholes profiting from it).

What you ask for has been tried already and failed miserably (producing several depressions along the way).


That said legal tender laws should be eliminated and people should be able to settle private debts in whichever 'money' they want. Some good competition against crooks in power is not bad to keep them in check, that way they have at least an incentive to run successful democracies and not simply oligarchies.

Matt Franko said...

the constitution Bob, Bill of rights?

These protect individual civil liberty no?

Tom Hickey said...

Look at what is happening in Europe right now. Germany has been running a mercantilist export economy with the rest of Europe, which is made up largely of net importers. Now instead of settling in euro, Germany wants guarantees in gold. Should that spread, as Marshall, thinks it may, we will be back to the old mercantilist-colonialist days that ended in wars.

What will happen in a new mercantilism is that the oil producers will end up with all the gold pretty quickly. How do you think that is going to play out?

Tom Hickey said...

There is nothing preventing anyone in the US using any kind of payment that others will accept. The federal government and local and state governments only accept US currency in payment of liabilities to them, but others are free to make contracts as they please.

People use the currency because it is the most convenient, unit of account, medium of exchange, store of value and denominator of debt, and they will continue to do so until sellers no longer trust the USD and demand something else for settlement. Then sellers will only accept either real goods in barter, or whatever they prefer to save in, such as gold, or even some other currency that is perceived to be stronger.

Dan Kervick said...

Bob, if you are so unhappy with the democracy that you bircher right-wingers have helped dismantle and assassinate, you are always free to move to Montana or Idaho to join the other lonely boomers-in-a-bunker. You may there barter gold, beaver pelts or mollusk shells for your vittles, to your heart's content. I imagine the tax men will be too lazy to hunt you down.

Septeus7 said...

Quote: "I'm not proposing a "gold standard". I'm proposing that each person be allowed to use whatever type of money they choose and to end the government's outrageous employment of monopoly fiat funny-money to steal and shift purchasing power and wealth."

People are already free to settle private debt in whatever way they choose. It does not make a damn difference. You say you aren't for a gold standard but then you say that gold leads to a utopia without war.
Which is it Bob?

Free Market Fiat from national production as credit claims against future production or gold?

You can't have both. You either have a unconstrained credit system based on real production or a artificially constrained gold requirement. Gold is the real fiat currency because it depends on laws and police saying that credit is constrained and must be tried to a piece a metal. You can only enforce this be degree because markets naturally work on credit. Gold is funny money as it value is created out of nothing but the regulations that require it's use and it complete removed from value of national production and require the theft of wealth from debtor to creditors via an artificial permanent deflation.

The issue is who decides what controls public credit. The Constitution says Congress shall have the power to borrow money on the "Credit of the United States" and you object to this power ergo you want the US to be colonial subject of a private currency hence you side with the British Crown on the issue of our revolution.

You are a monarchist. You believe in using a police state against people forming union of public credit i.e. nation states. You want a dictatorship of private finance oligarchs to have the right to break nation which start exercising sovereign claims over their nation's production and use to for public benefit because you want a International Empire to have first claim to any production are private property because that is the definition Empire.

You slavertarians are the problem. You are the police state. You are violence and the war of all against all. You are the hellfire club and every form of Bentham's cycle of debauchery. You are all that the because of your love of argurion is the root of all evil.

People are the real value in the economy not Gold and the people have the right determine was is credit between them and to have it issued for public purpose. The definition of tyranny is to deny the people their natural rights of self determination through economic sovereignty.

Anonymous said...

Good post Septeus,

Right-wing libertarians just want enslavement reinstituted, where property and capital trumps everything else.

For all I care they are the most dangerous kind, beyond the state and our current status quo of morons in power. Very dangerous insane people.

They want a regime that didn't work and started revolutions. Maybe they are covert revolutionaries... look at this post at moslereconomics

“Greenspan, Bernake, Paulson, and Geither will all be executed in public for financial terrorism and treason against the United State of America.”

You are inciting to violence.

This is exactly what the enemies of the West are hoping for – the self-destruction of America and West in general. Please check how many “former” Soviet spies, sorry, academics, work for right-wing “think tanks” sowing hatred within Western societies and trying to undermine and dismantle state institutions.

“Радио Москва” aka Russia Today is another “news” channel used to peddle Austrian-school-of-economics-type propaganda. Who pays for that?

Bob Roddis said...

This is exactly what the enemies of the West are hoping for – the self-destruction of America and West in general. Please check how many “former” Soviet spies, sorry, academics, work for right-wing “think tanks” sowing hatred within Western societies and trying to undermine and dismantle state institutions.

“Радио Москва” aka Russia Today is another “news” channel used to peddle Austrian-school-of-economics-type propaganda. Who pays for that?


How did you find out? As you probably know, all of us Austrian School advocates are well trained agents of the KGB which invented the so-called "Austrian Economics" in 1947 to help Stalin and Mao take over the world.

Matt Franko said...

"9 For I also am a man set under authority, having soldiers under me, and I am saying to this one, 'Go,' and he is going, and to another, 'Come,' and he is coming, and to my slave, 'Do this,' and he is doing it."
10 Now, hearing it, Jesus marvels. And He said to those following, "Verily, I am saying to you, With no one in Israel so much faith did I find."

The Lord ties faith directly to manifest recognition of levels of authority and subjection (use of the word "under").

Recognition of authority is important, in this case the authority of civil government.

When we have people whom, upon obtaining positions of authority in civil government, immediately surrender this authority either to "stupidity" ("We're out of money!") or in this case, to those who have obtained an ability to happen upon a metallic rock that exists in scarce supply in the ground, it is manifest faithlessness and insubjection.

Resp,

Anonymous said...

Bob,

"I'm proposing that each person be allowed to use whatever type of money they choose"

Ok, so in which type of money should the government spend, tax and borrow?