GOLD

[wren]

When you say 'existing money' where does this money come from? The point about money supply is that it is out there in the economy and can be spent. If the bank has to take money out of the economy, then yes that is deflationary. And there is the knock-on deflationary effect of causing it to draw future lending in.

No we're not. I'm rigorously using it to refer to the money supply in the post you responded to.

The first bolded part of your quote suggests the difference.

 

I'm talking about changes in the amount of money in existence. Not what is already out there in the economy.

[wren]

No but it may cause deflationary pressure. But if a bank has to find the money from somewhere it finds it from money that would otherwise be relent, so in that case it can be deflationary in pure money terms. My point was you just said the bank uses existing money without accounting for where that money came from. Which concealed the deflationary moment in your example.

Referring to the first two sentences it might well be disinflationary, rather than outright deflationary.

 

About the bit I bolded. It would be a shame to miss the wonderful deflationary "moment", as it sounds quite exciting.

 

My schematic example (which branched through a couple of alternative possibilities) involved various points at which the amount of money in existence would be increased and later decreased, or not.

 

Which was the exciting "moment" which is concealed?

[wren]

Wren, I'll answer this in a new thread on the main forum to take this away from the gold thread...

 

http://www.greenenergyinvestors.com/index.php?showtopic=4167

I'd had enough of this anyway.

 

The dynamics of money creation and destruction are interesting to consider. And yet fundamental questions presented by my simple (some said overly simple) schematic example remain unresolved.

 

I'm grateful to you, Magpie, for emphasizing the possible dynamic interplay of creation versus destruction which I find informative.

 

But statements so far on this, the busiest thread, about the mechanics of how banks handle defaulted loans are contradictory, and for me, therefore, (not knowing the laws or regulations) inconclusive.

 

[Magpie]

Which was the exciting "moment" which is concealed?

 

See my other thread for an explanation. In the example there the default is neutral in immdiate terms but forces the bank into deflationary behavior - it must take money back in loan repayments before it can make new loans, thus the ongoing effect is deflation.

 

 

 

[Errol]

Can't you two (Wren, Magpie) continue your discussion in your own thread thread?

[Errol]

Just thought I'd add ...

 

They want to keep it below $800 but they can't.

[Magpie]

Can't you two (Wren, Magpie) continue your discussion in your own thread thread?

 

I'm trying...

 

And apologies for the intrusion.

 

[nicejim]

Anyone know why silver's just fallen off a cliff? Down to $12.37 according to Kitco.

Yes, gold and silver 3-day charts on kitco look very similar as usual, until about 12 gmt.

Ratio @12ish: 62.8

Ratio now: 65.8

 

 

 

This inflation/deflation argument is a lot like how HPC used to get (probably still does?). It may be in the wrong thread but it's good to see that it hasn't devolved into an argument about whether taxation is theft and countries exist.

[wren]

See my other thread for an explanation. In the example there the default is neutral in immdiate terms but forces the bank into deflationary behavior - it must take money back in loan repayments before it can make new loans, thus the ongoing effect is deflation.

There is no "exciting moment" in your example, as far as I can tell, in relation to my example.

 

You, as I would expect, assume that banks cannot be allowed to fail, as if they are sacrosanct (which for the Powers That Be, may be the case).

 

As I said above, I am aware of the competing flows of money creation and of money destruction.

 

The first scenario, which you carefully and rhetorically very quickly skipped, of the money being payed back did involve money heaven (the money disappeared when the borrower payed back the loan). The example of default remains up in the air. What are the laws and regulations in this hypothetical society? Your example bank was incompetent. If lending institutions have any useful economic function it is to assess credit worthiness.

 

Your example bank created massive monetary inflation and then suffered a default which made them bankrupt. Maybe the good folk of the hypothetical society would tell the incompetent bank to get stuffed and continue with the remaining pounds as money, or find another money system.

 

The bank was bankrupt while the money in existence had been massively inflated.

 

What if the second borrower defaults?

[tl8177]

Just a quick point I was meaning to mention, and to draw away from this inflation/deflation talk

 

I was talking with some Mexican colleagues last month and they mentioned that there was a growing movement in mexico to bring silver back into their coinage. These guys are pretty heavy into their research work and I was pretty surprised when they mentioned it.. we were talking about the R&D in the mining industry so I would guess that this is something growing mainstream in the Mexican press. Anyone else heard of this?

 

[Magpie]

There is no "exciting moment" in your example, as far as I can tell, in relation to my example.

 

Again, I'll reply in the other thread.

 

[wren]

What if the second borrower defaults?

Then the bank is fucked.

The only bank in the hypothetical society in the example.

[G0ldfinger]

Just a quick point I was meaning to mention, and to draw away from this inflation/deflation talk

 

I was talking with some Mexican colleagues last month and they mentioned that there was a growing movement in mexico to bring silver back into their coinage. These guys are pretty heavy into their research work and I was pretty surprised when they mentioned it.. we were talking about the R&D in the mining industry so I would guess that this is something growing mainstream in the Mexican press. Anyone else heard of this?

Interesting. What kind of research is that?

[tl8177]

Interesting. What kind of research is that?

 

processing; metals and plastics. Working out cheaper ways to turn raw materials into usable products and how to enhance it by understanding how the material is affected by the processing. not very interesting really.

[frizzers]

I think the chap behind the movement's name is Hugo de Salinas from memory

[wren]

It's deferred deflationary pressure now.

 

Fair enough. But I am interested in actual changes in the amount of monies available.

 

Including, in this so-called "globalized" economy, the changes in the amounts of euros, yuan, rubles etc.

[Dubai]

Thought some of you gold bugs might find this interesting.....

 

 

Physical demand for gold is surging but the price keeps taking serious knocks. What’s happening.

 

Author: Lawrence Williams

Posted: Wednesday , 03 Sep 2008 LONDON

 

Gold market manipulation conspiracy theorists should be having a field day. The past few weeks have seen solid evidence that physical gold demand from individuals is soaring. We have seen the U.S. Mint having to suspend one ounce Gold Eagle coin sales because of what it terms “unprecedented demand”, Indian gold sales have picked up enormously in the past few weeks leading to purchasers having to wait several days for deliveries as the traditional sellers are short of gold, while yesterday we hear that Abu Dhabi, a major trading centre for precious metals, has seen gold sales rise by 300 percent in volume and 250 percent in value in August compared with a year ago.

 

 

http://morris108.wordpress.com/2008/09/04/...at-is-the-scam/

[wren]

But remember folks:

 

To bow to your bankers and "betters", and pay due servitude,

 

And be thankful that money is debt 'cos,

 

Otherwise the deflation bogeyman is gonna get you.

 

[Dubai]

But remember folks:

 

To bow to your bankers and "betters", and pay due servitude,

 

And be thankful that money is debt 'cos,

 

Otherwise the deflation bogeyman is gonna get you.

 

 

Have you had a swift one, Wren?

[Steve Netwriter]

I have just seen the light

 

Until this latest fiat currency system experiment is exterminated, I am now officially:

 

A Goldbug

 

( An enhanced version of the table from here: http://www.numismaster.com/ta/numis/Articl...ArticleId=5273 )

 

 

From now on I'm going to only risk what I can afford to lose in speculation in these fiat currencies heading for worthlessness.

 

I'm certainly too cautious to risk too much in a paper gamble.

 

I think we post rocket pictures as a bit of fun and to celebrate our CIGA (Comrades In Golden Arms) sensibleness.

 

I know it wouldn't be the same, but we really ought to be more realistic, and factual. Maybe we should stop misrepresenting gold.

Instead of posting rockets of gold going up, we should instead be posting pictures of fiat currency lead weights sinking :lol:

[Steve Netwriter]

As requested by Quark (who will hopefully do it in future ):

 

 

from the great site: http://jessescrossroadscafe.blogspot.com/ who are happy for these charts to be used elsewhere as long as the source is attributed

 

[Steve Netwriter]

Also from Jesse's:

 

 

:lol:

[Steve Netwriter]

To go with the gold price table:

 

From:

 

10. Inflation

http://www.chrismartenson.com/inflation

 

 

 

[Steve Netwriter]

A plot very similar to the table above, but this one from 1800, with the min & max price for each year plotted, so not only can you see the long stable period, but you can also see the yearly volatility.

 

 

So, from 1970, is that a 38 year bubble in the gold price, or a 38 year fiat currency experiment resulting in permanent inflation, and a diving buying power of the fiat currencies ?

 

[frizzers]