Indy, thanks for the post in english. I attempted to follow the dutch threads, but once translated they are barely/not understandable, so I have given up.
Thanks also for the concise stating of your position. As in all other spheres, in order to have an objective exchange (in this case of views), we first must establish a reference point for the sake of relativity. Your post does this.
Because I like to eliminate unknowns as much as possible, I would like to firstly clarify some of the things you have said:
Because it is a really beautiful concept just like the Bible I started to believe in it. Being a critical examiner I also started looking for the Freegold blueprint but there didn’t seem to be any.
Are these two statements not contradictory?
Believing something because it is a really beautiful concept seems diametrically opposed to be a critical examiner.
I’ll return to the blueprint issue in due course.
Believes have to fit in some thinking strategy and untill now they don't. [thoughts 1]. However I'm open for suggestions to put those believes in 'some' place with a little help from a friend.
“Oil for partly Dollar and partly Gold”
I read about Oil for partly Dollar and partly Gold and this seemed logical to me because the Dollar devalued couple of times in the past decades and the physical link between the Dollar en Gold was cut by Nixon (but NOT it's true link). The Arabs were simply asking for some Gold as a hedge against a devaluing dollar purchasing power. Later on the Arabs agreed with military protection instead of Gold and this also seems logical to me.
seems logical to me too, but not for the reason you state... what and when do you mean when you say “the Dollar devalued couple of times in the past decades”
Also, what do you mean with regard to the “Nixon Chop” when you say “but NOT it's true link”
Devaluation is a misconseption, sorry. I meant depreciation. Also depreciation is hard to measure because the dollar is the reference point for other world currencies and commodities are quoted in dollar also. I derive this opinion from how my American family asseses their purchasing power and Yes this is a subjective opinion..
The dollar imho never severed its bond to gold because dollar gold is fixed at $ 43 troy ounce. Why should the do that if there is no bond ?
While I agree that this is technically correct, I disagree that Oil seeks gold as a hedge against a devaluing dollar because this is too narrow a view of the situation.
This goes back to the reason “Oil for partly Dollar and partly Gold“ seems logical to me: Oil are happy with dollars (or whichever is the currency de jure) for their day to day flow of value (AKA their income and expenses), capital expenditure and short term investments, speculations and general consumption. But for that part of their value which they want to store (AKA their savings/reserves) they want gold.
I'm almost certain that the Arabs store Value (their personal concept of value) in all kind of things. I stated above that they sold 'part' of their gold.
The reason they want gold is not as a hedge against a devaluing dollar in particular, but against devaluing currencies in general.
I agree on that !
But to call gold a hedge against devaluing currencies, while technically correct, is to view it from the wrong perspective
. This is to imagine Oil thinks like you, but they don’t. The notion of storing value in currency seems viable to you, but for the problem of devaluation, so you want to hedge. Oil thinks your perspective naive. They have never even considered storing value in currency; the very idea, to Oil (and others of the Old World perspective), is absurd. They have always (millennia) used gold
for storing value. You suggest they should use gold as a hedge against value lost in devaluing currencies? The idea of storing value in currency was always ridiculous. Old World perspective laughs at such “western thinking”.
I agree on your statement that my view is maybe from the wrong perspective, but I'm sure I've read several articles about Arabs (among other investments) also buying Treasury Bonds from different countries in the world. Especially if you buy TB with Oil Dollars or Euro/s, you store oil-value into currencies. That doesn't advocate for a clear view on what value is, does it ?
So I say you are correct in this “gold as hedge” perspective, but only on your own terms
Because the Euro was a brand new currency the Arabs asked for some Gold too and this also makes sense. Foa writes about Arabs selling some of their acquired Gold to exchange this into other stores of wealth and even this seems logical to me but this still doesn’t advocate for Freegold.
Neither of these sentences are making sense to me; can you expand them?
-I'm pretty sure that the Arabs were selling their gold via a South Africa - Swirzerland link. I can't find it right now, but I'm sure I've read that somewhere in the GoldTrail.
-What goes for the Dollar goes for the Euro ... see answer above.
TRUST and ACCEPTANCE by a COMMUNITY
Critical indeed. We will come back to these later, for sure.
I've tried to explain my view on this in Indy.Thoughts 1 + 2
The Euro severed its bond with Gold and therefore the ECB can value the gold holdings marked to market, unlike the Dollar.
Yes euro is not like the dollar, but this is not
because “ECB can value the gold holdings MTM“, but because ECB is allowing gold to value the euro
MTM. Big difference, really big. Fundamental.
You are viewing this from the western trader perspective, not Old World perspective. Western trader perspective is about to go down the drain along with the system that supports it, the $IMFS.
The word 'therefore' is not in place, sorry. You can skip it. But I don't agree on 'because' also and would rather choose the word 'and'. Don't want to play wordgames, maybe I'm missing something ?
What makes you think I'm looking at the $IMFS from a trader perspective ?
I certainly don't want to look at the MS this way, because I'm sure the current MS is very fragile and nearly over the edge.
The Dollar severed its link to the nation state because the US treasury ONLY can issue Treasury Bonds (the dollar simply is a TB derivative) and the individual states can’t because they can ONLY issue State Bonds and Municipal Bonds. Because Greece and Athens CAN issue Eurobonds it seems like the Drachme STILL exists in the background and the Euro practically has NOT severed its link to the nation state but only in theory.
Dollar has not severed link to nation state: USA is
a nation. TBs are issued by US Treasury. Pure debt.
Is the euro a Eurobond derivative? I say no. The euro is a medium of exchange only, and its value is a derivative of the amount of gold it can purchase. This amount is free to float and is publicly market-set information available 24/7.
Bondholders should wakeup and demand bonds denominated in gold! What if the market devalues the euro in gold? What if the market devalues dollar in gold???
I say Yes. If the Euro was not, why all the fuzzy about saving the club MED countries because the Euro is cliffhanging right now. If the Euro was really a medium of exchange only, Greece can default easily without damaging the Euro. If bondholders should wake up and demand gold to sleep peacefully, why don't they. Or do you think French banks are stupid ?
According to the Freegold theory physical Gold has to price currencies. That means that TRUST and ACCEPTANCE in currencies and GOLD are a MUST in a Freegold system. But how can there be Trust if every single country has to assume that their neighbors are telling the truth about their gold holdings ?
State gold holdings have nothing to do with the value of a currency in Freegold.
Maybe I chose the wrong perspective here and you're right. I'll think this over.
Any currency is valued only by how much gold it is exchangeable for. CB gold reserves come into play only when a CB buys physical to weaken their currency, or sells gold in order to strengthen it. In both cases the size of the gold reserves (if any) not involved in the transaction are completely irrelevant.
Don't agree on this. Please enlighten your view on international trade because currency demand and supply really quote currencies. Unless you think International Trade will have a golden reference point which make currencies nothing more but 'scrips' (the kind of scrip that Lietaer advocates). Because of a conflict with our Internal Map 'scrip' will also require a WorldWide change of mind.[indy.thoughts]
The important thing in any monetary system is neither currency nor gold, but value. Any monetary system exists only to enable the equitable flow of value between the system’s users. Correctly used, currency and gold are but tools to assist users in objectifying and regulating this flow so as to ensure exchanges of value made inside this system are mutually beneficial.
Sorry, but Value is part of our Internal Map of Reality and agreeing on gold as an International Trade Value (I suppose that this is what you meant) requires reshape of internal Maps Worldwide. [Indy. thoughts 1].
You state 'correctly used'.
As long as human mankind exists Value has been a concept that was vulnerable to corruption.
In what market place physical Gold trades and who will supervice hounest trades
This requires a market maker/s to provide physical exchange facilities. As with any similar requirement for such services, the market always supplies facilities spontaneously where there is a commission in the offing doesn’t it? Supply and demand. An exchange not acting in accord with the needs of its customers would be shunned for one that is. Supply and demand.
Governments are time and again forced to control their budgets but they never managed to do so according to history. That same governments control their somehow unidentified Gold stocks in a freegold system. So how can a Gold system ever be free when government still is involved ?
Governments cede control to the market under Freegold, and the market rewards or punishes via the movement of gold and thus the movement of value into and out of a currency. For example, as the exchange rate of your currency drops in gold (due to your zone’s net consumption/BOP deficits) so it drops in buying power, meaning less consumption is possible in your zone. So your production becomes cheaper to those in other zones, slowly increasing your exports while diminishing your imports and moving your zone from being a net consumer to a net producer, at which time your zone starts to experience an inflow of gold as your strengthening currency has value removed from it and stored in gold by savers.
So governments cede to exist, because that is what will happen in my opinion when they're out of control.
"But governments won't want to cede control!"... will they have a choice? The current system is at its end, and there is nothing that can be done to save it. Govt control and power stems from this system and the "easy money" it supplies to buy votes. The critical point is that you can legislate what people must use as a medium of exchange, but you cannot legislate what they use as a store of value. If the system becomes free somewhere (from such control) the currency used in that zone where no coercion is used will become more valuable everywhere than those that use coercion to find usage demand.
I'm not shure about this government cede control stuff. However I'm sure the current $IMFS is in the dangerzone and has little chance to escape from (partly) default or some kind of devaluation against all kinds of real value including gold.
Govt cannot impede the flow of value... it will simply flow through another instrument that govt do not control. The only way control is maintained even now is through conditioning... look at where gold flows today: into India, China and the East, into the hands of POOR PEOPLE who see the flow of value with Old World perspective!
Govt can only impede your judgement with their "Credibility Inflation"!!!
'We the People want freegold" is close to whe the people wan't what ? [ indy. thoughts]
Last but not least we probably have an international trade currency problem.
No problem. All traders trade in whichever currency/s are most convenient as objective relative valuation has been supplied in real time to all market participants via the gold/currency exchange rate. Finding the value of one currency to another involves only simple triangulation with the gold price in each.
See my remarks about World trade above.
Any currency is worth only as much gold as the market is willing to exchange for it. TRUST and ACCEPTANCE by a COMMUNITY of the currency they use stems directly from the objective valuation gold gives that currency. Gold becomes the reference point, supplying relativity, and from this grows trust and so into acceptance, not from threat of force (legislation/fiat) but free choice.
see indy. thoughts 1 + 2
fofoa is really an expert in interpreting the freegold concept quoting today/s events and I respect the man ! However I’m still missing the blueprint
The “blueprint” is quite clear to me, and has been communicated very precisely (if very voluminously) by FOFOA via his blog. I suggest the problem is exactly as Another stated right from the start: the western trader mindset. Your post has exhibited it quite clearly. The Old World perspective is the one from which the “blueprint” is understandable. The construction blue print of a building is better understood by the builder than the building’s occupants.
Why you are so sure that the East already agrees on the Freegold concept. I can't find any evidence.