Agreed, but all the gold produced last year was a piss in the ocean. Depending on who you talk to, our fed increased the number of dollars out there by 10-15%. I hear that the gold was increased at under 2% even with the most negative numbers. The number is likely much lower. I'll take my chances with an asset that inflates slower than human population growth any day. Means gold per capita continues to decrease, and it's value continues higher.
What Howard Buffett, father of Wall Street legend Warren Buffett said on Gold
- Thread starter harrytrader
- Start date
Agreed, but all the gold produced last year was a piss in the ocean. Depending on who you talk to, our fed increased the number of dollars out there by 10-15%. I hear that the gold was increased at under 2% even with the most negative numbers. The number is likely much lower. I'll take my chances with an asset that inflates slower than human population growth any day. Means gold per capita continues to decrease, and it's value continues higher.
Well at least Warren wasn't dumb enough to think gold was an "asset" to invest in early on, otherwise he wouldn't be one the of the richest guys on the planet. Imagine passing up Coca Cola, American Express and Gillete early on and going into gold. I wonder why there are no gold billionaires....hmmm.
To add, the only good thing to come out of the 1849 gold rush in California were denim jeans.
To add, the only good thing to come out of the 1849 gold rush in California were denim jeans.
that's a good one! Of all the asset classes, stocks have the BEST long term historical returns. Better than bonds. Better than real estate. Better than treasuries. Of course, some commodities have higher returns, but higher risk. Just a risk premium.
And there are no commodities billionaire investors unless you called the Saudis and their oil which is not an investment but something they just have under their grounds.
I don't know what is it with these diehards hard assets goldbugs or silverbugs types are up to. Every market and asset class go through a bull/bear market. Gold had its huge bull market of the 70-early 80s. Then died down for like two decades. Maybe we'll see it again. Maybe not.
Who knows. I just trade them. If you think it's a pyramid scheme then maybe it is. The point is as trader we trade 'em all and manage risk.
If tomorrow people start trading ocean water or asteriod and it has good volatility, then I'll trade them too. I don't care.
Get that Harry? In fact, I hope I can find the next bubble and ride it up. And short it on the way down.
Too bad we dont' have any more great bubbles around.. Please let me know so I can get in and get out.
misc
Oh yeah, I get that what exactly people were told in 1929 hahaha ! And at every buble in past centuries. You HOPE to catch the next buble, yes you can HOPE because it happens once at each generation as well as crash since each generation is no more intelligent than the previous one, guess why there are so many gullibles at each period. Also you seem to forget something: inflation, it is even worst today as gov has manages to use accounting tricks to hide it ... like the Big Brokers and Firms which have been accused to do so except that gov seems to be above the law for that.
P.S.: and don't pretend that I predict the crash for now since I said that the buble can continue in a few years to 16000 on my model at the moment. There will be probably a mini crash before but the big one will have to coïncide technically and fondamentally with the retirement ... when people read the REAL MONEY can you tell me WHY THE THIEFS OF WALL STREET WILL LET THEM TAKE THEIR MONEY BACK HUH ? If you ignore that there is one thing that drives the market is LIQUIDITY and what is the origin of LIQUIDITY ? If you can't answer the question you don't understand much about the mechanism of stock market.
P.S.: and don't pretend that I predict the crash for now since I said that the buble can continue in a few years to 16000 on my model at the moment. There will be probably a mini crash before but the big one will have to coïncide technically and fondamentally with the retirement ... when people read the REAL MONEY can you tell me WHY THE THIEFS OF WALL STREET WILL LET THEM TAKE THEIR MONEY BACK HUH ? If you ignore that there is one thing that drives the market is LIQUIDITY and what is the origin of LIQUIDITY ? If you can't answer the question you don't understand much about the mechanism of stock market.
This is an integral official document that shows that the Congress has tried to regain the power of Money for the people but in vain as it is judged that "the people do not know what is good for them".
MONEY FACTS
SUBCOMITTEE ON DOMESTIC FINANCE
COMMITTEE ON BANKING AND CURRENCY
HOUSE OF REPRESENTATIVES
88th Congress, 2nd Session
SEPTEMBER 21, 1964
http://landru.myhome.net/monques/moneyfacts.html#MONEY
CONTENTS
--------------------------------------------------------------------------------
Letter of transmittal to members of the Subcommittee on Domestic Finance...
Chapter I: Preface...
Chapter II: What is money?...
Chapter III: How is money created?...
Chapter IV: Why was the Federal Reserve Act passed?...
Chapter V: Who determines the money supply?...
Chapter VI: Who owns the Federal Reserve banks?...
Chapter VII: Why was the Federal Deposit Insurance Act passed?...
Chapter VIII: How the Federal Reserve provides public funds to the private banks...
Chapter IX: What is monetary policy?...
Chapter X: What improvements are needed in the money system?...
LETTER OF TRANSMITTAL
--------------------------------------------------------------------------------
September 21, 1964.
To members of the Subcommittee on Domestic Finance:
Transmitted herewith for the use of the Subcommittee on Domestic Finance of the Banking and Currency Committee, and other members of the committee and the Congress, as well as the general public, is a series of questions and answers on the basic workings of our monetary system. It is a supplement to "A Primer on Money" and is designed to highlight in question and answer form the basic points brought out in the "Primer." It has also been indexed so as to facilitate its use.
It is hoped that "Money Facts" will prove useful to students and all others interested in further study of and improvement in our monetary system and that it will stimulate serious thought, research and discussion of the critical issues involved.
Wright Patman, Chairman.
Exerpt:
164. Is the "trustee" notion of monetary policymaking alien to American
democracy?
Of course. The claim that the people do not know what is good for them, and
therefore a small group of men should be given the power to make decisions
and then to take action without being held accountable to the people is 100
percent undemocratic. The essence of democracy is that the people decide for
themselves through their elected officials, what is good or bad for them.
Further, to give monetary control to a group like the Federal Reserve is to
hand over enormous power unfettered by responsibility to anyone. In a
democracy, especially the American form, the holders of power, almost
without exception, are responsible to the people, through elected officials
in the use of this power. The Federal Reserve's ideas that they should be
considered trustees rather than stewards runs counter to anything that
Americans have believed about power and responsibility since the founding of
the Republic.
MONEY FACTS
SUBCOMITTEE ON DOMESTIC FINANCE
COMMITTEE ON BANKING AND CURRENCY
HOUSE OF REPRESENTATIVES
88th Congress, 2nd Session
SEPTEMBER 21, 1964
http://landru.myhome.net/monques/moneyfacts.html#MONEY
CONTENTS
--------------------------------------------------------------------------------
Letter of transmittal to members of the Subcommittee on Domestic Finance...
Chapter I: Preface...
Chapter II: What is money?...
Chapter III: How is money created?...
Chapter IV: Why was the Federal Reserve Act passed?...
Chapter V: Who determines the money supply?...
Chapter VI: Who owns the Federal Reserve banks?...
Chapter VII: Why was the Federal Deposit Insurance Act passed?...
Chapter VIII: How the Federal Reserve provides public funds to the private banks...
Chapter IX: What is monetary policy?...
Chapter X: What improvements are needed in the money system?...
LETTER OF TRANSMITTAL
--------------------------------------------------------------------------------
September 21, 1964.
To members of the Subcommittee on Domestic Finance:
Transmitted herewith for the use of the Subcommittee on Domestic Finance of the Banking and Currency Committee, and other members of the committee and the Congress, as well as the general public, is a series of questions and answers on the basic workings of our monetary system. It is a supplement to "A Primer on Money" and is designed to highlight in question and answer form the basic points brought out in the "Primer." It has also been indexed so as to facilitate its use.
It is hoped that "Money Facts" will prove useful to students and all others interested in further study of and improvement in our monetary system and that it will stimulate serious thought, research and discussion of the critical issues involved.
Wright Patman, Chairman.
Exerpt:
164. Is the "trustee" notion of monetary policymaking alien to American
democracy?
Of course. The claim that the people do not know what is good for them, and
therefore a small group of men should be given the power to make decisions
and then to take action without being held accountable to the people is 100
percent undemocratic. The essence of democracy is that the people decide for
themselves through their elected officials, what is good or bad for them.
Further, to give monetary control to a group like the Federal Reserve is to
hand over enormous power unfettered by responsibility to anyone. In a
democracy, especially the American form, the holders of power, almost
without exception, are responsible to the people, through elected officials
in the use of this power. The Federal Reserve's ideas that they should be
considered trustees rather than stewards runs counter to anything that
Americans have believed about power and responsibility since the founding of
the Republic.
Since some pople seems to ignore the tight relation between Money creation (ie debts) and level of Taxes:
47. Where does the Federal Reserve get the money with which to create bank reserves?
It doesn't "get" the money; it creates it. When the Federal Reserve writes a check, it is creating money. This can result in an increase in bank reservesâa demand depositâor in cash; if the customer prefers cash, he can demand Federal Reserve notes, and the Federal Reserve will have the Treasury Department print them. The Federal Reserve is a total moneymaking machine. It can issue money or checks. And it never has a problem of making its checks good because it can obtain the $5 and $10 bills necessary to cover its checks simply by asking the Treasury Department's Bureau of Engraving to print them.
48. Who gave the Federal Reserve the power to create the money necessary to cover its checks?
The Congress. Because this power to create money is given by the Constitution to Congress, only the Congress can delegate this power. And this it has done in creating the Federal Reserve Systemâan agency of Congress authorized to create money.
49. How does the Federal Reserve change the money supply?
First, by increasing or decreasing the amount of bank reserves which the member banks of the Federal Reserve System have to their credit on the books of the Federal Reserve banks. Second, by regulations which tell the member banks the maximum amount of bank deposits they may create per dollar of reserves.
50. What is the formula that determines the maximum amount of money available to business and consumers?
Expressed mathematically this is a simple formula A Ã B = C where: A = Amount of bank reserves; B = Number of dollar deposits member banks may create per dollar of bank reserves; and C = Total bank deposits.
51. Can the Federal Reserve authorities change the money supply formula?
Yes. They can change either or both parts of the formula at any time, and they frequently do change one or both parts. There are certain limits set by the Federal Reserve Act to the changes the authorities can make. But these limits are extremely wide.
52. Does it make any difference which part of the formula the authorities change when they wish to increase the money supply?
Yes. Although the effect on the money supply of changing either part of the formula may be the same, the total economic effects differ depending on which part of the formula is changed. For example, when the Federal Reserve lowers reserve requirements, all of the new money is created by the commercial banks through their lending and investing activity. This obviates the necessity of transferring Government securities from private to public hands. On the other hand, when the Federal Reserve increases reserves by, say, purchasing U. S. Government securities, the interest income on these securities goes to the Federal Reserve System. Since the Federal Reserve turns over to the U. S. Treasury most of its earnings, the net effect of increasing the money supply by increasing reserves is to favor the private banking system. So, when the Federal Reserve officials decide to increase the money supply, whether they favor the U. S. Treasury or the private banks does make a differenceâin the amount of taxes you, I, and all other taxpayers must pay.
47. Where does the Federal Reserve get the money with which to create bank reserves?
It doesn't "get" the money; it creates it. When the Federal Reserve writes a check, it is creating money. This can result in an increase in bank reservesâa demand depositâor in cash; if the customer prefers cash, he can demand Federal Reserve notes, and the Federal Reserve will have the Treasury Department print them. The Federal Reserve is a total moneymaking machine. It can issue money or checks. And it never has a problem of making its checks good because it can obtain the $5 and $10 bills necessary to cover its checks simply by asking the Treasury Department's Bureau of Engraving to print them.
48. Who gave the Federal Reserve the power to create the money necessary to cover its checks?
The Congress. Because this power to create money is given by the Constitution to Congress, only the Congress can delegate this power. And this it has done in creating the Federal Reserve Systemâan agency of Congress authorized to create money.
49. How does the Federal Reserve change the money supply?
First, by increasing or decreasing the amount of bank reserves which the member banks of the Federal Reserve System have to their credit on the books of the Federal Reserve banks. Second, by regulations which tell the member banks the maximum amount of bank deposits they may create per dollar of reserves.
50. What is the formula that determines the maximum amount of money available to business and consumers?
Expressed mathematically this is a simple formula A Ã B = C where: A = Amount of bank reserves; B = Number of dollar deposits member banks may create per dollar of bank reserves; and C = Total bank deposits.
51. Can the Federal Reserve authorities change the money supply formula?
Yes. They can change either or both parts of the formula at any time, and they frequently do change one or both parts. There are certain limits set by the Federal Reserve Act to the changes the authorities can make. But these limits are extremely wide.
52. Does it make any difference which part of the formula the authorities change when they wish to increase the money supply?
Yes. Although the effect on the money supply of changing either part of the formula may be the same, the total economic effects differ depending on which part of the formula is changed. For example, when the Federal Reserve lowers reserve requirements, all of the new money is created by the commercial banks through their lending and investing activity. This obviates the necessity of transferring Government securities from private to public hands. On the other hand, when the Federal Reserve increases reserves by, say, purchasing U. S. Government securities, the interest income on these securities goes to the Federal Reserve System. Since the Federal Reserve turns over to the U. S. Treasury most of its earnings, the net effect of increasing the money supply by increasing reserves is to favor the private banking system. So, when the Federal Reserve officials decide to increase the money supply, whether they favor the U. S. Treasury or the private banks does make a differenceâin the amount of taxes you, I, and all other taxpayers must pay.
WHO DETERMINES THE MONEY SUPPLY?
93. Who appoints members of the Federal Open Market Committee?
Seven of the nineteen members of the "discussion" Committee are appointed by the President of the United States and confirmed by the Senate of the United States. Their term is 14 years. The other 12 participants at Open Market Committee meetings are elected through votes of private commercial bankers; specifically, they are the presidents of the 12 Federal Reserve banks, elected to their posts indirectly by bankers from banks which are members of the Federal Reserve System.
94. What are the most important Open Market Committee powers?
The Open Market Committee has the power to determine the Nation's supply of money and credit, and therefore, the general level of interest rates, among other things.
95. How does the Federal Reserve influence interest rates?
By open market operations, and by setting the required reserves of member banks, the Federal Reserve determines the amount available for lending. This together with the demand for loanable funds is the heart of the market for money that sets interest rates. In addition, by open market operations, the Federal Reserve can effect the level of interest rates on Government bonds. And finally, the Federal Reserve influences expectations about interest rates.
96. Why is the Federal Open Market Committee one of the most powerful groups of men in our country?
Because in many ways their power is equal to that of the President in deciding how the world's greatest economic mechanism will operate. By regulating the supply of money, the Committee can control the general level of interest rates. This in turn is one of the major determinants of the level of business activity in the country. The Committee, then, has the power to offset any action taken by anyone to stimulate or restrain the economy. This indeed is power.
97. Are current open market operations what the founders of the Federal Reserve System intended?
No. It was expected that in monetizing "eligible" short term commercial paper, the Federal Reserve would provide sufficient liquidity to sound banks in periods of need (or restrain excessive credit expansion). While the Federal Reserve was expected to exert supervisory powers, it was expected that the money supply and interest rates, would be fully responsive to business conditions. Thus the discount rate, rather than open market operations was regarded as the Federal Reserve's most important tool.
98. Why was the discount rate regarded as an important regulatory tool?
Because under the original Federal Reserve arrangement, no specific limits were placed on the amount of money the system could create. After all, if the banks had eligible paper to rediscount, then the regional bank would automatically create reserves. This raised the possibility of infinite money creation provided the banks' lending rates and the system's charges were in a fixed favorable relation. But if the system could control the discount rate, it could discourage rediscounting or borrowing from it simply by raising its discount rate high enough. At a high enough rate, the commercial banks would find no businessmen willing to borrow. Thus the supply of eligible paper available to the commercial banks would dry up and, in turn, the commercial banks would be unable to acquire more reserves by discounting. The automatic system then had a regulator; namely, the discount rate.
99. Is eligible paper discounted much today?
Very rarely.
100. Why have open market operations replaced discounting as the most important means of regulating the money supply?
Basically, because the Federal Reserve found open market operations a more sensitive tool to control the money supply. And through the years the Federal Reserve has decided that its responsibilities were not consistent with the authorization of an automatic money supply.
101. Precisely what does the Federal Open Market Committee do?
It determines the amount of government securities the Federal Reserve will buy and sell, in order to influence the level of bank reserves. In essence, the Committee determines U. S. monetary policy.
102. What functions have been left to the regional banks?
Now that discounting eligible paper is rarely used, the regional Federal Reserve banks clear checks and gather statistics and other economic data.
103. Have the intentions of the founders of the Federal Reserve System been altered by the turn to open market operations?
Yes, when the System was originally founded a struggle was waged over who would control the Federal Reserveâpublic or private interest. The solution was a compromise. But what (in 1913) was the master switch governing the money supplyâthe discount rateâwas left in the hands of a totally public bodyâthe Federal Reserve Board in Washington. This was a deliberate act. President Wilson rejected the notion of diluting the public nature of the Board when he said, "Which one of you gentlemen would have me select the presidents of railroads to be on the Interstate Commerce Commission to fix passenger rates and freight rates?"
But when Congress in 1933 and 1935 authorized the Open Market Committee, which in effect succeeded to the policymaking role of the Board, it gave private interest a firm foothold in determining monetary policyâthe money supply and the general level of interest rates. Five of the twelve voting members of the Open Market Committee are regional bank presidents. These men hold their offices through the votes of bank directors, two-thirds of whom are elected by private bankers. The other seven bank presidents, of course, participate in the discussions of the Open Market Committtee. The upshot is that men whose views must meet the test of the private bank-selected directors help determine the Government's monetary policy. A purely public group has given way to a mixed body with questionable qualifications to represent the public interest.
93. Who appoints members of the Federal Open Market Committee?
Seven of the nineteen members of the "discussion" Committee are appointed by the President of the United States and confirmed by the Senate of the United States. Their term is 14 years. The other 12 participants at Open Market Committee meetings are elected through votes of private commercial bankers; specifically, they are the presidents of the 12 Federal Reserve banks, elected to their posts indirectly by bankers from banks which are members of the Federal Reserve System.
94. What are the most important Open Market Committee powers?
The Open Market Committee has the power to determine the Nation's supply of money and credit, and therefore, the general level of interest rates, among other things.
95. How does the Federal Reserve influence interest rates?
By open market operations, and by setting the required reserves of member banks, the Federal Reserve determines the amount available for lending. This together with the demand for loanable funds is the heart of the market for money that sets interest rates. In addition, by open market operations, the Federal Reserve can effect the level of interest rates on Government bonds. And finally, the Federal Reserve influences expectations about interest rates.
96. Why is the Federal Open Market Committee one of the most powerful groups of men in our country?
Because in many ways their power is equal to that of the President in deciding how the world's greatest economic mechanism will operate. By regulating the supply of money, the Committee can control the general level of interest rates. This in turn is one of the major determinants of the level of business activity in the country. The Committee, then, has the power to offset any action taken by anyone to stimulate or restrain the economy. This indeed is power.
97. Are current open market operations what the founders of the Federal Reserve System intended?
No. It was expected that in monetizing "eligible" short term commercial paper, the Federal Reserve would provide sufficient liquidity to sound banks in periods of need (or restrain excessive credit expansion). While the Federal Reserve was expected to exert supervisory powers, it was expected that the money supply and interest rates, would be fully responsive to business conditions. Thus the discount rate, rather than open market operations was regarded as the Federal Reserve's most important tool.
98. Why was the discount rate regarded as an important regulatory tool?
Because under the original Federal Reserve arrangement, no specific limits were placed on the amount of money the system could create. After all, if the banks had eligible paper to rediscount, then the regional bank would automatically create reserves. This raised the possibility of infinite money creation provided the banks' lending rates and the system's charges were in a fixed favorable relation. But if the system could control the discount rate, it could discourage rediscounting or borrowing from it simply by raising its discount rate high enough. At a high enough rate, the commercial banks would find no businessmen willing to borrow. Thus the supply of eligible paper available to the commercial banks would dry up and, in turn, the commercial banks would be unable to acquire more reserves by discounting. The automatic system then had a regulator; namely, the discount rate.
99. Is eligible paper discounted much today?
Very rarely.
100. Why have open market operations replaced discounting as the most important means of regulating the money supply?
Basically, because the Federal Reserve found open market operations a more sensitive tool to control the money supply. And through the years the Federal Reserve has decided that its responsibilities were not consistent with the authorization of an automatic money supply.
101. Precisely what does the Federal Open Market Committee do?
It determines the amount of government securities the Federal Reserve will buy and sell, in order to influence the level of bank reserves. In essence, the Committee determines U. S. monetary policy.
102. What functions have been left to the regional banks?
Now that discounting eligible paper is rarely used, the regional Federal Reserve banks clear checks and gather statistics and other economic data.
103. Have the intentions of the founders of the Federal Reserve System been altered by the turn to open market operations?
Yes, when the System was originally founded a struggle was waged over who would control the Federal Reserveâpublic or private interest. The solution was a compromise. But what (in 1913) was the master switch governing the money supplyâthe discount rateâwas left in the hands of a totally public bodyâthe Federal Reserve Board in Washington. This was a deliberate act. President Wilson rejected the notion of diluting the public nature of the Board when he said, "Which one of you gentlemen would have me select the presidents of railroads to be on the Interstate Commerce Commission to fix passenger rates and freight rates?"
But when Congress in 1933 and 1935 authorized the Open Market Committee, which in effect succeeded to the policymaking role of the Board, it gave private interest a firm foothold in determining monetary policyâthe money supply and the general level of interest rates. Five of the twelve voting members of the Open Market Committee are regional bank presidents. These men hold their offices through the votes of bank directors, two-thirds of whom are elected by private bankers. The other seven bank presidents, of course, participate in the discussions of the Open Market Committtee. The upshot is that men whose views must meet the test of the private bank-selected directors help determine the Government's monetary policy. A purely public group has given way to a mixed body with questionable qualifications to represent the public interest.
----------------------------------
Prae
I consider Mr. Fleckenstein, the silver company director/officer to be reliable;
paraphrasing, said within the last month ,he figures Buffet sold it long ago.
Thats the mr. Fleckrnstein, who is Jim Cramer 's friend.
