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Sushi
16th September 2008, 17:22
Just stumbled upon something... I think this is a must read

http://www.realclearmarkets.com/articles/2008/09/rep_ted_poe_is_right_about_the.html


The U.S. government currently owns about 215 million ounces of gold. At the current market price of gold ($752/oz), this is worth about $162 billion. If we emptied Fort Knox and converted all of our gold reserves to the gold coins that Ron Paul advocates, this would provide enough gold "dollars" to replace just under 19% of the paper dollars currently in circulation (i.e., the monetary base). If we took Ron Paul's proposal one step farther and went to 100% reserve banking, we would suddenly have less than one eighth as many "dollars" as we have now.

Of course, we wouldn't have to use today's market price of gold. At a higher gold price, the same amount of gold would allow us to make more "dollars" of gold coins. However, to replace all of our dollars of paper currency with our available gold would require a gold price of $4050/oz. The gold price would have to be pegged at $6500/oz to replace all of the "dollars" of M1, which is what we would have to do in order to implement 100% reserve banking.


Fortunately, it is possible to stabilize the dollar and create an economic boom at the same time. Judge Poe's bill, H.R. 6690, would do this. It would require the Federal Reserve to use its Open Market operations to bring the COMEX price of gold down to $500/oz and keep it there. H.R. 6690 would also give the economy a powerful supply-side stimulus in the form of "first year expensing" of all capital investment.

H.R. 6690 defines the value of the dollar in terms of the market value of gold, but does not use gold as money. In this way, Judge Poe's bill would not create a new and potentially unlimited source of demand for a scarce commodity. This is the key difference between H.R. 6690 and both Ron Paul's approach and the classic gold standard.

Ron Paul believes that governments should not have the power to create money. However, the U.S. Constitution gives the Federal government exactly that power. Article I, Section 8 of the Constitution provides that: "The Congress shall have Power...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures..."

Ron Paul argues that paper currency amounts to "bills of credit" and that the Constitution prohibits the Federal government from issuing these, and from making them "legal tender". However, the only place in the Constitution where these issues are mentioned is Article I, Section 10, which merely denies these powers to the States. Ron Paul believes that the Framers should have denied these powers to Congress as well, but they did not.

I think this is the sickest thing Ive read in a long time...

Kelly
16th September 2008, 18:05
The guy that wrote that article doesn't even seem to understand that the "Fed" is NOT a government agency.

This is real scary. It puts unlimited power in their hands, and if they can control COMEX that means that they control the price of gold for the world.

Is the rest of the world going to take this laying down?

hekura
16th September 2008, 18:35
"Is the rest of the world going to take this laying down?"

Kelly, your question got me to thinking...if I were a trader in the UK, or anywhere...I would be royally pissed about this. I suspect there are many who are. Why wouldn't it be logical to focus some of this "pissed-off-ness", on the part of the foreign "proletariat" into pressuring OUR politics? Within their own countries, people have variable levels of influence...and their opinions DO count, with regard to the US as a world power...certainly in the case of setting metal prices worldwide. Has anyone thought of "politicking" for the US in other countries? International news coverage (which is a little less controlled than US coverage) of such a thing could provide a venue for TRUTH.

...am I just hallucinating?