Quixote2
17th June 2010, 01:32 PM
Snipped from the latest Gekko vs Denninger debate(?):
http://www.zerohedge.com/article/mr-denninger-and-gold-%E2%80%93-part-deux-or-rebuttal-all-fiat-money-apologists#comment-418737
Confiscation in 1933 and the de facto confiscation in 1973 with the end of Bretton Woods, did not serve to "f*ck" gold bugs or little people. They were to protect the FEDERAL RESERVE from a bank run.
If people recall back to the 1930s, there were bank runs all over the place. The Federal Reserve Note came into legal existence in 1913. And, if one recalls, ALL notes at that time were *backed* by silver or gold.
Fearing a bank run on the "dollar," FDR simply confiscated the gold and in actuality forced its delivery to the Fed in exchange for FRNs. Simple as that. The fear was a run on the Fed's holdings, the exposure of a massive fractional lending operation, and the consequent collapse of the dollar. It was to protect the FED, not to screw people.
The 1933 seizure really WAS just that simple...it was no different from what got usury clan goldsmiths lynched throughout the middle ages for doing the same thing, lending what they did not have, circulating unbacked notes purporting to be backed.
When Nixon closed the BW gold window, it was the same thing, effective seizure of gold, the notes went from backed to unbacked, bye bye gold you thought you were entitled to. Again, the reserves had to be protected from a run - the period leading up to that closure are very clear in a historical sense as far as what was going on in the Gold Pool, what France was up to, etc.
The Fed very much IS the dollar now, it's a FRN. But at this point there's little than can be run on...wtf does the Fed promise in redemption for its notes? NOTHING.
Another seizure event at this point or an attempt thereon, would simply show that the jig is up, because it would a desperate measure to try to move the FRN to some pseudo-backed status, essentially announcing to the world that it was at or near a point of collapse as a true fiat instrument. I would expect dollar collapse rather than orderly turning in of private gold. Kleptocratic governments full of corrupt bureaucrats cannot expect orderly and patriotic citizens to do what they're told. This ISN'T 1933 anymore, it's not even 1973. And the hands the gold is in...let's look at that as well. Is it your average sheeple that is out there sitting on krugerrands or is it more the Don't Tread on Me type?
If they come for something, it will be pensions and 401ks, not gold. Nations only try to back currencies when they have to and are on their last legs...to try to give value to the valueless.
Now it is obvious, the next bank run is when foreign banks (China etc) do not roll over their Fed notes (net withdrawal of money). When this bank run needs to be stopped, the amount of gold or silver held by the masses is inadequate to confiscate. What is available to seize or confiscate and use to buy the notes for financing the US gooberment is our IRAs and retirement funds. Just replace the market holdings with fresh fed reserve and treasury bonds, bills, and notes.
The end is near. Maybe I should withdraw my IRA and take the hit before I get rolled into an investment managed by the social security administration.
http://www.zerohedge.com/article/mr-denninger-and-gold-%E2%80%93-part-deux-or-rebuttal-all-fiat-money-apologists#comment-418737
Confiscation in 1933 and the de facto confiscation in 1973 with the end of Bretton Woods, did not serve to "f*ck" gold bugs or little people. They were to protect the FEDERAL RESERVE from a bank run.
If people recall back to the 1930s, there were bank runs all over the place. The Federal Reserve Note came into legal existence in 1913. And, if one recalls, ALL notes at that time were *backed* by silver or gold.
Fearing a bank run on the "dollar," FDR simply confiscated the gold and in actuality forced its delivery to the Fed in exchange for FRNs. Simple as that. The fear was a run on the Fed's holdings, the exposure of a massive fractional lending operation, and the consequent collapse of the dollar. It was to protect the FED, not to screw people.
The 1933 seizure really WAS just that simple...it was no different from what got usury clan goldsmiths lynched throughout the middle ages for doing the same thing, lending what they did not have, circulating unbacked notes purporting to be backed.
When Nixon closed the BW gold window, it was the same thing, effective seizure of gold, the notes went from backed to unbacked, bye bye gold you thought you were entitled to. Again, the reserves had to be protected from a run - the period leading up to that closure are very clear in a historical sense as far as what was going on in the Gold Pool, what France was up to, etc.
The Fed very much IS the dollar now, it's a FRN. But at this point there's little than can be run on...wtf does the Fed promise in redemption for its notes? NOTHING.
Another seizure event at this point or an attempt thereon, would simply show that the jig is up, because it would a desperate measure to try to move the FRN to some pseudo-backed status, essentially announcing to the world that it was at or near a point of collapse as a true fiat instrument. I would expect dollar collapse rather than orderly turning in of private gold. Kleptocratic governments full of corrupt bureaucrats cannot expect orderly and patriotic citizens to do what they're told. This ISN'T 1933 anymore, it's not even 1973. And the hands the gold is in...let's look at that as well. Is it your average sheeple that is out there sitting on krugerrands or is it more the Don't Tread on Me type?
If they come for something, it will be pensions and 401ks, not gold. Nations only try to back currencies when they have to and are on their last legs...to try to give value to the valueless.
Now it is obvious, the next bank run is when foreign banks (China etc) do not roll over their Fed notes (net withdrawal of money). When this bank run needs to be stopped, the amount of gold or silver held by the masses is inadequate to confiscate. What is available to seize or confiscate and use to buy the notes for financing the US gooberment is our IRAs and retirement funds. Just replace the market holdings with fresh fed reserve and treasury bonds, bills, and notes.
The end is near. Maybe I should withdraw my IRA and take the hit before I get rolled into an investment managed by the social security administration.