Posted on 08/03/2008 5:07:56 PM PDT by shrinkermd
If a bank had 1 ounce of gold for every $10,000 in loans, how would that prevent this mess?
Because it is not held in universal esteem and only a few would even bother to purchase it and no individual could store or sell it.
“What in the world would prompt someone to even look at that metric?”
The desire to sell gold on the margin to idiots.
Me, I advise that, if gold becomes the medium of exchange, skip gold and go directly to canned goods and shotguns.
No, the Fed does that, not the Treasury.
He has 100% control over executive orders.
Which didn't allow immediate drilling anyway. Congress has to act.
He supported big budget increases for the IRS and SEC so they could harass businesses and individuals. He supported Sarbanes Oxley which has had a negative impact on our economy. And he supported amnesty for illegals.
You are correct.
But the best thing he did for the economy was to cut taxes. The economy blasted off for 6 years. Revenues to the Treasury increased for most of those years. He tried (poorly) to privatize some of SS.
Economically he was one of the better presidents.
The Fed's actions do affect the dollar's value. However intervention is done by the Treasury at the direction of the president, usually in coordination with other countries and their treasuries.
The Treasury doesn't have the money to intervene. Historically it has been the Fed that intervenes.
In Japan, the government borrows money from the Bank of Japan and then enters the forex market with it.
It's not like the Treasury can take money from the general fund and buy a couple billion euros. The Fed can do it all day long.
Absolutely.
It's not like the Treasury can take money from the general fund and buy a couple billion euros.
Can you see the debate on the Senate floor? LOL!
The Fed can do it all day long.
You bet.
Whadday mean by all that!? It's right there in the air. You store it there. When you want it, you simple extract it. What could be more convenient?
No more of that dull, heavy metal. It's expensive to move and to guard. And if you drop it, you break your toe or your dog's back.
Helium is just the opposite! And, it's fun.
It would have prevented banks from making loans in excess
of a predetermined gold to loan ratio. in other words, most
loans would be backed by gold reserves and the amount loaned
out would be limited by that ratio. As it stands, bank loans
are backed by nothing: numbers on a piece of paper.
Currently, they hold a certain portion of their deposits in reserve, why would gold have been better?
most loans would be backed by gold reserves and the amount loaned out would be limited by that ratio.
Right. And that would have prevented them from making bad loans how?
As it stands, bank loans are backed by nothing: numbers on a piece of paper.
There were no bank failures when we were on the gold standard, right?
Good for you....better than $1700 if you ever need a little Christmas money.
I did some Googleization, and found a place called Midwest Refineries that "in theory" would pay a lot better than the coin shop we used......92% of daily market on your coins. I'll be crossing my fingers and mailing them our 1/4 ounce Y2K coins shortly.
RE: current bank reserves: These “reserves” are nothing but numbers on a piece of paper that are not backed by any
asset of true value.
RE: making bad loans: If their loans were limited by the
amount of gold in reserve, they would be more careful to not exceed that reserve.
RE; bank failures: regardless of the monetary base, there
are bad apples. However, depositors could depend upon
being made whole with something of value, gold.
These reserves are either cash in the vault or a balance in their account at the Fed. A balance that could be turned into cash.
RE: making bad loans: If their loans were limited by the amount of gold in reserve, they would be more careful to not exceed that reserve.
Loans are limited now by cash in reserve. Why does 1000 ounces of gold (worth about $900,000) protect the bank more than cash of $900,000?
RE; bank failures: regardless of the monetary base, there are bad apples.
I'm glad you see that gold didn't magically protect banks in the past. Not sure why you think it would be different today.
However, depositors could depend upon being made whole with something of value, gold.
Or cash.
Have you checked the value of the dollar relative to other
currencies lately? It’s way down. With the Fed dumping
dollars from airplanes and true inflation at 10% to 12%:
the dollar is not fairing very well.
Yes.
So how would gold prevent banks from making bad loans? How would 1000 ounces of gold (worth about $900,000) protect the bank more than cash of $900,000?
Currently, because of inflation and the cheapness of
dollars, it takes an ever increasing number of dollars
to maintain reserves.
Wrong. $1,000,000 in reserves covers the same $$ amount of loans, whether the dollar is worth 90 Yen or 120 Yen.
Gold has dropped about 15% from the recent peak. Should banks have to reduce loans by 15%?
The issue is not dollar value relative to other currencies
but inflation pure and simple: it now takes many more dollars to buy the same asset than it took a year ago.
A bank may have to add gold reserves or reduce gold reserves
from time to time:so what?
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