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Vendico
03-30-2008, 05:19 AM
but if we move to a gold standard it might fix it.

The idea would for the government to pay for every homeowners mortgage out right. It would stop the foreclosure crises. It will pay off the banks. I'm sure a lot of other bad things would stop. It would kill the dollar overseas though. But I think if we would phase in gold standard at the same time, it might fix it.

I dunno, just a random thought.

jrich4rpaul
03-30-2008, 07:47 AM
This theory assumes that the government is actually looking out for us/America.

Therefore, it's already dead in the water.

Aratus
03-30-2008, 08:04 AM
folks, the "COMPLETE Tx Results" thread
clued me onto an old JFK era order... so

CAREFULLY LOOK UP THIS OLD
PERHAPs NEVER RESCENDED ORDER!

Pres. John F. Kennedy's Executive Order 11110
http://www.john-f-kennedy.net/thefederalreserve.htm


if it implies what it does, i think we can footnote this
for all transition arguements we have for RON PAUL's
FED + MONEY between now an' the glorious A.D year 2012 -!-

Unspun
03-30-2008, 08:05 AM
but if we move to a gold standard it might fix it.

The idea would for the government to pay for every homeowners mortgage out right. It would stop the foreclosure crises. It will pay off the banks. I'm sure a lot of other bad things would stop. It would kill the dollar overseas though. But I think if we would phase in gold standard at the same time, it might fix it.

I dunno, just a random thought.

Where does this money come from to pay off the banks?

Bradley in DC
03-30-2008, 08:16 AM
Where does this money come from to pay off the banks?

Trees.

Unspun
03-30-2008, 08:19 AM
Trees.

“Government is the only agency which can take a useful commodity like paper, slap some ink on it, and make it totally worthless.” - Ludwig von Mises

:p

Bradley in DC
03-30-2008, 08:25 AM
“Government is the only agency which can take a useful commodity like paper, slap some ink on it, and make it totally worthless.” - Ludwig von Mises

Excellent, thanks!

liberteebell
03-30-2008, 08:29 AM
folks, the "COMPLETE Tx Results" thread
clued me onto an old JFK era order... so

CAREFULLY LOOK UP THIS OLD
PERHAPs NEVER RESCENDED ORDER!

Pres. John F. Kennedy's Executive Order 11110
http://www.john-f-kennedy.net/thefederalreserve.htm


if it implies what it does, i think we can footnote this
for all transition arguements we have for RON PAUL's
FED + MONEY between now an' the glorious A.D year 2012 -!-

Well, that's interesting. Wonder if Ron Paul's outspokenness regarding the federal reserve had anything to do with his campaign suddenly becoming DOA. In other words, I wonder if he was threatened...

soapmistress
03-30-2008, 08:32 AM
Fantastic! Instead of putting the government in charge of redistribution of wealth, we'll add the extra chains to those shackles and pile on the redistribution of our debt too. :(

liberteebell
03-30-2008, 08:37 AM
Trees.

LOL!

I don't have a clue as to the ins and outs of doing such a thing but if there have to be bail-outs (the fact that the gubmint doesn't give a damn about Americans notwithstanding), why wouldn't there be any interest in helping get the homeowners facing foreclosure into restructured loans that they can afford and eating the rest? It sure seems to me that it would be a lot cheaper than bailing out all the banks and banks don't want to "own" homes anyway. In my mind, this would also help stabilize the housing industry by price stability and less inventory on the market.

Somebody please tell me why this wouldn't make some sense.

NBTxn4RP
03-30-2008, 09:12 AM
Well....if the government is going to pay of those mortgages in foreclosure, then I want them to pay off my mortgage too. And then, what about my parent's home, which is already paid off - maybe they should get reimbursed. And when my sister buys her home...well, maybe the government should just give her one....

It would open up and whole new can o' worms...

soapmistress
03-30-2008, 09:25 AM
A bail out would only reinforce the bad lending habits of these banks!

If they get stuck "owning" these homes and are forced to sell them off cheap and eat the rest, perhaps they will start giving home loans only to those who understand and afford them. That's not discrimination - it is living and borrowing within our means.

If these banks were your children who had made poor choices, would you bail them out?

If these borrowers were your kids who dug thier own debt-hole, would you bail 'em out?

There's such a huge disconnect between the way we would run our households and the way we expect government to run this country.

Aratus
03-30-2008, 09:28 AM
we tether money to greenbacks because printing is cheap, franking is cheap.
a silver note is a voucher, you take an old bill to the treasury, you get a small piece
of silver. we have tariff duties on our ports because they are a tax on FOREIGN goods.
we clip people's wages for social secuirty, and tell them the fund won't be dissipated
by a string of political hacks. the young pay for their elders and someone elses elders
when they work. we tent to have extate taxes that clip you as you go six feet under
or something like that. we also TAX sin, hense booze and tobacco. we have many ways
to raise revenue. GOV'T BONDs spring to mind! i could go on. having metal back paper
is why there is a gold and silver ratio standard. otherwise we ain't worth a continental.

we could have lesser metals back lesser bills. fort knox bars for $500 and up via gold...
silver etc for 1+2 dollar notes and above! this as copper soars in price. we need stockpiles
of strategic metals. not to encourage a looting of gov't depots and stockpiles akin to
the legendary TEAPOT DOME SCANDAL, yet mindful of what a gov't military related
war-time suppy system does in peace-time, why not have RON PAUL streamline all
this as he gets in office. LETs look at what FDR did from 1933 to 1935 as we debate
either 2009 to 2011 or alternatively the years 2013 to 2015 if we all be so lucky!!!
WE NEED TO DO MORE THAN RED PENCIL NUTTY PROJECTS, WE NEED A TRUE REFORM!

Aratus
03-30-2008, 09:32 AM
folks, lets like the 1964 episcopalian frugality of good ol' AU~H20!

liberteebell
03-30-2008, 09:52 AM
A bail out would only reinforce the bad lending habits of these banks!

If they get stuck "owning" these homes and are forced to sell them off cheap and eat the rest, perhaps they will start giving home loans only to those who understand and afford them. That's not discrimination - it is living and borrowing within our means.

If these banks were your children who had made poor choices, would you bail them out?

If these borrowers were your kids who dug thier own debt-hole, would you bail 'em out?

There's such a huge disconnect between the way we would run our households and the way we expect government to run this country.


Oh ABSOLUTELY!! I couldn't agree more! I believe in natural and logical consequences, also for my children, and I DON'T believe in rewarding bad behaviour. There should be no disconnect in the way we run our households and the way we expect government to run our country. But there is.

My point is, it appears that the taxpayers are going to be forced to finance bailouts of some sort. As a taxpayer, I'd rather bail out my fellow taxpayers, even if they made poor decisions, than I would a bunch of banks that will only continue looking for the next scam.

IF there are going to be bailouts, I'm thinking that helping restructure loans for people, ONE TIME ONLY, rather than banks, would help settle the mess that the housing market is in. I believe that there are actually a lot of people who would and could continue paying their mortgage if they got some restructuring. The fact is that many people could have afforded the resets in their loans had the costs of energy, food, property taxes and insurance not gone up in the meantime.

Sure, there will still be plenty of people that will simply walk away from their homes and mortgages, no matter what, and the banks should have to eat those loans.

It's just a thought.

banjojambo9
03-30-2008, 09:54 AM
[QUOTE=Vendico;1376439]but if we move to a gold standard it might fix it.

The idea would for the government to pay for every homeowners mortgage out right. It would stop the foreclosure crises. It will pay off the banks. I'm sure a lot of other bad things would stop. It would kill the dollar overseas though. But I think if we would phase in gold standard at the same time, it might fix it.

I dunno, just a random thought.[/QUO
mortgage revolt!!!

TruthAtLast
03-30-2008, 12:14 PM
but if we move to a gold standard it might fix it.

The idea would for the government to pay for every homeowners mortgage out right. It would stop the foreclosure crises. It will pay off the banks. I'm sure a lot of other bad things would stop. It would kill the dollar overseas though. But I think if we would phase in gold standard at the same time, it might fix it.

I dunno, just a random thought.

what about all of the millions of people who DIDN'T make bad investments and DIDN'T try to buy a house they really couldn't afford. They get screwed?

MoneyWhereMyMouthIs2
03-30-2008, 12:54 PM
what about all of the millions of people who DIDN'T make bad investments and DIDN'T try to buy a house they really couldn't afford. They get screwed?

The only loser in this should be those who made and sold (and possibly bought) bad paper.

Karrl
03-30-2008, 01:05 PM
http://www.lewrockwell.com/reisman/reisman44.html

Gold as the Source of New Bank Capital and Reserves

The Federal Reserve System holds approximately 260 million ounces of gold. The market price of gold recently reached $1,000 per ounce. This means that the Fed’s gold can easily be thought of as an asset with a market value of roughly $260 billion.

As an initial approach to understanding the solution to our problem, let us assume that the Federal Reserve declared its gold holding as being held in trust for the benefit of the American banking system, and proceeded to allow every bank to enter on the asset side of its balance sheet a portion of this gold corresponding to its share of the total of the $2.5 trillion of checking accounts presently in the economic system. The banks would not physically possess the gold but only book entries corresponding to it.

The gold entered on banks’ balance sheets could also count as equivalent new and additional bank reserves. Thus the measure would simultaneously add $260 billion of new and additional bank reserves in the form of gold as well as $260 billion of new and additional bank capital. The reserves and the capital would both be essentially permanent.

In order to prevent the monetization of the gold reserves, the Fed could mandate a permanent required gold reserve against all checking deposits – those counted in M1, those counted as “sweeps,” and those counted as retail money funds – in the ratio of $260 billion to $2.5 trillion, i.e., a little over 10 percent.

A major shortcoming of this very simple solution is that the addition of $260 billion in gold to bank assets would probably be insufficient. It almost certainly would be if the Fed decided, as it should, to take back its government securities from the investment banks and give them back their securities of far less value. That would probably bankrupt most or all of the investment banks. Furthermore, because the commercial banks are their main creditors, the assets of the investment banks would move into the possession of the commercial banks and do so, of course, at a far lower value than the loans that had been made to the investment banks. Thus, the present capital of the commercial banks and much more would be wiped out.

Accordingly, the book value placed on the Fed’s gold holding needs to be substantially higher than $1,000 per ounce, if it is to result in the creation of sufficient bank capital and reserves. The question is, how much higher?

The most logical answer to this question was supplied as far back as the 1950s by the late Murray Rothbard, who argued for the establishment of a 100-percent-reserve gold standard by means of pricing the Fed’s gold stock at whatever price was necessary to make it equal the outstanding supply of money.

Taking the outstanding supply of money today as being $3.3 trillion, Rothbard’s proposal implies a gold price of approximately $12,700 per ounce. At such a price, the Fed’s gold stock would be sufficient to provide a 100 percent reserve against both all US checking deposits and all US currency.

The provision of a 100 percent reserve would be an immediate guarantee against any reduction in the supply of checkbook money. This would obviously be the case if the banks simply paid out gold in response to customers’ demands for the redemption of their checking deposits. At $12,700 per ounce, the banks and the Fed would have enough gold to redeem every single dollar of checking deposits and currency in the economic system. (That’s the meaning of a 100 percent reserve.)

Of course, in the circumstances envisioned here, the banks would not pay out physical gold. But they would have the ability to pay out paper currency to the full extent of outstanding checking deposits, and that currency would have an undiminished gold backing at the price of gold of $12,700 per ounce. Thus whatever the recession that might develop in the months ahead, it would be contained, insofar as the money supply of the country would not be reduced. That would guarantee a major reduction in the possible severity of what might otherwise develop.

This 100-percent-reserve gold standard as thus far described would obviously be a long way from the full-bodied 100-percent-reserve gold standard that Rothbard envisioned, and which I myself have elaborated upon and advocated. It would be a standard that for some time was largely just nominal, in that the actual gold of the monetary system would still be in the possession of the Federal Reserve System. Nor would there yet be any obligation of the Fed to buy or sell gold at the price of $12,700 per ounce or at any other price. The purpose of the system I have described would simply be the twofold one of providing reserves sufficient to prevent any possible reduction in the supply of checkbook money and also of providing capital to banks sufficient to substantially more than offset the losses otherwise resulting from a decline in the value of banks’ assets.[5]

Indeed, given that what would be present is an addition to the assets of the banking system in an amount equal to the full magnitude of outstanding fiduciary media, i.e., of $2.5 trillion of checking deposits minus $40 billion of presently existing standard money reserves, the overwhelming likelihood is that the banks would be handed far too much capital. Even with losses of $1 trillion on their existing assets, they would still stand to gain practically $1.5 trillion in new and additional capital. Such a bonanza would not be justifiable. The solution would be to pass most of it on to the banks’ depositors in the form of bank stock or bonds paid as a dividend on their accounts.

It is not possible in the space of one article to explore, beyond the very limited extent to which I’ve done so,[6] the problems and the solutions entailed in moving on to the full-bodied 100-percent-reserve gold standard that is the ultimate objective of my proposal. Under such a gold standard, paper currency and checking deposits will, of course, be fully convertible into gold, physical gold coin will enjoy wide circulation, and the supply of gold in the country will be free to increase or decrease simply in response to market forces.

All I have tried to show here is how the twin problems of a lack of bank capital and of bank reserves, which are the core of the threat of deflation, could be solved by means of establishing the framework of a 100-percent-reserve gold monetary system.

Needless to say, such a system would not only end the threat of deflation, but, equally important, it could end the threat of inflation as well. For if it were actually followed, the increase in the quantity of money would be limited to the increase in the supply of gold, which is extremely modest compared with increases in the supply of irredeemable paper money. This is because gold is rare in nature and costly to extract. Irredeemable paper money in contrast is virtually costless to produce and is potentially as abundant as the supply of currency-sized sheets of paper, indeed, as abundant as the size of the largest number that can be printed on all such sheets of paper.

Above all, the solution I have proposed would constitute a major step toward the establishment of a full-bodied precious metal monetary system and thus toward ultimately eliminating the government’s physical control over the money supply and all of the violations of individual freedom that that control represents and makes possible.

And what is more, it could be accomplished at a cost to the Federal Reserve not of hundreds of billions of dollars – the sums the Fed is risking in exchanging its government securities for bank assets of vastly lower value – not for the $30 billion it has risked to bail out just Bear Stearns, but for a little more than $11 billion! Just $11 billion is the value at which the Fed carries its gold stock on its balance sheet, at a price of gold of approximately $42 per ounce.

Thus, to say it all in one sentence, the threat of massive deflation can be eliminated, the threat of inflation ended, and the actual and potential domain of economic freedom greatly expanded, for $11 billion – an $11 billion that would not even be an out-of-pocket expense to anyone but merely a balance-sheet charge on the books of the Federal Reserve System when it deducted its gold holding from its balance sheet and added it to the balance sheets of the banks.

amy31416
03-30-2008, 01:26 PM
Trees.

Do you mean to tell me that my dad was wrong all these years when he proclaimed "Money doesn't grow on trees?"

Damn. Everything I know is wrong. :)

Broadlighter
03-30-2008, 02:44 PM
If we go to a gold standard anytime soon, this is the likely scenario from Jim Sinclair:

Quote:

Dear CIGA:

In five to ten years Henny Penny can fall from the sky! But let me give you an alternative scenario to the recent statements made at the Reuter’s Mining Summit about the dollar and its relationship to gold.

The Advent of and Application of a Modernized, Revitalized, Federal Reserve Gold Certificate Ratio.

How Gold Re-enters the US Dollar Equation.

1. The dollar again enters a full-blown bear market as a product of its deteriorating internal fundamentals.

2. The march into the new system of Authoritarian Free Enterprise continues as a result of all the measures being adopted and reinforced to combat terrorism – perceived or otherwise.

3. There comes a point in the dollar decline that the public will support draconian measures as they are reassured by eminent authority and political consensus that this is the correct system fix.

4. At this point, major wealth reassumes a long dollar position.

5. There are two key items in the draconian plans, the first of which is the significant reduction of Federal entitlement spending for the common benefit of all. This is intended to stabilize the US Federal Budget deficits and save the dollar, thereby creating jobs and improving the US and global economic system. That is the spin. Authoritarian Free Enterprise favors the authority of commerce and not the common good. This is when policy changes will occur, the deficits will come into balance and the US dollar will enter a bullish period.

6. In the second move, gold enters the picture. Gold convertibility is not what will occur and the Gold Community will not be pleased by the role gold will play. Gold is coming back into the system not at the pleasure of present gold advocates but at the pleasure of the masters of the global economy.

Gold will function as a control item for the US dollar. Convertibility is simply too automatic and too cumbersome for the barons of commerce. Gold’s role, however, as a barometer and control item will be seized in the form of a modernized, revitalized Federal Reserve Gold Certificate Ratio.

Gold will be tied to levels of international dollar liquidity measured by the outstanding US debt in the hands of non-US entities. This is another view of the cumulative affect of the US Current Account.

Assuming the unfortunate event that the price of gold closes any day at the end of the open outcry session of the COMEX (simply as a point of measure) 3% above the $518 - $529 price level it can be considered having moved out of a normal bull market into a run away market. That run away situation would be the signal that gold has assumed its traditional role in attempting to balance the international balance sheet of the USA.

That is another way to say that the value of the gold held by the US Treasury would be at a market price that would when computed be equal to the amount of US Treasuries held by non-US entities calculated at par or 100 cents to the dollar issue price. That situation would be the balanced position of assets versus liabilities for the US dollar internationally.

That price then is recognized internationally by central banks and all gold is revalued on their respective balance sheets to this market price. By this means, the US Current Account now becomes the means by which the US Treasury must increase their gold position if the price of gold times the gold held by the US Treasury (Gold Certificates) is below the level of value at par times all the US Federal paper held by non US entities.

This is modernized because it is not like the old Federal Reserve Gold Certificate Ratio that was tied directly to the cost of money. It is revitalized because it moves to maintain the balance of the international balance sheet of the USA Inc.

Such a condition for a corporation is conducive to acceptance of its common shares. Such a condition by a country is conducive to the value of its common share namely its own currency. Thus, the old outdated and impractical US Federal Gold Certificate Ratio becomes modernized and revitalized.

If the holdings of US Federal paper dropped internationally, the US Treasury could stand pat or sell gold.

There is no question that instruments of speculation would immediately appear, allowing the market to place bets on the state of the US current Account, marking the price of gold to the assumed level thereby relieving the US Treasury of having to do anything at all but watch as the market keeps the US international balance sheet in balance for them.

The gold people would be quite pleased with the price of gold and quite displeased when they recognize whom it protects. However, the system of Authoritarian Free enterprise with a sound US dollar controlled by gold - not convertible but as a control item of US creation of international liquidity – would guarantee the dollar’s viability for generations to come.

It would reinstate a one-alarm system and that alarm would be turned off immediately in the marketplace or by the US Treasury at will.

The action of the marketplace or by the US Treasury would - if liquidity were c reated - assure that the balance sheet of the USA was always in balance.

The fix as predicted as the Reuters Mining Summit. That can only happen for short to the problem is a balance sheet fix and not a fix that gold convertibility will have any place in.

Yes, we may see a return to a gold standard, but not in a way that takes power out of the hands of the banking elites.

I've posted this on other threads here.

kigol
03-30-2008, 04:30 PM
This theory assumes that the government is actually looking out for us/America.

Therefore, it's already dead in the water.

..