Greece mulls printing counterfiet euros

From Ambrose Evans-Pritchard:

Top Syriza officials say they are considering drastic steps to boost liquidity and shore up the banking system, should the ECB refuse to give the country enough breathing room for a fresh talks.

“If necessary, we will issue parallel liquidity and California-style IOU’s, in an electronic form. We should have done it a week ago,” said Yanis Varoufakis, the finance minister.

…Mr Varoufakis and ministers will hold an emergency meeting tonight with the private banks and the governor of the Greek central bank, Yannis Stournaras, to decide what to do before the cash reserves of the four big lenders dry up tomorrow.

…Syriza sources say the Greek ministry of finance is examining options to take direct control of the banking system if need be rather than accept a draconian seizure of depositor savings – reportedly a ‘bail-in’ above a threshhold of €8,000 – and to prevent any banks being shut down on the orders of the ECB.

Government officials recognize that this would lead to an unprecedented rift with the EU authorities. But Syriza’s attitude at this stage is that their only defence against a hegemonic power is to fight guerrilla warfare.

Hardliners within the party – though not Mr Varoufakis – are demanding the head of governor Stournaras, a holdover appointee from the past conservative government.

They want a new team installed, one that is willing to draw on the central bank’s secret reserves, and to take the provocative step in extremis of creating euros.

“The first thing we must do is take away the keys to his office. We have to restore stability to the system, with or without the help of the ECB. We have the capacity to print €20 notes,” said one.

Now that really is the nuclear option. It is effectively state counterfieting. The blow to the euro would be immense.

David Llewellyn-Smith

Comments

  1. The Balkans: the cradle of European stability since 1914.
    (well before, but that date is the more memorable.)

  2. Faith in faith-based money systems is beginning to break down. If you can merely print wealth from thin air then how come Zimbabwe is not the richest country by now?

    • Perhaps the mistake Gideon made was not to print Rand?! Euros aren’t restricted to Greece….

    • Torchwood1979

      Just don’t explain the economics of that to Idi Amin (well, thankfully he’s dead). When Uganda’s central banker explained that the currency was worthless because they had printed too much, said banker ended up with his decapitated head stuck on a stake outside Uganda’s central bank :/

    • Zimbabwe is a case of trade shock which lends to hyperinflation, see post WWII Germany.

      Skippy… bimetallism is faith based from day one it was used i.e. divine authority e.g. even in the recent past authority give it legitimacy. To bad its inherently deflationary to boot, so the question begging is why the medium of exchange does not matter, as the same sorts always blow themselves up anyway.

      • http://www.nakedcapitalism.com/2013/09/the-regressive-politics-of-quantitative-easing.html

        When it comes to what goes on in the marble corridors of the Federal Reserve, Americans tend to be suspicious. For different reasons, both the right and the left have challenged Fed policies aimed at bolstering the economy in the wake of the Great Recession. In two papers for the Institute of New Economic Thinking’s Working Group on the Political Economy of Distribution, “Have Large Scale Asset Purchases Increased Bank Profits?” and the forthcoming “The Impact of ‘Quantitative Easing’ on Expected Profits: Explaining the Rise and Fall of the Fed’s QE Policy,” economist Gerald Epstein and his colleague Juan Antonio Montecino sought to find out who in the economy tends to benefit from the Fed’s actions. They conclude that Wall Street and wealthy Americans are the big winners from policies like quantitative easing, while the rest see little improvement in their economic lives. End result? Inequality is getting worse.

        http://www.nakedcapitalism.com/2015/04/federal-reserve-destroying-economic-future.html

        Skippy…. why are people always confused about status quo solutions to status quo failures, but yeah buy gold or end the fed.

      • If you are referring to Zimbabwe then no QE is largely different in that it is not adding more cash to the economy, rather its more like an asset swap, hence no immediate inflation. (and debt crisis do not tend to cause inflation, just the opposite in fact, as capitol is destroyed as people go broke). That’s my rather basic understanding…….

      • Yes Zulu, QE is a portfolio swap which has zilch effect on FRN creation, tho successive applications have been known to benefit solely the most upper income bracket as they hold the majority of financial assets.

  3. flawse
    July 6, 2015 at 12:07 pm
    If these damned Greek leaders were as smart as everyone here thinks they’d have, by now, had the Drachmas printed up and sitting in crates in banks ready to be exchanged for any hard currency.
    In the next four months they’d run a substantial Current Account Surplus which would give them foreign reserves to get through theyear – with ‘austerity’ somewhat more severe than they have so far been willing to engage in. It could have been done but only by taking away the entrenched distortions.

    REPLY

    Wiley Wolf
    July 6, 2015 at 12:13 pm
    Therein lies the issue. Should the banks not open tomorrow, irrespective of whose currency they helicopter -dish out, its all over red rover.WW

    • The trade shock is going to make them look like Zimbabwe, unless they have already sorted out trade partners to facilitate any losses, Russia, China, et al.

      • Skip, I hope they go under, not only can you buy good x charter yachts over there, they also have Catalina flying boats still flying, used as water bombers. 2 or 3 of those would make a good tourist operation over here. Not to mention get you into all the airshows here for free. WW

      • C.M.BurnsMEMBER

        I disagree Skippy. Consider a parallel example…

        Bali splits off from Indonesia and prints its own currency, resulting in Bali holidays now 1/3 the price they were before.

        Once they learnt that Thomas cook still carries this new currency, as do their credit card provider; would the number of bogan Australian tourists increase, decrease, stay the same or go logarithmic ?

        Now swap Greece for Bali, and bogan English with bogan Australian…

      • Sorry Burns, I don’t do the detached from reality reductive reasoning without hard data but bucket loads of bias logic exercises.

        Skippy…. seems you did not read the link about the card system… but just thunkit about… additionally the EU is not just Germany and France e.g. they all vote i.e. even the small members are exposed to whatever may come and vote accordingly, especially when it comes time to punishment.

      • WW and Skippy – They have four months during which they run a large 9for them) CAS – their peak tourism months.
        Dang = Catalinas one came into the Sunshine Coast a couple of years ago. Other than that I used see ’em out west when i was a kid! They’re seriously OLD!

      • WW and Skippy – They have four months during which they run a large for them) CAS – their peak tourism months. They just MIGHT have managed it!
        Dang = Catalinas one came into the Sunshine Coast a couple of years ago. Other than that I used see ’em out west when i was a kid! They’re seriously OLD!

      • skippy
        Why will tourism suffer if there is no civil instability?
        Edit: Gotcha! Missed the point!

      • C.M.BurnsMEMBER

        I read your article skippy (thanks for sharing, was a great read). I just disagree on the length of time it will take to resolve and once resolved the willingness of punters to return en mass for a bargain holiday

        Each of the types of participants are themselves in competition with all other participants in that particular part of the process: MSPs, Card Networks and Card Issuers.

        There is a huge first-mover advantage for participants in each part of the process if they can update their own systems/terminals/infrastructure/systems to accommodate the drachma.

        think about the profitability if visa beat mastercard by 4 weeks and ALL transactions in greece, across all industries, could only run on the visa network for that period of time.

        The Troika may try and excert a crap-ton of pressure on these companies to boycott or slow down their support for the drachma but that’s when geopolitics gets real. If those “western” companies drag there heels there will be chinese and/or russian firms ready to roll out the red carpet.

        Nato knows this and can’t allow it to happen. Nato > Troika.

      • Sorry Burns but, it should be noted this is not your usual global economic enviroment, where one or two entity’s have a sad and the rest can pile in to the fire sale to jump start the economy, not that anyone would want that… look at Mexico.

        Skippy… I would also add the Troika is 19 country’s, plus the BIS, IMF, et al, its a big table imo.

  4. The ECB has lost its last shred of credibility as an independent central bank.

    Its mandate is price stability, yet it acted to punish the Greek banking system prior to the referendum in an attempt to scare Greeks into voting yes. The ECB is merely acting on the orders its political masters and has zero credibility as an independent central bank.

      • Agree. ECB is not behaving like a central banker but as a party to the creditors. I find it disturbing that a non elected bank can close down the banks of a sovereign. Something’s very wrong with that, but it is really unsurprising as the ECB has broken it’s own rules over many years.

    • Agree, I said it again here. http://www.macrobusiness.com.au/2015/06/greece-confronts-the-final-deadline-again/

      “The ECB may appear to be supporting the Greeks on the surface, but don’t be fooled, it is once again up to its old tricks. Check out this wonderfully timed piece of fictional overreach on the eve of the crisis through the BoG:” – http://www.bankofgreece.gr/Pages/en/Bank/News/PressReleases/DispItem.aspx?Item_ID=4988&List_ID=1af869f3-57fb-4de6-b9ae-bdfd83c66c95&Filter_by=DT

      But that’s not new. The ECB were part of the 2010 deal that really started us down this latest track, they forced Greece into a new government a year or so later, they pulled the same ELA trick on the Irish back in the day and meddled in Spanish and Italian politics as well.

      It’s extremely bizarre to look at the ECB through the prism of the RBA, just imagine the backlash if Stevens attempted even 1% of what the ECB has been up to.

      • C.M.BurnsMEMBER

        Gittens, Pascoe et all would probably applaud the bravery and lateral thinking of our marvelous central bank.

        And the sheeple punters reading the tele would all nod in sage agreement.

      • DE Is the ECB not just operating as it thinks it is supposed to? The fundamental problem, as per you and most intelligent people, is one of a central monetary authority without central fiscal authority.
        That said a central fiscal authority covering as divergent a mob as the whole of Europe East to West and North to South is just about doomed to failure.
        I fail to see any long term cure but a return to the Drachma with close ties to Europe maintained.JMO

    • Yeah well, too bad they didnt scare anyone this time
      I called my mother in Greece on Satday, she’s a pensioner. She was laughing LOL

  5. With respect, but how is printing the currency you use & endorse ‘state counterfeiting’?

    It’s a shit sandwich, tho, I agree.

    Maybe we can call this ‘Greasing’ ?

    What?!

    • An interesting point as Greece have the capacity to print 20 euros, and they can avoid counterfeiting by “stamping” the currency to distinguish from the common euro. This is the parallel currency theory which many people confuse with a dual currency where the euro and drachma circulate together which would be a real sandwich. But it’s more than hard currency, the entire banking system takes time to transform as is the case when new states enter the union. The Troika are pragmatic and will have to work with Greece whatever happens. We see the IMF weakening their previously truculent posturing and the ECB has been sending mixed messages for a week, it’s just that the NO vote caught the creditors completely unprepared.

      • If they will try this we will quickly see a modern application Gresham’s law.

        Will be awesome.

      • Peachy, do you remember when our 50c coins had about 55c worth of silver.
        The Chinese seamen used to take them back on board their ships by the bagful.WW

    • Because Euro printing quotas are set by the ECB as agreed by treaty. Every euro-denominated country has ceded sovereignty over their currency to the ECB. Who coulda predicted that *THAT* would cause problems down the road (except Denmark, Sweden, and the UK – EU members that chose to keep the kroner/krona/pound)?

  6. truthisfashionable

    “draconian seizure of depositor savings – reportedly a ‘bail-in’ above a threshold of €8,000”

    That is a really low amount to be taking a hair cut on as a depositor.

    Information is starting to creep out of just how bad they would have been under a yes vote.

    • That was a rumour circulating on the weekend but has been rejected by the parties since then.

  7. Next will be outing them from SWIFT.

    Then Greece enters CIPS.

    There we have it – the play book.

      • And why should gold go to the moon? It just sits there as the ultimate exampled of unproductive enterprise.

        Skippy…. what people should just receive increased value for nothing?

      • Don’t know how to tell you but the “honest” bit is just a emotive feeling and the store of anything is just mythology.

        “money is not wealth, cooperation in a structured and reliable way is wealth. if that is cultivated, then wealth is created.”

        Skippy…. maybe we should go back to witch hunting whilst were at it.

      • Gold and silver are very honest, skip. No way to make them other than the expenditure of prodigious amounts of energy. They are energy embodied, and rare to boot. That makes them a store of wealth, as they have been for literally thousands of years. Compare that to a fiat currency like the Euro, soon to be on the nail in outdoor dunnies everywhere 😯

      • Law gives them the quality’s you denote not the Universe or a Creator as such its a political act not intrinsic quality. Bloody hell go read some history not written by some bloke out of antiquity or some ideological cult.

        Forensic anthropology has much better optics than the religious opinions you repeat imo.

        Skippy…. You sound like some guy that just came down off the mountain, ***it is***.

        PS. “energy embodied” lmmao Soddy?

      • Skippy, you seem to have an ideological objection to precious metals, perhaps because you see them as the darling of the Right. Amirite?

        Use your mental helicopter to rise above the current political scene (if you can, which is perhaps doubtful), and go back hundreds, then thousands of years. Gold and silver retained their values, more or less, through all those eons, and still do today, despite the haters.

        Read and come back to throw more poo:
        https://www.bullionvault.com/guide/gold/Why-gold

        😉

        You laugh at “embodied energy”? Therefore you flaunt your ignorance:

        For an ore grade (i.e. metal content) of 3.5 gram per tonne of ore, the study estimated that production of each tonne of gold from non
        -refractory ore used approximately 200,000 gigajoules (GJ) of energy and 260,000 tonnes of water. It produced 18,000 tonnes of GHGs (CO
        2 equivalent) and 1,270,000 tonnes of waste solids. For refractory ores, the GHG emissions and energy use were about 50% higher, owing to additional processing steps required. Per tonne of metal produced these figures were several orders of magnitude greater than those
        for other metals, such as steel and aluminium. However, gold is produced in much smaller quantities, so the total environmental footprint for global gold production is smaller than some other commonly used metals, including steel, copper and aluminium

        It’s much the same for silver.

        Imagine how precious gold and silver will be when energy expenditure is curtailed because of CO2 limits? 😯

      • “Imagine how precious gold and silver will be when energy expenditure is curtailed because of CO2 limits?”

        That’s akin to saying used condoms are valuable in Japan because of the potential to raise the fertility rate.

      • Rusty, that’s a tortured analogy

        Unless PMs go to zero, their value will skyrocket when it costs 10x as much to produce them

        Especially in a carbon constrained world, where the value of almost everything else is collapsing, and base metals are mined much less (silver is a byproduct of base metal mining)

      • …and population paste is by product of a happy ending. But I won’t come to a consensus that it’s worth exchanging for anything.

        No I agree it may, like precious metals, acquire the sentiment of many of a medium of exchange, particularly in country like Japan where racial purity is paramount, then I implore for the get rich quick set to keep a bundle of used condoms in their wallet.

        But I would assert the ‘store of wealth’ is fabricated in the minds of those willing to accept the sentiment of its value, than any value ordained as natural law.

      • But I would assert the ‘store of wealth’ is fabricated in the minds of those willing to accept the sentiment of its value, than any value ordained as natural law.

        You have about 5000 years of history against you, but who knows, you may be right. We may indeed be in a time when all faith is lost in barbarous relics, and we turn instead to money magicked into existence with a press of the “enter” key.

        We’ll see who’s right, champ

      • R2M,

        I have no problems with commodity’s, hell my family owns several hundred thousand acres of gold, copper and turquoise geology rights, held in perpetuity. The problem is when people start regurgitating truisms out of antiquity with only supernatural claims in support.

        As far as your history lesson goes it has nothing to do with politics, its a matter of forensic anthropology observed out side any political or ideological agency. Gold was in antiquity simply a soft malleable metal which was laying around and was easy to work. Previously all other materials [save stones] were organic and as such decomposed, it was this simple fact that catapulted gold into our species mythology. The system of government back then was deity on earth or deity backed, they used the quality’s of gold, always shiny, everlasting, indestructible, et al, as their religious iconography e.g. only the highest members of society could own gold.

        Later the clever pricks figured out they could increase the psychological effects of gold wrt to their social control powers by exchanging small amounts of gold for more intrinsic value like foodstuffs or value added products, the peons thought they were holding a small bit of heaven or divinity in their hands.

        Now the really clever bit is when it was used as a medium of exchange to assist in tax collection due to war, yet they had full control over the base metal. You might be interested to know the first commodity of intrinsic value to be used as a base control of weight to gold was wheat e.g. wheat gave gold value and not the other way around, which golds only previous quality’s was directly a result of its religious status by dicta of the ruling class.

        Now if you really want to get stuck into it – grain silos were the first banks on the planet, the social strata was the ruling divine or divinity backed heraldic bloodlines followed by the priest – warrior class and then the chattel [herd]. Priest were the guardians of the grain silos and dependence it as a means of payment for good and services to run their compounds and civil undertakings as the administrators of the ruling class.

        BTW I never laughed at “embodied energy” I did chuckle about Soddy and his attempt to establish a different sort of accountancy on a medium of exchange which at the end of the day amounts to contracts in a absurd form Newtonian empiricism. yet it has the same failures that commodity moeny has e.g. assured baked in deflationary boom and bust, no human agency required.

        Skippy…. hate to say it but so much of what passes for main stream economic is re-branded 16th to 19th century quasi religious sociopolitical beliefs, only the cannons have been reinterpreted and translated so many times to date.

      • Gold was in antiquity simply a soft malleable metal which was laying around and was easy to work. Previously all other materials [save stones] were organic and as such decomposed, it was this simple fact that catapulted gold into our species mythology

        Wrong. Gold is also rare (and always has been), it is also a noble metal impervious to corrosion (gold coins have lain centuries on the sea bed without change), lustrous and also beautiful. These characteristics have made it desirable throughout the ages.

        There are many physical aspects of the yellow metal which are truly amazing. Gold is the most malleable (able to be hammered into very thin sheets) and ductile (able to be drawn into a fine wire) of all metals. It is so malleable that a goldsmith can hammer one ounce of gold into a thin translucent wafer covering more than 100 square feet only five millionths of an inch thick. It would be so thin that 1,000 sheets would be needed to make up the thickness of one newspaper page. Its ductility is equally amazing. One ounce of gold can be drawn into a wire 50 miles long! Furthermore, ONLY one ounce of this marvelous metal is required to plate a thread of copper 1,000 miles long. That’s really stretching it, wouldn’t you say?

        Since time immemorial the noble metal’s resplendent luster allows it to be designed into the world’s most coveted and exquisite jewelry — fit for queens or kings.

        Gold is also one of the heaviest metals known. It has a specific gravity of 19.3, which means it weighs 19.3 times as much as an equal volume of water. Therefore, one cubic foot of gold weighs 1,206 pounds. More than half a ton! This probably explains why there has NEVER been any large armed robberies of gold bullion throughout history. Who the hell could carry it?

        Silver in addition has many other properties that make it extremely useful in industries of all kinds, and the uses keep on expanding.

      • “You have about 5000 years of history against you, but who knows, you may be right.”

        I have no doubts if that’s your position. the fabrication that has made humankind perceive value in precious metals has been around at least for 5,000 years. But it’s a fabrication none the less.

        But I am right because you scenario paints 100% becoming gold miners to be very wealthy. I think we’d end up dead.

        Precious metals would still have the same amount as ‘stored energy’, Us not so much. However with no human creativity to assign value, it becomes valueless.

        It’s more reasonable to then assume human creativity can assign this fiction and call something else money, and if enough of us came to consensus, it would then also be money. Much like we have with precious stones, etc, etc.

        “We may indeed be in a time when all faith is lost in barbarous relics, and we turn instead to money magicked into existence with a press of the “enter” key.”

        Then we’d find another system with flaws, much like the barbarous relic. I’d suspect the flaw, regardless of the money, can be assigned from being a human design, rather than if it can be found on the periodic table.

        “We’ll see who’s right, champ”

        Actually I’m not doubting there may be a resurgence in gold prices in my life time. I would place more confidence in the hive mind defaulting to a barbarous relic than not.

      • “Gold is also rare (and always has been), it is also a noble metal impervious to corrosion (gold coins have lain centuries on the sea bed without change), lustrous and also beautiful. These characteristics have made it desirable throughout the ages.”

        That sure sounds like sentiment to me.

      • Rusty, I am telling you with certainty that mankind is facing an existential crisis in the years ahead. An EXISTENTIAL CRISIS in which many things will lose value, including Aussie homes and almost all equities.

        In times of crisis, precious metals have always done well, and will do even better when all other asset classes tank.

        I wish you luck in your investments. I am sure I am right, I’m only unsure of the timing.

      • WOW what kind of thinking does it take to make the leap to scarcity is the the ultimate driver of price or desirability by others…. not – conditioned – to think so. Compounded by a completely ignoring rigorous anthropological studies, yet cheery pick some timeline profuse with human ignorance as the foundation of an objects ability to do anything to adjust our currant sociopolitical trajectory i.e. gold will save humanity and life as we know it [?] on this orb?

        How does that bloody work…. Magic?

        Skippy…. it might help you to bone up on social psychology R2M, other wise you might just as well as roll the door closed on the cave with your hoard of gold and your favorite supernatural reading material. Good luck with that… seriously.

      • “I am telling you with certainty” and there we go… as a booming voice from above that has the power of time travel in a deterministic universe…. sigh.

        R2M its curious that on one hand you seemingly acknowledge certain environmental challenges, yet are so fixated on gold or commodity moeny. So which is the precursor to your thinking processes, gold – commodity money and how the environmental changes might effect that psychological state of mind wrt profit or loss or store of price against other asset classes or is the environmental challenges just tool of fear to justify a desire to see its antiquarian concepts established for personal reasons.

        Skippy…. just can’t see how gold or commodity money really changes anything, especially when the last 5000 years has a lot to do with our environmental challenges of late, 1975 till know is just a blink of time in comparison.

      • Skippy, last reply here:

        I became aware firstly of the environmental challenges we face about 25 years ago. Realizing that combating these challenges would threaten most asset classes, I looked for an asset class that people turn to when other things collapse, and that will hold value in a contracting world, a world of degrowth, a world of economic descent‡ where the descent lasts for 100 years or more. Precious metals are one of the few asset classes that foot the bill, the other being farmland. Also important are tools and skills, if you want to invest in practical things. Hope this helps,

        ‡ – The Long Descent: A User’s Guide to the End of the Industrial Age

      • A druid, good grief its as bad as rapturists R2M, with both the world will end is always around the corner, so they act like it and eventually will get their belief validated. Pro tip… humans have been destroying the environment from day one, that’s why as hunter gathers we had to move all the time. Once Ag got going the replenishment rate went right out the window wrt entropy states, then its just a matter of scale.

        Skippy… all these apocalyptic cults are all self defeating, oxygen stealing, apathy generators, gold, gawd and guns paranoids and who benefits the most from this, as usual, the status quo.

      • A druid, good grief its as bad as rapturists R2M, with both the world will end is always around the corner, so they act like it and eventually will get their belief validated.

        John Michael Greer is a respected author who has a side interest in ancient pantheistic beliefs. While not a believer in any religion myself, I prefer his sort of belief system to monotheism.

        Pro tip… humans have been destroying the environment from day one, that’s why as hunter gathers we had to move all the time. Once Ag got going the replenishment rate went right out the window wrt entropy states, then its just a matter of scale.

        Even more “pro-tip”, scientists are saying “this time it’s different”. You can start your education, skippy, with the book “Limits to Growth”, and go from there. With your obvious lacuna of knowledge in this domain, your attitude to gold becomes easy to understand. 🙄

        all these apocalyptic cults are all self defeating, oxygen stealing, apathy generators

        You are speaking from a position of pure ignorance of what’s happening ecologically on the Earth today.

      • R2M,

        I afraid you fell into the druid version of atlas shrugged 25 years ago.

        Skippy… if you ever want to check out my bonafides you can always search NC data base, 7 years of it, I was one of the very first to push scientific white papers under ever ones noses. That’s not to mention my friends at places like JPL, TRW, university’s in Calif & Boulder, NCAR, et al, and not to mention decades of civil – industrial construction internationally. So yeah, I’ve the changes up close and personal and supported by decades of reading and education.

      • How many time has gold peaked and crashed in just the last hundred years, selling ones book puts folks in the same mob as the status quo.

        Skippy…. funny thing is you still have to convert it.

      • How many fiat currencies have gone to zero, skip (hint: historically, all of them)

      • R2R. All you say is true however the number of gold pumpers and doomsday merchants flogging the stuff makes me nervous. What is exactly gold’s value? It is impossible to value. Diamonds are a better precious metal, or even platinum as it is used in industry and only really mined in 2 countries. Gold has gone up nearly 4 fold since its 2000 lows how much further can it rise? I own Au as insurance. Prefer owning stock in undervalued companies trading in Asia, UK, Mexico and Germany.

      • BoomToBustMEMBER

        well the Chinese have been buying tones of gold, do they know something we dont ?? I tend to think they have a lot better long term strategy that does not hinge upon the governments policy doing what is required to get re-elected. Interesting times !

      • Private or sovereign?

        And how many bimetallism based societies have gone poof over night or euthanized whole populations for it, endless wars, destruction of environments, et al.

        Skippy…. but yeah, atomistic individualism myopically focused on an inanimate object by which to fend of paranoid fears about stuff…. Darwin award criteria….

      • BoomToBust, If you had any basic knowlage about how the monetary system works, banking CB or private, you would know its an asset, one of – many – in a “basket of assets” used as reserves, that is all.

        That some have this zealot like fixation about gold or bimetallism [precious stones have higher value and transportability imo] that everything they see is distorted through those biased optics. So if anyone buys it their obviously hedging a bust, groan….

        Skippy…. sure is comforting to see so many wank on about money, debt, banks, gov, when the problem is more everything being grounded in metaphysical mythology and not the knowlage we have today.

        PS, so Devo… so… we will repeat….

      • Since the start of the Fed gold just over $20 of gold has gone to over $1100 with a couple of dramatic peaks so it’s doing OK. The only real difference between it and fiat as money is that the amount of it in existence is not at the mercy of an unelected council and private bankers who have the ability to create it for the benefit of their allies and at the expense of everyone else.

      • Precious metals have no counterparty risk, which is fabulous when serious SHTF

        (Skippy and other warriors of the left cannot see this)

      • “Since the start of the Fed gold just over $20 of gold has gone to over $1100 with a couple of dramatic peaks so it’s doing OK”

        The two numbers expressed there are calibrations, they have no real meaning to what is a ‘store of wealth’.

      • Gold and silver have been stores of wealth throughout recorded history… And history is cyclic, therefore expect a big comeback by the PMs!

      • “Is anything a ‘store of wealth’?”

        In real terms, one’s exertion to bring product to market. When recognised, it brings optimal dignity to all humans.

        This value can be leveraged via technology, or enhanced by location and/or nepotism. We use money as a proxy because it has infinite divisibility, because our labour nor the product we make has this criteria.

      • one’s exertion to bring product to market

        IOW, energy.

        In the end, it all comes down to energy, and metals that are rare and need a lot of energy to mine, have value just because of that, even if all the other factors that shout out for precious metal values are ignored

      • “IOW, energy.

        In the end, it all comes down to energy, and metals that are rare and need a lot of energy to mine, have value just because of that, even if all the other factors that shout out for precious metal values are ignored”

        If it was about energy, coal would be money. Yes, I know durability &/or destructibility.

        Being metal, they are also inert, so that stored energy is redundant, and all it gives is a reflective surface to aid ones narcissism. One can’t release the enrgy to ‘find value’.

        it’s a long bow to draw to say the energy in metals is what humans value.

      • Precious metals are rare partly because of their embodied energy. Comparing coal to gold shows that you are just not getting it 🙄

        With something like gold you have to combine:

        ► a long history of desire by mankind (jewelry etc)
        ► a long history of investment as a hedge against fiat currency
        ► a long history of use as a currency (includes silver, one of the first monies)
        ► rarity (gold is now running out, we are passed peak gold)
        ► embodied energy to find and extract (very high, and this factor will be a killer in the future)
        ► intrinsic qualities (immutable, and in the case of silver, the most reflective and conductive metal on earth as we head into the solar age)

      • No, I am getting it. You’re punting on past performance…

        “With something like gold you have to combine:

        “► a long history of desire by mankind (jewelry etc) – ”

        I call that sentiment, but not a natural law assigning natural value

        “► a long history of investment as a hedge against fiat currency”

        I call that past performance, but not a natural law assigning natural value

        ‘► a long history of use as a currency (includes silver, one of the first monies)’

        I call that legacy, but not a natural law assigning natural value

        ‘► rarity (gold is now running out, we are passed peak gold)’

        Coal will one day be rare too. I call that scarcity, but not a natural law assigning natural value

        “► embodied energy to find and extract (very high, and this factor will be a killer in the future)”

        Also impossible to release, so this characteristic is redundant of having any natural value.

        “► intrinsic qualities (immutable, and in the case of silver, the most reflective and conductive metal on earth as we head into the solar age)”

        So utility value based on usage in a limited area. This says punting on stockpiling so these guys have to pay more, but not a natural law assigning natural value.

        Mate, I know everything you’re asserting. You’re repeating the mantra of the hind mind, “it is because it is”, and you’re even attempting to build it up with some buzzwords such as energy, and way markers of value such as scarcity.

        But no, the wealth of a civilisation is not how much gold it mines, it is how much product of utility it brings to market. Your fetish has productive workers, taken away from productive enterprise, to mine precious metals. Wealth limiting and deflationary at the same time.

        Yes, it is money, but it is not of value.

      • You say precious metals have no “natural value” (ignoring the fact that gold is, was and always will be the most desirable metal for jewelry, or that silver has irreplaceable physical properties), whereas I say that their rarity, production costs and history make them a natural investment in an anxious, even panicked age.

        We’ll have to see who’s right! Who knows, maybe the only thing that will have value is food, if the future gets bad enough 😯

      • “and history make them a natural investment in an anxious, even panicked age”

        I don’t think such an emotional state is best when determining value.

      • Sometimes the clever thing to do is not play the stoopid game in the first place…. its usually fixed and looking for fresh suckers… but everyone thinks their the smart one…

        Skippy… my moto has always been – sometimes it better to stay home… than go broke….

      • drsmithyMEMBER

        Something like 10% of gold mined is used for industrial purposes. Clearly its value is not primarily determined by that.

        There seems to be a lot of conflation of the industrial and ornamental (and “ornamental” covers money) uses of gold going on here.

      • Drsmithy,

        Recent anthro in south central America shows jade predates gold as the psychological preference until gold was introduced by a lager ethnic group with more power, then gold did its thing.

        Skippy… strictly introduced as a form of indoctrination by religious – spiritual beliefs, gold was used for nothing else.

      • Recent anthro in south central America shows jade predates gold as the psychological preference until gold was introduced by a lager ethnic group with more power, then gold did its thing.

        Skippy… strictly introduced as a form of indoctrination by religious – spiritual beliefs, gold was used for nothing else.

        More pig ignorance from skippy. Jade use is relatively recent compared to gold, which dates back far, far longer in human societies (ancient Egypt, the pyramids and beyond). Only in Mesoamerica did gold replace Jade (around 500 AD in Costa Rica and Lower Central America.) Most of south America used gold long before jade.

      • “In real terms, one’s exertion to bring product to market. When recognised, it brings optimal dignity to all humans.”

        Are you saying that you believe people should not be allowed to save for retirement should and be forced to work until they drop dead?

      • R2M,

        Your projecting again, I said anthro from south central America provided a case where jade was replaced by a more powerful socio-ethnic group e.g. the south with its gold moved to central America which was the event that changed the psychological perception of jade – in – central – America. Seems your quasi religious devotion to gold has bias conformation issues, which can lead to reading comprehension problems R2M.

        As far as other older social ethnic groups go, its irrelevant, duration or age of beliefs does not imbue validity, nor does it change the observation that the concept of golds supernatural quality’s in antiquity was held by everyone as part of the base human condition, anymore than domestication of the horse lead the huge change in sociopolitical beliefs as it enabled its believers to rapidly move west. Huge transformation between the sun and moon mythos, matriarchal to patriarchal.

        Skippy…. you seem to have a ridged agenda R2M, which is troublesome, as it takes away from your environmental positions and puts you in the same club as 3d1k imo.

      • you seem to have a ridged agenda R2M, which is troublesome, as it takes away from your environmental positions and puts you in the same club as 3d1k imo.

        My “ridged” rigid position is that

        ► big trouble coming, bigger than mankind has ever seen before
        ► we need to prepare
        ► skill up, get land, get tools, and with any surplus cash get precious metals. Not all these assets will come through for you, but all have great track records and seem to have the right “fit” with a world in decline, where almost all other assets are sure to lose value

        My attitudes and outlook are roughly the same as Chris Martenson : you are sorely in need of his Crash Course, skippy:
        http://www.peakprosperity.com/crashcourse

        If you think that makes me the same as 3dik, I suggest you are not able to think very clearly, skip.

      • “If you think that makes me the same as 3dik, I suggest you are not able to think very clearly, skip.”

        Skippy…. preponderance for sharing the same group think ideological cult optics, but think a few disagreements on nuance is a chasm and not a stream.

    • Gold is money Skippy. It always has been ever since the concept of money became a concept, and it will remain so. Heisenberg, Platinum’s rarity is reflected in the price premium, so i’m not sure of the issue there. As for diamonds, that market there is tightly controlled, and even less transparent than the gold market.

      Gold is an alternative currency. Think of it as insurance against a lack of confidence in fiat. Consider the amount of paper gold that is traded on exchanges like Comex. The more confidence is lost the more counter parties will want to take physical deliver, ala University of Texas. Barring that you could also physically own other commodities or invest in countries where debt is low and companies are undervalued as you suggest.

      • Gold is an asset class, money is everywhere, your bar tab, frequent flyer points are all forms of money.

        Skippy… read some Innes or Lerner its a creature of law e.g. the state and not some supernatural stuff…

      • So were salt, silk, spices, cotton etc. You are right Skippy, anything can be money. You have misunderstood my post a bit, my fault i wasn’t very clear. What i am talking about is the distinction of which asset is better suited as money. To be suited it needs to be tradeable for everything you need and it needs to have a narrow spread. Fiat works just fine in this case, the problem arises when the spread widens as a result of inflation, and by that i mean the Austrian school definition of inflation.

        Gold is just like paper. It has value because we as a society have proclaimed it does. The difference is that it has been this way for thousands of years so it has a track record, and supply increases aren’t as simple as turning on a press. The reason for gold being used versus other metals actually has a lot to do with the physical properties of gold as an element versus other metals. Gold still has a place in the financial architecture of today’s modern system.

      • Haha, thanks for the laugh, skipp!

        Gold (a rare metal that costs at least $800/oz to mine at today’s prices) = frequent flyer points (zeros and ones in a computer’s magnetic memory somewhere) = a bar tab (a figure written on a piece of paper)

        You can’t make this stuff up!
        Unless your name is “Skippy”
        Great, worth the visit here today 😀

    • If referring to me, then I’m already well stocked up on B, starting to hoard $ to buy RE.

      Have been watching this situation unfold with interest, but markets still seem fairly complacent about it all so far…

  8. Skippy, if you want some evidence today of why gold is money, look at the way the price behaves. It commenced a secular bull market slowly and gradually since the early 2000’s and the massive expansion of the Fed’s balance sheet post the tech wreck under Greenspan. It isn’t accepted by any Western govt. as a form of payment yet it is being bid up because the things that are accepted have been grossly inflated.

    It’s not an accident gold has been used as the most effective currency for thousands of years prior to Bretton Woods. Over the ages people have accepted all sorts of things as currency, but none of them ever survives the test like gold does.

    There is a reason the Chinese and Russians are hoarding the stuff. With China’s great imbalances at the moment it needs the renminbi to eventually work as a form of reserve currency. They know it has a far greater chance of adoption if it is backed (at least implicitly) if not explicitly by a large hoard of gold reserves. This is also why the Swiss, prior to the disaster of the central bank in the early 2000’s and selling gold at the rock bottom have always hoarded it, and why people have always felt safe parking their money in Switzerland (neutrality and bank secrecy aside).

    • +many! I think we are getting closer and closer to an end of the USD being the world’s undisputed reserve currency.

    • Go read “5000 years of Debt”.

      Skippy… it uses methodology that has a bit more gravitas than mass indoctrination, btw the status quo through out antiquity preferred gold as it was their creation in the first place… too serve them.

  9. State sponsored counterfeiting!! If I recall correctly, North Korea did that with the USD.

    Interesting times.

    • And apparently the U.S. also did the same with Iran’s currency. So by that logic the biggest counterfeiters are governments.

  10. Varoufakis has resigned. A knowledgable and honourable man.

    http://yanisvaroufakis.eu/2015/07/06/minister-no-more/

    Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.

    Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.

    • bolstroodMEMBER

      Out of office , but not out of the game. He has fucked with the Troika’s heads
      An Honourable Man.
      More power to him.

  11. When fools and conspiracy theorists like Jim Rogers (who went long the Rubble just before it collapsed) Paul Craig Robert, even Alex Jones are pumping the gold story it has to make you nervous. These guys are idiots. Peter Schiff was right 8 years ago but since then he has missed the greatest bull run in US stocks just about in there history. Property involves enormous leverage so I stay clear. Carl Icahn’s recent call that the market is overheated because Junk Bonds are over priced also makes me scared of leveraged stocks. Still buying strong businesses with minimal leverage and trading under intrinsic value will serve you well in an inflationary environment – far better than what gold will.

    • who went long the Rubble just before it collapsed.

      Yeah, but it recovered and he is was also long a bunch of Russian companies who have little debt on their balance sheets, make money hand over fist and traded on PE’s of 5 and 6 and have also made good price gains since MICEX fell sharply initially post sanctions.

    • Yer and he has been a bear on US equities ever since the GFC struck and they have increased 2.5 times since then. I am always skeptical of anyone talking their book. I keep 5% of my holdings in physical gold and another 5% in Platinum, silver and agricultural stocks. I like the gold thesis, however it is fighting central banks and no one ever wins that game. Someday all the apocalyptic scenarios will come true but I am not going to hang around waiting when there are profits to be made.

      • I like the gold thesis, however it is fighting central banks and no one ever wins that game

        Central Banks vs degrowth, debt crisis and growing climate crisis (i.e. Mother Nature) …I like the odds. 😉

        You can wait and wait until the writing is clearly on the wall, and who knows when that will be, and risk not being able to get into serious amounts of PMs at all, or you can move early.

        Better a decade early than a minute too late 😯

  12. Well guys hot off the press YV has been sacked, Is this a Greek tragedy or what.WW

  13. In a big surprise, Varoufakis resigns as FinMin despite no vote.


    Minister No More!
    Posted on July 6, 2015 by yanisv

    The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage.

    Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.

    Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.

    I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.

    And I shall wear the creditors’ loathing with pride.

    We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new Minister of Finance, and our government.

    The superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning.”

    http://yanisvaroufakis.eu/2015/07/06/minister-no-more/

  14. AusDreamNoMore

    I will be taking US dollars with me because they might not be interested in using euro’s