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Friday, October 10, 2008

Finally, central banking explained

The U.S. Federal Reserve and other central banks have been in the headlines recently. First there were the various expansions of power that allowed the Fed a greater role in the economy, and then there was yesterday's coordinated interest rate cut by six of the world's central banks, including the Fed and the Bank of Canada.

A month ago few Canadians knew who Federal Reserve chairman Ben Bernanke was, now they've seen him testifying before Congress clamoring for a bailout, but they still may be unsure exactly what he does.

Here is Australia's answer to Jon Stewart, Shaun Micallef, interviewing the Reserve Bank of Australia's Tony Froth (remember then-Fed Chair Alan Greenspan's July 2005 comment that "the apparent froth in the housing markets appears to have interacted with evolving practices in mortgage markets") trying to get to the bottom of it:

UPDATE: Welcome to our fine blog LewRockwellites!

We are Canada's #1 political blog, but, more importantly, we're pro-liberty! Go ahead and explore.

We've covered Canadians giving an Austrian explanation of the financial crisis here and here. If you want to learn more about Canada, we recently compared gun rights in Canada and Switzerland and if you're curious about Canada's political scene and our present election, we've got some short but apt summaries here and here.

Posted by Kalim Kassam on October 10, 2008 in Humour | Permalink

Comments

Anybody catch Jim Flaherty's announcement of a 25B "injection into the Canadian economy? Does this look familiar to anyone here in Canada where the economy is healthy and sound? (According to PM Harper anyway)

Posted by: JC | 2008-10-10 3:43:04 PM

This is a great video. Too right mate!

Posted by: JC | 2008-10-10 4:37:43 PM

Anybody catch Jim Flaherty's announcement of a 25B "injection into the Canadian economy?

Posted by: JC | 10-Oct-08 3:43:04 PM

Can't you get anything right? The government is buying government backed mortgages back from the banks. The mortgages are then to be resold later. If the mortgage holder defaulted the government would be on the hook either way.

Posted by: The Stig | 2008-10-10 5:20:46 PM

If the mortgage holder defaulted the government would be on the hook either way.

Posted by: The Stig | 10-Oct-08 5:20:46 PM

The "government" would be on the hook either way?

Sinse when is any of this ANY of the government's business? At all?

You work for the government don't you. Its the only possible way you could have your head so far up its ass.

Posted by: JC | 2008-10-10 8:49:03 PM

The "government" would be on the hook either way?

Sinse when is any of this ANY of the government's business? At all?

Posted by: JC | 10-Oct-08 8:49:03 PM

Ever heard of Canada Mortgage and Housing Corporation? I didn't think so.

You work for the government don't you. Its the only possible way you could have your head so far up its ass.

Posted by: JC | 10-Oct-08 8:49:03 PM

I don't work either directly or indirectly for any government. Unlike you I do understand how the system works. Go back to salivating while listening to Ron Paul's video's on Youtube. BTW. You still haven't explained how your commodity based wonder currency would work, or even detailed what commodities you'll use. Until you do don't waste my time.

Posted by: The Stig | 2008-10-10 9:07:24 PM

Oddly, everyone I spoke to today referred to it as a mini "bail out" Hmmmm

Posted by: JC | 2008-10-10 9:10:13 PM

Stig:

I'm with you on this one.

JC is obviously a financial illiterate.

Cheers.

Posted by: set you free | 2008-10-10 9:12:36 PM

Can't you get anything right? The government is buying government backed mortgages back from the banks. The mortgages are then to be resold later. If the mortgage holder defaulted the government would be on the hook either way.

Posted by: The Stig | 10-Oct-08 5:20:46 PM

I'm still trying to figure out how this is anything but a step down the path that led the US to where it is today.

Posted by: Janet | 2008-10-10 9:16:55 PM

This video isn't just hilarious, it also exemplifies how I feel every time I sit through a macro lecture.

Posted by: Janet | 2008-10-10 9:17:42 PM

I don't work either directly or indirectly for any government. Unlike you I do understand how the system works. Go back to salivating while listening to Ron Paul's video's on Youtube. BTW. You still haven't explained how your commodity based wonder currency would work, or even detailed what commodities you'll use. Until you do don't waste my time.

Posted by: The Stig | 10-Oct-08 9:07:24 PM



We've been over this I don't know how many times now and its boring....

You suggested Maple Syrup and Walnuts....well that would be a step up from "thin air" wouldn't it?

And I don't need to be a financial whiz kid to know which way the wind blows and neither does the rest of the country.

The Canada Mortgage and Housing Corporation is just another level of bureacracy and completely unnecessary.

You go ahead and defend your glass house...I hope you don't get hurt too badly when it collapses on you. And its going to.

Posted by: JC | 2008-10-10 9:31:58 PM

I'm still trying to figure out how this is anything but a step down the path that led the US to where it is today.

Posted by: Janet | 10-Oct-08 9:16:55 PM

The action by the government today was to add financial liquidity to the banks. The banks ARE NOT being bailed out in Canada. Take a course in accounting so you can read a balance sheet then get a financial statement from RBC or BMO. You'll find our banks are solid.

Posted by: The Stig | 2008-10-10 9:41:12 PM

This ain't Ron Paul...

http://www.youtube.com/watch?v=xIsHD7nwTbU&eurl=http://www.campaignforliberty.com/

http://www.youtube.com/watch?v=mQOt1yyJeNg

http://www.youtube.com/watch?v=zhLPNdjyjyg&feature=related

I may be a financial illiterate...but I'll take the word of these guys over most people's...any day of the week.



Posted by: JC | 2008-10-10 10:13:05 PM

The action by the government today was to add financial liquidity to the banks.

Posted by: The Stig | 10-Oct-08 9:41:12 PM

Translation: The action taken by the government today was more "meddling" in the market. Plain and simple. Add liquidity...my ass! :)

Posted by: JC | 2008-10-10 10:27:57 PM

Scalped from harry on another website:

Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering.

Yoda

Posted by: set you free | 2008-10-11 1:02:04 AM

"The mortgages are then to be resold later."

But if they aren't worth anything because the mortgage holder still can't pay later, then the taxpayer gets $0 back, and the government is saddled with even more debt.

" If the mortgage holder defaulted the government would be on the hook either way. "

Right, and the government gets its money from the taxpayer. So either the government goes bankrupt from its massive debt, and the taxpayer loses his or her lifetime investment in the institution that is supposed to be protecting them (not going to happen), or the government simply borrows more money from foreign nations whose production is actually in significant surplus to its consumption (i.e. it doesn't overextend its own credit and become a debtor nation.) Oh, but wait... Then the "mortgage holder" becomes the debtor nation, and the "lending institution" is ultimately the foreign nation with a surplus and good credit... Where things go from there is any madman's pick out of a number of perfectly logical but utterly immoral solutions.

Posted by: rintrah | 2008-10-11 8:51:32 AM

You'll find our banks are solid.

Posted by: The Stig | 10-Oct-08 9:41:12 PM



Then why does the government need to inject 25B in "thin air" dollars to the "solid" banking system? And who is actually paying for it?

Posted by: JC | 2008-10-11 8:59:07 AM

This is great! Our media and entertainment industry in America are far too uninformed to put on a show such as this!

:)

Posted by: Jonathan H | 2008-10-11 11:43:49 AM

JC:

Once you're in a hole, stop digging.

It's apparent you're an economic illiterate, so please stop embarrassing yourself.



Posted by: set you free | 2008-10-11 12:14:34 PM

Harpo was once a Hayekian who's now condemned Canada to at least a mild DEPRESSION with this taxpayer insured, liquidity fueled bail out of banks -- banks' who are only still solvent because the Canadian real estate collapse was delayed by high commodity prices, now on their way down.

Posted by: Name | 2008-10-11 2:17:48 PM

Name:

What planet did you just arrive from?

Canadian housing statistics just came out two days ago and the market is pretty stable.

I'm guessing you're a new arrival from Chicken Littleovia.

Could you cite any Canadian economic statistic which suggests a depression?

Let's see.

Budget surplus ... $2.9 billion.

Canadian banking system ranked best in the world.

105,000 new jobs.

Unemployment rate steady at 6.1%.

GDP increasing at a rate of 0.7%.

National debt being paid off from increasing tax revenue due to higher employment.

Jack Layton bemoaning the fact that Canada's labour market is so tight, Alberta has to bring in foreign workers.

Where's the problem, Chicken Little?

Posted by: set you free | 2008-10-11 2:46:04 PM

JC:

Once you're in a hole, stop digging.

It's apparent you're an economic illiterate, so please stop embarrassing yourself.



Posted by: set you free | 11-Oct-08 12:14:34 PM

So the questions I raised aren't valid?

Qualify that...if you can.

I love how these trained morons make statements like that and give no reasoning whatsoever for such assinine assertations. Prove yourself!



Posted by: JC | 2008-10-11 3:00:09 PM

Speaking of Ron Paul's videos -- there's one on the Yahoo! Finance homepage (top right) right now, titled "Ron Paul: Rescue Plan is 'Not Good'"

http://finance.yahoo.com/

or

http://cosmos.bcst.yahoo.com/up/player/popup/?rn=289004&cl=10144272&src=finance&ch=1316259

:-)

-AK

Posted by: AK | 2008-10-11 3:05:58 PM

"Where's the problem, Chicken Little?"

Exactly. Where's the problem that requires a $25B "backstop" of taxpayer money? If the banks and their mortgage portfolios are so secure than where are all the private investors lining up to guarantee them on their own initiative and dime? For example, how much have the armchair economists on this blog who are poo-pooing Ron Paul and the like *personally* invested in bank stocks lately? How much have they borrowed using their own property and good name as security, in order to take advantage of this once-in-a-lifetime opportunity to score big by betting against the financial apocalypse?

Sounds like either the sky is falling, or someone is using the public's vague impression that the sky is falling to pull a very fast and smooth one and get a LOT of free insurance on someone else's dime.

Posted by: Turkie Lurkie | 2008-10-11 4:20:27 PM

JC:

The $850 billion in the US was for what were termed ‘toxic' loans. In other words, it was unlikely they would ever be paid out. The US taxpayer basically will have their taxes raised $850 billion for a good intention gone wrong.

Although the goal of ‘equal opportunity of home ownership for every American' is admirable, there was political pressure in Congress and advocacy pressure by ACORN exerted upon the lenders.

Like anything, the road to hell was paved with good intentions.

At the crisis point, it was no surprise that people who did not qualify as good credit risks were unable to make payments on their mortgage.

The Canadian banking system, best in the world, did not indulge itself in this type of ‘social equality' loans.

Canadian banking practise is solid, with ability to repay an important consideration before a cent is given to the borrower.

Therefore, the mortgage system insured by CMHC is solid and shows no more than the usual percentage of potential default.

In the US, bad loans represent a growing percentage of portfolios. Combined with a spike in oil prices, people who were living payday to payday found it increasingly harder to pay their loans.

Housing prices had been artificially inflated about the long-term inflation line due to the influx of unqualified borrowers ... as per the classic supply/demand curve.

Combined with the fact US taxpayers can write off mortgage interest against their income tax, which created an incentive for an irresponsible consumer society.

Once house prices started coming down due to the fact more people could not afford their mortgage payments, more and more Americans found themselves in houses in which they owed more money than the house was worth.

As more and more bad (or toxic) loans showed up on the books of US lenders, their ability to give out more credit became more limited.

Canada has neither the taxpayer writeoff incentive or the housing instability due to falling prices in its financial structure.

The fact Canadian banks did not indulge in these risky lending practises is the main reason the banking system is considered the best in the world.

Yet, since financial markets are intertwined internationally, Canada was not immune to what's referred to as the credit crunch.

The $25 billion transferred onto the books of the CMHC represent totally safe loans and was just an accounting procedure.

In the US, Congress had to approve the $850 billion of debt it was loading up on the US taxpayers. Curiously, a higher percentage of Democrats in both the House of Representatives and the Senate voted in favour of putting the taxpayer on the hook, even though they blamed Wall Street greed for the problem.

In Canada, the issue did not have to be approved by the House, since it did not involve the expenditure of any taxpayers' dollars. If it had, the opposition parties would be howling.

That's about as simple an explanation as I can offer.

Any questions on any of the points brought out here?

Intelligent ones only, please. The important thing is to move away from economic ignorance and to understand how these things work.





Posted by: set you free | 2008-10-11 4:30:19 PM

I have good suggestion may be funny though

or may be hidden we can do that who knows:

USA has 10 trillion debth

listen how they can find the solution is so easy

plus

we have 7 to 10 rich country in the world who ruled the rest as third world

include Canada with 1 trillion debt

due to too much war we can asked them to print more money for all and happy ended story

who can stop them

they can do once every 100 years for politicla reasons

just tell Bush print 40 trillion american US paper money in their bank it is only piece of paper realy call it money

then get 10 trillion to bank owe to US anthoer 9 to other 9 rich country include pay debt of Harper too

20 trilion print money new for USA and 9 more rich country we put Canada while canada is not rich country anyway

and 20 trillion print money for third world country

wiht more or less every body back to zero or close to plus number and start all over again

or made all norht america one currency

like europe used one currency now or any other solution

creat more job

stop rich company stop small new innovation compnaied or do ot let mid compnay grow as well

we need secure stock run by government in few resource such as energy cna be us by govment and some prive together as secure investment

then choose 100 poor counties in map in middle east include Iraq and afgan and pay each 200 bilion in totoal of all 100 third world we will give them another 20 trilion to rebuilt thier county and pay hunger put all muslim included that 100 to stop them enter in any war qand busy them for rebuilt their country instead

made minimum wage food on table rent or house for all peopel in world and if some one look or ask more let do some motivation and freedom by border not those crook criminla in USA are too much fraud can bother all world since americna are gridy and let them step back from enterfer in other country security

let peopl has life and happy ended story

the bank are happy all economict harper-bush become happy and bank start borrow more

and made three stock

one stock for government for secure one for people above 40 years old with interst of 5%

one FOR LARG COMPANY STOCK

one for small new innovation stock

one for mid medium business ready to grow

matter of problmes of recesion by print paper money will resolve ane execuse of war will help this job done hay plus bush can do any thing

remeber in his vote



Posted by: new | 2008-10-11 4:39:52 PM

Any questions on any of the points brought out here?

Intelligent ones only, please. The important thing is to move away from economic ignorance and to understand how these things work.

Posted by: set you free | 11-Oct-08 4:30:19 PM

That's a valid observation all the way around. And not one bit of it is in any way at all news to me. I'm not as illiterate as you'd like to think you see.

My problem is that I simply disagree with the way things are presently done. I see this system as generally predatory and corrupt. It starts right at the beginning for me...with government issued currency. Not an altogether bad thing provided it is done with integrity and with regard to the actual value of that currency. I don't believe that it is though.

I think we have an "old boy" system of corporate elitists and high level politicians who are able to manipulate this system of finance for their own well being and with complete disregard for people in general as anything but sources of income.

Basically its financial "fuedalism" and I'd like to see it change to a system with more accountibility and oversight.

Thanks for taking the time to explain your position / thinking.

Posted by: JC | 2008-10-11 5:01:31 PM

JC:

There's only one course for you to take.

Run for office and see how your ideas play in the marketplace.

If you want accountability and oversight in the financial markets, there's no better place it's practised than in Canada.

Posted by: set you free | 2008-10-11 5:13:22 PM

I was feeling smug because I'm in a cash situation, then someone had to go and spoil it by bringing up inflation. We're all going to get bloody this time.

Canada may have the most stable banking system, but they're still too loose with mortgages for my liking. Thank the conservatives for putting a stop to 40 year mortgages, but 5% is still too small a down payment. It's not that long ago that first time buyers had to save for at least 5 years to buy a house. We bought that house to live in, not to build a portfolio around. We need to be re-educated on the basics of personal finances, and I think we're in for a crash course.

With all the focus on home mortgages, nobody's talking about student loans. Is it going to get tougher to finance an education? Will tuitions have to drop? Taxpayers will be on the hook for that too. My plan is to bribe an Indian Chief into swearing that my kids are 1/8 Mic Mac. Hard times require outside the box solutions.

Posted by: dp | 2008-10-11 5:47:07 PM

JC:

There's only one course for you to take.

Run for office and see how your ideas play in the marketplace.

If you want accountability and oversight in the financial markets, there's no better place it's practised than in Canada.

Posted by: set you free | 11-Oct-08 5:13:22 PM

I would agree that we do pretty well here in Canada as compared to most other nations.

And you aren't the first person to suggest I run for office. I've even considered it. But my wife (sinse May)has told me that if I want to go down that road...I'm going alone.

But if I ever get Divorced! I'm going for it! lol

Posted by: set you free | 11-Oct-08 5:13:22 PM



Posted by: JC | 2008-10-11 7:55:33 PM

But if I ever get Divorced! I'm going for it! lol

Posted by: set you free | 11-Oct-08 5:13:22 PM



Posted by: JC | 11-Oct-08 7:55:33 PM

Ooops! one cut and paste too many.

Posted by: JC | 2008-10-11 7:56:27 PM

JC:

If you ever run for politics, there's much to be said for original ideas.

Cut and paste don't cut it.

Posted by: set you free | 2008-10-11 9:02:47 PM

Then why does the government need to inject 25B in "thin air" dollars to the "solid" banking system? And who is actually paying for it?

~JC | 11-Oct-08 8:59:07 AM

You mean the Canadian government that owes the Banks $480 Billion CDN in national debt has "injected"(repayed) $25 Billion back to those same Banks that is owes $480 Billion to?

Oh, the HORROR!!!

(and just to restore liquidity and confindence in the Canadian dollar too the farging basticles-have they no shame)

Don't Timothy McVeigh wannabes like you, JC, believe in paying your debts?

Posted by: Speller | 2008-10-11 11:23:06 PM

I am ecstatic to have found the Western Standard! It seems that at least some of our brothers and sisters to the north understand liberty and freedom, and call socialists, socialists!

This is all going to end very, very badly if the people don't stop the politicians and their buddy's the banksters

Posted by: Habman | 2008-10-12 6:46:26 AM

Show your outrage at the what the Federal Reserve has done to the American Economy.

Sign and comment on the Abolish the Federal Reserve Petition at

http://www.petitiononline.com/fed/petition.html

Posted by: Ron Holland | 2008-10-12 8:10:58 AM

Don't Timothy McVeigh wannabes like you, JC, believe in paying your debts?

Posted by: Speller | 11-Oct-08 11:23:06 PM

That's completely uncalled for and very very low...but then that's what you are isn't it? Low!

You mean the Canadian government that owes the Banks $480 Billion CDN in national debt has "injected"(repayed) $25 Billion back to those same Banks that is owes $480 Billion to?

And sinse the government produces nothing, how can "it" pay back anything...Dumbass.

That's our tax dollars your talking about.

Thanks Speller, I love it when a moron gives me the opportunity to point out things like that.

Have another small minded day. :)

Posted by: JC | 2008-10-12 9:38:13 AM

JC:

$25 billion of strong mortages in the most solid banking system in the world. Cost to Canadian taxpayer for what's essentially an accounting move ... zero.

$1.5 trillion in ‘toxic loans' in the US thanks to the stupidity of social justice mortgages encouraged by politicians on both sides of the House. Cost to the US taxpayer ... $850 billion and counting.

Housing prices in Canada ... holding steady.

Housing prices in US ... a comparable one to my $450,000 house in Phoenix can be had for $50,000.

Why are US house prices plunging and Canadian house prices holding fairly steady?

Politically-correct lending practises south of the border coming back to bite the financial system.

Thanks USA. Your road to hell was paved with good intentions.

Posted by: set you free | 2008-10-12 10:22:41 AM

No, no JC: Nothing's wrong, everything is great. The government is injecting $25B into the economy. This won't cause inflation. This is all normal. These dopes aren't even suspicious. Everything will be fine as long as our buddy Steve is in charge. Willing rubes.

Posted by: attitude | 2008-10-12 11:44:58 AM

The fact that no one sees the Rothchilds, Morgans, Walbergs, and an array of Zionist are rapidly changing the world as you know it, into A NEW WORLD ORDER, by manipulation of the highest government officials in the most powerful countries of the world, has got to be the real joke. This planned burst of the bubble now lowered the economy of USA and Europe simultaneously. This in turn will ripple around the world causing all the ecomys to drop. Once the paper dollar is worthless the introduction of the ET (electronic transactions- RFID) will be right there to protect the people that have any net worth left.

You jerks better wakeup and revelotion against the people as mentioned at the top of this comment.

Just think, Mayer Rothchild been stealing $ from the world all his life. Enough to pay every man woman and child on the planet 73,000 US Dollars, a total of 500 trillion. Th greed is way too much and needs to be cut down. The world is headded for the worse dictatoral govenment of all time.

Stop the Bank Bailouts___ it's just transfering wealth to the rich and eliete.

Posted by: George | 2008-10-12 3:44:09 PM

About 5 month ago i started to do blogging

and say my opion about problmes I saw in canada then in world and mostly related to unfair act and opion about Muslim and espcially Muslim canadian

soon I noticed while i said so many good ideas 99% of ideas was taken soon by main stream medias and newspapers and global and mail and etc,,

not becuase i was favor of them really!

now i noticed my ideas go to world politician desk recently

http://www.reportonbusiness.com/servlet/story/RTGAM.20081012.wbankseurope13/BNStory/Business/home

http://www.theglobeandmail.com/servlet/story/RTGAM.20081012.wimf1012/BNStory/Front

http://www.theglobeandmail.com/servlet/story/RTGAM.20081012.wworldbank1012/BNStory/Front

http://www.theglobeandmail.com/servlet/story/RTGAM.20081012.wbankskoring1013/BNStory/Front

which i said this ideas few month ago

any way

I took 5 economic course in universtiy and

so many math courses and know the business view and problmes in Canada

while i still have problems in English like Mr. Dion I am joking this one

next steps is now

to after banking and all money borrow get rid of it to fix the problems among

all level of business in world

import export and local business

and not let big company interfer in small company in illegal compettion and steal each other buisness

while there is way open that small can go mid and if they are lucky to join big company

still big compnay has not right to smash small conmpanies

and as the final of my message I am working in this month of october to made sure

people know how much big company did damages small company by interupt their business

while never let me tell you NEVER big company able to do ANY thing small but with brain of new innovation can do it

I hope in almost final of my message this option is open to public is warning for all citizen in all world that each single of us and our act is count and every body illegal act will affect our next person and our neighbours

people must particiapte in politic as part of life to let people get free of all nonsense we saw in past 20 years in world

we can be happier if we put so many differnces apart and focus in main issues and find real solution to today problmes rather than choose war and fight and legal action to ask our right

I am sure world find correct direction and move more forward but still we need more honest poltician to work for usa nd inform us with problms before it get worst and let

elected people to made real direction to get recommanded not made majority of power of abosolute dictorship to have power and misused our money in world and we pay pentality for them

we can do once but we are not stupid to let this happend one more time again

attention future leader of country or local leaders:

we all people are watching you this time

just behave well and do not trick us again

thank you to my parents who sent me to the best schools and universities it helped while my job is not to stay here long

Posted by: new | 2008-10-12 11:39:13 PM

In this video the Reserve Banker says that the Reserve Bank had long ago sold its Gold reserves.

Assuming that most western reserve banks have done the same thing, I have a question. Who was all that gold sold "to"? And where is it now?

Posted by: JC | 2008-10-13 9:20:09 AM

JC:

Once again, you prove your economic illiteracy.

The US went off the gold standard in the early '70s and the rest of the world followed.

We're in a fiat currency system, that is, a currency backed up by confidence in government's ability to maintain confidence.

Gold was sold off to the private market and its price is now determined by supply and demand.

Posted by: set you free | 2008-10-13 10:22:44 AM

Gee set...good thing your not a teacher I guess. If you were, everytime someone asked a question you would start your answer by telling them how stupid they are. How very egotistic and arrogant of you.

So all that gold is just floating around on the free matrket now?

Bull. I don't believe that for a minute.

have a good day. :)

Posted by: JC | 2008-10-13 12:21:19 PM

So all that gold is just floating around on the free matrket now?

Bull. I don't believe that for a minute.

have a good day. :)

Posted by: JC | 13-Oct-08 12:21:19 PM

Actually there never really was any gold reserves. It's just an elaborate hoax by the Illuminati,the Masons, the Council on Foreign Relations, the Bilderberg Group, the Bohemian Grove Group, and other members of the "New World Order" to fool libertarians like you.

Posted by: The Stig | 2008-10-13 1:16:23 PM

Central banks are still major holders of gold, they just don't keep as much of it anymore. Modern fiat currencies have no tie to gold, but are based on a government's ability to pay its debts, normally through taxation. The Federal Reserve has been selling off gold, while the Bank of China has been buying it, but much of the gold sold by Central banks ends up in private hands. While the price of gold is largely determined by market forces, because they are such big players in the gold market and because it affects their monetary policy, central banks (which are extra-market institutions) manipulate the prices as well.

George, I'm going to try to reason with you, though this may prove futile. I think you overestimate the competence of these banksters. Yes, if they had studied sound economic theory they would have known they were creating a bubble, but in their hubris they really thought that they knew how to make a paper standard as good as gold. I know that historically the Rothschilds have played a major role in the BoE and other central banks and that the Morgans have been beneficiaries of Fed policy. What evidence is there that they are particularly zionist, or driven by zionism rather than simple greed? In the absence of any evidence, why single out these families from among the huge financial and political elite who benefit from central banking? Why would I think that they are in charge? It looks to me like noone is in charge at all.

Posted by: Kalim Kassam | 2008-10-13 2:33:42 PM

While the price of gold is largely determined by market forces, because they are such big players in the gold market and because it affects their monetary policy, central banks (which are extra-market institutions) manipulate the prices as well.

Posted by: Kalim Kassam | 13-Oct-08 2:33:42 PM

Oh do explain how central banks "manipulate" the price. And also explain why they do it. Bear in mind that the largest holder of gold reserves is the US with about $250 billion.



Posted by: The Stig | 2008-10-13 2:54:29 PM

Stig,

Start here: http://www.gata.org/node/6242

Posted by: Kalim Kassam | 2008-10-13 4:18:44 PM

Stig,

Start here: http://www.gata.org/node/6242

Posted by: Kalim Kassam | 13-Oct-08 4:18:44 PM

Bwahahahahaha. And I'll end there. COMEX ended price fluctuation limits on gold several years ago so you can get wild swings in the price. The markets determine the price of gold, which isn't what conspiracy theorists want to hear.

Posted by: The Stig | 2008-10-13 4:43:28 PM

Actually there never really was any gold reserves. It's just an elaborate hoax by the Illuminati,the Masons, the Council on Foreign Relations, the Bilderberg Group, the Bohemian Grove Group, and other members of the "New World Order" to fool libertarians like you.

Posted by: The Stig | 13-Oct-08 1:16:23 PM



Just another sarcastic (statist) idiot.



Posted by: JC | 2008-10-13 5:09:59 PM

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