Re: [gang8] Dollar Hegemony Revisited

["Hugh Whinfrey" <econ@xxxxxxxxxxxx>]

William Hummel writes

> A "gold bug" in common parlance means one who advocates the return to
> gold as the monetary base, "true money".

Yes indeed. That was also how I had understood the term until
recently. In specific, until I ran into the "conspiracy theorists" at
GATA who were alleging the price-capping.It seems folks were
also calling them "gold bugs".

It turns out that these folks are not "gold bugs" in the sense of
being advocates of a return to the gold standard. I have that
directly in writing from the group's chairman, FWIW. Instead
what they are advocating is a "free gold" market. Exactly the
same thing that William is trying to argue already exists. So
the objectives are one and the same, the difference is only in
their assessments of whether it has already been achieved or
not.

After looking around still more, beyond the confines of that one
organisation, I found plenty of "free gold" folks habituating what
are called "gold bug" sites on the net. In fact I'd guess it's about
50-50 out there as to whether a given person typed as a "gold bug"
is really a "free gold" advocate, i.e. thus not at all an advocate of a
return to the gold standard..

You can ask GATA yourself - they have an e-mail address
for such questions - there's no need to take my word
for it..And, no, I've never been associated with them.

>I can't imagine where Hugh
> gets the notion that I am a gold bug.  The words above say quite the
> opposite.

Agreed. It helps to read them carefully.

> Only "gold bugs" think of gold as a reserve currency.  Most of us, I'm
> sure, treat gold as a commodity whose price in USD, or pounds, or
> whatever, is determined in the gold market.

The US Treasury still has, what, 8 or 9 thousand tons of the stuff on
its books. The Germans supposedly have a bunch. And then the
French do too. The list goes on. So we have a dilemma again. It would
then seem that folks who support the present system then are "gold bugs"
since gold is still evidently on the books as a reserve currency.

This comes back to what I was saying about this farcical duality
of whether gold currently is or is not a "reserve currency" actually
undermining dollar hegemony. Folks are saying it isn't, but then
they are keeping the stuff on their books.So which is it ? It sends
a mixed message, i.e. one of indecision and hesitation, which
translates into a big neon sign flashing "weakness" in big bold letters.

                                   ***
I would suggest that confidence would be stronger in a system where
the supportive rhetoric is at least matched by the advertised reality.
                                   ***

It all seems to be leading to the fact that if we're going to redo the
Plaza Accord, etc. then gold has to be dealt with in fact rather than
in rhetoric.And that the present incarnation of "dollar hegemony" will
likely bleed the US nearly to death of its industrial base until this is done.
I can only point out that the military advantage goes hand.in.hand
with industrial base.

> Price capping on gold?  Who is doing it?

Sigh. You're a couple of months behind on the news William.
JP Morgan has already admitted being a part of it in a court
case in New Orleans, "Blanchard" is the opposing party.

Here's an older link referring to the disclosure of their monopoly in the
market for gold derivatives:
http://news.findlaw.com/prnewswire/20030515/15may2003104259.html

Hugh