Friday, August 29, 2014

The Myth of the Unchanging Value of Gold

Mises Daily: Friday, August 29, 2014 by

According to mainstream economics textbooks, one of the primary functions of money is to measure the value of goods and services exchanged on the market. A typical statement of this view is given by Frederic Mishkin in his textbook on money and banking. "[M]oney ... is used to measure value in the economy," he claims. "We measure the value of goods and services in terms of money, just as we measure weight in terms of pounds and distance in terms of miles."

When money is conceived as a measure of value, the policy implication is that one of the primary objectives of the central bank should be to maintain a stable price level. This supposedly will remove inflationary noise from the economy and ensure that any changes in money prices that do occur tend to reflect a change in the relative values of goods and services to consumers. Thus, for mainstream economists, stabilizing a price index based on a basket of arbitrarily selected and weighted consumer goods, e.g., the CPI, the core CPI, the Personal Consumption Expenditure (CPE), etc., is a prerequisite for rendering money a more or less fixed yardstick for measuring value.

This idea — that a series of acts involving interpersonal exchange of certain sums of money for quantities of various goods by diverse agents over a given period of time somehow yields a measure of value — is another ancient fallacy that can be traced back to John Law. Law repeatedly referred to money as "the measure by which goods are valued." This fallacy has been refuted elsewhere and rests on the assumption that the act of measurement involves the comparison of one thing to another thing that has an objective existence, and whose relevant physical dimensions and causal relationships with other physical phenomena are absolutely fixed and invariant to the passage of time, like a yardstick or a column of mercury.

In fact, the value an individual attaches to a given sum of money or to any kind of good is based on a subjective judgment and is without physical dimensions. As such the value of money varies from moment to moment and between different individuals. The price paid for a good in a concrete act of exchange does not measure the good's value; rather it expresses the fact that the buyer and the seller value the money and the price paid in inverse order. For this reason neither money nor any other good can ever serve as a measure of value.

Unfortunately, advocates of a gold-price target wholeheartedly embrace this mainstream doctrine while giving it an odd twist. They begin with the wholly unsupported assumption that one commodity, gold, is stable in value and that, therefore it can serve as the lone guiding star — or "The Monetary Polaris" as Nathan Lewis terms it — for Fed monetary policy. According to Steve Forbes, writing in the introduction to Lewis's Gold: The Monetary Polaris, real gold standards have one thing in common: "They use gold as a measuring rod to keep the value of money stable. Why? Because the yellow metal keeps its intrinsic value better than anything on the planet."

Thursday, August 28, 2014

Save our Swiss gold!

This Swiss method of voting by national referendum - popular initiative - is a fundamental difference between our representative republic and theirs ("democracy" isn't in the Constitution). Think for a minute... would you entrust the American masses to have the same comprehension of our rule of law as do the Swiss? Look at what our national referendum to vote for a president brought us, and that's your answer. Every president and duplicitous congress through patient gradualism, have usurped our individual rights guaranteed by law. Obama is no worse. He just seems that way because he's been brought in to mop-up what other traitors, each one progressively "worse", accomplished before him. Just following orders. The end is nigh. That's what you're feeling. 

The Swiss should have known better than to leave their gold with a foreign custodian after WWII. Although, the American people still don't know if you don't hold it, you don't own it.

August 28, 2014 

In just three months, on November 30, the Swiss will vote in a federal referendum on the future of the country's gold reserves.

The referendum has arisen through a popular initiative called 'Save our Swiss Gold.' In Switzerland, citizens can propose changes to the Swiss constitution through a mechanism called a popular initiative, even if parliament is against the proposal.

The 'Save Our Swiss Gold' initiative is set to highlight the important issue of sovereign gold reserves and who has possession and controls them. It may lead to an important debate about each country's national patrimony and their gold reserves.

The 'Save Our Swiss Gold' initiative is proposing the following:
  • rules to prevent the Swiss National Bank (SNB) selling any more of the country's gold reserves
  • to direct that the SNB must keep a minimum of 20% of its reserves in gold, and
  • to require that all Swiss gold must be stored in Switzerland.
This would require repatriation of Swiss gold since some of the Swiss gold reserves are stored abroad.

The Swiss National Bank (SNB) are against the proposal but were forced last year, in reaction to the popular campaign, to reveal the storage locations of the Swiss gold.

In April 2013, Thomas Jordan, SNB President, confirmed that 70% of Switzerland's gold is in Switzerland, 20% is at the Bank of England, and 10% is stored with the Bank of Canada, and that this mix of holdings had been in place for more than a decade.

Since the Swiss hold a total of 1,040 tonnes of gold reserves, this would mean that there are 104 tonnes of Swiss gold at the Bank of Canada and 208 tonnes in the Bank of England. Jordan's explanation of the foreign gold storage was that it provided "adequate regional diversification and good market access".

Since the Bank of England specialises in the custody of gold on behalf of numerous foreign central banks, it's not surprising then that the SNB stores gold at the Bank of England.

What is surprising is that the SNB still holds gold at the Bank of Canada, since the Bank of Canada is a legacy custodian of other countries' gold and appears to have stopped storing other nations sovereign gold in recent years.

When the Bank of Canada was asked earlier this year as to how many foreign central banks it acts as gold custodian for, it confirmed that it currently acts as gold custodian for only four foreign central banks, but that due to confidentiality, it was unable to disclose the identity of the national account holders.

However, its known from other sources that both the Netherlands and Sweden also hold some of their gold reserves at the Bank of Canada.

The Dutch central bank, De Nederlandsche Bank, has stated previously that most of its gold reserves are held at the Federal Reserve Bank in New York, the Bank of England, and the Bank of Canada, with less than 10% stored in the bank's own headquarters in Amsterdam.

The Swedish Riksbank has also stated recently that its gold is stored in a number of foreign locations, such as the Federal Reserve, the Bank of England but also the Bank of Canada.

The identity of the 4th foreign central that stores gold at the Bank of Canada is unclear, but it may be the Bank of England or the Federal Reserve, since both banks historically held gold accounts with the Bank of Canada.

Given that Canada sold nearly all of its own substantial gold holdings a number of years ago, it seems like an anomaly that the Bank of Canada in Ottawa is still holding gold on behalf of other countries. Most countries that had held gold in Ottawa repatriated it long ago.

Citizens of Switzerland, the Netherlands and Sweden should be concerned that some of their nation's gold is in custody with a bank that is no longer a specialist in gold custody and that did not even see fit to maintain its own gold reserves. They should also be concerned about the secrecy and lack of transparency regarding their gold.

The upcoming Swiss gold referendum will be very interesting and will highlight and focus minds on why the SNB vigorously defends the need to keep some of its gold reserves in a long forgotten vault in Ottawa.

About the Author
Mark O'Byrne
Mark O'Byrne is executive director of Ireland-based GoldCore.

FEMA Camp Locations in US - state-by-state List & Map - Expel the FedGov from State Lands

Location of FEMA Camps & Map

See related sites also:
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      City Council to Police: You Have 60 Days to Get Rid of Your MRAP Military Tank

      Local city councils are thankfully coming to the realization that these fedgov's 'benevolent' gifts of war weapons are a back door sneak attack to federalize the people's local police. The City of Davis didn't fall for it. Hats off to these folks! Future cities must refuse these 'trojan horses' at the door and stamp any delivery papers "RETURN TO SENDER."

      Demanding their state's national guard units be brought home right away is what the governors should be doing with no more foot dragging.

      Melissa Melton The Daily Sheeple
      August 28th, 2014

      Apparently not all city councils are thrilled with the idea of their local police department driving around "protecting" their streets with mine resistant, ambush protected vehicles straight off the battlefields in Iraq and Afghanistan.

      The city council of Davis, California, a town of about 66,000 people near Sacramento, has now adopted a resolution to "tank the tank" as one protester put it, after a large crowd of concerned citizens showed up to the council's most recent meeting. CBS13 reports:
      The vehicle, worth nearly $700,000 didn't cost the Davis Police Department a dime, as it was acquired through a federal government surplus program. The MRAP was developed by the military for the wars in Iraq and Afghanistan. After Pentagon budget cuts, the vehicle has been making its way to local law enforcement…
      A big concern for protesters is the vehicle could be used to quash peaceful protests and demonstrations, especially in light of clashes between heavily-armored police and protesters in Ferguson, Missouri, following the shooting death of Michael Brown.
      Of course the police chief argued that they really need an MRAP, since apparently all police chiefs around the country have been brainwashed to believe that, even though crime rates are at the lowest they've been in over 20 years, 'America is a war zone':
      The chief promised specific guidelines for its use, and said like many police forces who now have the armored vehicles, it's a necessary piece of safety equipment.
      "We enjoy a certain quality of life but none the less the real world intrudes upon us from time to time," Black said. [emphasis added]
      Oh, so now we're to the level that a TANK is "necessary" to police America's streets???

      Wow. Good to know.

      I guess that's why the Pentagon has been giving these tanks out to towns like candy, even tiny towns with less than 4,000 people living in them…

      In the meantime, GO PROTESTERS. More people across the nation need to stand up and protest the ever-growing police state and more city councils need to adopt these resolutions.

      We need to take back our streets from the militarized soldiers our local police forces have been morphing into over the last two decades…before it is too late.
      (H/T Chris Jones)

      Delivered by The Daily Sheeple

      Contributed by Melissa Melton of The Daily Sheeple.
      Melissa Melton is a writer, researcher, and analyst for The Daily Sheeple and a co-creator of Truthstream Media with Aaron Dykes, a site that offers teleprompter-free, unscripted analysis of The Matrix we find ourselves living in. Melissa also co-founded Nutritional Anarchy with Daisy Luther of The Organic Prepper, a site focused on resistance through food self-sufficiency. Wake the flock up!

      UPDATE: Can American Banks Raiding Safety Deposit Boxes Be Legal Next After they Loot their Customers Personal Accounts?

      "Yes, We Can! We don't need no phreakin' Constitution!"
                          ...and the people's response is:

      the People say "You phreakin' DO need to obey the Federal and state constitutions!" Any actions to seize our private property by any federal agency or their law officers will be nullified by the individual states. Violators or trespassers of these personal rights can and will be arrested and judged in a state court. No federal magistrate has the granted authority to interpret or end-around our Rule of Constitutional Law.

      Our own state law enforcement entities will no longer be a "team player" with tyrants, but will as they should be, do the right thing and become team players with the people, not accessories to oppression. 

      Any bank likewise delegating these confiscations to third parties jeopardize their being prohibited for having any business authority or surrogates within those states.  

      Questions? Watch:  ▶ Nullification a Tool We All Have by Thomas Woods - YouTube

      Latest in 3-D Printing: High-Quality Skeleton Keys

      ​Thursday, August 28, 2014, via AllGov

      The marvel of 3-D printers, which can make a variety of objects out of hunks of plastic, is proving to be a nightmare for those trying to keep things locked up.

      Duplicate keys that open high-security locks can now be made by anyone, thanks to 3-D printers. And they can do so without even having the original key to work from, according to Wired's Andy Greenberg. With just photographs of keyholes on hand, experts can create "bump" keys that can open "millions of locks with a carefully practiced rap on its head with a hammer," Greenberg reports.

      Jos Weyers and Christian Holler, who developed the software to make the keys, say they're not doing it for the benefit of thieves, but so locksmiths and security experts will be aware of the potential for abuse of the printers. "It's a kind of false sense of security," Holler told Wired. "If a protected profile is your only protection, you should be aware that's no longer enough."

      People don't even need their own 3-D printer to make a bump key, thanks to printing services such as Shapeways or i.Materialise that will make keys, no questions asked.

      The nefarious use of 3-D printers was first reported by Greenberg two years ago when he pointed out that the technology could be employed to make keys that will unlock high-security handcuffs.
      -Noel Brinkerhoff, Steve Straehley

      To Learn More:

      Stock Advance-Decline Line Foretells Job Openings -Technical Analysis Chart

      We don't often publish specific stock market indicators. This one, however, may be a useful complement to meld with other tarot cards you may use for your investing/trading.

      A-D Line Foretells Job Openings

      Chart In Focus
      August 28, 2014

      Back in 2011, I wrote about Why Even Fundamental Analysts Should Watch A-D Line, noting that the NYSE A-D Line is very strongly correlated to corporate profits.  

      But because the A-D Line can be calculated each day in real time, whereas corporate profits are reported with a significant lag, in effect the A-D Line gives a leading indication for what the profits data will look like once they are released.

      The same point applies in this week's chart, which compares the NYSE A-D Line to the Bureau of Labor Statistics' measure of U.S. nonfarm job openings.  The job openings data are published monthly, and the A-D data is the month-end closing values for our Ratio-Adjusted A-D Line, which factors out the changing numbers of issues traded each day. 

      Once again the correlation is really strong, but because the job openings data is reported with a lag, we actually get a leading indication.  This data series only goes back to December 2000, which is not as far back as the corporate profits data, but still that is enough time to demonstrate the correlation. 

      And at the upturns from recessionary bottoms, there seems to be an actual leading indication.  The A-D Line started upward from its October 2002 low well ahead of the September 2003 bottom for job openings.  We saw the same effect in 2009.  On a month-end basis, the A-D Line bottomed in February 2009, while the job openings data finally reached its bottom in July 2009. 

      One might reasonably complain that the recovery in the job openings data has not been as steep as it should have been, or as we needed it to be, and that argument has some merit.  But the A-D Line has correctly identified the direction of that movement.  And the continuing strength in the A-D statistics portends good things for a continuing jobs recovery.  At the point when the A-D Line tops and starts to turn down, it won't just be investors that will need to start worrying. 
      Tom McClellan
      Editor, The McClellan Market Report

      America's Corrupt Institutions

      August 28, 2014

      Editorial By Paul Craig Roberts

      Every public institution in the United States and most private ones are corrupt.

      To tell this story would be a multi-book task. Lawrence Stratton and I have written one small volume of the story. Our book, The Tyranny of Good Intentions, now with two editions and multiple printings, documents the corruption of law in the United States and has been cited in rulings by Federal District and Appeal Court judges.

      Law is just one public institution, but it is a cornerstone of society. When law goes, everything goes.

      Only about 4 percent of federal felony cases go to trial. Almost all, 96 percent, are settled by negotiated plea bargains. Law & Order Conservatives condemn plea bargains for the wrong reason. They think plea bargains let criminals off easy.

      In fact, plea bargains are used by prosecutors to convict the innocent along with the guilty. Plea bargains eliminate juries and time-consuming trials, that is, plea bargains eliminate all work on the part of prosecutors and police and lead to high conviction rates for prosecutors, the main indicator of their career success. Once upon a time, prosecutors pursued justice. They carefully examined police investigations and only indicted suspects whose conviction they thought could be obtained by a jury. Sloppy police work was discarded.

      No more. Once indicted and provided with a lawyer, the defendant learns that his lawyer has no intention of defending him before a jury. The lawyer knows that the chance of getting even a totally innocent defendant found not guilty is slim to non-existent. Prosecutors, with the consent of judges, suborn perjury for which they are permitted to pay with money and dropped charges against real criminals, and prosecutors routinely withhold evidence favorable to the defendant. If a prosecutor detects that a defendant intends to fight, the prosecutor piles on charges until the defendant's lawyer convinces the defendant that no jury will dismiss all of so many charges and that the one or two that the jury convicts on will bring a much longer sentence than the lawyer can negotiate. The lawyer tells the defendant that if you go to trial, you will be using up the time of prosecutors and judges, and the inconvenience that you cause them will send you away for many a year.

      In some state and local courts it is still possible on occasion to get an almost fair trial if you can afford an attorney well enough connected to provide it. But even in non-federal courts the system is stacked against the defendant. Many prisons have been privatized, and privatized prisons require high incarceration rates in order to be profitable. The same holds for juvenile detention prisons. Not long ago two Pennsylvania judges were convicted for accepting payments from private detention prisons for each kid they sentenced.

      Judges prefer plea bargains despite the fact that plea bargains amount to self-incrimination, because plea bargains dispense with time-consuming trials that cause backed-up and crowded court dockets. Trials also demand far more work on the part of a judge than accepting a plea bargain.

      The fact of the matter is that in America today you are expected to convict yourself. Even your lawyer expects it. The torture is not physical; it is psychological. The system is severely biased against the defendant. Conviction by a jury brings a much heavier sentence than conviction by a deal that the defendant's attorney negotiates with the prosecutor's office. All the prosecutor wants is a conviction. Give him his conviction for his record as an effective prosecutor, and you get off lighter.

      The injustice lies in the fact that the rule applies to the innocent as well as to the guilty. ? The prosecutor and often the judge do not care whether you are innocent or guilty, and your lawyer knows that it does not matter to the outcome.

      The police have learned that such a small number of cases go to trial that their evidence is seldom tested in court. Consequently, often police simply look for someone who might have committed the crime based on past criminal records, select someone with a record, and offer him or her up as the perpetrator of the crime. This police practice is one explanation for high recidivism rates.

      In the totally corrupt American criminal justice (sic) system, anyone indicted, no matter how innocent, is almost certain to be convicted.

      Let's take the case of Alabama Democratic Governor Don Siegelman. Judging by the reported evidence in the media and testimony by those familiar with the case, Don Siegelman, a popular Democratic governor of Alabama, was a victim of a Karl Rove operation to instruct Democrats that their political party would not be permitted a comeback in executive authority in the Republican South.

      There is no doubt but that the Alabama Republican newspapers and TV stations are political tools. And there is little doubt that former Republican US Attorneys Alice Martin and Leura Canary and Republican US federal district court judge Mark Fuller were willing participants in Karl Rove's political campaign to purge the South of popular democrats.

      Republican US district court judge Mark Fuller was arrested in Atlanta this month for beating his wife in an Atlanta hotel. The judge, in whose honor courts must rise, was charged with battery and taken to the Fulton County jail at 2:30 AM Sunday, August 10. If you look at the mug shot of Mark Fuller, he doesn't inspire confidence. Fuller was a bitter enemy of Siegelman and should have recused himself from Siegelman's trial, but ethical behavior required more integrity than Fuller has.
      ​Finish reading at The Daily Bell​​ ...​....