"It's the Debt, Stupid" by FOFOA
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Thu, 03/06/2010 - 07:49
"It's the Debt, Stupid" by FOFOA
http://fofoa.blogspot.com/2010/06/its-debt-stupid.html
Quote:
Why is global recapitalization impossible through fiat, yet inevitable through gold?The answer is quite revealing.
It's the debt. Not the currency itself. The government could easily decree its money to be 50 times more valuable. It could announce that your taxes are cut to just 2% of what they used to be (in nominal terms), increasing the value of the currency already in circulation 50-fold. But the problem is all the private debt that's denominated in that currency!
For it to be a system-wide recapitalization, every debtor would have to pay (in real terms) 50x more than he signed up for. Salaries would be cut by 98% yet your debt would remain the same. If your monthly mortgage is $1,000 and your monthly income is $4,000, under a 50x fiat revaluation/recapitalization your mortgage would stay at $1,000/mo. and your income would drop to $80 per month. Can you see how this is impossible?
But gold is different. The (100%) holders of physical gold can become 50x wealthier and no debtor has to lift a pinky. (Someone holding 2% in physical gold would retain the same purchasing power.)
and a teaser for the rest:
Quote:
Two questions that seem to come up a lot are 1) how do you see the world after the Freegold phase transition, and 2) what if things don't fall the way you foretell? In this section I will attempt to address both of these questions with the assistance of links to two of my older posts.
IMO the writings of FOFOA should be your reading priority.
With his writings, and those connected, much understanding can be gained.
Thu, 03/06/2010 - 12:20
#2
Who was the guest coming up
Who was the guest coming up who didn't agree with him?
Re the last obviously scripted bit....
What a numpty.
Captain,
"That's 5,304,873,750 (5.3 billion) one ounce coins".
I have to ask. Did you just use the density of gold or do you know the density of 1oz coins? ie does that take into account the air gaps?
Thu, 03/06/2010 - 12:57
#3
my kind of swimming pool
Steve Netwriter said:
Quote:
I have to ask. Did you just use the density of gold or do you know the density of 1oz coins? ie does that take into account the air gaps?
Wikipedia states that 165,000 tonnes of gold is estimated to be total ever mined. They also claim all gold ever mined (same amount, obviously), would fill 2.5 olympic sized swimming pools. 165,000 tonnes is 5.3 billion ounces.
I'm happy to let Wikipedia do the 'heavy lifting' on this. 
In coin form, I imagine the volume taken would be larger, as you point out. 
Thu, 03/06/2010 - 13:49
#4
Volunteers
Capt Goodvibes wrote:
In coin form, I imagine the volume taken would be larger, as you point out.
OK then, who's going to volunteer to try it out?
1x coin
2x coins
3x coins
.
.
.
.
5 billion 2 hundred and.... oh damn where was I?
Thu, 03/06/2010 - 18:54
#5
That was a jolly good read,
That was a jolly good read, thanks for posting the link 
Sun, 06/06/2010 - 02:24
#6
No, you can't eat gold. And you won't need to, either. Observe..
FOFOA said, in the comments below "It's the Debt, Stupid":
Quote:
Fractional reserve in and of itself is not such a terrible thing. The problem is that it creates a moral hazard. This moral hazard is such that even regulation cannot fix it because ultimately the regulators become morally corrupted by the system.The shift that is coming in the gold market, from paper to a physical market, is the ultimate conclusion to a fractional reserve system. It is the collapse of the system as confidence is ultimately lost that there is any reserve actually being held in your name.
If we only use fiat currency as a unit for trade, and not for store of value, but instead have a non-fractional wealth reserve riding shotgun, the system will once again become sustainable.
The currency will fluctuate per the actions of the printer, but if he prints too much, more value will flow into the wealth reserve. If the printer is responsible, people will gradually be willing to hold the fiat for longer and longer periods of time. Ultimately, if the printer remains responsible, some people may hold the fiat as a store of value. But then this will tempt the printer to print more and value will flow back into gold.
This is where evolution is taking us. It is not taking us back, it is taking us forward. We are evolving to a place where governments print the money we use for trade, but not for savings. They will have to earn our trust again before we will save in their currency.
Reposted from comments he left under a much earlier post.
For a lot of interested people, I believe, this will be the passage that reveals Freegold to them, that allows them to appreciate where we are going.
Worth reading over and over. It's a keeper.
Off topic, at least at first glance:
From http://www.youtube.com/watch?v=m07W3GcGbos
After viewing, it is clearly not off topic at all.
He agrees, the underlying cause is DEBT. And tells us the problem has been developing for 30 years. Nothing to do with the 30 year bull market in bonds?
I hear what Crescenzi is saying, and it interests me, as does how he delivers it. Body language, demeanor, and the things he implies without saying them.
Most of all, the fact that he feels he needs to say them at all. He smiles his way through this interview. Good on him.
Discredits the Euro, discredits gold. Fine. I encourage everyone to form their own opinions, and support their right to express them.
But how much gold is in physical existence is not an argument against it. It is, rather, justification for gold to buy many more dollars than it does currently.
I can understand perfectly well how the majority of people would buy this 'interview' without thinking twice. Another brickbat for the 'barbarous relic'.
Yet, when he asks the interviewer how many swimming pools to hold the world's gold, he can barely ask the question for laughing, and she tries to answer before he has asked enough for the question to be answered, whilst laughing too. This was clearly scripted. And it shows. Pretty quick to produce the quote from Gone With The Wind. Didn't miss a beat. Try watching the video again with this in mind, it comes off a little different, no?
Two and one half olympic swimming pools. Doesn't sound like much, until you realize just how big an olympic size pool is. 2,500 m3 (88,000 cu ft). Times 2.5 is 6250 m3 (220,000 cu ft). That's 5,304,873,750 (5.3 billion) one ounce coins. Sounds like a lot to me. Ever been to an actual Olympic-size pool? Takes an athlete to swim to the far end.
When discussing China buying either Euros or Dollars:
So he says that 'land is the only thing that lasts'? That counts out the United States then, "the military might, the political might".
And this is where gold has an exemplary record, as a store of wealth through the ages. Not just the last 250 years. Thousands of years.
Fiat currency of the United States? How many pools can you fill with that? Hundreds? Thousands? Millions? We can't count them because they won't stop printing them long enough!
Political might? Gimme a break.
Military might? Has the US actually won a war since WW2? Sounds remarkably like a scare tactic. When bullies go down, they go down hard. Do you really want to be clinging to one when they do?
Once you gain a clearer perspective from which to view these expansive issues, and 'gain an unobstructed view of the horizon', the comments made in the video are clearly purposely placed obstructions, being rushed into place to hide something. Something big.
This is MOPE. Management Of Perspective Economics.
The only goal here is to divert attention from the debt based woes of the USA to the identical woes across the Atlantic. This is what it looks like when the best looking horse in the glue factory, for the moment, takes to the stage to flex and pose.
The $IMFS is in trouble, and it's showing. Clearly.
I expect the anti-gold, anti-Euro rhetoric to step up from TPTB, via all their usual MSM sources, such as this one.
Anybody not understanding my point here needs to return to "It's the Debt, Stupid" by FOFOA to calibrate their perspective.
This is not the hour to be sucked in by Uncle Sam, the world's biggest grifter.
You don't own your stuff, your stuff owns you.
http://flowofvalue.blogspot.com/