Indian Gov wants the temple gold

[jim4silver]

I am sure nothing could go wrong for the temples by doing this. Hey, at least they will receive a piece of paper and some interest payments for the gold. Sounds fair to me. LOL Nothing said about ever getting that gold back. Kind of like when you were a kid and you "lent" your friend that dollar or two. "Poof it's gone".

India's rich temples may open gold vaults for Narendra Modi - The Times of India


Jim

 

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[Marchas45]

Yea they will probably offer 20% interest rates to the Temples but how long that will last is: Only Their God Knows. Lol

 

[Goose-0]

As I read it, the gold depositors will be offered .75% to 1% interest, with a possible "5%" in the future. (HA!) Also, there was a word mentioned several times...."Scheme" .....it sure sounds like it. Then take the 1933 "scheme" that FDR (and congress) banned gold except for old gold coins (collectible) and everyone had to turn in their gold for some paper. Gold at the time was around $24.20/oz (?) and a short time later, FDR 'declared' that gold was now worth $35/oz....some sort of a way to decrease the national debt I believe.

 

[jim4silver]

As I read it, the gold depositors will be offered .75% to 1% interest, with a possible "5%" in the future. (HA!) Also, there was a word mentioned several times...."Scheme" .....it sure sounds like it. Then take the 1933 "scheme" that FDR (and congress) banned gold except for old gold coins (collectible) and everyone had to turn in their gold for some paper. Gold at the time was around $24.20/oz (?) and a short time later, FDR 'declared' that gold was now worth $35/oz....some sort of a way to decrease the national debt I believe.

Goose,

What the gov did with the gold in 1933 is considered a form of dollar devaluation (they increased the value of gold relative to the dollar by 40% after the "confiscation", the gold price was adjusted from 20.67 an ounce to $35 an ounce- back then the price was fixed and didn't change). Bernanke spoke of the devaluation in his speech in 2002 (see link below) when he was a fed governor. In his speech called "making sure IT doesn't happen here", he outlines ways the Fed could fight deflation if faced with it. He goes on to name some techniques to fight deflation (such as what we now call QE 1, 2 and 3, etc). He also mentions "a 40 percent devaluation of the dollar" (Bernanke's words) back in 1933 with the gold call in. The paragraph addressing the gold issue is on page 7, first full paragraph, but worth reading the whole thing because it basically tells us what they are willing to do to fight deflation. From my reading, the only tool we haven't used yet is the "devaluation". I don't know how they would do that nowadays though.


http://www.bis.org/review/r021126d.pdf


PS While some might argue the 1933 executive order was not an outright "confiscation" because the Gov paid you $20.67 per ounce of gold you turned in, it was a confiscation of 40% of value since after the folks turned in their gold, the price was set 40% higher. Maybe call it confiscation of value or something like that perhaps.

One thing rarely mentioned is each person could still keep $100 face worth of US gold coins (in addition to the "rare coins" exemption although they didn't define what rare coins were), so they didn't "confiscate" it all.

Just my opinion.



Jim

 

[Goose-0]

A long read Jim, thanks.

 

[bradley1719]

PS While some might argue the 1933 executive order was not an outright "confiscation" because the Gov paid you $20.67 per ounce of gold you turned in, it was a confiscation of 40% of value since after the folks turned in their gold, the price was set 40% higher. Maybe call it confiscation of value or something like that perhaps.

Jim

I agree.... I would call it "underhanded" if nothing else.

However, if you read my post on gold standards and confiscation, can you tell me another option if the original goal was to increase the currency supply to fight off the depression? How else were they going to get the gold they needed due to being on a restrictive gold standard? Buy it outright? Unfortunately, that would not have been feasible. So they had no other option but to "confiscate" it and then raise the value of gold. If you really think about the restrictions a gold backed currency puts on the government, I think you'd have to agree that they either had to go off of the gold standard in 1933, or they had to confiscate gold. And when you think about it that way.... was it really "stealing" like so many gold bugs like to paint it? Some of those same gold bugs have no idea that going back on a gold standard is a surefire way to put confiscation right back into the FED's "bag of tricks".

Again, I'm happy to say that it was "underhanded". But many gold bugs make the government out to be absolute crooks (going so far as to say people were held up at gunpoint while their gold was "stolen" from them). I'm not saying that there aren't crooks in government, but you have to look at what really happened with an open mind. In this particular case, I don't think the government had too much choice given that their hands were tied. On one hand you have to deal with getting the country out of the worst depression we have ever seen (one that many experts say was caused by a "currency crunch"). On the other hand you have a very restrictive gold standard that says any dollars you print must be (at least partially) backed by gold. I think they took the only option that would really solve the problem.

 

[jim4silver]

I agree.... I would call it "underhanded" if nothing else.

However, if you read my post on gold standards and confiscation, can you tell me another option if the original goal was to increase the currency supply to fight off the depression? How else were they going to get the gold they needed due to being on a restrictive gold standard? Buy it outright? Unfortunately, that would not have been feasible. So they had no other option but to "confiscate" it and then raise the value of gold. If you really think about the restrictions a gold backed currency puts on the government, I think you'd have to agree that they either had to go off of the gold standard in 1933, or they had to confiscate gold. And when you think about it that way.... was it really "stealing" like so many gold bugs like to paint it? Some of those same gold bugs have no idea that going back on a gold standard is a surefire way to put confiscation right back into the FED's "bag of tricks".

Again, I'm happy to say that it was "underhanded". But many gold bugs make the government out to be absolute crooks (going so far as to say people were held up at gunpoint while their gold was "stolen" from them). I'm not saying that there aren't crooks in government, but you have to look at what really happened with an open mind. In this particular case, I don't think the government had too much choice given that their hands were tied. On one hand you have to deal with getting the country out of the worst depression we have ever seen (one that many experts say was caused by a "currency crunch"). On the other hand you have a very restrictive gold standard that says any dollars you print must be (at least partially) backed by gold. I think they took the only option that would really solve the problem.

Bradley,

I don't know enough about the Great Depression to know what the best remedy should have been. But what I would like to ask is, what caused it? Was it the citizens doing risky things, or probably more likely (I am guessing though) that is was caused by recklessness or excesses caused by the banks or financial institutions of the day?

If we fast forward to today we see how we were told in 2008 that the Gov had to do what they did to save us from perdition, yet we find out later that the banks and financial institutions did things that were risky and stupid, so all of us sheep have to pay for it. So I guess if the Great Depression was not the fault of citizens, it bothers me that citizens suffer any loss to help the banks and/or financial institutions, which seem to get out scot-free while still paying themselves those big bonuses, etc (remember AIG?). Maybe there was no other way to fix things in the Great Depression, I don't know.

We learn today that the banks and such have not really changed their ways too much with respect to what they were doing in 2008 and earlier, and Dodd Frank has basically been gutted to really have no teeth. So the next time we are told "we have to do this for YOUR own good", maybe we should ask who caused it and who is getting off the hook at taxpayers'/citizens' expense. It won't be gold that is "confiscated" next time because we are not on a gold standard and really nobody citizen-wise has any except jewelry. If you believe Bernanke and what he said in 2002, there will probably be some form of dollar devaluation (just like they did in 1933 when they revalued gold upward) but I don't know how they would do it this time. In other countries that have had currency problems, PM's held up exceptionally well, like in Argentina, etc. That is one reason I like PM's because in a devaluation scenario, PM's hold up very well as do other hard assets.


Just my opinion.

Jim

 

[bradley1719]

Bradley,

I don't know enough about the Great Depression to know what the best remedy should have been. But what I would like to ask is, what caused it? Was it the citizens doing risky things, or probably more likely (I am guessing though) that is was caused by recklessness or excesses caused by the banks or financial institutions of the day?

If we fast forward to today we see how we were told in 2008 that the Gov had to do what they did to save us from perdition, yet we find out later that the banks and financial institutions did things that were risky and stupid, so all of us sheep have to pay for it. So I guess if the Great Depression was not the fault of citizens, it bothers me that citizens suffer any loss to help the banks and/or financial institutions, which seem to get out scot-free while still paying themselves those big bonuses, etc (remember AIG?). Maybe there was no other way to fix things in the Great Depression, I don't know.

We learn today that the banks and such have not really changed their ways too much with respect to what they were doing in 2008 and earlier, and Dodd Frank has basically been gutted to really have no teeth. So the next time we are told "we have to do this for YOUR own good", maybe we should ask who caused it and who is getting off the hook at taxpayers'/citizens' expense. It won't be gold that is "confiscated" next time because we are not on a gold standard and really nobody citizen-wise has any except jewelry. If you believe Bernanke and what he said in 2002, there will probably be some form of dollar devaluation (just like they did in 1933 when they revalued gold upward) but I don't know how they would do it this time. In other countries that have had currency problems, PM's held up exceptionally well, like in Argentina, etc. That is one reason I like PM's because in a devaluation scenario, PM's hold up very well as do other hard assets.


Just my opinion.

Jim

The experts can't even agree on what caused the great depression. More than likely, it was a number of different things that created the perfect storm. My opinion is that a lack of currency due to the gold standard lead to what typically happens when a gold standard is in place: wealth outstrips the currency supply. There are quite a few experts that agree with this assessment. Again, it was likely a number of factors but I believe the currency crunch had a lot to do with it.

I agree that it is ridiculous that the banks can get away with what happened in 2008 and yet the public has to foot the bill. But I think that is a different topic.

As for what they will do next time? I don't know. But under a fiat currency system, you have more options than you do under a gold standard. Are fiat currencies perfect? Absolutely not. But fiat currencies typically do not CAUSE depressions. But gold standards can and likely have for centuries. It's just the nature of the beast. You can't represent something that is constantly growing with something that is relatively fixed. It just doesn't work.

I agree that hard assets like PM's hold up well when a currency is devalued. That's the whole reason why I got into PM's in the first place. That doesn't make PM's perfect. They have their own pros and cons. For example.... silver has lost over 50% of its value over the past 4 years...

 

[jim4silver]

I agree that hard assets like PM's hold up well when a currency is devalued. That's the whole reason why I got into PM's in the first place. That doesn't make PM's perfect. They have their own pros and cons. For example.... silver has lost over 50% of its value over the past 4 years...

Yes, but from the early 2000's to 2011 it gained 1000% returns ($4 to $40+). Anyone who started buying during the mania has not done well. Fortunately I got into PM's in the mid 2000's and am ahead, especially when I factor in my semi numismatic stuff I have accumulated. But definitely PM's are not for everyone.


Jim

 

[bradley1719]

Yes, but from the early 2000's to 2011 it gained 1000% returns ($4 to $40+). Anyone who started buying during the mania has not done well. Fortunately I got into PM's in the mid 2000's and am ahead, especially when I factor in my semi numismatic stuff I have accumulated. But definitely PM's are not for everyone.


Jim

Agreed.