huskerbob

China Wants to Ditch the Dollar

We have two parallel currencies in the US right now - the US mint makes gold and silver coins that serve as US tender, and the Fed makes dollars from rags, ink, and electrons.
Simply fulfill the mandate of the Constitution and mint coins for anyone who brings metal to the mint. No need to abolish or start a new currency, just let them compete. When times are sweet, the metal loses its luster, and in times like these it gets its shine back. Just mint enough to keep up with demand for crying out loud! I'm pretty sure that gold and silver would be accepted anywhere.

China Wants to Ditch the Dollar

Uh, guys, a renminbe float might not float your boat. Ha! I just came up with that.
If China floats their currency, they won't be needing to buy all our treasury debt. Then what happens? I guess we could look forward to our myopic state and local governments selling off infrastructure to the Chinese to get hard currency.
Our government wants China to float their currency about as much as they want to find Bin Laden.

China's Latest Hunting Trip

Mr. Mad H F T: I am just adding a qualifier to your mention of the GLD purchase: no one can be certain that GLD actually purchased any physical gold. Of course they say they did, but their prospectus makes it clear that neither they nor anyone else will ever have any clue as to how much gold is actually being held by GLD.

“The Custodian is required to use reasonable care in selecting subcustodians, but otherwise has no responsibility in relation to the subcustodians appointed by it, and the Custodian is not responsible for their selection of further subcustodians. The Custodian does not undertake to monitor the performance by subcustodians of their custody functions or their selection of additional subcustodians. The Custodian is not responsible for the actions or inactions of subcustodians” (p. 44)

“In addition, the Trustee has no right to visit the premises of any subcustodian for the purposes of examining the Trust’s gold or any records maintained by the subcustodian, and no subcustodian is obligated to cooperate in any review the Trustee may wish to conduct of the facilities, procedures, records or creditworthiness of such subcustodian.” (p.37)

To make matters worse, the Prospectus states that there will be no written contractual agreements between subcustodians and the Custodian or the Trustee (page 11-12). The Prospectus further states quite clearly that “because neither the Trustee nor the Custodian oversees or monitors the activities of subcustodians who may hold the Trust’s gold, failure by the subcustodians to exercise due care in the safekeeping of the Trust’s gold could result in a loss to the Trust.” (p. 12)." “Custodian and the Trustee will not require any direct or indirect subcustodians to be insured or bonded” with respect to gold held by the subcustodians on behalf of the Trust (p. 11)."
Thanks to Dave Kranzler for picking out these gems.