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[Leslie <cayadopi AT yahoo.com>]

It seems that there were changes to the law in 1977 which were upheld which 
later legalized gold contracts as enforceable.  Therefore gold can be used as 
a currency.
 
 
http://the-moneychanger.com/articles_files/mmm_files/gold_files/enemy_in_mirrow.phtml
 
"USING GOLD AS MONEY IS NOT FORBIDDEN 
"Effective October 27, 1977 (twenty-five years ago) gold clauses once again 
became enforceable in US courts.  On June 5, 1933 House Joint Resolution No. 
192 was passed, which declared that it was against public policy to discharge 
debts by paying gold.  That is, HJR 192 effectively made “gold clauses” 
(contractual agreements specifying payment in gold) unenforceable in court.  
They were not “forbidden” in the sense that you could go to jail for 
contracting in gold, you just could not avail yourself of the courts to 
enforce a gold clause in case of default. 
  
"The so-called “legalisation of gold” at the end of 1974 actually repealed 
the provisions of the Gold Reserve Act of 1934 that forbade private ownership 
of gold.  However, gold clause contracts were still in legal limbo, so the 
law “legalising” gold clause contracts was passed in 1977, and is codified at 
Title 31, United States Code, Sections 5118(a)(1) and (d)(2).  The 
enforceability of these new gold clauses was tested and upheld in Fay Corp. 
v. Frederick & Nelson Seattle, Inc., 896 F2d 1227 (9th Cir.). " 
 
------------------
 
Gold is money, and so is just about anything else.... LOL.
 
I agree with you that because of the limited supply of gold and the world's 
creation of an incredible amount of fiat paper currency, that coming up with 
a new asset backed currency, any kind of asset - becomes a challenge, but not 
impossible.  (Actually there are rumors nos about a one-world, some type of 
asset backed currency, being discussed by the G-20.)
 
Since the 70s USD are "petro-dollars" as the world up until recently had to 
convert to USD to buy oil on the NY or UK exchanges.  Now added to the mix 
are Euro-Dollars as some countries are no longer accepting US Dollars in 
payment for oil.
 
 
And I agree with your other posts that gold, if looked at as just a piece of 
metal, is good for sinkers, filings in teeth, jewelry, and not a whole lot 
more...
 
However, throughout history people have used some type of a medium of 
exchange in addition to barter.  Some of those mediums of exchange have been 
pretty wild, others somewhat logical.   There is always some mechanism in 
place to determine the value of the medium of exchange, regardless of what 
medium is being used - people exchanging goods/services set the value in one 
form or another.
 
Currently we are using fancy pieces of colored paper throughout the world as 
a medium of exchange.  The value of the various pieces of paper - one brand 
of currency relative to another brand of currency is determined in the market 
place.  Some value the pound worth more than the dollar, or the dollar worth 
more than the yen, etc.
 
When you live in one country and use that country's medium of exchange to 
purchase eggs, the person in the next country using their own medium of 
exchange to purchase the same quanity of eggs will be the pretty much the 
same - not currency terms, but in the amount of labor hours that need to be 
worked to obtain the medium of exchange to obtain same qty of eggs.  
 
Gold (and to a much lesser degree silver) were chosen a long time ago for a 
number of reasons, including divisibility and portability, and limited 
supply.  It also crosses borders easily.  Gold is gold is gold no matter what 
country you are in.
 
One of the current problems facing us today, is that "eggs" are purchased 
across borders.  So one currency needs to be exchanged for another when 
buying across borders.  The prices of the currencies fluctuate constantly 
based on perceptions of who knows all what.... the stability of the 
government, the ability of the government to repay debts, interest rates on 
government bonds, the lack of dilution of the amount of paper in circulation, 
etc.
 
I believe in one of your emails you posted that say one ounce of gold today 
would buy X, and that no matter what is happening with the value of currency 
it would still only buy the same quantity of X or less of X.  It also could 
buy more of X in the future.  True, and key to a decision of whether or not 
to buy gold is whether you think gold (coverted to a paper currency or via 
direct exchange) will buy more or something in the future.
 
The value is still set by buyers and sellers and fluctuates,  based on their 
perception of the future value of paper currencies.  
 
The only reason to purchase or sell gold as a currency - as a store of value 
-  is when a person believes the paper currency is going to fall or rise in 
value relative to the current and future perception of the value of gold.  
 
The current problem, as I see it, is at the international level of fiat 
currencies. All fiat currencies are being diluted in value as the governments 
around the world keep adding more currency into circulation.  They are all 
falling in purchasing power.  The trick is how fast each loses purchasingn 
power relative to each other.
 
Since we import a significant number of things we buy from other currencies, 
the various currency fluctuations affect our daily purchases.  Should the 
dollar begin to slide against the currencies of the countries from which we 
import - the number of paper dollars we need to shop at Walmart increases and 
the foreign country will demand more dollars in exchange for their currency.
 
If one perceives that the dollar is going to be worth significantly less, not 
a store of value, one would be very smart to trade in those dollars for 
ANYTHING that will store value.  Which of course includes, honey, shovels, 
sugar, seeds, fencing, land, tires, oil, diesel, nat gas, etc.  
 
It can also include gold or silver.  Gold or silver can be converted easily 
into other paper currencies.  And it can also be used in enforceable 
contracts to purchase here in this country (unless the 1977 law has since 
been repealed).  
 
When people fear hyper-inflation, a rapid loss of value in paper currencies, 
they run to anything else that stores value, not just gold.  It could be 
every day goods a years worth of food, garden supplies, seed, fuel, clothes, 
shoes, anything used day to day or that can be bartered.  
 
Others with greater wealth will buy other things, other currencies, 
gold/silver, land, anything they think will preserve their wealth.
 
There is one caveat to the past performace of gold since the early 80s, and 
that is the government's incessant artificial manipulation downward of gold 
prices thru short sales via direct market intervention.  That "game" might 
actually become "game over" soon if the COMEX gold banks are emptied out at 
the rate so far this month -  40% gone the first week this month.  
 
 
BobF posted a link yesterday about Backwardation in the gold futures 
contracts.  This IS significant.  The wealthy are taking physical delivery of 
gold.  They no longer have CONfidence that the COMEX has enough gold in the 
gold bank vaults to back up the futures contracts.  If they did, they would 
just leave the gold in the COMEX vaults - a nice safe place.  They no longer 
perceive the COMEX to be a safe place.  The rich are looking for something to 
store value.    Why?    I believe they fear the USDollar is going to not only 
tank (a given with all the money printing), but that hyper-inflation can no 
longer be ruled out.  
 
Which brings us back to the point you actually made.  1 ounce of gold today 
will buy (let's say 20 barrels of oil) or USD $760.   Say the dollar starts 
to devalue in 2010, and that same barrel of oil in 2010 costs in USD 
$1760.... it would still only cost 1 ounce of gold (more or less).
 
Another point you made is that, "When people had to "liquidate" a debt or 
asset, it was most often done in molasses or rum or whiskey which could be 
stored for a long time and kept its value."  The key here is "something that 
could be stored for a long time and kept its value".

 
Personally, I find a LOT of value in things like canning jars, non-electric 
kitchen tools, knives, etc.  But I can not use my canning jars to purchase 
say a new pair of pants at Walmart.  I need an acceptable medium of 
exchange.... a USD $.  But if today's pair of pants are made in China and 
cost $7.60,,, in a falling dollar world, that same pair of pants could be 
$17.60  
 
(I'm just making up numbers btw.)
 
You can't eat gold, or wear it, or make it into anything useful (too 
soft),,,, but you can convert it by using it as a medium of exchange into 
something you can eat or wear or make, or desire.
 
Gold buyers and sellers ultimately decide the value, based on their 
perceptions of the future value of fiat currency.  From the article posted 
yesterday, the perception seems that a whole lot of people not just in the 
US, but around the world are concerned about fiat paper dollars.
 
In the end, no matter what is used as a medium of exchange, it represents to 
a certain degree the amount of labor and skill required to produce something 
that another person wants.  They dicker back and forth about the value --- 
the same as gold prices rising up and down.
 

<<<It is currently illegal to use gold as currency.  When the 1933 exectutive 
order prohibiting the private ownership of gold was partially lifted in the 
1970's, only the provision for hold gold was removed.  The prohibition
againstusing gold as currency still stands.>>>

<<<The current economy cannot return to a gold standard for the simple reason 
that there is not enough gold in existence to back up the outstanding 
currency.>>>
 
<<<If you took all the extant gold and divided that into the countless 
trillions 
of existing fiat currency, that would mean anyone with a high school class 
ring would be a multi-millionaire.>>>


<<<<Trying to figure out what we are going to use as money is a lot like 
trying 
to decide by what means we are going to power our cars ..... maybe the answer 
is  'nothing'.>>>






>From cayadopi AT yahoo.com  Sun Dec  7 18:51:33 2008
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Subject: [Homestead] Depression first?
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Whoa nellie........... and here I thought it would be hyper-inflation first...
 
The below are excerpts from the first 1/3 of the 3rd hour radio show dated 
12/6/2008 at financialsense.com 
  
Puplava/Loeffler discuss:  Big differences between recession & depression. 
  
  
NORMAL RECESSION CYCLE 
·         Recession is a contraction in GDP, 
·         Recession – the contraction in GDP is brought about due to raising 
interest rates and a slowdown in the economy, then the Fed comes in a cuts 
interest, it reduces debt burdons, re-fi becomes easier, and as credit 
becomes more available, the economy is stimulated, and stimulates buying. 
·         This buying brings the recession to a halt and the economy bounces 
up again 
  
DEPRESSION 
·         Key point to understand is that a depression is all about excess 
debt and a de-leveraging process that results.  (How many times have we heard 
“deleveraging in the past year?  This is exactly what is going on.) 
·         As people de-leverage, they sell assets that were purchased with 
debt.  As they sell those assets, the asset values decline. 
·         The more asset values decline – credit become tighter. 
·         As credit becomes tighter, you get an economic contraction. 
·         However, in a depression the traditional monetary responses used in 
a recession cease to work and more and more asset comes in to play, more 
de-leveraging, more margins calls and it becomes a self feeding cycle.  
  
  
The current events of the past year are more reminiscent of a depression than 
a recession because the typical remedies that have been used by central 
bankers over the past 50-60 years clearly are not working. 
  
Recession v Depression isn’t just about the level of economic growth, but a 
shift in the actual environment where the rules are all changing. 
  
  
LOOKING AT A DEPRESSION 

It is a de-leveraging process 
Wealth destruction
Economy declines
All prices falling together
Assets fall and debt becomes worth more (a greater % of asset). Servicing 
debt becomes more expensive, and stimulates more selling.

 
  
The first part to get hit was the financial sector, Feb 2007, then again Aug 
2007. 
  
3 parts to the economy: 
  
Manufacturing 
Service 
Financial 
  
Up until recently, approx this summer, most of the contraction was hitting 
the financial section:  real estate, mortgage, banking system, Wall Street, 
insurance companies. 
  
Underlying difference between recession and depression is debt levels and the 
magnitude of de-leveraging. 
  
  
  
Typical response to recession stops working. 
  
We’ve had a series of unconventional moves that shows that the Fed’s 
traditional methods of combating a recession have failed, and that they have 
move to depression battle mode: 
  

Term Auction Facility
Asset Swaps
Loans to Securities Dealers
Shotgun mergers of brokerage firms
Swap lines to European Banks
Fed back-stop commercial paper market
Fed back-stop money market funds
Fed nationalization of FNM and FRE
Projected to see the Fed nationalize part of the banking system, similar to 
Swedish model.
  
  
Now all kinds of consumers and companies lining up for a hand-out also. 

Hints of the Fed buying up consumer debt
Auto makers lining up
etc
  
This is giant amounts of money .  Where is all this money going to come from? 
Out of thin air.  
  
How much money?  So far? 
  
Rescue Fnds:  8.5 Trillion committed so far, they’ve actually issued and 
spent 3.2 Trillion so far. 
  
The size and magnitude of this monetization is illustrated here, which will 
eventually show up as inflation (a day of reckoning).  Article on Friday that 
thoughts of deflation might be coming to an end given the size and magnitude 
of monetization going on. 
  
This is what the Fed has committed (the taxpayers) to as of 11/30/08: 
  

 1.8 Trillion - Commercial Paper 
900 Billion - Term Auction Facility
606 Billion – Other Assets
600 Billion - Finance Company Debt Purchases
540 Billion - Money Market Facilities
291 Billion - Citigroup Bailout
250 Billion - Term Security Lending
200 Billion - Term Asset Backed Loan Facilities.
123 Billion - Loans to AIG
  92 Billion - Discount Window Borrowings
 62 Billion - Commercial Program #2
 50 Billion - Discount Window Program #2
 29 Billion - Bear Stearns Bailout
 10 Billion -Overnight Loans
118 Billion -Secondary Credit 
  
Total so far 5.5 Trillion so far of which 2.1 Trillion has been used. 
  

1.4 Trillion - FDIC commitment / loan guarantees
139 Billion - Guarantees on GE Capital
 10 Billion – another infusion to Citigroup
700 Billion - TARP  - Troubled Asset Relief Program
168 Billion - Stimulus Package earlier this year
 50 Billion - Exchange Stabilization Fund
 29 Billion - Tax Breaks for Banks
300 Billion - Hope for Homeowners July 08
  
8.5 Trillion…. And this doesn’t include next year’s stimulus program…. 
500-700 Billion. 
  
  
Citizens are getting more and more torqued about Wall Street getting a free 
ride. 
  
Congress now talking about buying down mortgages. 
Driving down interest rates for home purchases down to 4.5%. 
  
These things were all predicted, “When Money Dies”. 
  
The size and scope of the programs tell you this is NOT an ordinary 
recession.  It is more like a depression. 
  
’29 Depression versus now. 
  
Then the government tried to get the depression to end via intervention. 

FDR came in, declared a bank holiday, came back with the FDIC.
FDR severed the dollar from gold, which allowed step 3
FDR started the monetization process
  
Today, we have similar events that further hint that we are in a depression: 

The Fed came in and raised the FDIC limits from 100K to 250K insurance.
The Fed is artificially suppressing the price of gold.
The Fed is printing money like crazy and down the road…
“The Nuclear Option” coming at some point, will be devaluation of the dollar.



>From bobford79 AT yahoo.com  Sun Dec  7 18:51:54 2008
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Subject: Re: [Homestead] gold back currency anyone?
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Some people like the idea of gold because you can't 'carry' all of those 
things you just listed.  You can carry gold, easily , and then use the 
transported gold to buy new supplies of the sort that you listed, when you 
get where you are going.  It becomes one of those "on the one hand or on the 
other hand" dilemnas............


-------------------------------------------------------------------------


--- On Sun, 12/7/08, Gene GeRue <genegerue AT ruralize.com> wrote:


>
> I like land, seeds, tools, ammunition, spare parts for water, electrical 
> and plumbing systems, building materials, hardware,  clothes, kitchen and 
> bath necessities, books and music..
>
> This coming year might also be a good time to fill up large propane
> and diesel tanks.
>