71–80 of 238 posts
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Ah that reminds me so much of Game of Thrones were this one dude builds all his power and businesses based on an empty vault and a promise of what is inside.
Wasn't that movie only? I read book longer before but I never remembered the empty vault thing...
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> that's not property That's the whole point. The US government effectively treats other country's good reserves as their own. It was shrewd negotiation because they got much more than zero, and then US government/Federal Reserve has significant negotiating ability on its side by virtue of having the world reserve currency and the ability to impact monetary policy and systems so heavily on a global scale.
"US government/Federal Reserve has significant negotiating ability" Yeah about that, in public, the only lever we can pull against Germany is stalling. Not exactly a show of strength. If you take away our leverage over you by removing your gold, we'll... um... ah... we'll punish you by doing it really slowly, yeah that'll teach you a lesson. Like trying to cancel your cable TV or a gym membership, the only influence…
I wonder why there is only a conspiracy for the FED but not for e.g. the Banque de France. Just because the amounts held by Germany are smaller?
Bloomberg has a very interesting article on this topic also: https://www.bloomberg.com/news/features/2015-02-05/germany-s... Reading in between the lines, it seems as if a good chunk of gold has gone missing and there is an attempt by both sides to save face.
I'll just leave this here: http://www.zerohedge.com/news/2013-03-02/why-jpmorgans-gold-...
Pretty disappointing if you ask me. The entire gold vault (one million ounces of gold) is worth about a third of one percent of JPMorgan Chase's entire market capitalization.
That reminds me of the history of Spanish gold. In summary: the republican government made an arrangement with Russia to send their gold reserves to not let Franco capture it. Suddenly the russian military help became quite expensive. Paid in gold of course. All of it.
Why do countries bother to hold gold? Wouldn't it be sensible to sell as much of it off as possible? (I'm asking like "ELI5" because I'm sure there is a reason)
One part of a market is holding your promises. If you don't all your current transactions are considered shady (standards& poors, ...), hence the notation agency on currency: it measures how likely you are to reimburse your debt.
USA being one of the largest emitter of bound on the market, the word they are being crooks on an important topic would damage on the long term reputation hence the value of their currency, hence triggering a strong recession + hyper-inflation.
In the case trust in USA Feb bank (which is private) is broken, USA may turn abruptly in Venezuela.
Since most notation agencies are in the USA, it might have a domino effect creating major chaotic fluctuations between currencies, hence automatically triggering a safe backing off from every hedge fund out of their countries ...
If USA lose the trust of the market since globalisation is labelled in US$ it means either people are going to diversify to Swiss Francs, Euro, CAD, Pounds ... and a big loss for USA.
No one want this. Not the big european, asian groups.
Workers and modests people would be totally glad, but it would mean a 1929 situation in the USA for sure, and in a lot of connected economies.
So no one wants this.
How do you even transport 300 tons of gold? Load it onto a military ship, maybe in smaller batches, and hope the crew isn't too corrupt?
When one ton of gold is supposed to leave germany for USA, it is accounted as leaving registered in accounting books as a +1 ton in USA fed reserv, but it actually stays on the territory and countend as -0 in germany... as long as the amount is not credited.
if flux of swap goes the wrong direction (more sell than buy from USA) then you also have to physically transport some gold.
> The US had paid for its imports with pieces of paper on the promise, that these pieces of paper were as good as gold and would be exchanged for gold at a fixed rate upon request. In 1971 Nixon just said screw you, you can keep those papers and we will keep your commodities and the gold. We stayed friends anyway. We had to. It's a bit more complicated, isn't it? Wasn't it West Germany, in May 1971, that said "screw…
It all started with the emergence of "Eurodollars" in the City of London, in the late 50s --- in itself, and their consequences, an inevitably that only a few thinkers such as https://en.wikipedia.org/wiki/Jacques_Rueff foresaw with any kind of accuracy (even though his favouring a gold standard isn't something I personally buy into as a good idea for the modern globalized economy --- same goes for a dollar standard or Euro standard or crypto-standard or any such notion though)
How do you even transport 300 tons of gold? Load it onto a military ship, maybe in smaller batches, and hope the crew isn't too corrupt?
In the case where exists a credible threat of attack by another power, you'd want to use a much stronger escort, ideally a carrier strike group and some attack submarines. Escorted aerial transport would be another option, requiring more flights and being more vulnerable in transit, but with each flight exposed to attack for a much shorter period, and significantly lowering the cost of a successful attack.
In any case, if you're concerned about perfidy among those entrusted with items of value, the classic response is to ensure that no one acting alone has sufficient leeway to steal, and ideally that massive collusion among many actors at all levels of your guard force is necessary to do so.
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Without a serious army? Are you kidding me? Yes its not exactly the US military but bloody hell, you would have a very very hard time trying to take over Switzerland - even these days. Road tunnels designed to be blown up, hundreds of thousands of modern trained soldiers with guns at home - fighting on their own terrain, ammunition dumps in individual towns, strong points, bunkers in every apartment block, supplies o…
How do airplanes work?
The idea of Germany invading Switzerland is surreal.