From: Paul C (clyder@GN.APC.ORG)
Date: Thu Jun 17 2004 - 18:34:55 EDT
cmgermer@UFPR.BR wrote: >Claus: >What is the problem with the fact that the central banksí gold reserves >are of gold from that time? Perhaps you mean that the reserves of gold >have not increased, which is right, but they havenít decreased either, >despite the enormous efforts especially by the US, which makes the >non-decrease more important than the non-increase. But so far we are >talking just about the official reserves. If we take into account the >total reserves, including the private ones, this is not true, because they >have increased a lot. It should also be noted that after the suspension of >the convertibility of the dollar, in 1971, the law that since 1936 >prohibited the private holding of monetary gold has been suspended in 1974 >or 75, thus turning the private holding of monetary gold legal again. >Thus, private reserves of gold are also part of the total money in the >function of hoarding. > >The private holdings of gold in the hoarding function of money have >significantly increased since then (caused by the uncertanty derived from >the crisis of the dollar since the late 1960s, and aggravated by the >increasing payments deficits of the US), which would not have been >expected if the monetary function of gold were in fact declining. Now I'm >not referring to the legal recognition of this function, but to the >dependency of this function on the actual functionning of the system, as >reflected in the performance of capitalists. It is this actual >functionning of the system that makes of gold a privileged means of >hoarding and prevents the monetary system from demonetizing it, which >would correspond to the interests of the US since the 70s. The fact that >it has not been possible shows that the law of motion of the monetary >system rules the actions of the big US power and not the opposite (which >is how I think one should interpret the facts from a materialist point of >view). > > Gold is indestructible, which is why gold reserves in the economy as a whole have not declined. I agree that it is held as a hedge against inflation, but this does not make it money any more than works of art which are also held by the rich as a hedge against inflation. >The huge monetary reserves of gold, including official and private >holdings, around 120,000 tons, are a big problem if one attempts to >anticipate either a complete demonetization (if possible, which is not >obvious), or an official return to the convertibility of gold (which would >not need to include its circulation in the form of coins), which is not >impossible. > > > > >>By the way, does the European Central Bank hold gold? >>If so where did it get it from? >> >> >> > >Claus: >I donít understand the reason for the question. Anyway, yes, the ECB holds >gold. It came from the share of each of the partner-countries to the >initial capital (Iím not sure of the figure, but I think it is 15% of each >countryís share). This looks curious indeed, if that is what you mean, >because the ECB, having been created when gold was no more officially used >in the circulation functions, the ECB did not have a historical hangover >of gold, thus it looks strange that it created something that is supposed >to have no actual relevance. What is it that you had in mind in making >this question? > > It was a matter of curiosity. I dont know much about the accounts of the ECB or about the relationship between its capital reserves and its issues. The ECB seems to me to be rather different from a normal state bank in that the EU lacks the economic levers of state with respect to tax revenues that most nation states have, yet at the same time the member states that have adopted the Euro, have lost the right to create money which is a normal attribute of sovereignity. Chartalist monetary theory would seem to indicate that this is an unstable situation leading either to recessionary tendancies or strong political pressures on the regulations of the monetary union. > > >>I agree that there is some use of gold as a store of value, but >>the same applies to works of art, land etc. That does not make >>any of these into money. >> >> >> > >Claus: >Thatís right. Works of art are not commodities either, they are not >reproducible through labor, hence they cannot be money. Land is another >story, though it isnít a commodity either. I donít see the problem. > > > My point is that neither gold nor work of art can function as a means of payment, purchase or exchange, and as such are not money. >>> >>> >>A loan of gold by the Bank of England is quite distinct from the >>creation of money. The latter occurs by them creating an account >>denominated in sterling on which another bank can draw. The former >>is an intervention in the commodity futures market. >> >> >> > >Claus: >As I already said, in Marxís theory there is a clear difference between >money and credit money. Bank accounts are credit money. If one adopts a >chartalist point of view, this difference vanishes. Why donít you see any >difference between the workings of the commodity futures market and the >bank operations with gold? > > What I am saying is that when the bank lends gold to a private gold trading company it is participating in a particular commodity future market. It is not engaging in old style ususry saying 'We lend you 1 ton of gold and you must promise to pay us back 5% interest denominated in gold. It is saying, we will lend you the gold and charge you a fee in sterling for this. In doing this it is acting like a trader on a commodity market who lends say a tanker of oil, in return for a monetary fee.
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