Re: (OPE-L) Re: on money substance and abstract labor

From: clyder@GN.APC.ORG
Date: Tue Jun 15 2004 - 11:49:59 EDT

Quoting cmgermer@UFPR.BR:

> Claus:
> Petroleum, wheat, butter and the like are not monetary reserves, they are
> reserves of raw materials, dependent on technological and market structure
> characteristics of the particular sectors of production and also on
> national security reasons, which is a totally different thing. You are not
> going to find petroleum, wheat and butter in the statistics of the
> international reserves of the central banks published by the IMF and other
> monetary institutions.

Yes but that is a historical hangover. The central banks still
hold gold from the days when it was a monetary reserve.

By the way, does the European Central Bank hold gold?
If so where did it get it from?

> Gold goes on being produced, year after year, with increasing output, a
> great proportion of which goes into hoards. It is a well known fact that
> the demand for gold and its price increase in the crises and decrease in
> normal times, which is the opposite of what happens with raw materials and
> other assets. Isnít this the usual working of money in its hoarding
> function? I would ask: how do you explain this? Do capitalists also build
> reserves of wheat, butter, petroleum and so on as hoards? Do you think
> that the gold privately held by capitalists today is of the same kind of
> the other raw materials, or would you think that it is motivated by a
> sentimentalist historical hold-over?

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.

> It may seem that the official gold reserves lay inactive in the vaults of
> the central banks, but this is not true. Iíll provide a very empirical
> example: in a speech recently at a conference a senior manager of the Bank
> of England explained that the gold reserves of the Bank are managed Ďon a
> day to day basisí, Ďaimed at achieving a return on them, by lending a
> portion to the marketí. The Bank is also Ďa very significant custodian of
> physical goldí, belonging primarily to other central banks but also to
> commercial firms, which is in part Ďlent on to the market in our own name,
> at a margin to reflect the cost and credit risk incurredí. Isnít this
> called banking credit? And what is the object of banking credit if 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.

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