----- Original Message ----- From: "Craig Spencer" <[EMAIL PROTECTED]>
> ***Maybe I've got it!*** The US can continue to get away with > floating its fiat currency worldwide as long as there is no > realistic alternative. If the Euro became a realistic > alternative then people would have a choice and that would > end the whole house of cards. Yep Craig, I believe you've got it. Europe wants to run the same game America's been running. You said it right -- foreigners have been exchanging REAL value in exchange for the greenbacks America has been printing. So we have a trade deficit because we export lots of greenbacks in exchange for lots of real foreign goods. Europe wants a piece of that action. They may get their wish: as y'all probably know, China is already moving a small portion of its foreign currency reserves into the Euro. You're right about one other thing, too. It does seem utterly irrational to say that a currency is "backed" by gold reserves when you can't redeem the currency for gold. I guess the ECB is trying to plant some fuzzy notion in people's heads that there's a fundamental limit on the total number of euros they'll print, determined by the gold reserves they have on hand. In other words, they're saying don't worry, we'll always have enough gold to "cover" 15% of our euros. But what the hell does that mean? If they have 100 tons of gold in reserve, then how many euros are they allowed to print in order to maintain their 15% "backing"? 10 million? 10 billion? How do you answer that question? The euro is not DEFINED as a specific quantity of gold, so I guess they'd have to resort to the total spot-market price of the gold reserves, expressed in euros. Sheesh, it sounds like a bunch of hocus-pocus to me! I bet it's just a marketing ploy to help the Euro compete with the US dollar as a trash currency for buying stuff cheap from poor hardworking slobs around the world. Of course, there are limits to how much we can print money to buy real goods. In the 1970's we tried to buy foreign oil with a bunch of new paper, and the price of oil shot through the roof. That ain't gonna happen with clothes and toys made in China though 'cause they're already so dirt-freakin' poor they'll take anything we give 'em. That won't last forever, though -- China is becoming more capitalistic while the US and Europe are becoming more socialistic. I bet that's why the US and Europe have to print up a bunch of crappy paper to buy stuff overseas, because otherwise they'd have to pay the consequences of their socialism. They won't escape forever. Regards, Patrick Chkoreff --- You are currently subscribed to e-gold-list as: [email protected] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
