tag:blogger.com,1999:blog-6089228851855763774.post5696903556619793185..comments2024-03-29T07:10:06.022+08:00Comments on Gold Chat: Freebanking and bullion bankingBron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-6089228851855763774.post-60684576862974750622012-12-13T10:00:13.042+08:002012-12-13T10:00:13.042+08:00Further to my December 3, 2012 5:24 AM & Decem...Further to my December 3, 2012 5:24 AM & December 3, 2012 5:24 AM above:<br /><br />A free banking view of freegold would look like:<br /><br />1. CBs clear imbalances between each other in gold.<br /><br />2. CBs issue base money and currency which become the reserves of their domestic commercial banking system, and is used for settlement in said system.<br /><br />3. Citizens transact in credit issued by the commercial banks (along with a much smaller amount of CB-issued currency).<br /><br />4. Citizens also can buy gold with the credit issued by commercial banks, closing the currency management loop.Michael Hhttps://www.blogger.com/profile/08900572113023618278noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-85918115926595561612012-12-12T14:46:46.056+08:002012-12-12T14:46:46.056+08:00Corrections:
"the transfer of some other ag...Corrections:<br /><br /> "the transfer of some other agreed-upon medium"<br /><br />"side-payments to reach a joint optimum"<br /><br />I was trying to avoid having to go through the ordeal of that spam blocker.costatahttps://www.blogger.com/profile/17932860172715556937noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-36878322947403425172012-12-12T14:44:00.923+08:002012-12-12T14:44:00.923+08:00Hi Bron,
I have been looking through the older PD...Hi Bron,<br /><br />I have been looking through the older PDF version of L. W. White's book for some quotes that highlight the similarities between Free Banking as it was practised centuries ago and the LBMA clearing members system.<br /><br />I had to transcribe this so apologies in advance if there are any typos. From Page 32 of 194:<br /><br /><i>In a bi-lateral note exchange the clearing balance is computed simply between the two participants. Where third and further banks enter the arrangement, it is likely to be cheaper to conduct the exchange multilaterally than as a series of bi-lateral exchanges.<br /><br />A single clearing balance is computed for each bank against all other banks, and settlement is paid into and out of a central pool.</i><br /><br />White goes on to observe that settlement need not be in specie or by physical transfer. It could just as easily be effected by "the transfer of some other agreed-upon medium. He also specifically refers to the "side-payments to reach a loint optimum". <br /><br />So the central pool concept can be virtual without invalidating the comparison between Free Banking and the LBMA clearing members system.costatahttps://www.blogger.com/profile/17932860172715556937noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-26013613527846693432012-12-09T01:09:47.179+08:002012-12-09T01:09:47.179+08:00Nothing to add, just subbing so I can read what yo...Nothing to add, just subbing so I can read what you bright people write.<br /><br />Milambermilamberhttps://www.blogger.com/profile/17412309240173757052noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-26519554254716544032012-12-08T16:35:29.071+08:002012-12-08T16:35:29.071+08:00Michael H,
I have a few history of gold books in ...Michael H,<br /><br />I have a few history of gold books in the Perth Mint, will see if I can find anything.<br /><br />costata,<br /><br />Thanks for the link, I'll check it out.Bron Sucheckihttps://www.blogger.com/profile/00530576934994289879noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-55126388406973711792012-12-08T11:22:05.204+08:002012-12-08T11:22:05.204+08:00Hi Bron,
The book available at this link (by Lawr...Hi Bron,<br /><br />The book available at this link (by Lawrence H. White) is widely considered to be an excellent exploration of Scottish free banking. There are also links at the bottom of the page to other works on the topic by Selgin, Hayek and others.<br /><br />http://www.iea.org.uk/publications/research/free-banking-in-britain-theory-experience-and-debate-1800-1845<br /><br />There's also a free PDF download option. If any of your readers want to explore this topic in depth the links at site would be a good starting point IMHO. <br /><br />Cheers <br />costatahttps://www.blogger.com/profile/17932860172715556937noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-53277883983000174732012-12-07T22:16:08.733+08:002012-12-07T22:16:08.733+08:00Thanks for putting these together.
A few more com...Thanks for putting these together.<br /><br />A few more comments on why gold is so special that it needs its own banking and accounting:<br /><br />First, the value of gold as a raw material dwarfs the value added in processing and handling. For example, one can buy 1 oz gold coins online for $50 over spot -- $50 to be split between the mint, shipping, and retailing, and a 3% price move could wipe out the entire gross margin.<br /><br />So it is obvious that the inventory and work-in-progress needs to be hedged, but this is also true of other low-margin commodities such as corn. Futures markets are enough for true commodities, so why not for gold?<br /><br />That leads to the second characteristic that makes gold special, which is that investors want to own it, and are willing to underwrite the mining and processing to get their metal.<br /><br />Still doesn't really explain the origin of gold-denominated credit, outside of historic evolution, to which I am reluctant to ascribe as 100% the origin of gold banking.<br /><br />That is why I was wondering when gold banking came about. I would imagine that it would be superfluous under a gold standard, since currency credit = gold credit at that point. But it might have started before 1971, when presumably mines did not have the same capabilities as foreign CBs to convert dollars to gold.<br /><br />Did gold banking exist prior to, say, 1980?<br /><br />(btw the captcha is a real pita)Michael Hhttps://www.blogger.com/profile/08900572113023618278noreply@blogger.com