FOA (09/13/99; 09:09:03MDT - Msg ID:13518)

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ORO, Some things I know.

This work started back in 1988, not long after the 87 crash. Important people were
asking some very serious questions about the timeline of the world monetary system.
They expected a long-term evolving report that would expand ongoing events into a
format of true life context. A context to be understood at all levels of economic exposure.
In other words, it had to do a better job of explaining the (then) recent illogical swings of
world economic affairs and the effects of those swings on various national economic
groups. Were we progressing into a new, better age, or was our system responding in a
death like downtrend?

Because the questions grew from a fear that the world economy would indeed contract in
the future, leaders wanted to know how one could retain the most wealth during such an
event. It was thought that if the basic extended family blocks of a nation could survive
such a collapse, savings intact, those nations and their children would be a benefit to
economic affairs of the future. In effect, negate a possible return to the Dark Ages of
European history. Our time frame was outward some 20+ years. I cannot offer the full
report or it's complete ongoing analysis. But, the effort you have seen to date is one of
sharing somewhat for the common good of all.

In a search for reasoning, they looked first, not only at the most broad perspectives, but
ones that had the effects of history for confirmation. Often the record of historical human
reactions are the only precedent that can refute the use of modern day financial theory.
Especially if that Theory is in a "practice for proof" stage that might last for a generation
or more.

1. They found one absolute repeating event that shaped the lives of countless individuals.
Its effects upon the destiny and life directions of recent society had no equal. That one
most striking and frightening observation was of the failure of paper money. With irony,
we stood here in the middle of 1988, a time of advanced thinking using higher education
for guidance and could easily document that no paper money ever put into use had ever
survived. Weather backed by precious metals or in standalone form, not one lasted! Yet,
we were hip deep in an entire economic world that based and denominated it's wealth
upon the further extensions of "fiat paper money".

2. The second major observation was in the evolution of what debt is. From the very
beginning of time humans have borrowed and owed, from and to each other. During
most of history, the period of time between a debt owed and a debt paid was looked
upon as "a period of risk". The accepted longline historical concept was that the item
borrowed may not be returned to the owner. In addition to this view it was ingrained that
the primary real loss came from not being able to replace the "item" lent, not the
secondary loss of not receiving the medium of exchange. Yet in today's world (1999), the
"thing" that is usually at risk in a debt is the currency. Modern common perception
stands that no one should have to accept these loses. In concept, governments nurture
these perceptions only because they "can" replace the currency with ease. Yet the actual
physical structure of the debt (the economic good that the loan was based upon) is never
regained. This engine alone is a major force in the destruction of currency systems. Its
effect is to shrink the platform that creates real wealth and expands the financial
instruments whose value depends upon that platforms continued function. Indeed, it is a
complete conflict to historical, natural human interactions.

From these two grand perspectives we view the unstable trend lines of our modern
economic structure. It is from this present structure, that many entities, both large and
small now attempt to retreat. But, in order to transport wealth with assets intact, they
had to understand these money dynamics as an ongoing breakdown of our economic
system. A breakdown that ebbs and flows with a political posturing that makes this
journey very uncomfortable without a stable, longterm grasp of the process. As the river
Nile floods and withdraws in its endless rush for the sea so too will the energies of paper
currencies be eventually absorbed into the ocean of history.

Onward:
Michael Kosares of USAGOLD knows well the very early coins of gold. Money coins that
by their very existence today prove victory over the past creations of mankind's
fraudulent commerce. The value of these coins now reflect an even higher value as art.
Another minor means of wealth transportation that has historically outperformed money
gold.

But, in distant times past these same coins performed a far more noble roll. They
remained the only existing money stock after "major economic societies failed". This
particular function of gold is not important for 99% of time that economies function. One
small evidence of this is present in the old Gold standard. With ragged inefficiency, paper
currency circulated as gold deposit receipts along with gold coins during the course of
normal financial dealings. However, after we endure that once in a "several centuries
failure", the gold money stock becomes the vital building block of the next generation.
History has shown that during that brief time, the owners of every ounce of gold provide
the only efficient medium of exchange that rebuilds the marketplace. In transition, these
latter day gold owners never rule the financial world. Rather they perform the act of
energizing a dead economy by transporting buying power into the next expansion. The
history of past human interaction was never one of hoarding money so much, as it was
that of trading to gain life's things.
Life goes on.

Viewpoint:
It was pointed out that one need not invest in gold to negate the effects of an inflation.
All we have to do is buy real things that increase in currency value faster than the loss of
buying power. True, in that light gold is but one of many things that should keep us at
least even. However, we are in the process of experiencing a "breakdown" or at the very
least a major change in the entire financial system. Not just an ongoing inflation during a
phase of a longline expansion. Our goal for certain individuals, is to show this dynamic at
work as the real life events unfold and document it's progress. For private individuals
that read these pages, historical purpose and present day logic will build further support
for the holding of physical gold as these events reveal the true season. In this light I
offer Another’s direction given some many years ago, "in this special season, let others
buy things to hedge their present worth, let us buy gold in support of our future
generations".

Onward:
After reading ORO (9/8/99; 8:24:51MDT - Msg ID:13029), I wanted to at least be more
direct in offering this ongoing discussion of events. You do a wonderful job of writing and
I often find my information is just a reword what is said:

----- "In order to gain action from people, one needs to provide a timetable for the
events (within my nephew's lifetime, mine, my parents' or my grandparents', or before
the year turns, any time now...). This is the kind of support that I myself required before
I was willing to accept the need for putting resources into "gilded insurance". The same
need for support with numbers and charts that I am working on filling is needed to
induce the financial pros to give their clients direction. The issue is a patriotic one. Small
business America will not survive without small capital hoards. The same problem they
had in the depression. The reason for the length of the depression, was the confiscation
of gold. The inability of small businesses to find capital pools in an atmosphere of credit
unwinding, and the simple death of the money supply in lieu of the indestructible gold
that was confiscated was the cause for an extra decade of suffering. The only way I see
to avoid it is to convince people to build these pools now or end up working for a
foreigner for the rest of their lives, since only foreign pools of gold capital will be
available (India, perhaps Europe, Arab countries, Asians from countries that managed to
pick up the pieces most quickly)." -----

ORO, on these points I completely agree. However, all that is left to drive the last
remnants of this world engine is the "American Dream". The leverage to attain that
"Dream" is presently stretched so far that any withdrawal back into reality will implode
the dollar with amazing speed. The time may be already past for any large scale building
of gold stocks based upon reality. But, still the effort is not lost.

Also:
----- "The key to the numbers is that set of numbers that quantifies the issues.
Particularly important is the understanding of how the international dollar system works,
how leveraged it is, how that makes it susceptible even to small shocks, how a dollar
collapse in international markets would play out in the US. Once the arguments and the
numbers are shown and it is possible to convince a professional of the dangers facing the
dollar both as reserve currency and the currency of the US, only then is it possible to
make the argument for gold as anything other than another paper airplane to ride in the
markets. Perhaps you will start a presentation of the qualitative issues regarding the
dollar (rather than gold), interspersed with the data you may want to quote. I am
currently working on the data to show the details of the situation." -----

Onward:
The best indicator one could find to advance the warning of a reserve currency
breakdown is the fall away of price inflation after decades of local currency and debt
expansion. To observe the history of paper money is to view its constant loss of value as
expressed in the price of daily things. Weather backed by gold or nothing but "a dream",
no world economic power has ever let its currency increase in value for the long term.

The only way any currency can, in the short haul become price inflation neutral is
through the demise of its competing moneys. This effect is seen as an increase in the
holdings of one major currency and the corresponding sale (increase in trading velocity)
of the displaced foreign money. In the case of the modern world reserve currency, the
dollar, we look to the net increase of foreign holdings of US treasury debt. The proxy for
holding US cash.
(Note: A table of this recently appeared on the Investech web site. I cannot reproduce it.
Perhaps someone else can.)
From 1979 through 1994, the increase was always positive, but never in fully
manageable amounts. From 1995 till mid 1998, the accumulation exploded off the chart
as money competitors became the spending currency and the dollar the holding
currency. It's well documented how this effect has kept price inflation in terms of the
local US markets from rising. However, this long trend also had the effects of
denominating almost all world debt in dollar terms. This was seen throughout the 90s
and is considered the end time event that will break the dollar. Because the local
American economic structure has always been finite, it cannot defend its currency with
the exchange of real goods nor represent the value of the debts of the entire world. The
downside, not discussed result of this will be the complete destruction of the dollar as a
reserve currency. This begins as an attempt is made to reverse the dollar holding
process. The same chart above also presents a massive decline in net foreign US debt
purchases beginning in 1999+/-. The trigger of this action was the successful
establishment of a larger competing reserve currency, the Euro.

Because a world reserve fiat currency can only represent the tradable value of its local
economic structure, the world markets will now devalue most all debt based upon the
dollar. This effort will begin a real "catch up" phase on the US price inflation front, even
as dollar debt is burned with a vengeance world-wide. This loss of the dollar vehicle will
also bring the destruction of many contemporary derivative markets that priced
commodities for their value as trading items, rather than their traditional good use.

More in a later time. Thank You FOA