The insightful Mencius Moldbug (MM) has a 3 December 2009 post at his Unqualified Reservations about game theory and central banks, link: http://unqualified-reservations.blogspot.com/2009/12/gold-and-central-banks-game-theory.html. MM asked a question I have asked many times over the last 30 years, "I've never really understood why gold miners sell gold, beyond recouping the cost of mining". They mine gold, but would rather "invest" in paper. Crazy. Why? To appease Wall Street "analysts"? To hell with Wall Street analysts!
Subscribe to:
Post Comments (Atom)
4 comments:
This is what I always thought happened in OTC securities markets with the big dealers when they have the axe ... from Mesiour Moldbug...
... The problem that breaks Florentine accounting is: if I drive the market up by buying, how should I value what I just bought? Should I mark it to the market price?
If so, I am marking it to supply and demand (including me)? Or should I mark it to the price I could sell it for?
If so, I am marking it to supply and demand (not including me).
The larger the position, the larger the difference between demand (including me) and demand (not including me)...
Excellent commentary...
... And there is another individual motivation that CBs might have for remonetizing. Suppose a large exporter, such as China, which undervalues its currency and runs a large trade surplus as a result, takes a huge radical step and goes all the way to a 100%-reserve gold currency. The ultimate hard currency.
If this succeeds, China is the new England - the financial capital of the world, forever. Everyone else's money? In a word: pesos. Hard currency is Chinese currency. China's natural supremacy over the barbarian kingdoms of the West is restored...
The sooner the we face this possibility the sooner we can right our course...
He he he...
That Mencius is one smart guy.
Anonymous 3:
Yes, MM is very smart, one of the smartest guys in the blogosphere. My only criticism of him is he is prolix. If MM can say something in 100 words as opposed to ten, he'll choose 100. If you haven't read his comments about maturity transformation, do so.
I have long thought China will surplant the US are the world's financial capital by about 2050.
IA
Post a Comment