Dear Dr. Yourdon:

Read your book a couple years ago with great interest & would do any- thing of which I'm capable to supplement another book by you which may give people a little more positive attitude re. the coming debachle and the light at the other end which, hopefully will not be another train.

I was first introduced to gold in 1960,was written up in Harry Browne's first two books as someone whom his readers could trust re. purchasing gold mining stocks. We began buying when gold was $35 & got out when it went over $700. I believe it is now time to buy again; this time for the purpose of financial survival, not necessarily for gain. If you care to check on Westergaard and/or GoldEagle, you will find several articles of mine which they have published during the past couple years. They both have published my bio., also.

Please feel free to call me at 800:4477-911 (our emergency hot-line), or fax @ 480:657-0849.

Cordially, Jack Weber, Principal Golden Eagle Enterprises, LLC

-- (Jack) John H. Weber (jweber@ionet.net), August 20, 1999

Answers

When we get to the chapter on banking and finance, it obviously makes sense to talk about gold, etc.

But if we're faced with a severe Y2K crisis, it seems to me that society might want to re-think a very fundamental assumption about banking -- i.e., that "money" is created by, and legitimized by, governments, which then provide the rules and regulations by which banks carry out day-to-day transactions involving that money. One of the unfortunate consequences of this partnership is that the government is more easily able to keep track of who has how much money, which facilitates taxation, controls over movement of monies in and out of the country, etc.

What if society said, "Hey, we don't want this any more! We're going to create a monetary system that operates on the Internet, and that NOBODY controls!" You might choose to participate in a subset of that banking environment that allows fractional-reserve deposits and lending practices, in order to achieve higher interest rates to go along with a higher risk; but I might choose to participate in a different subset of that banking environment that was not based on a fractional-reserve system, in order to minimize my risk.

Is such a thing possible? I think it could be done, using today's technology. Is it politically likely to happen, given the way society has allowed political leadership to control money for the past several thousand years? Hmmm... who knows?

Ed

-- Ed Yourdon (HumptyDumptyY2K@yourdon.com), August 21, 1999.

I am by no means an expert in this area so I would be glad to hear comments from John about my view of the precious metal "coin" situation.

It seems to me that the ownership of precious metal coins is primarily interesting to the small investor (during a y2k breakdown) because they are physical assets which have a known and standardized content of pure and rare earth metals which are recognized as valuable throughout the world. The use of such coins has also been part of the human past and most people have an acceptance of a gold or silver coin as being valuable.

After all the dust has settled and things are getting back on track, a handful of gold coins will have weathered the storm more predictably than a national currency or a stock...meaning that it will predictably have a value well above zero.

But some people are hoping to return to a gold standard. Here is some math - please find my errors if there are any: Worldwide total gold in private and reserves = 32,000 tons. (US Reserve is 8,000) 28 ounces in a pound. 56,000 ounces in a 2000 pound ton. 1.79 billion ounces total gold. $300 per ounce of gold. $537 billion total value of world gold. (US Reserve = $135 billion of gold).

US Dollar money supply (cash and digital) is about 7000 billion or about 40 times the current value of gold reserves. US GDP is about 7000 billion. The dollar money supply is about equal to a single year of GDP.

The world GDP is about 25,000 billion dollars, so the total world money supply might be about 20,000 billion or about 40 times the current world gold value.

In order for an international standard of money backed entirely by gold to emerge, either the value of gold would have to rise approximately by 40 fold. This would be a massive wealth transfer to owners of gold, and away from owners of any other form of currency.

The other consideration is that a massive drop in the actual worldwide GDP could reduce the amount of currency that a gold standard would need to back.

One problem with a new gold standard seems to be that in order for gold to start working as money, the owners of the gold have to spend it or loan it. They would have to convert their gold into the new currency and spend the currency into circulation. Or they could loan the gold or the currency to someone who would agree to pay them back. But most gold is locked up in national banks who will resist a non-political monetary unit (international).

-- Thom Gilligan (thomgill@eznet.net), August 20, 1999.

For a functioning prototype gold monetary payments system, see
http://www.e-gold.com

Also, I have heard that in one of Ludwig von Mises' (author of "Human Action" and others) books, he outlined a method on how to rapdily convert from a fiat (fraudulent) money system to one backed by gold. Sorry I don't have details. I don't personally recall that, and those types of books are packed away, for a few months at least. :-)

I'd like to see an honest money system, but you know what the say about snowballs in hell. Takes both an honest government and an intelligent, honest people. Neither of which I observe.

Even so, if the book is supposedly about creating a better world post-Y2K, such a chapter is a definite must.

-- A (A@AisA.com), August 21, 1999.

Also see this thread on this forum.

"Banking -- Honest Mney and Banking" (Money misspelled)
http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001EyA

-- A (A@AisA.com), August 21, 1999.

Ed,

I am intrigued by your vision of Internet banking/money exchange. However, I am reminded that for a Doctor in the Emergency Room, it looks like everyone in town is getting sick or injured. What I am saying is that for us Internet Junkies, this form of communication is very appealing and rewarding. Unfortunately for the bulk of the population it is not. Don't know why they are not really interested in Y2k OR the Internet, but few are. Will that change, presuming we don't get into the higher order of collapse? I wonder. I confess that I am disappointed in how few people, % wise, seem to want to take part in this technological wonder, or use it for everyday needs. It seems that the basic reason that the current government spin machine can work as brilliantly as it does is that so few people see other viewpoints, on the Internet. In fact the powers-that-be can actually say "that is just some Internet created fantasy" and get away with it, not with us junkies of course, but with the population at large.

-- Gordon (gpconnolly@aol.com), August 21, 1999.

Everyone who posted. SHAME , SHAME !! No one caught that big Bo Bo ! As a former science teacher I nearly fell out of my chair when I saw 28 ounces to the pound . Check any dictionary and you'll see it's 16 ounces to the pound ! Always has been . You need to do some recalculating on the final numbers. Regards Jack. Eagle

-- Hal Walker (e999eagle@freewwweb.com), August 22, 1999.

That last post should be directed to Thom G. ; not John H. Weber. Eagle

-- Hal Walker (e999eagl@freewwweb.com), August 22, 1999.

Sorry Hal, remember some of us reside in Metric countries :)

-- JQ (onca@hotmail.com), August 22, 1999.

hal, you need to remember that gold is not measured in regular ounces. it is measured in troy ounces.

-- jocelyne slough (jonslough@tln.net), August 24, 1999.

Just a hunch...... no matter how it is measured gold will be useless. Except for jewelry.

I believe that the value of gold in the monetary system took it's last breath when the cry of Jack Kemp's call for the return of the gold standard fell on deaf ears.

Seems it is perceived value these days and perception runs amock alot more than it use to. Heck, how many Baby's Babies can Fort Knox hold.

-- Norm (Prez22@aol.com), September 03, 1999.

Uh..... that should be: How many Beanie Baby's can Fort Knox hold.

-- Norm (Prez22@aol.com), September 03, 1999.