Banking with Gold

Let's assume for arguments' sake that gold is money. I know plenty of people believe that but I'm asking the non-believers to cross over for just a minute or two. Now that I have your attention, the question I want to address is: How can we bank with gold and do other transactions that currently require us to use FeRN's (Fradulen...excuse me, Federal Reserve Notes)? I'm glad you asked that. I have an idea. First remember that a prime problem with banking using gold is bank robberies. The crooks find out where the gold is and go for it. My idea fixes that problem. In our day of instant information, why not use Thomas Jefferson's approach to storing power to store gold? He said he knew of no safe repository except in the hands of the people. Hmmmm. Not bad. How about a banking SYSTEM that leaves the gold in the hands of the members and only the amount they are willing to risk is combined with other depositors' risk capital for lending to a good business proposition? Here's how it would work. Let's say you have 100 T.O. of gold. You're not willing to risk all of it but you are willing to risk say, 20 troy ounces. The banker (in this case, me) doesn't care how much you have in total, only what you are willing to commit in case the right deal comes along so you can earn some interest or profit on it. Okay, if all members subscribe to fixed amounts, the bank keeps that information on hand so the members can be called on to evaluate the deal that gets past the vetting by the banker (remember? me.). Only really solid deals will be offered and the member would subscribe or not subscribe. The only time the gold would be in one place is delivery at closing where the investment or loan is secured by something. Because the vast bulk of the gold is out in private holdings (depositor information is kept secret so no one knows) there is no hoard of gold to rob. Neat, huh? Plus, the only deals that would pass muster would pay return in gold or food or some other agreeable commodity. By using gold (silver and platinum will work as well) eagles, which are legal tender, the face value of the coins are what is used for accounting and will keep the members well under the threshold of income tax liability. Imagine! An investment that would pay back in gold! Maybe food, too!
It's got possibilities!

Disappearing wealth...?

The media complains about how much wealth has disappeared since last summer. Oh, please. Wealth doesn't just disappear (unless it's covered by lava or nuked). All those dollars represented speculative gains (wealth as a term doesn't apply) in hopes that some greater fool will buy at a higher price. This is known as, "the greater fool theory". How apt. Real wealth requires labor. Someone digs ore from the ground and refines it or plants crops and harvests them or in some way changes natural resources into something useful in everyday life. This is wealth built on labor and is lasting. Financial wealth is often illusory. Not always but often; such as now. Our Federal Reserve System (Central Bank, also the FED) has been creating money from nothing for so long now (since 1913) that our entire financial system is like a great big soap bubble sitting on top of bedrock. The bedrock represents the real wealth of our country and the soap bubble represents claims against that wealth. Not only that, we have a derivatives market that represents claims against the soap bubble. Sheeeesh! What we see popping is the bubble not the bedrock. Like the tulip mania in Holland in 1637, the perceived value of a tulip bulb drove the prices so high that one contract sold for 10 times the average annual earnings of a craftsman. Suddenly, someone perceived that the bulb only grew flowers and sold out. Someone else sold out and in February 1637 the price collapsed. Did the wealth vanish? No, someone sold at the high and kept the wealth just like now. The stock market is a zero sum game: for every seller there has to be a buyer. Someone gets the high price when they sell. In our case, the air is being let out of our stock bubble and reality is setting in. That's all that is happening. Of course, if you were in with the money manipulaters (read the FED) you would know ahead of time and would be able to liquidate and keep your profit. When the FED sent the word out to restrict credit, which the banks have done, the collapse was inevitable. Stick with bedrock type investments: gold, silver, platinum, producers of such, producers of food.