Non-Violent Resistance -
The philosophy of Satyagraha, holding on to The Truth
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Sunday, 30 April 2017
quote [ With big fanfare, Deutsche Bundesbank announced on February 9 that ahead of plan they had repatriated 300 tons of gold from New York. This put a positive spin on a rather disturbing fact –1236 tons of gold that is supposed to be part of Germany’s currency reserve will continue to be kept outside of German control in New York - indefinitely. ]
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satanspenis666 said @ 5:48pm GMT on 30th April
Same reason you can withdraw money from your bank. The money doesn't belong to the Fed, the Fed is just the custodian holding it. Germany had the choice to leave the gold, repatriate the gold, or sell the gold in NY and repatriate the cash. Germany wasn't forced to do anything, it simply decided what to do with it's assets.
Before the FDIC, banks would occasionally become insolvent. If customers became aware that their bank may be insolvent, they would withdraw their money and this would occasionally cause a run on banks, causing mass panic for the remaining customers that haven't withdrawn their cash yet. This is largely a problem because banks lend out long term debts (such as issuing mortgages), which are funded by short term deposits (that cash in your checking/savings can be withdrawn at any time). A run on the banks, will cause the bank to sell assets at fire-sale prices.
If the Fed didn't allow a country to withdraw reserves from the bank, it could cause mass panic with other country's central banks. Unlike the above example of a run on banks, the Fed is not investing these gold reserves, so if the Fed was not able to pay back the gold, it would simply mean that the gold is not there and all trust would come crashing down.
While Germany could repatriate 300 tons of gold, they were still required to maintain 1,200 tons as a required reserve. Repatriating the last 1,200 tons would basically mean that Germany is no longer interested in trading with the US ever again.
satanspenis666 said @ 5:50pm GMT on 30th April
Same reason you can withdraw money from your bank. The money doesn't belong to the Fed, the Fed is just the custodian holding it. Germany had the choice to leave the gold, repatriate the gold, or sell the gold in NY and repatriate the cash. Germany wasn't forced to do anything, it simply decided what to do with it's assets.
Before the FDIC, banks insolvency was a major concern. If customers became aware that their bank may be insolvent, they would withdraw their money and this would occasionally cause a run on banks, causing mass panic for the remaining customers that haven't withdrawn their cash yet. This is largely a problem because banks lend out long term debts (such as issuing mortgages), which are funded by short term deposits (that cash in your checking/savings can be withdrawn at any time). A run on the banks, will cause the bank to sell assets at fire-sale prices.
If the Fed didn't allow a country to withdraw reserves from the bank, it could cause mass panic with other country's central banks. Unlike the above example of a run on banks, the Fed is not investing these gold reserves, so if the Fed was not able to pay back the gold, it would simply mean that the gold is not there and all trust would come crashing down.
While Germany could repatriate 300 tons of gold, they were still required to maintain 1,200 tons as a required reserve. Repatriating the last 1,200 tons would basically mean that Germany is no longer interested in trading with the US ever again.
<-- Entry / Current Comment
satanspenis666 said @ 5:48pm GMT on 30th April [Score:1 Informative]
Same reason you can withdraw money from your bank. The money doesn't belong to the Fed, the Fed is just the custodian holding it. Germany had the choice to leave the gold, repatriate the gold, or sell the gold in NY and repatriate the cash. Germany wasn't forced to do anything, it simply decided what to do with it's assets.
Before the FDIC, banks insolvency was a major concern. If customers became aware that their bank may be insolvent, they would withdraw their money and this would occasionally cause a run on banks, causing mass panic for the remaining customers that haven't withdrawn their cash yet. This is largely a problem because banks lend out long term debts (such as issuing mortgages), which are funded by short term deposits (that cash in your checking/savings can be withdrawn at any time). A run on the banks, will cause the bank to sell assets at fire-sale prices.
If the Fed didn't allow a country to withdraw reserves from the bank, it could cause mass panic with other country's central banks. Unlike the above example of a run on banks, the Fed is not investing these gold reserves, so if the Fed was not able to pay back the gold, it would simply mean that the gold is not there and all trust would come crashing down.
While Germany could repatriate 300 tons of gold, they were still required to maintain 1,200 tons as a required reserve. Repatriating the last 1,200 tons would basically mean that Germany is no longer interested in trading with the US ever again.
