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“Masses of Worthless Paper”

Lord Tammerlain

DP Veteran
Jan 25, 2010
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Political Leaning
A good long read, it is in a PDF format that does not allow for easy coping for quotes

http://www.aucontrarian.com/May 10 gdb/may 10 GDB Fred Sheehan.pdf

It is about the Fed in general and the great depression and current recession. It relates to how the previous boom, or credit bubble in the years before the depression and the current recession were/ are the reasons for the depression
Marc Faber, who runs those publications, is a regular guest on CNBC. He definitely gives good interviews.
Why are banks dumping gold?

They didn't dump it in the sense of selling it. It looks like they needed cash so they pawned it:

In an interview with Reuters Television this week, GFMS Chairman Philip Klapwijk said commercial banks may have had enough unallocated gold on deposit to make up such a tonnage.

But even the largest commercial banks would struggle to trade that amount on an annual basis, and as this would be on behalf of clients, it would be unavailable for swaps.

"No commercial bank has ever had 350 tonnes of gold to swap," said Commerzbank analyst Eugen Weinberg. "Even 10 tonnes seems out of range."

If the gold were sourced from unallocated gold accounts, that would also raise questions over the viability of the bank effectively pawning its clients' gold to support itself.


More likely, analysts say, is that the gold was sourced from the official sector, with a central bank loaning gold to a commercial bank or banks that used it to raise currency.

BIS footnote unlocks major development in gold use | Reuters

Anyway, let's see: We have the rampant speculation and bubble in real estate, the rapid rise of consumer lending, the securitization of mortgages, the financial collapse, the rebound in stocks, the deceleration in inflation, and the sluggish employment. Now, all we need is a European bank to collapse to complete the picture:

1931: Kreditanstalt Bank announces that it is unable to publish 1930 accounts in time, due to the English auditor's discovery of misstatements in the accounts of ex-Boden-Kredit Anstalt. At 11 May, the bank declares unexpected losses totalling 140m schillings, triggering a run on the bank, probably encouraged by French creditors seeking to block the Austro-German customs union plan.

Unable to freeze the deposits of the country's largest financial institution, which includes half the nation's total businesses, Austrian authorities set up a number of public-private sector bail-out plans, with help from The House of Rothschild and the Central Bank.

But the run spreads to all the country's banks and those of Germany, as savers fear that the country's credibility been hit. As such, they demand that their schillings be converted to gold, given that the country operates under the gold standard.

Despite international loans from the Bank of England and the BIS, backed by the Fed, and interest rate hikes meant to attracted in-country capital, in the end, Austria defaults and abandons the gold standard, while freezing the assets of non-residents still in the country's banks. Germany then follows suite and prohibits transactions in gold.

The Great Depression's Second Wave: Are We About to Live Through Kreditanstalt Bank Redux? -- Seeking Alpha
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