Loan Modification

LA Times On Goldline and Gold Investing: Are They Good For Consumers?

By Implode-Explode Heavy Industries

A decent article, tinted with a more than a little pro-fiat bias, but could have been much worse (the following excerpts being fair admissions):

Goldline clearly engages in a hard sell, but it may be difficult to prove that they're deliberately duping people into making unwise investments.

Nor is it necessarily misleading to share with customers a sense of urgency about moving money into gold. "We're in extraordinary times," Carter said. "There's a lot of concern about paper currencies."

...

As with most investments, there's a strong element of "buyer beware" at work here. If you bought a home in L.A. around the peak of the housing bubble in mid-2007, you didn't do particularly well. If you bought more recently, you probably got pretty good value for your money.

Yeah, talk about corporate cronyism in misleading people into investments... we're glad he mentioned real estate!

We also wonder if Lazarus has noticed the omnipresent hazard of "subprime" investments of various sorts that have been and most certainly still are floating around the nation's stock of fiat "paper wealth" (the default alternative to gold).

Anyways, for your information, the flagrant propaganda is in this bit:

For instance, Beck has cited on his radio and TV shows a 1933 executive order signed by President Franklin D. Roosevelt authorizing the government to buy people's gold as a way to prevent deflation and put more money into circulation.

The order permitted U.S. citizens to keep about 5 ounces of gold in their possession. It also exempted gold used in industry, jewelry, art and antiques, which could include collectible coins.

Despite alarmist claims to the contrary circulating online, Roosevelt's order did not result in Gestapo-style, house-to-house searches for gold, and only one person was prosecuted for violating the order ? a New York attorney who failed to register 27 gold bars stored in a bank.

Firstly, it is more than a little disingenuous to characterize an executive order that confiscates all except the first 5 ounces of something as "permitting 5 ounces". Anyone attempting to use gold as a significant store of wealth would likely be more concerned with the confiscation of all ounces from 5 to infinity.

More importantly, Roosevelt had little need to "go from door to door", since most gold holders kept their in bank vaults and deposit boxes, which were shuttered, looted, and then re-opened, with fresh crisp "Federal Reserve Notes" in their place. Finally, since gold-backed US Treasury dollars -- the form of money most people held -- were actually gold bailment notes, all Roosevelt had to do was make these non-exchangeable, with the stroke of a pen. So the lack of door-to-door busts is wayyyyyyyyyyyy besides the point.

More importantly, and totally ignored by Lazarus, is that Roosevelt's order and the attendant laws outlawed gold clauses in contracts, making it impossible to peg business transactions of any sort of stable monetary anchor. Effectively, the whole economy was forced to use the government's fiat dollars, a never-before condition in the history of the republic.

Despite the quiet restoration of the gold clause in the 70s (even as the final vestiges of gold convertibility for nations were eliminated), we are still reaping that bitter harvest of a shift of the economy into pure fiat.

Full post as published by Mortgage Lender Implode-o-Meter on July 31, 2010 (boomark / email).